<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 10, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ICF KAISER INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1437073
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
AND SUBSIDIARY GUARANTORS
CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC.
ICF KAISER GOVERNMENT PROGRAMS, INC.
PCI OPERATING COMPANY, INC.
SYSTEMS APPLICATIONS INTERNATIONAL, INC.
(EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR RESPECTIVE CHARTERS)
CALIFORNIA 94-2278222
DELAWARE 54-1761768
DELAWARE 54-1589711
DELAWARE 54-1770848
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
8711
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
---------------
9300 LEE HIGHWAY PAUL WEEKS, II, ESQ.
FAIRFAX, VIRGINIA 22031 SENIOR VICE PRESIDENT, GENERAL COUNSEL
(703) 934-3600 AND SECRETARY
(ADDRESS, INCLUDING ZIP CODE, AND ICF KAISER INTERNATIONAL, INC.
TELEPHONE NUMBER, INCLUDING AREA CODE, 9300 LEE HIGHWAY
OF REGISTRANTS' PRINCIPAL EXECUTIVE FAIRFAX, VIRGINIA 22031
OFFICE) (703) 934-3600
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
COPY TO:
JAMES J. MAIWURM, ESQ.
CROWELL & MORING LLP
1001 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
(202) 624-2500
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12% Senior Notes due 2003,
Series B ............... $15,000,000 100.5% $15,075,000 $4,568.18
- -------------------------------------------------------------------------------
Guarantees of 12% Senior
Notes, Series B ........ $15,000,000 (2) (2) (2)
- -------------------------------------------------------------------------------
Total ................... $15,000,000 100.5% $15,075,000 $4,568.18
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) In accordance with Rule 457(f)(1), the registration fee is calculated
based on the average of the bid and asked price on the over-the-counter
market on January 6, 1997, of the 12% Senior Notes due 2003, Series A, of
ICF Kaiser International, Inc.
(2) No additional consideration will be paid by the recipients of the 12%
Senior Notes due 2003, Series B, for the Guarantees. Pursuant to Rule
457(n) under the Securities Act of 1933, no separate fee is payable for
the Guarantees.
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 10, 1997
PROSPECTUS
ICF KAISER INTERNATIONAL, INC.
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF ITS 12% SENIOR NOTES DUE 2003,
SERIES B, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, FOR EACH $1,000 IN PRINCIPAL AMOUNT OF ITS OUTSTANDING 12% SENIOR
NOTES DUE 2003, SERIES A
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997,
UNLESS EXTENDED.
----------
ICF Kaiser International, Inc. ("ICF Kaiser" or the "Company") hereby offers
to exchange (the "Exchange Offer") up to $15,000,000 in aggregate principal
amount of its new 12% Senior Notes due 2003, Series B (the "Exchange Notes"),
for up to $15,000,000 in aggregate principal amount of its outstanding 12%
Senior Notes due 2003, Series A (the "Old Notes" and, together with the
Exchange Notes, the "Notes"), that were issued and sold in a transaction exempt
from registration under the Securities Act of 1933, as amended (the "Securities
Act").
The terms of the Exchange Notes are substantially identical (including
principal amount, interest rate, maturity, security and ranking) to the terms
of the Old Notes for which they may be exchanged pursuant to the Exchange
Offer, except that the Exchange Notes (i) are freely transferable by holders
thereof (except as provided below) and (ii) are not entitled to certain
registration rights and certain additional interest provisions that are
applicable to the Old Notes under the Registration Rights Agreement (as
defined). The Exchange Notes will be issued under the indenture dated as of
December 23, 1996 governing the Old Notes (the "Indenture").
The interest rate on the Exchange Notes will be 13% until the Company
achieves and maintains $36 million of Earnings (as defined) for two consecutive
quarters on a trailing twelve-month basis after deducting minority interests
and before interest, taxes, depreciation and amortization calculated in
accordance with generally accepted accounting principles. See "Description of
the Notes--Interest Rate Increase." Interest on the Exchange Notes is payable
semiannually on June 30 and December 31 of each year, commencing June 30, 1997.
Interest on the Exchange Notes will accrue from December 31, 1996. The Exchange
Notes are not redeemable prior to December 31, 1998. The Exchange Notes are
redeemable, in whole or in part, at the option of the Company on or after
December 31, 1998 at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption.
The Exchange Notes will be senior unsecured obligations of the Company, will
rank senior to all subordinated indebtedness of the Company and will rank pari
passu in right of payment with all existing and future senior indebtedness of
the Company, including the Old Notes and indebtedness under the Credit Facility
(as defined). As of September 30, 1996, after giving pro forma effect to the
issuance of the Old Notes, borrowings under the Credit Facility and application
of the proceeds therefrom, the Company would have had approximately $153.9
million of total indebtedness and $18.8 million secured indebtedness under the
Credit Facility. The Exchange Notes will be unconditionally guaranteed by four
wholly owned subsidiaries of the Company (the "Subsidiary Guarantors").
In the event of a Change of Control (as defined), the Company will be
required to offer to purchase all Exchange Notes then outstanding at a purchase
price equal to 101% of the aggregate principal amount of such Exchange Notes,
plus accrued and unpaid interest, if any, to the date of purchase.
(Continued on next page)
----------
HOLDERS OF OLD NOTES SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH IN "RISK
FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS PRIOR TO MAKING A DECISION WITH
RESPECT TO THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
(Continued from previous page)
The Old Notes were originally issued and sold on December 23, 1996 in a
transaction not registered under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Rule 144A
promulgated under the Securities Act. Accordingly, the Old Notes may not be
reoffered, resold or otherwise pledged, hypothecated or transferred in the
United States unless so registered or unless an applicable exemption from the
registration requirements of the Securities Act is available. Based upon its
view of interpretations provided to third parties by the Staff (the "Staff")
of the Securities and Exchange Commission (the "Commission"), the Company
believes that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any holder that is (i) an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act (an "Affiliate"), (ii) a broker-dealer who acquired Old Notes directly
from the Company or (iii) a broker-dealer who acquired Old Notes as a result
of market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of such
holders' business and such holders are not engaged in, and do not intend to
engage in, and have no arrangement or understanding with any person to
participate in, a distribution of such Exchange Notes. Each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any
resale of Exchange Notes. The Letter of Transmittal that is filed as an
exhibit to the Registration Statement of which this Prospectus is a part (the
"Letter of Transmittal") states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Broker-dealers who
acquired Old Notes as a result of market-making or other trading activities
may use this Prospectus, as supplemented or amended, in connection with
resales of Exchange Notes. The Company has agreed that, for a period of 180
days after the Exchange Date (as defined), it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. Any
holder who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes and any other holder that cannot rely upon
interpretations of the Staff must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction.
Old Notes initially purchased by qualified institutional buyers and
institutional accredited investors were initially represented by a single,
global Old Note in registered form, registered in the name of a nominee of The
Depository Trust Company ("DTC"), as depository. The Exchange Notes exchanged
for Old Notes represented by the global Old Note will be represented by one or
more global Exchange Notes in registered form, registered in the name of the
nominee of DTC. See "Book-Entry; Delivery and Form." Exchange Notes issued to
persons other than qualified institutional buyers and institutional accredited
investors in exchange for Old Notes held by such investors will be issued only
in certificated, fully registered, definitive form. Except as described
herein, Exchange Notes in definitive certificated form will not be issued in
exchange for the global Old Note or interests therein.
The Old Notes and the Exchange Notes constitute new issues of securities
with no established public trading market. Any Old Notes not tendered and
accepted in the Exchange Offer will remain outstanding. To the extent that Old
Notes are not tendered or are tendered but are not accepted in the Exchange
Offer, a holder's ability to sell such Old Notes could be adversely affected.
Following consummation of the Exchange Offer, the holders of any remaining Old
Notes will continue to be subject to the existing restrictions on transfer
thereof and the Company will have no further obligation to such holders to
provide for the registration under the Securities Act of the Old Notes except
under certain limited circumstances. See "Old Notes Registration Rights;
Additional Interest." No assurance can be given as to the liquidity of the
trading market for the Old Notes or the Exchange Notes. The Old Notes are not
listed on any securities exchange and the Company does not intend to apply for
a listing of the Exchange Notes on a securities exchange.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered or accepted for exchange. The Exchange
Offer will expire at 5:00 p.m., New York City time, on , 1997, unless
extended (the "Expiration Date"). The date of acceptance for exchange of the
Old Notes (the "Exchange Date") will be the first business day following the
Expiration Date, upon surrender of the Old Notes. Old Notes tendered pursuant
to the Exchange Offer may be withdrawn at any time prior to the Expiration
Date; otherwise such tenders are irrevocable.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all expenses incident to the Exchange Offer.
<PAGE>
AVAILABLE INFORMATION
The Company and the Subsidiary Guarantors have filed with the Commission a
Registration Statement on Form S-1 (together with all amendments, exhibits,
schedules and supplements thereto, the "Registration Statement") under the
Securities Act with respect to the Exchange Notes being offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain items
of which are omitted as permitted by the rules and regulations of the
Commission. For further information with respect to the Company, the
Subsidiary Guarantors and the Exchange Notes, reference is hereby made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete and,
where such contract or other document is an exhibit to the Registration
Statement, each such statement is qualified in all respects by the provisions
in such exhibit, to which reference is hereby made.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements, and other information filed by the Company
may be inspected by anyone without charge at the Commission's Public Reference
Room, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: New York Regional Office, 7
World Trade Center, New York, New York 10048; and Chicago Regional Office, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material may also
be obtained at the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of prescribed fees. The
Commission also maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
The Company's common stock is traded on the New York Stock Exchange.
Reports, proxy material and other information concerning the Company may be
inspected at the office of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
In the event that the Company ceases to be subject to the reporting
requirements of the Exchange Act, the Company has agreed that, so long as the
Exchange Notes remain outstanding, it will file with the Commission and
distribute to holders of the Exchange Notes copies of the financial
information that would have been contained in annual reports and quarterly
reports, including management's discussion and analysis of financial condition
and results of operations, that the Company would have been required to file
with the Commission pursuant to the Exchange Act. Such financial information
shall include annual reports containing consolidated financial statements and
notes thereto, together with an opinion thereon expressed by an independent
public accounting firm, as well as quarterly reports containing unaudited
condensed consolidated financial statements for the first three quarters of
each fiscal year.
i
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. The terms "Company" or "ICF Kaiser" in this
Prospectus may refer to ICF Kaiser International, Inc. and/or any of its
consolidated subsidiaries. Effective December 31, 1995, the Company changed its
fiscal year end from February 28 to December 31.
THE COMPANY
ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its
other operating subsidiaries, is one of the nation's largest engineering,
construction, program management and consulting services companies. The
Company's Federal Programs, Engineers and Consulting Groups provide fully
integrated services to domestic and foreign clients in the private and public
sectors of the environment, infrastructure and basic metals and mining industry
markets. For the latest nine-month period ended September 30, 1996, ICF Kaiser
had gross and service revenue of $1,023.4 million and $433.6 million,
respectively. Service revenue is derived by deducting the costs of
subcontracted services and direct project costs from gross revenue and adding
the Company's share of income (loss) of joint ventures and affiliated
companies. As of November 30, 1996, the Company employed 5,176 people located
in more than 80 offices worldwide.
In the environmental market, the Company provides services in connection with
the remediation of hazardous and radioactive waste, waste minimization and
disposal, risk assessment, global warming and acid rain, alternative fuels and
clean up of harbors and waterways. Demand for environmental services is driven
by a number of factors, including: the need to improve the quality of the
environment; federal, state and municipal regulation and enforcement; and
increased liability associated with pollution-related injury and damage. ICF
Kaiser is well-positioned to take advantage of the growing market arising from
the increased awareness internationally of the need for additional and/or
initial environmental regulations, studies and remediation.
ICF Kaiser also provides services to the infrastructure market. This market
is driven by the need to maintain and expand, among other things, ports, roads,
highways, mass transit systems and airports. Increasingly, environmental
concerns, such as wastewater treatment and reducing automotive air pollutant
emissions, are a driving force behind new infrastructure and transportation
initiatives. The Company has capitalized on its specialized technical and
environmental skills to win projects that provide consulting, planning, design
and construction services. Internationally, there is a critical need for
infrastructure projects where population growth of major cities has been and
will continue to be extremely high. The Company currently provides engineering
and construction management services for mass transit and wastewater treatment
facilities in many such major cities worldwide.
ICF Kaiser assists its basic metals and mining industry clients by providing
the engineering and construction skills needed to maintain and retrofit
existing plants and replace aging production capacity with newer, more
efficient and more environmentally responsible facilities. The Company's
engineering and construction skills, as well as its access to process
technologies, have helped establish it as a worldwide leader in serving the
basic metals and mining industries, especially aluminum and steel. ICF Kaiser
is currently expanding its operations internationally, particularly engineering
and construction management services related to alumina production from
bauxite, aluminum smelting and other basic industry facilities.
The Company is currently working on several large, highly visible projects,
including, but not limited to, (i) a five-year contract at the U.S. Department
of Energy's Rocky Flats Environmental Technology site near Golden, Colorado,
(ii) a two-year contract with Nova Hut, an integrated steel maker based in the
Czech Republic, (iii) two four-year Total Environmental Restoration Contracts
("TERC") to perform environmental restoration work at federal installations for
the U.S. Army Corps of Engineers, (iv) a five-year construction management
contract
1
<PAGE>
for the Boston Harbor wastewater treatment facility and (v) a three-year
contract as the project manager at the light rail transit system in Manila.
ICF Kaiser International, Inc. was incorporated in Delaware in 1987 under the
name American Capital and Research Corporation. It is the successor to ICF
Incorporated, a nationwide consulting firm organized in 1969. In 1988, the
Company acquired the Kaiser Engineers business which dates from 1914. The
Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-
1207, telephone number (703) 934-3600.
THE EXCHANGE OFFER
The Exchange Offer........ The Company is offering to exchange (the "Exchange
Offer") up to $15,000,000 aggregate principal
amount of its 12% Senior Notes due 2003, Series B
(the "Exchange Notes"), for up to $15,000,000 ag-
gregate principal amount of its outstanding 12% Se-
nior Notes due 2003, Series A, that were issued and
sold in a transaction exempt from registration un-
der the Securities Act (the "Old Notes" and to-
gether with the Exchange Notes, the "Notes"). The
form and terms of the Exchange Notes are substan-
tially identical (including principal amount, in-
terest rate, maturity, security and ranking) to the
form and terms of the Old Notes for which they may
be exchanged pursuant to the Exchange Offer, except
that the Exchange Notes are freely transferable by
holders thereof except as provided herein (see "The
Exchange Offer--Terms of the Exchange" and "--Terms
and Conditions of the Letter of Transmittal") and
are not entitled to certain registration rights and
certain additional interest provisions that are ap-
plicable to the Old Notes under a registration
rights agreement dated as of December 23, 1996 (the
"Registration Rights Agreement") between the Com-
pany and BT Securities Corporation as initial pur-
chaser (the "Initial Purchaser") of the Old Notes.
Exchange Notes issued pursuant to the Exchange Of-
fer in exchange for the Old Notes may be offered
for resale, resold or otherwise transferred by
holders thereof (other than any holder that is (i)
an Affiliate of the Company, (ii) a broker-dealer
who acquired Old Notes directly from the Company or
(iii) a broker-dealer who acquired Old Notes as a
result of market-making or other trading activi-
ties), without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such Exchange Notes are acquired
in the ordinary course of such holders' business
and such holders are not engaged in, and do not in-
tend to engage in, and have no arrangement or un-
derstanding with any person to participate in, a
distribution of such Exchange Notes.
Minimum Condition......... The Exchange Offer is not conditioned upon any min-
imum aggregate amount of Old Notes being tendered
or accepted for exchange.
Expiration Date........... The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997, unless extended (the
"Expiration Date").
2
<PAGE>
Exchange Date............. The first date of acceptance for exchange for the
Old Notes will be the first business day following
the Expiration Date.
Conditions to the
Exchange Offer........... The obligation of the Company to consummate the Ex-
change Offer is subject to certain conditions. See
"The Exchange Offer--Conditions to the Exchange Of-
fer." The Company reserves the right to terminate
or amend the Exchange Offer at any time prior to
the Expiration Date upon the occurrence of any such
condition.
Withdrawal Rights......... Tenders of Old Notes pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expira-
tion Date. Any Old Notes not accepted for any rea-
son will be returned without expense to the
tendering holders thereof as promptly as practica-
ble after the expiration or termination of the Ex-
change Offer.
Procedures for Tendering
Old Notes................. See "The Exchange Offer--How to Tender."
Federal Income Tax
Consequences.............. The exchange of Old Notes for Exchange Notes by
tendering holders will not be a taxable exchange
for federal income tax purposes, and such holders
should not recognize any taxable gain or loss as a
result of such exchange.
Use of Proceeds........... There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Effect on Holders of Old
Notes..................... As a result of the making of this Exchange Offer,
and upon acceptance for exchange of all validly
tendered Old Notes pursuant to the terms of this
Exchange Offer, the Company will have fulfilled a
covenant contained in the terms of the Old Notes
and the Registration Rights Agreement, and,
accordingly, the holders of the Old Notes will have
no further registration or other rights under the
Registration Rights Agreement, except under certain
limited circumstances. See "Old Notes Registration
Rights; Additional Interest." Holders of the Old
Notes who do not tender their Old Notes in the
Exchange Offer will continue to hold such Old Notes
and will be entitled to all the rights and
limitations applicable thereto under the Indenture.
All untendered, and tendered but unaccepted, Old
Notes will continue to be subject to the
restrictions on transfer provided for in the Old
Notes and the Indenture. To the extent that Old
Notes are tendered and accepted in the Exchange
Offer, the trading market, if any, for the Old
Notes not so tendered could be adversely affected.
See "Risk Factors--Consequences of Failure to
Exchange Old Notes."
3
<PAGE>
TERMS OF THE EXCHANGE NOTES
The Exchange Offer applies to $15,000,000 aggregate principal amount of Old
Notes. The form and terms of the Exchange Notes are substantially identical to
the form and terms of the Old Notes, except that the Exchange Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The Exchange Notes will evidence the same
debt as the Old Notes and will be entitled to the benefits of the Indenture.
See "Description of the Notes."
Securities Offered........ $15,000,000 of 12% Senior Notes due 2003, Series B
Maturity Date............. December 31, 2003
Interest Rate and Payment
Dates.................... The Exchange Notes will bear interest at a rate of
12% per annum. Interest will accrue from December
31, 1996 and will be paid semiannually on June 30
and December 31 of each year, commencing June 30,
1997.
Temporary Interest Rate
Increase................. The interest rate on the Exchange Notes will be 13%
until (i) the Company achieves and maintains for
two consecutive quarters on a trailing twelve-month
basis $36 million of earnings after deducting mi-
nority interests and before interest, taxes, depre-
ciation and amortization calculated in accordance
with generally accepted accounting principles
("Earnings") or (ii) March 31, 1998, provided that
the Company's Earnings are $36 million as of that
date on a trailing twelve-month basis. If the
Company's Earnings are not $36 million as of that
date on a trailing twelve-month basis, then the in-
terest rate will continue at 13% until the
Company's Earnings are $36 million for one quarter
on a trailing twelve-month basis. See "Description
of the Notes--Interest Rate Increase."
Optional Redemption....... The Exchange Notes are redeemable, in whole or in
part, at the option of the Company on or after De-
cember 31, 1998 at the redemption prices set forth
herein, plus accrued and unpaid interest thereon,
if any, to the redemption date.
Change of Control......... In the event of a Change of Control, the Company
will be required to offer to purchase all of the
outstanding Exchange Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of purchase. See "De-
scription of the Notes--Change of Control."
Ranking................... The Exchange Notes will be unsecured obligations of
the Company, will rank senior to all subordinated
indebtedness of the Company and will rank pari
passu in right of payment with all existing and fu-
ture senior indebtedness of the Company, including
the Old Notes and indebtedness under the Credit Fa-
cility (as defined).
Guarantees................ The Exchange Notes will be unconditionally guaran-
teed by the Subsidiary Guarantors.
Certain Covenants......... The Indenture contains certain covenants that,
among other things, limit: (i) the incurrence of
additional indebtedness by the Company and its
4
<PAGE>
Restricted Subsidiaries (as defined); (ii) the pay-
ment of dividends; (iii) the repurchase of capital
stock or subordinated indebtedness; (iv) the making
of certain other distributions, loans and invest-
ments; (v) the sale of assets and the sale of the
stock of Restricted Subsidiaries; (vi) the creation
of restrictions on the ability of Restricted Sub-
sidiaries to pay dividends or make other payments
to the Company; and (vii) the ability of the Com-
pany and its Restricted Subsidiaries to enter into
certain transactions with affiliates or to merge,
consolidate or transfer substantially all assets.
All of these limitations and restrictions are sub-
ject to a number of important qualifications and
exceptions. See "Description of the Notes--Certain
Covenants."
For additional information regarding the Exchange Notes, see "Description of
the Notes."
EXCHANGE OFFER; REGISTRATION RIGHTS; ADDITIONAL INTEREST
Pursuant to the Registration Rights Agreement, the Company has agreed (i) to
file the Registration Statement on or prior to February 6, 1997 with respect to
the Exchange Offer, (ii) to use its best efforts to cause the Registration
Statement to become effective under the Securities Act on or prior to April 27,
1997 and (iii) to use its best efforts to consummate the Exchange Offer on or
prior to June 11, 1997. In the event that applicable interpretations of the
Staff do not permit the Company to effect the Exchange Offer, or if for any
reason the Exchange Offer is not consummated, the Company will use its best
efforts to cause to become effective a shelf registration statement with
respect to the resale of the Old Notes and to keep such shelf registration
statement effective until December 23, 1999.
The Company will be obligated to pay additional interest as liquidated
damages to holders of the Old Notes under certain circumstances if the Company
is not in compliance with its obligations under the Registration Rights
Agreement. See "Old Notes Registration Rights; Additional Interest."
RISK FACTORS
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED PRIOR TO MAKING A DECISION WITH RESPECT TO THE EXCHANGE OFFER.
5
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The summary historical consolidated financial data of the Company for the ten
months ended December 31, 1995, and each year in the four-year period ended
February 28, 1995, have been derived from the Company's audited consolidated
financial statements. This information should be read in conjunction with the
Consolidated Financial Statements and the related notes thereto appearing
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The summary historical
consolidated financial data of the Company as of September 30, 1995 and 1996
and for the nine-month periods then ended, have been prepared on the same basis
as the consolidated financial statements and, in the opinion of the Company,
include all normal and recurring adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the information set forth
therein. Operating results for the nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ended December 31, 1996. Certain reclassifications have been made to the prior
period financial statements to conform to the presentation used in the
September 30, 1996 financial statements. The data for the nine months ended
September 30, 1995 and 1996 set forth below are unaudited.
<TABLE>
<CAPTION>
TEN MONTHS NINE MONTHS ENDED
YEAR ENDED FEBRUARY 28 OR 29, ENDED SEPTEMBER 30,
------------------------------------- DECEMBER 31, --------------------
1992(1) 1993 1994(2) 1995 1995 1995 1996
-------- -------- -------- -------- ------------ -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Gross revenue........... $710,873 $678,882 $651,657 $861,518 $916,744 $731,795 $1,023,410
Service revenue (3)..... 385,942 391,528 382,708 459,786 425,896 357,582 433,647
Unusual income
(expense), net......... (67,054) 50 (8,709) -- 500 -- --
Operating income
(loss)................. (43,963) 22,744 (5,230) 13,688 17,505 13,171 21,170
Interest expense, net... 10,347 6,921 6,722 13,000 11,202 10,629 11,885
Income (loss) before
income taxes, minority
interests, and
extraordinary item..... (54,310) 14,894 (12,877) 1,239 6,303 2,542 9,285
Income tax provision
(benefit).............. (13,794) 6,255 (349) 2,900 2,091 1,300 840
Minority interests...... -- -- -- -- 1,960 1,315 4,725
Extraordinary loss on
early extinguishment of
debt................... -- -- 5,969 -- -- -- --
Net income (loss)....... (40,516) 8,639 (18,497) (1,661) 2,252 (73) 3,720
Preferred stock
dividends and
accretion.............. 2,416 5,293 4,896 2,154 1,803 1,616 1,631
Redemption of preferred
stock.................. -- -- 1,929 -- -- -- --
Net income (loss)
available for common
shareholders........... (42,932) 3,346 (25,322) (3,815) 449 (1,689) 2,089
BALANCE SHEET DATA (END
OF PERIOD):
Working capital......... $ 65,623 $ 85,861 $ 87,648 $ 91,640 $ 84,589 $ 84,422 $ 102,009
Total assets............ 318,947 293,076 281,198 281,422 369,517 373,074 374,535
Total indebtedness...... 86,332 74,391 123,042 127,311 125,153 121,561 133,384
Redeemable preferred
stock.................. 45,161 44,824 20,212 19,617 19,787 19,736 19,940
Shareholders' equity.... 51,151 58,521 30,780 27,624 28,427 27,690 33,192
OTHER DATA:
EBITDA (4).............. $ 32,250 $ 33,460 $ 13,038 $ 22,920 $ 23,402 $ 19,182 $ 24,285
Capital expenditures.... 3,644 4,638 1,388 2,426 1,759 1,720 4,905
Depreciation and
amortization........... 9,159 10,766 9,559 9,232 8,357 7,326 7,840
Ratio of earnings to
fixed charges (5)...... N/A 1.8x N/A 1.0x 1.2x 1.1x 1.2x
</TABLE>
- --------
(1) Fiscal year 1992 reflects an after-tax charge of $52.4 million associated
with the disposal and restructuring of certain businesses.
(2) In fiscal year 1994, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions."
(3) Service revenue is derived by deducting the costs of subcontracted services
and direct project costs from gross revenue and adding the Company's share
of the equity in income of unconsolidated joint ventures and affiliated
companies.
(4) EBITDA represents operating income (loss), excluding unusual items, plus
depreciation and amortization minus minority interests. Management believes
that EBITDA is generally accepted as providing useful information regarding
a company's ability to service and/or incur debt. EBITDA should not be
considered in isolation or as a substitute for net income, cash flows or
other consolidated income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.
(5) The ratio of earnings to fixed charges is calculated by dividing income
from continuing operations before fixed charges and income taxes
("earnings") by fixed charges. Fixed charges consist of interest expense
and that portion of rental expense that the Company believes to be
representative of interest. In the years ended February 29, 1992 and
February 28, 1994, earnings, as defined, were inadequate to cover fixed
charges. The deficiencies were $54.3 million and $12.9 million for the
years ended February 29, 1992 and February 28, 1994, respectively.
6
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, before
tendering their Old Notes for the Exchange Notes offered hereby, holders of
Old Notes should consider carefully the following factors, which may be
generally applicable to the Old Notes as well as to the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes, as set forth in the legend thereon, as a
consequence of the issuance of the Old Notes pursuant to the exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act and
applicable state securities laws, or pursuant to an exemption therefrom.
Except under certain limited circumstances, the Company does not intend to
register the Old Notes under the Securities Act. In addition, any holder of
Old Notes who tenders in the Exchange Offer for the purpose of participating
in a distribution of the Exchange Notes may be deemed to have received
restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. To the extent Old Notes are tendered
and accepted in the Exchange Offer, the trading market, if any, for the Old
Notes not so tendered could be adversely affected. See "The Exchange Offer"
and "Old Notes Registration Rights; Additional Interest."
COMPANY IS HIGHLY LEVERAGED
On a pro forma basis, at September 30, 1996, assuming the issuance of the
Old Notes, borrowings under the Credit Facility and application of the net
proceeds therefrom, the Company would have had total indebtedness of $153.9
million, representing 82.4% of total capitalization. Effective March 8, 1996,
the Company agreed to increase the interest rate on the Company's 12% Senior
Subordinated Notes due 2003 (the "Existing Notes") by one percent until the
Company achieves and maintains a specified level of earnings as defined in the
Fourth Supplemental Indenture to the Indenture dated as of January 11, 1994
(as such Indenture has been and may be amended, restated, supplemented or
otherwise modified from time to time, the "Existing Indenture") governing the
Existing Notes. The Indenture governing the Notes contains an identical
increased interest rate provision.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including, but not limited to, the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be limited; (ii) a substantial portion of the
Company's cash flow from operations will be dedicated to the payment of the
principal of, and interest on, its debt; (iii) the agreements governing the
Company's long-term debt contain certain restrictive financial and operating
covenants which could limit the Company's ability to expand; (iv) the
Company's substantial leverage may make it more vulnerable to economic
downturns and reduce its flexibility in responding to changing business and
economic conditions; and (v) the level of the Company's leverage may make it
more difficult for the Company to obtain performance and similar bonds. The
ability of the Company to pay interest and principal on the Notes and to
satisfy its other debt obligations will be dependent on the future operating
performance of the Company, which could be affected by changes in economic
conditions and other factors, including factors beyond the control of the
Company. A failure to comply with the covenants and other provisions of its
debt instruments could result in events of default under such instruments,
which could permit acceleration of the debt under such instruments and in some
cases acceleration of debt under other instruments that contain cross-default
or cross-acceleration provisions.
If the Company is unable to generate sufficient cash flow to meet its debt
obligations, the Company may be required to renegotiate the terms of the
instruments relating to its long-term debt or to refinance all or a portion of
its long-term debt. However, there can be no assurance that the Company will
be able to successfully renegotiate such terms or refinance its indebtedness,
or, if the Company were able to do so, that the terms
7
<PAGE>
available would be favorable to the Company. In the event that the Company
were unable to refinance its indebtedness or obtain new financing under these
circumstances, the Company would have to consider various other options such
as the sale of certain assets to meet its required debt service, negotiation
with its lenders to restructure applicable indebtedness or other options
available to it under law. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
HISTORY OF NET LOSSES
As shown in the following table, for three of the past five fiscal years,
the Company has had net losses; fiscal 1992 reflects an after-tax charge of
$52.4 million associated with the disposal and restructuring of certain
businesses. The Company's cumulative deficit at September 30, 1996 was $30.8
million.
<TABLE>
<CAPTION>
TEN MONTHS NINE MONTHS
YEAR ENDED FEBRUARY 28 OR 29, ENDED ENDED
---------------------------------- DECEMBER 31, SEPTEMBER 30,
1992 1993 1994 1995 1995 1996
-------- ------ -------- ------- ------------ -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)....... $(40,516) $8,639 $(18,497) $(1,661) $2,252 $3,720
Net income (loss)
available for common
shareholders........... (42,932) 3,346 (25,322) (3,815) 449 2,089
</TABLE>
RECENT AND ANTICIPATED RESULTS
For the three months ended September 30, 1996, the Company's operating
income decreased $2.8 million from the corresponding period in 1995, primarily
due to a decrease in operating income from engineering and construction
operations. The Company's service revenue and operating results for the fourth
quarter will be significantly lower than the third quarter. For the nine
months ended September 30, 1996, the Company's Federal Programs Group had
significant increases in costs associated with marketing activities in pursuit
of large-scale projects, including approximately $2.1 million in 1996
associated with the Company's unsuccessful recompete bid on the U.S.
Department of Energy's ("DOE") proposal at its Hanford site ("Hanford") and
significant costs associated with other DOE proposals. In August 1996, the
Company was informed that it was unsuccessful in its bid for the DOE's new
management and integration contract at Hanford. The Company's existing
contract at Hanford, the operating income from which has been significant to
the Company's results, was set to expire in March 1997, and effectively was
terminated by DOE on October 1, 1996. Management believes the impact on
earnings due to the closeout of the Hanford contract will be material in the
fourth quarter of 1996. Management also believes the impact on earnings due to
the closeout of the Hanford contract will be material in future periods,
unless replaced with new contracts or offset by savings from the Company's on-
going cost reduction program. There can be no assurance, however, that the
Company will be able to enter into new contracts or achieve cost savings that
will, in the aggregate, totally offset the effect of the loss of the Hanford
contract. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
In March 1996, the Company and Nova Hut, an integrated steel maker based in
the Ostrava region of the Czech Republic, signed a two-year $102 million
contract to provide engineering and construction services for the initial
phase of a mini-mill project. The Company is currently negotiating a contract
with Nova Hut for the next phase of the mini-mill project and expects to
complete negotiations in the first quarter of 1997. If negotiations are
successful, anticipated earnings associated with this contract for the next
phase of work are expected to be material to the Company's operating results.
There can be no assurance, however, that such negotiations will be completed.
The Company has sold (the "Disposition") its interest in entities owning and
operating a pulverized coal injection facility in Indiana ("PCI"). Although
the sale will result in a gain in the fourth quarter of 1996, the negative
effect of the sale in future periods on earnings and cash flows will be
significant. See "Unaudited Pro Forma Consolidated Financial Statements."
8
<PAGE>
LIMITED ABILITY TO INCUR ADDITIONAL DEBT
Excluding borrowings under the Credit Facility, the Existing Indenture and
the Indenture (together, the "Indentures") limit the Company's ability to
incur additional Indebtedness (as defined). The amount of available additional
indebtedness may be insufficient for working capital needs, potential
acquisitions, significant capital expenditures, repayment of debt or other
purposes. See "Description of the Notes--Certain Covenants--Limitations on
Additional Indebtedness" and "Description of the Credit Facility."
COMPANY DEPENDENT ON FEDERAL GOVERNMENT CONTRACTS
A substantial portion of ICF Kaiser's revenues are derived from services
performed directly or indirectly under contracts with various agencies and
departments of the Federal government. During the ten months ended December
31, 1995, approximately 78% of the Company's consolidated gross revenue was
derived from contracts with the U.S. Government. During the ten months ended
December 31, 1995, the DOE accounted for approximately 68% of consolidated
gross revenue; the U.S. Department of Defense ("DOD"), the U.S. Environmental
Protection Agency ("EPA") and other Federal agencies collectively accounted
for approximately 10% of the Company's consolidated gross revenue.
The Company's existing contract at Hanford effectively was terminated by DOE
on October 1, 1996. As a result, and based on the Company's current assessment
of the closeout of the Hanford contract, management believes the impact on
earnings will be material in the fourth quarter of 1996, as well as in future
periods, unless replaced with new contracts and/or cost reductions. In
response to the reduction and eventual elimination of the Hanford contract, in
August 1996 the Company initiated a significant operational efficiency and
cost savings program, together with management changes, with the objective of
minimizing the long-term impact associated with the termination of the Hanford
contract. See "--Recent and Anticipated Results."
Contracts made with the U.S. Government generally are subject to annual
approval of funding. Limitations imposed on spending by Federal government
agencies, which might result from efforts to reduce the Federal deficit or for
other reasons, may limit the continued funding of the Company's existing
Federal government contracts and may limit the ability of the Company to
obtain additional contracts or task orders under existing contracts. These
limitations, if significant, could have a material adverse effect on the
Company.
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. As a result of pending audits relating to fiscal years 1986
forward, the government has asserted, among other things, that certain costs
claimed as reimbursable under government contracts either were not allowable
or not allocated in accordance with federal procurement regulations. The
Company is actively working with the government to resolve these issues. The
Company has provided for the potential effect of disallowed costs for the
periods currently under audit and for periods not yet audited, although the
amounts at issue have not been quantified by the government or the Company.
This provision will be reviewed periodically as discussions with the
government progress. Based on the information currently available, management
believes the potential effects of these pending audits will not have a
material adverse effect on the Company's financial position, results of
operations or cash flows.
All Federal contracts may be terminated by the U.S. Government at any time,
with or without cause. There can be no assurance that existing or future
Federal government contracts would not be terminated or that the government
will continue to use the Company's services at levels comparable to current
use.
RISK ASSOCIATED WITH COMPANY'S PLEDGE OF ASSETS
The Company and most of its subsidiaries have granted a security interest in
substantially all of their accounts receivable and certain other assets to
secure all debt incurred pursuant to the Credit Facility. The Company would
not be able to incur additional debt (including additional debt permitted by
the Indentures) if
9
<PAGE>
the Company were required to pledge assets in connection with the incurrence
of such additional debt. In the event of bankruptcy or liquidation of the
Company there can be no assurance that sufficient assets would be available
for payment of the Notes.
LIMITED ABILITY TO MAKE ACQUISITIONS AND OTHER INVESTMENTS
The Credit Facility limits the Company's ability to make acquisitions and
other investments, and the Indentures limit the Company's ability to make
restricted payments, including certain payments in connection with investments
and acquisitions. Limitations in the Existing Indenture are based in part on
the Company's Consolidated Net Income (as defined) during the period since
August 31, 1993; the losses incurred by the Company during fiscal 1994 and
1995 have the effect of making this limitation very restrictive.
The indebtedness, investment, acquisitions and restricted payments
limitations in the Credit Facility and the Indentures discussed above mean
that during the next several years it likely will be necessary for the Company
to issue additional equity securities to fund any significant acquisitions and
to invest significant amounts in joint ventures. These limitations may make it
more difficult for the Company to compete effectively in its markets.
FRAUDULENT CONVEYANCE LAWS
The incurrence by the Company of indebtedness such as the Notes may be
subject to review under relevant state and federal fraudulent conveyance laws
if a bankruptcy case or lawsuit is commenced on behalf of unpaid creditors of
the Company. Under these statutes, if a court were to find that (i) the Notes
were incurred with the intent of hindering, delaying or defrauding creditors
or that the Company received less than a reasonably equivalent value or fair
consideration for the Notes and (ii) at the time the Notes were issued, the
Company was insolvent, was rendered insolvent by the issuance of the Notes,
was engaged in a business or transaction for which the assets remaining with
the Company constituted unreasonably small capital, or intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as
they matured, such court could void the Company's obligations under the Notes,
or subordinate the Notes to all other indebtedness of the Company. In that
event, there would be no assurance that any repayment on the Notes would ever
by recovered by holders of the Notes. The measure of insolvency for purposes
of the foregoing would vary depending upon the law of the jurisdiction which
is being applied. Generally, however, the Company would be considered to have
been insolvent at the time the Notes were issued if the sum of its debts was
then greater than all of its property at a fair valuation, or if the then fair
saleable value of its assets was less than the amount that was then required
to pay its probable liability on its existing debts as they become absolute
and matured. There can be no assurance as to what standard a court would apply
in order to determine whether the Company was "insolvent" as of the date the
Notes were issued, or that, regardless of the method of valuation, a court
would not determine that the Company was insolvent on that date. Nor can there
be any assurance that a court would not determine, regardless of whether the
Company was insolvent on the date the Notes were issued, that the payments
constituted fraudulent transfers on another of the grounds listed above.
LIMITATIONS ON CHANGE OF CONTROL
In the event of a Change of Control, the Company would be required, subject
to certain conditions, to offer to purchase all outstanding Existing Notes and
Notes at a price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest, if any, thereon to the date of purchase. As of September
30, 1996, the Company did not have sufficient funds available to purchase all
of the Existing Notes and Notes were they to be tendered in response to an
offer made as a result of such a Change of Control. There can be no assurance
that, at the time of a Change of Control, the Company will have sufficient
cash to repay all amounts due under the Existing Notes and Notes. The terms of
the Credit Facility prohibit the optional payment or prepayment or any
redemption of the Existing Notes and Notes. If, following a Change of Control,
the Company has insufficient funds to purchase all the Existing Notes and
Notes tendered pursuant to such an offer, an event of default in respect of
such Notes would occur. The Change of Control provisions of the Indentures may
have the effect of discouraging attempts by a person or group to take control
of the Company. See "Description of the Notes--Change of Control."
10
<PAGE>
The Company's Restated Certificate of Incorporation, By-laws, Shareholder
Rights Plan and certain other agreements contain provisions that could have
the effect of delaying or preventing a change of control of the Company or
affect the Company's ability to engage in certain extraordinary transactions.
COMPANY DEPENDENT ON GOVERNMENTAL ENVIRONMENTAL REGULATION CONTINUING
A substantial portion of the Company's business has been generated either
directly or indirectly as a result of Federal and state laws, regulations and
programs related to environmental issues. Accordingly, a reduction in the
number or scope of these laws and regulations, or changes in government
policies regarding the funding, implementation or enforcement of such laws,
regulations and programs, could have a material adverse effect on the
Company's business. In addition, any significant effort by the DOE to reduce
the role of private contractors in environmental projects could have a
material adverse effect on the Company.
POTENTIAL ENVIRONMENTAL LIABILITY FOR COMPANY'S WORK
The assessment, analysis, remediation, handling, management, and disposal of
hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or
other regulatory action. These risks include potentially large civil and
criminal liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients.
Potential Liabilities Arising Out of Environmental Laws and Regulations
All facets of the Company's business are conducted in the context of a
rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to regulation by
a number of Federal agencies, including the EPA and the Occupational Safety
and Health Administration, as well as applicable state and local regulatory
agencies. The Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") addresses cleanup of sites at which there has been a release or
threatened release of hazardous substances into the environment. Increasingly,
there are efforts to expand the reach of CERCLA to make environmental
contractors responsible for cleanup costs by claiming that environmental
contractors are owners or operators of hazardous waste facilities or that they
arranged for treatment, transportation, or disposal of hazardous substances.
Several recent court decisions have accepted these claims. Should the Company
be held responsible under CERCLA for damages caused while performing services
or otherwise, it may be forced to bear such liability by itself,
notwithstanding the potential availability of contribution or indemnity from
other parties. The Resource Conservation and Recovery Act ("RCRA") governs
hazardous waste generation, treatment, transportation, storage and disposal.
RCRA, or EPA-approved state programs at least as stringent, govern waste
handling activities involving wastes classified as "hazardous." Substantial
fees and penalties may be imposed under RCRA and similar state statutes for
any violation of such statutes and the regulations thereunder.
Potential Liabilities Involving Clients and Third Parties
In performing services for its clients, the Company could potentially be
liable for breach of contract, personal injury, property damage and negligence
(including improper or negligent performance or design, failure to meet
specifications and breaches of express or implied warranties). The damages
available to a client, should it prevail in its claims, are potentially large
and could include consequential damages.
Environmental contractors, in connection with work performed for clients,
potentially face liabilities to third parties from various claims, including
claims for property damage or personal injury stemming from a release of
hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including through a sudden and accidental release
or discharge of contaminants or pollutants during the performance of services;
through the inability, despite reasonable care, of a remedial plan to contain
or correct an ongoing
11
<PAGE>
seepage or release of pollutants; through the inadvertent exacerbation of an
existing contamination problem; or through reliance on reports or
recommendations prepared by the Company. Personal injury claims could arise
contemporaneously with performance of the work or long after completion of the
project as a result of alleged exposure to toxic or hazardous substances. In
addition, increasing numbers of claimants assert that companies performing
environmental remediation should be adjudged strictly liable, i.e., liable for
damages even though its services were performed using reasonable care, on the
grounds that such services involved "abnormally dangerous activities."
Clients frequently attempt to shift various of the liabilities arising out
of remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and
for environmental fines and penalties including liabilities arising as a
result of breaches by the Company of specified standards of care.
For EPA contracts involving field services in connection with response
actions under Superfund, a program established under CERCLA to clean up
hazardous waste sites and provide for penalties and punitive damages for
noncompliance with EPA orders, the Company is eligible for indemnification
under Section 119 of CERCLA, for pollution and environmental damage liability
resulting from release or threatened release of hazardous substances.
Recently, EPA has constricted significantly the circumstances under which it
will indemnify its contractors against liabilities incurred in connection with
CERCLA projects. There are other proposals both in Congress and at the
regulatory agencies to further restrict indemnification of contractors from
third-party claims.
Kaiser-Hill Company, LLC ("Kaiser Hill") (a limited liability company owned
equally by the Company and CH2M Hill Companies, Ltd.) signed a five-year
Performance Based Integrating Management contract in 1995 to perform work at
the DOE's Rocky Flats Environmental Technology Site near Golden, Colorado. The
terms of that contract govern any liability (including without limitation, a
claim involving strict or absolute liability and any civil fine or penalty,
expense or remediation cost, but limited to those of a civil nature), which
may be incurred by, imposed on, or asserted against Kaiser-Hill arising out of
any act or failure to act, condition, or exposure which occurred before
Kaiser-Hill assumed responsibility on July 1, 1995 ("pre-existing
conditions"). To the extent the acts or omissions of Kaiser-Hill constitute
willful misconduct, lack of good faith, or failure to exercise prudent
business judgment on the part of Kaiser-Hill's managerial personnel and cause
or add to any liability, expense or remediation cost resulting from pre-
existing conditions, Kaiser-Hill shall be responsible, but only for the
incremental liability, expense or remediation caused by Kaiser-Hill. The
contract further provides that Kaiser-Hill will not be reimbursed for
liabilities and expenses to third parties caused by the willful misconduct or
lack of good faith of Kaiser-Hill's managerial personnel or the failure to
exercise prudent business judgment by Kaiser-Hill's managerial personnel.
MARKET FOR COMPANY'S SERVICES HIGHLY COMPETITIVE
The market for the Company's services is highly competitive. The Company and
its subsidiaries compete with many other environmental consulting, engineering
and construction firms ranging from small firms to large multinational firms
having substantially greater financial, management, and marketing resources
than the Company. Other competitive factors include quality of services,
technical qualifications, reputation, geographic presence, price, and the
availability of key professional personnel. See "Business--Competition and
Contract Award Process."
RISKS ASSOCIATED WITH COMPANY'S ABILITY TO ATTRACT AND RETAIN PROFESSIONAL
PERSONNEL
The Company's ability to retain and expand its staff of qualified
professionals is an important factor in determining the Company's future
success. The market for these professionals, especially environmental
professionals, is competitive. There can be no assurance that the Company will
continue to be successful in its efforts to attract and retain such
professionals.
12
<PAGE>
FLUCTUATIONS IN QUARTERLY FINANCIAL RESULTS
The Company's quarterly financial results may be affected by a number of
factors, including the commencement, completion or termination of major
projects. Accordingly, results for any one quarter are not necessarily
indicative of results for any other quarter or for the year.
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Exchange Notes are being offered to the holders of the Old Notes. The
Old Notes were offered and sold in December 1996 to a small number of
institutional and accredited investors and are eligible for trading in the
Private Offerings, Resale and Trading through Automated Linkages ("PORTAL")
Market.
The Company does not intend to apply for a listing of the Exchange Notes on
a securities exchange. There is currently no established market for the
Exchange Notes and there can be no assurance as to the liquidity of markets
that may develop for the Exchange Notes, the ability of the holders of the
Exchange Notes to sell their Exchange Notes or the price at which such holders
would be able to sell their Exchange Notes. If such markets were to exist, the
Exchange Notes could trade at prices that may be lower than the initial market
values thereof, depending on many factors, including prevailing interest
rates, the markets for similar securities, and the financial performance of
the Company. The Initial Purchaser has made a market for the Old Notes.
Although there is currently no market for the Exchange Notes, the Initial
Purchaser has advised the Company that it currently intends to make a market
in the Exchange Notes. However, the Initial Purchaser is not obligated to do
so, and any such market making with respect to the Old Notes or the Exchange
Notes may be discontinued at any time without notice. In addition, such
market-making activities will be subject to the limits imposed by the
Securities Act and the Exchange Act and may be limited during the Exchange
Offer or the pendency of an applicable Shelf Registration Statement (as
defined).
The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.
ORIGINAL ISSUE DISCOUNT
The Old Notes were issued with original issue discount. Consequently,
holders of Exchange Notes will have income for tax purposes arising from such
original issue discount prior to the actual receipt of cash in respect of such
income. See "Certain Federal Income Tax Considerations" for a more detailed
discussion of the federal income tax consequences to the holders of the
Exchange Notes of the exchange of Old Notes for Exchange Notes and the
ownership and disposition of the Exchange Notes.
If a bankruptcy case is commenced by or against the Company under the United
States Bankruptcy Code (the "Bankruptcy Code"), the claim of a holder of any
of the Notes with respect to the principal amount thereof may be limited to an
amount equal to the sum of (i) the initial offering price allocable to the Old
Notes and (ii) that portion of the original issue discount that is not deemed
to constitute "unmatured interest" for purposes of the Bankruptcy Code. Any
original issue discount that was not amortized as of any such bankruptcy
filing would constitute "unmatured interest."
USE OF PROCEEDS
There will be no cash proceeds to the Company resulting from the Exchange
Offer.
The Company used the net proceeds received from the sale of the Old Notes to
repurchase a portion of the Company's Series 2D Senior Preferred Stock having
an aggregate liquidation preference of $20.0 million. The balance of the
Series 2D Senior Preferred Stock was repurchased using borrowings under the
Credit Facility. See "Unaudited Pro Forma Consolidated Financial Statements."
13
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The sole purpose of the Exchange Offer is to fulfill the obligations of the
Company under the Registration Rights Agreement with respect to the
registration of the Old Notes.
The Old Notes originally were issued and sold on December 23, 1996 (the
"Issue Date"). Such sales were not registered under the Securities Act in
reliance upon the exemption provided by Section 4(2) of the Securities Act and
Rule 144A promulgated under the Securities Act. In connection with the sale of
the Old Notes, the Company agreed to file with the Commission the Registration
Statement, pursuant to which the Exchange Notes, consisting of another series
of senior notes of the Company covered by such Registration Statement and
containing substantially identical terms to the Old Notes, except as set forth
in this Prospectus, would be offered in exchange for Old Notes tendered at the
option of the holders thereof. If (i) because of any change in law or in
currently prevailing interpretations of the Staff of the Commission the
Company is not permitted to effect the Exchange Offer, (ii) the Exchange Offer
is not consummated within 180 days of the Issue Date, (iii) in certain
circumstances, after the consummation of the Exchange Offer, the Initial
Purchaser continues to hold Exchange Notes and so requests, (iv) the holders
of not less than a majority in aggregate principal amount of the Old Notes
determine that the interests of the holders would be materially adversely
affected by consummation of the Exchange Offer or (v) in the case of any
holder of Old Notes that participates in the Exchange Offer, such holder does
not receive Exchange Notes on the date of the exchange that may be sold
without restriction under state and federal securities laws (other than due
solely to the status of such holder as an Affiliate of the Company), then the
Company will file with the Commission a registration statement (the "Shelf
Registration Statement") to cover resales of the Old Notes by the holders
thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. In the event
that (i) the Company fails to file the Registration Statement, (ii) the
Registration Statement or, if applicable, the Shelf Registration Statement, is
not declared effective by the Commission or (iii) the Exchange Offer is not
consummated or the Shelf Registration Statement ceases to be effective, in
each case within specified time periods, the interest rate borne by the Old
Notes will be increased. See "Old Notes Registration Rights; Additional
Interest."
TERMS OF THE EXCHANGE
The Company hereby offers to exchange, upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal accompanying the
Registration Statement of which this Prospectus is a part, $1,000 in principal
amount of Exchange Notes for each $1,000 in principal amount of Old Notes. The
terms of the Exchange Notes are substantially identical to the terms of the
Old Notes for which they may be exchanged pursuant to this Exchange Offer,
except that the Exchange Notes generally will be freely transferable by
holders thereof, and the holders of the Exchange Notes (as well as remaining
holders of any Old Notes) are not entitled to certain registration rights and
certain additional interest provisions that are applicable to the Old Notes
under the Registration Rights Agreement. The Exchange Notes will evidence the
same debt as the Old Notes and will be entitled to the benefits of the
Indenture. See "Description of the Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered or accepted for exchange.
Based on its view of interpretations set forth in no-action letters issued
by the Staff to third parties, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for the Old Notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than
any holder that is (i) an Affiliate of the Company, (ii) a broker-dealer who
acquired Old Notes directly from the Company or (iii) a broker-dealer who
acquired Old Notes as a result of market making or other trading activities)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such Exchange Notes are acquired in the
ordinary course of such holders' business, and such holders are not engaged
in, and do not intend to engage in, and have no arrangement or understanding
with any person to participate in, a
14
<PAGE>
distribution of such Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. Broker-dealers who
acquired Old Notes as a result of market-making or other trading activities
may use this Prospectus, as supplemented or amended, in connection with
resales of the Exchange Notes. The Company has agreed that, for a period of
180 days after the Exchange Date, it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. Any holder who
tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes or any other holder that cannot rely upon
such interpretations must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction.
Tendering holders of Old Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Old Notes
pursuant to the Exchange Offer.
The Exchange Notes will bear interest from December 31, 1996. Holders of Old
Notes whose Old Notes are accepted for exchange will be deemed to have waived
the right to receive any payment in respect of interest on the Old Notes
accrued from December 31, 1996 to the date of the issuance of the Exchange
Notes. Interest on the Exchange Notes is payable semiannually in arrears on
June 30 and December 31 of each year, commencing June 30, 1997, accruing from
December 31, 1996 at a rate of 12% per annum, subject to a temporary interest
rate increase to 13% until the occurrence of certain events. See "Description
of the Notes--Interest Rate Increase."
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer expires on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1997 unless the Company in
its sole discretion extends the period during which the Exchange Offer is
open, in which event the term "Expiration Date" means the latest time and date
on which the Exchange Offer, as so extended by the Company, expires. The
Company reserves the right to extend the Exchange Offer at any time and from
time to time prior to the Expiration Date by giving written notice to Bankers
Trust Company (the "Exchange Agent") and by timely public announcement
communicated by no later than 5:00 p.m. on the next business day following the
Expiration Date, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service. During any extension of the
Exchange Offer, all Old Notes previously tendered pursuant to the Exchange
Offer will remain subject to the Exchange Offer.
The initial Exchange Date will be the first business day following the
Expiration Date. The Company expressly reserves the right to (i) terminate the
Exchange Offer and not accept for exchange any Old Notes for any reason,
including if any of the events set forth below under "Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by the
Company and (ii) amend the terms of the Exchange Offer in any manner, whether
before or after any tender of the Old Notes. If any such termination or
amendment occurs, the Company will notify the Exchange Agent in writing and
will either issue a press release or give written notice to the holders of the
Old Notes as promptly as practicable. Unless the Company terminates the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date,
the Company will exchange the Exchange Notes for Old Notes on the Exchange
Date.
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by the Company to record holders of Old Notes and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the lists of holders for subsequent
transmittal to beneficial owners of Old Notes.
15
<PAGE>
HOW TO TENDER
The tender to the Company of Old Notes by a holder thereof pursuant to one
of the procedures set forth below will constitute an agreement between such
holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
General Procedures
A holder of an Old Note may tender the same by (i) properly completing and
signing the Letter of Transmittal or a facsimile thereof (all references in
this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Old Notes being tendered and any required
signature guarantees (or a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") pursuant to the procedure described below), to the
Exchange Agent at its address set forth on the back cover of this Prospectus
on or prior to the Expiration Date or (ii) complying with the guaranteed
delivery procedures described below.
If tendered Old Notes are registered in the name of the signer of the Letter
of Transmittal and the Exchange Notes to be issued in exchange therefor are to
be issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder, the signature of such signer need not be guaranteed. In any
other case, the tendered Old Notes must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Company and duly executed
by the registered holder and the signature on the endorsement or instrument of
transfer must be guaranteed by a bank, broker, dealer, credit union, savings
association, clearing agency or other institution (each an "Eligible
Institution") that is a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Exchange Act. If the
Exchange Notes and/or Old Notes not exchanged are to be delivered to an
address other than that of the registered holder appearing on the note
register for the Old Notes, the signature on the Letter of Transmittal must be
guaranteed by an Eligible Institution.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender Old Notes should contact such holder promptly and instruct such holder
to tender Old Notes on such beneficial owner's behalf. If such beneficial
owner wishes to tender such Old Notes itself, such beneficial owner must,
prior to completing and executing the Letter of Transmittal and delivering
such Old Notes, either make appropriate arrangements to register ownership of
the Old Notes in such beneficial owner's name or follow the procedures
described in the immediately preceding paragraph. The transfer of record
ownership may take considerable time.
Book-Entry Transfer
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at DTC (the "Book-Entry Transfer Facility") for purposes of
the Exchange Offer within two business days after receipt of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the Book-
Entry Transfer Facility, the Letter of Transmittal, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address specified on
the back cover of this Prospectus on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER INSURANCE BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION
DATE.
16
<PAGE>
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds
otherwise payable to a holder pursuant to the Exchange Offer if the holder
does not provide its taxpayer identification number (social security number or
employer identification number, as applicable) and certify that such number is
correct. Each tendering holder should complete and sign the main signature
form and the Substitute Form W-9 included as part of the Letter of
Transmittal, so as to provide the information and certification necessary to
avoid backup withholding, unless an applicable exemption exists and is proved
in a manner satisfactory to the Company and the Exchange Agent.
Guaranteed Delivery Procedures
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Old Notes to reach the Exchange Agent before the
Expiration Date, a tender may be effected if the Exchange Agent has received
at its office listed on the Letter of Transmittal on or prior to the
Expiration Date a letter, telegram or facsimile transmission from an Eligible
Institution setting forth the name and address of the tendering holder, the
principal amount of the Old Notes being tendered, the names in which the Old
Notes are registered and, if possible, the certificate numbers of the Old
Notes to be tendered, and stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange trading days after the
date of execution of such letter, telegram or facsimile transmission by the
Eligible Institution, the Old Notes, in proper form for transfer, will be
delivered by such Eligible Institution together with a properly completed and
duly executed Letter of Transmittal (and any other required documents). Unless
Old Notes being tendered by the above-described method (or a timely Book-Entry
Confirmation) are deposited with the Exchange Agent within the time period set
forth above (accompanied or preceded by a properly completed Letter of
Transmittal and any other required documents), the Company may, at its option,
reject the tender. Copies of a Notice of Guaranteed Delivery which may be used
by Eligible Institutions for the purposes described in this paragraph are
available from the Exchange Agent.
A tender will be deemed to have been received as of the date when the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a timely Book-Entry Confirmation) is received
by the Exchange Agent. Issuances of Exchange Notes in exchange for Old Notes
tendered pursuant to a Notice of Guaranteed Delivery or letter, telegram or
facsimile transmission to similar effect (as provided above) by an Eligible
Institution will be made only against deposit of the Letter of Transmittal
(and any other required documents) and the tendered Old Notes (or a timely
Book-Entry Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Notes will be
determined by the Company, whose determination will be final and binding. The
Company reserves the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of counsel
to the Company, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or
irregularities in tenders of any particular holder whether or not similar
defects or irregularities are waived in the case of other holders. Neither the
Company, the Exchange Agent nor any other person will be under any duty to
give notification of any defects or irregularities in tenders or shall incur
any liability for failure to give any such notification. The Company's
interpretation of the terms and conditions of the Exchange Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Old Notes for exchange (the "Transferor") exchanges,
assigns and transfers the Old Notes to the Company and it revocably
constitutes and appoints the Exchange Agent as the Transferor's agent and
attorney-in-fact to cause the Old Notes to be assigned, transferred and
exchanged. The Transferor represents
17
<PAGE>
and warrants that it has full power and authority to tender, exchange, assign
and transfer the Old Notes and to acquire Exchange Notes issuable upon the
exchange of such tendered Old Notes, and that, when the same are accepted for
exchange, the Company will acquire good and unencumbered title to the tendered
Old Notes, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim. The Transferor also warrants that it
will, upon request, execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Old Notes. The Transferor further agrees that acceptance
of any tendered Old Notes by the Company and the issuance of Exchange Notes in
exchange therefor shall constitute performance in full by the Company of its
obligations under the Registration Rights Agreement and that the Company shall
have no further obligations or liabilities thereunder (except in certain
limited circumstances). All authority conferred by the Transferor will survive
the death or incapacity of the Transferor and every obligation of the
Transferor shall be binding upon the heirs, legal representatives, successors,
assigns, executors and administrators of such Transferor.
By tendering Old Notes and executing the Letter of Transmittal, the
Transferor certifies that (a) it is not an Affiliate of the Company, that it
is not a broker-dealer that owns Old Notes acquired directly from the Company
or an Affiliate of the Company, that it is acquiring the Exchange Notes
offered hereby in the ordinary course of such Transferor's business and that
such Transferor has no arrangement with any person to participate in the
distribution of such Exchange Notes, (b) that it is an Affiliate of the
Company or of the Initial Purchaser of the Old Notes and that it will comply
with the registration and prospectus delivery requirements of the Securities
Act to the extent applicable to it, or (c) that it is a Participating Broker-
Dealer (as defined in the Registration Rights Agreement) and that it will
deliver a prospectus in connection with any resale of such Exchange Notes. By
tendering Old Notes and executing the Letter of Transmittal, the Transferor
further certifies that it is not engaged in and does not intend to engage in a
distribution of the Exchange Notes.
WITHDRAWAL RIGHTS
Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth on the back cover of this Prospectus prior to the Expiration Date. Any
such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Old Notes to be withdrawn, the certificate
numbers of Old Notes to be withdrawn, the principal amount of Old Notes to be
withdrawn, a statement that such holder is withdrawing its election to have
such Old Notes exchanged, and the name of the registered holder of such Old
Notes, and must be signed by the holder in the same manner as the original
signature on the Letter of Transmittal (including any required signature
guarantees) or be accompanied by evidence satisfactory to the Company that the
person withdrawing the tender has succeeded to the beneficial ownership of the
Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of withdrawal. All
questions as to the validity of notices of withdrawals, including time of
receipt, will be determined by the Company and such determination will be
final and binding on all parties.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Old Notes validly tendered and not withdrawn and
the issuance of the Exchange Notes will be made on the Exchange Date.
The Exchange Agent will act as agent for the tendering holders of the Old
Notes for the purposes of receiving Exchange Notes from the Company and
causing the Old Notes to be assigned, transferred and exchanged. Upon the
terms and subject to conditions of the Exchange Offer, delivery of Exchange
Notes to be issued in exchange for accepted Old Notes will be made by the
Exchange Agent promptly after acceptance of
18
<PAGE>
the tendered Old Notes. Old Notes not accepted for exchange by the Company
will be returned without expense to the tendering holders (or in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the procedures described above,
such non-exchanged Old Notes will be credited to an account maintained with
such Book-Entry Transfer Facility) promptly following the Expiration Date or,
if the Company terminates the Exchange Offer prior to the Expiration Date,
promptly after the Exchange Offer is so terminated.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Company will not be required to issue Exchange
Notes in respect of any properly tendered Old Notes not previously accepted
and may terminate the Exchange Offer (by oral or written notice to the
Exchange Agent and by timely public announcement communicated by no later than
5:00 p.m. on the next business day following the Expiration Date, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service) or, at its option, modify or otherwise amend the
Exchange Offer, if (a) there shall be threatened, instituted or pending any
action or proceeding before, or any injunction, order or decree shall have
been issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain or
prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, (ii) assessing or seeking any
damages as a result thereof or (iii) resulting in a material delay in the
ability of the Company to accept for exchange some or all of the Old Notes
pursuant to the Exchange Offer; (b) any statute, rule, regulation, order or
injunction shall be sought, proposed, introduced, enacted, promulgated or
deemed applicable to the Exchange Offer or any of the transactions
contemplated by the Exchange Offer by any government or governmental
authority, domestic or foreign, or any action shall have been taken, proposed
or threatened, by any government, governmental authority, agency or court,
domestic or foreign, that in the reasonable judgment of the Company might
directly or indirectly result in any of the consequences referred to in
clauses (a)(i) or (ii) above or, in the reasonable judgment of the Company,
might result in the holders of Exchange Notes having obligations with respect
to resales and transfers of Exchange Notes that are greater than those
described in the interpretations of the Staff referred to on the cover page of
this Prospectus, or would otherwise make it inadvisable to proceed with the
Exchange Offer; or (c) a material adverse change shall have occurred in the
business, condition (financial or otherwise), operations, or prospects of the
Company.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by it with respect to all or any portion of the Exchange Offer
regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition or may be waived by the Company in
whole or in part at any time or from time to time in its sole discretion. The
failure by the Company at any time to exercise any of the foregoing rights
will not be deemed a waiver of any such right, and each right will be deemed
an ongoing right that may be asserted at any time or from time to time. In
addition, the Company has reserved the right, notwithstanding the satisfaction
of each of the foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by the Company concerning the fulfillment or
nonfulfillment of any conditions will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no Exchange Notes will be issued in exchange for any such Old
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or qualification of the Indenture under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act").
19
<PAGE>
EXCHANGE AGENT
Bankers Trust Company has been appointed as the Exchange Agent for the
Exchange Offer. Letters of Transmittal must be addressed or transmitted to the
Exchange Agent at:
MAIL: HAND/OVERNIGHT DELIVERY: BY FACSIMILE:
Bankers Trust Company Bankers Trust Company (212) 250-6961
Corporate Trust and Agency Group Corporate Trust and Agency Group (212) 250-6392
Reorganization Dept. Receipt & Delivery Window
P.O. Box 1458 123 Washington Street, 1st Floor CONFIRM BY
Church Street Station New York, New York 10006 TELEPHONE:
New York, NY 10008-1458 (800) 735-7777
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile number other than the ones set forth herein, will
not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The
Company will, however, pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for reasonable out-of-pocket expenses
in connection therewith. The Company also will pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and
expenses of the Exchange Agent and printing, accounting, investment banking
and legal fees, will be paid by the Company and are estimated to be
approximately $130,568.
No person has been authorized to given any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the respective dates as
of which information is given herein. The Exchange Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of Old Notes in
any jurisdiction in which the making of the Exchange Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction.
However, the Company may, at its discretion, take such action as it may deem
necessary to make the Exchange Offer in any such jurisdiction and extend the
Exchange Offer to holders of Old Notes in such jurisdiction. In any
jurisdiction the securities laws or blue sky laws of which require the
Exchange Offer to be made by a licensed broker or dealer, the Exchange Offer
is being made on behalf of the Company by one or more registered brokers or
dealers that are licensed under the laws of such jurisdiction.
DISSENT AND APPRAISAL RIGHTS
HOLDERS OF OLD NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS IN
CONNECTION WITH THE EXCHANGE OFFER.
FEDERAL INCOME TAX CONSEQUENCES
The exchange of Old Notes for Exchange Notes by tendering holders will not
be a taxable exchange for federal income tax purposes, and such holders should
not recognize any taxable gain or loss as a result of such exchange. See
"Certain Federal Income Tax Considerations."
OTHER
Participation in the Exchange Offer is voluntary and holders of Old Notes
should consider carefully whether to accept the terms and conditions thereof.
Holders of the Old Notes are urged to consult their financial and tax advisors
in making their own decisions on what action to take with respect to the
Exchange Offer.
20
<PAGE>
As a result of the making of and upon acceptance for exchange of all validly
tendered Old Notes pursuant to the terms of this Exchange Offer, the Company
will have fulfilled a covenant contained in the terms of the Old Notes and the
Registration Rights Agreement. Holders of the Old Notes who do not tender
their Old Notes in the Exchange Offer will continue to hold such Old Notes and
will be entitled to all the rights and limitations applicable thereto under
the Indenture, except for any such rights under the Registration Rights
Agreement that by their terms terminate or cease to have further effect as a
result of the making of this Exchange Offer. See "Description of the Notes."
All untendered Old Notes will continue to be subject to the restriction on
transfer set forth in the Indenture. To the extent that Old Notes are tendered
and accepted in the Exchange Offer, the trading market, if any, for any
remaining Old Notes could be affected adversely. See "Risk Factors--
Consequences of Failure to Exchange Old Notes."
The Company may in the future seek to acquire untendered Old Notes in open
market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company has no present plan to acquire any Old Notes
that are not tendered in the Exchange Offer.
21
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 30, 1996 and as adjusted as of such date to give effect to the
issuance of the Old Notes, borrowings under the Credit Facility, Disposition
of PCI and the application of the assumed proceeds therefrom. This table
should be read in conjunction with the consolidated financial statements and
notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED
----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt:
Credit Facility (a)................................. $ 13,000 $ 18,800
12% Senior Subordinated Notes due 2003, Series
A(b)............................................... -- 14,700
Existing 12% Senior Subordinated Notes due 2003..... 120,339 120,339
Other............................................... 45 45
----------- -----------
Total debt........................................ 133,384 153,884
Minority interests in subsidiaries.................... 6,441 6,441
9.75% Series 2D Senior Preferred Stock (c)............ 19,940 --
Common shareholders' equity (d)....................... 33,192 43,221
----------- -----------
Total capitalization.............................. $192,957 $ 203,546
=========== ===========
</TABLE>
- --------
(a) The Company used a borrowing of $5.8 million under the Credit Facility to
repurchase partially the Series 2D Senior Preferred Stock on December 30,
1996.
(b) The proceeds from the issuance and sale of the Old Notes were used to
repurchase partially the Series 2D Senior Preferred Stock on December 30,
1996. The Old Notes are shown net of the $0.3 million discount associated
with issuance. The Old Notes have not been adjusted for the approximate
$0.1 million value assigned to the warrants issued concurrently with the
Old Notes.
(c) The Company repurchased the Series 2D Senior Preferred Stock with the net
proceeds from the issuance of the Old Notes and borrowing under the Credit
Facility.
(d) Common shareholders' equity is adjusted to reflect the effects of the net
gain on the Disposition of PCI, expenses associated with the borrowing
under the Credit Facility and the remaining accretion on the Series 2D
Senior Preferred Stock. Common shareholders' equity has not been adjusted
for the approximate $0.1 million value assigned to the warrants issued
concurrently with the Old Notes. See "Unaudited Pro Forma Consolidated
Financial Statements."
22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data of the Company for the ten months
ended December 31, 1995, and each year in the four-year period ended February
28, 1995, have been derived from the Company's audited consolidated financial
statements. This information should be read in conjunction with the
Consolidated Financial Statements and the related notes thereto appearing
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The selected consolidated
financial data of the Company as of September 30, 1995 and 1996 and for the
nine-month periods then ended, have been prepared on the same basis as the
consolidated financial statements and, in the opinion of the Company, include
all normal and recurring adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the information set forth therein.
Operating results for the nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ended December 31, 1996. Certain reclassifications have been made to the prior
period financial statements to conform to the presentation used in the
September 30, 1996 financial statements. The data for the nine months ended
September 30, 1995 and 1996 set forth below are unaudited.
<TABLE>
<CAPTION>
TEN MONTHS NINE MONTHS ENDED
YEAR ENDED FEBRUARY 28 OR 29, ENDED SEPTEMBER 30,
-------------------------------------- DECEMBER 31, --------------------
1992(1) 1993 1994(2) 1995 1995 1995 1996
-------- -------- -------- -------- ------------ -------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Gross revenue........... $710,873 $678,882 $651,657 $861,518 $916,744 $731,795 $1,023,410
Service revenue (3)..... 385,942 391,528 382,708 459,786 425,896 357,582 433,647
Unusual income
(expense), net......... (67,054) 50 (8,709) -- 500 -- --
Operating income
(loss)................. (43,963) 22,744 (5,230) 13,688 17,505 13,171 21,170
Interest expense, net... 10,347 6,921 6,722 13,000 11,202 10,629 11,885
Income (loss) before
income taxes, minority
interests, and
extraordinary item..... (54,310) 14,894 (12,877) 1,239 6,303 2,542 9,285
Income tax provision
(benefit).............. (13,794) 6,255 (349) 2,900 2,091 1,300 840
Income (loss) before
minority interests and
extraordinary item..... (40,516) 8,639 (12,528) (1,661) 4,212 1,242 8,445
Minority interests...... -- -- -- -- 1,960 1,315 4,725
Net income (loss) before
extraordinary item..... (40,516) 8,639 (12,528) (1,661) 2,252 (73) 3,720
Extraordinary loss on
early extinguishment of
debt................... -- -- 5,969 -- -- -- --
Net income (loss)....... (40,516) 8,639 (18,497) (1,661) 2,252 (73) 3,720
Preferred stock
dividends and
accretion.............. 2,416 5,293 4,896 2,154 1,803 1,616 1,631
Redemption of preferred
stock.................. -- -- 1,929 -- -- -- --
Net income (loss)
available for common
shareholders........... (42,932) 3,346 (25,322) (3,815) 449 (1,689) 2,089
Primary and Fully
Diluted Net Income
(Loss)
Per Common Share:
Before extraordinary
item.................. $ (2.25) $ 0.16 $ (0.92) $ (0.18) $ 0.02 $ (0.08) $ 0.10
Extraordinary loss on
early extinguishment
of debt............... -- -- (0.29) -- -- -- --
-------- -------- -------- -------- -------- -------- ----------
Total.................. $ (2.25) $ 0.16 $ (1.21) $ (0.18) $ 0.02 $ (0.08) $ 0.10
======== ======== ======== ======== ======== ======== ==========
BALANCE SHEET DATA (END
OF PERIOD):
Working capital......... $ 65,623 $ 85,861 $ 87,648 $ 91,640 $ 84,589 $ 84,422 $ 102,009
Total assets............ 318,947 293,076 281,198 281,422 369,517 373,074 374,535
Long-term liabilities... 85,675 75,602 130,752 133,130 125,818 126,953 139,063
Total indebtedness...... 86,332 74,391 123,042 127,311 125,153 121,561 133,384
Redeemable preferred
stock.................. 45,161 44,824 20,212 19,617 19,787 19,736 19,940
Shareholders' equity.... 51,151 58,521 30,780 27,624 28,427 27,690 33,192
OTHER DATA:
EBITDA (4).............. $ 32,250 $ 33,460 $ 13,038 $ 22,920 $ 23,402 $ 19,182 $ 24,285
Capital expenditures.... 3,644 4,638 1,388 2,426 1,759 1,720 4,905
Depreciation and
amortization........... 9,159 10,766 9,559 9,232 8,357 7,326 7,840
Ratio of earnings to
fixed charges (5)...... N/A 1.8x N/A 1.0x 1.2x 1.1x 1.2x
</TABLE>
- -------
(1) Fiscal year 1992 reflects after-tax charge of $52.4 million associated
with the disposal and restructuring of certain businesses.
(2) In fiscal year 1994, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions."
(3) Service revenue is derived by deducting the costs of subcontracted
services and direct project costs from gross revenue and adding the
Company's share of the equity in income of unconsolidated joint ventures
and affiliated companies.
(4) EBITDA represents operating income (loss), excluding unusual items, plus
depreciation and amortization minus minority interests. Management
believes that EBITDA is generally accepted as providing useful information
regarding a company's ability to service and/or incur debt. EBITDA should
not be considered in isolation or as a substitute for net income, cash
flows or other consolidated income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure
of a company's profitability or liquidity.
(5) The ratio of earnings to fixed charges is calculated by dividing income
from continuing operations before fixed charges and income taxes
("earnings") by fixed charges. Fixed charges consist of interest expense
and that portion of rental expense that the Company believes to be
representative of interest. In the years ended February 29, 1992 and
February 28, 1994, earnings, as defined, were inadequate to cover fixed
charges. The deficiencies were $54.3 million and $12.9 million for the
years ended February 29, 1992 and February 28, 1994, respectively.
23
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth historical financial information for the
Company and pro forma financial information giving effect to the issuance of
the Old Notes, borrowings under the Credit Facility, the Disposition of PCI
and application of the assumed proceeds therefrom (collectively, the "Pro
Forma Transactions"). The pro forma statement of operations data are presented
as if the Pro Forma Transactions had occurred as of March 1, 1995, and the pro
forma balance sheet is presented as if the Pro Forma Transactions had occurred
on September 30, 1996. The pro forma adjustments are described in detail in
the accompanying notes. These pro forma results have been prepared for
comparative purposes only and do not purport to indicate what would have
occurred had the transactions actually occurred at the dates indicated, or of
results which may occur in the future. This pro forma financial information
should be read in conjunction with the notes thereto and the historical
consolidated financial statements of the Company included elsewhere in this
Prospectus.
24
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
(1) (2) (3) (4)
PRO FORMA ADJUSTMENTS
----------------------- PRO FORMA
ICF KAISER DISPOSITION OTHER AFTER
HISTORICAL OF PCI ADJUSTMENTS ADJUSTMENTS
---------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents............ $ 21,022 $16,500 $ 13,950 (a) $ 37,022
5,550 (b)
(20,000)(c)
Contract receivables,
net.................... 234,168 -- -- 234,168
Prepaid expenses and
other current assets... 10,780 -- -- 10,780
Deferred income taxes... 11,938 2,613 23 (b) 14,574
-------- ------- -------- --------
Total Current Assets.. 277,908 19,113 (477) 296,544
-------- ------- -------- --------
Fixed Assets
Furniture, equipment,
and leasehold
improvements........... 48,839 (1,365) -- 47,474
Less depreciation and
amortization........... (36,595) 852 -- (35,743)
-------- ------- -------- --------
12,244 (513) -- 11,731
-------- ------- -------- --------
Other Assets
Goodwill, net........... 50,510 -- -- 50,510
Investments in and
advances to
affiliates............. 12,168 (4,651) -- 7,517
Due from officers and
employees.............. 986 -- -- 986
Other................... 20,719 -- 750 (a) 21,469
-------- ------- -------- --------
84,383 (4,651) 750 80,482
-------- ------- -------- --------
$374,535 $13,949 $ 273 $388,757
======== ======= ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-
term debt.............. $ -- $ -- $ 5,800 (b) $ 5,800
Accounts payable and
subcontractors
payable................ 76,304 -- -- 76,304
Accrued salaries and
employee benefits...... 59,721 -- -- 59,721
Accrued interest........ 4,061 -- -- 4,061
Other accrued expenses.. 14,869 -- -- 14,869
Deferred revenue........ 14,648 -- -- 14,648
Other................... 6,296 3,633 -- 9,929
-------- ------- -------- --------
Total Current
Liabilities.......... 175,899 3,633 5,800 185,332
-------- ------- -------- --------
Long-term Liabilities
Long-term debt, less
current portion........ 133,384 -- 14,700 (a) 148,084
Other................... 5,679 -- -- 5,679
-------- ------- -------- --------
139,063 -- 14,700 153,763
-------- ------- -------- --------
Commitments and
Contingencies
Minority Interests in
Subsidiaries............. 6,441 -- -- 6,441
Redeemable Preferred
Stock.................... 19,940 -- (19,940)(c) --
Common Stock.............. 224 -- -- 224
Additional Paid-in
Capital.................. 67,158 -- -- 67,158
Notes Receivable Related
to Common Stock.......... (1,732) -- -- (1,732)
Retained Earnings
(Deficit)................ (30,805) 10,316 (227)(b) (20,776)
(60)(c)
Cumulative Translation
Adjustment............... (1,653) -- -- (1,653)
-------- ------- -------- --------
$374,535 $13,949 $ 273 $388,757
======== ======= ======== ========
</TABLE>
25
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
(1) (2) (3) (4)
PRO FORMA ADJUSTMENTS
-------------------------- PRO FORMA
ICF KAISER DISPOSITION OTHER AFTER
HISTORICAL OF PCI ADJUSTMENTS ADJUSTMENTS
------------- ------------ ------------ -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Gross Revenue........... $ 1,023,410 $ (3,453) $ -- $ 1,019,957
Subcontract and direct
material costs....... (592,295) 752 -- (591,543)
Equity in income of
joint ventures and
affiliated
companies............ 2,532 (2,025) -- 507
------------- ---------- ---------- -------------
Service Revenue......... 433,647 (4,726) -- 428,921
Operating Expenses
Direct cost of
services and
overhead............. 354,658 (1,290) -- 353,368
Administrative and
general.............. 49,979 -- -- 49,979
Depreciation and
amortization......... 7,840 (355) 70 (a) 7,555
------------- ---------- ---------- -------------
Operating Income........ 21,170 (3,081) (70) 18,019
Other Income (Expense)
Interest income....... 944 (12) -- 932
Interest expense...... (12,829) -- (1,491)(a) (13,912)
408 (d)
------------- ---------- ---------- -------------
Income (Loss) Before
Income Taxes and
Minority Interests..... 9,285 (3,093) (1,153) 5,039
Income tax provision
(benefit)............ 840 (928) 1,600 (e) 1,512
------------- ---------- ---------- -------------
Income (Loss) Before
Minority Interests..... 8,445 (2,165) (2,753) 3,527
Minority interests in
net income of
subsidiaries......... 4,725 -- -- 4,725
------------- ---------- ---------- -------------
Net Income (Loss)....... 3,720 (2,165) (2,753) (1,198)
Preferred stock
dividends and
accretion............ 1,631 -- (1,631)(c) --
------------- ---------- ---------- -------------
Net Income (Loss)
Available for Common
Shareholders........... $ 2,089 $ (2,165) $ (1,122) $ (1,198)
============= ========== ========== =============
Primary and Fully
Diluted Net Income
(Loss) Per Common
Share.................. $ 0.10 $ (0.05)
============= =============
Primary and Fully Di-
luted Weighted Average
Common and Common
Equivalent Shares Out-
standing............... 21,955 21,955
============= =============
OTHER DATA:
EBITDA (f).............. $ 24,285 $ (3,436) $ -- $ 20,849
Cash interest expense... 11,840 -- 1,463 13,303
Capital expenditures.... 4,905 -- -- 4,905
Depreciation and
amortization........... 7,840 (355) 70 7,555
</TABLE>
26
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
TEN MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
(1) (2) (3) (4)
PRO FORMA ADJUSTMENTS
----------------------- PRO FORMA
ICF KAISER DISPOSITION OTHER AFTER
HISTORICAL OF PCI ADJUSTMENTS ADJUSTMENTS
---------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Gross Revenue................. $916,744 $(4,004) $ -- $912,740
Subcontract and direct
material costs............. (493,971) 753 -- (493,218)
Equity in income of joint
ventures and affiliated
companies.................. 3,123 (1,240) -- 1,883
-------- ------- ------- --------
Service Revenue............... 425,896 (4,491) -- 421,405
Operating Expenses
Direct cost of services and
overhead................... 359,887 (1,292) -- 358,595
Administrative and general.. 40,647 -- 250 (b) 40,897
Depreciation and
amortization............... 8,357 (433) 78 (a) 8,002
Unusual items, net.......... (500) -- -- (500)
-------- ------- ------- --------
Operating Income.............. 17,505 (2,766) (328) 14,411
Other Income (Expense)
Gain on disposition of
investment................. -- 11,336 -- 11,336
Interest income............. 2,053 (10) -- 2,043
Interest expense............ (13,255) -- (1,656)(a) (14,548)
363 (d)
-------- ------- ------- --------
Income (Loss) Before Income
Taxes and Minority
Interests ................... 6,303 8,560 (1,621) 13,242
Income tax provision
(benefit).................. 2,091 1,712 (1,155)(e) 2,648
-------- ------- ------- --------
Income (Loss) Before Minority
Interests ................... 4,212 6,848 (466) 10,594
Minority interests in net
income of subsidiaries..... 1,960 -- -- 1,960
-------- ------- ------- --------
Net Income (Loss)............. 2,252 6,848 (466) 8,634
Preferred stock dividends
and accretion.............. 1,803 -- (1,803)(c) --
-------- ------- ------- --------
Net Income Available for
Common Shareholders.......... $ 449 $ 6,848 $ 1,337 $ 8,634
======== ======= ======= ========
Primary and Fully Diluted Net
Income Per Common Share...... $ 0.02 $ 0.40
======== ========
Primary and Fully Diluted
Weighted Average Common and
Common Equivalent Shares
Outstanding.................. 21,517 21,517
======== ========
OTHER DATA:
EBITDA (f).................... $ 23,402 $(3,199) $ (250) $ 19,953
Cash interest expense......... 12,500 -- 1,625 14,125
Capital expenditures.......... 1,759 -- -- 1,759
Depreciation and amortiza-
tion......................... 8,357 (433) 78 8,002
</TABLE>
27
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Column 1 has been prepared from the Company's historical consolidated
financial statements included elsewhere in this Prospectus. Column 2 has been
prepared from the Company's accounts and represents the effect of the
Disposition of PCI and the entities associated with the Disposition. Column 3
represents unaudited pro forma adjustments that the Company considers
necessary to give effect to the Pro Forma Transactions other than the
Disposition of PCI. Column 4 represents the unaudited pro forma results of
operations and financial position of the Company after giving effect to the
Pro Forma Transactions.
(a) To record the result of the issuance of the Old Notes that were used to
repurchase partially the Series 2D Senior Preferred Stock on December 30,
1996. Estimated professional fees and discount of $0.3 million associated
with the issuance of the Old Notes are shown as if they were amortized
over 96 months. The Old Notes and common shareholders' equity have not
been adjusted for the approximate $0.1 million value assigned to the
warrants issued concurrently with the Old Notes. Annual interest expense
on the Old Notes is assumed to be 13%.
(b) To record the borrowings under the Credit Facility and associated
expenses. The borrowings were used to repurchase the balance of the Series
2D Senior Preferred Stock on December 30, 1996.
(c) To record the result of the repurchase of the Series 2D Senior Preferred
Stock and the reversal of the effects of the associated dividends and
accretion.
(d) To record, as a result of the Pro Forma Transactions, the effect of the
reduction in interest expense of the Credit Facility. It is assumed that a
portion of the cash provided by the Pro Forma Transactions will be used to
repurchase the Series 2D Senior Preferred Stock, that the balance will be
reinvested in the Company's business activities and that such activities
will provide funds to allow the Company to reduce borrowings under the
Credit Facility.
(e) To record the net effect on the income tax provision.
(f) EBITDA represents operating income (loss), excluding unusual items, plus
depreciation and amortization minus minority interests. Management
believes that EBITDA is generally accepted as providing useful information
regarding a company's ability to service and/or incur debt. EBITDA should
not be considered in isolation or as a substitute for net income, cash
flows or other consolidated income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure
of a company's profitability or liquidity.
28
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is one of the nation's largest engineering, construction,
program management and consulting services companies, providing fully
integrated capabilities to clients in three related market areas: environment,
infrastructure and basic metals and mining industries. The Company provides
services to domestic and foreign clients in both the private and public
sectors.
Change in Fiscal Year
The Company changed from a fiscal year ending February 28 to a fiscal year
ending December 31, effective December 31, 1995. As a result, the accompanying
financial statements include consolidated operations for the ten months ended
December 31, 1995 and for the years ended February 28, 1995 and 1994. See Note
S to the consolidated financial statements for the ten months ended December
31, 1995 for unaudited comparative operating results for the ten months ended
December 31, 1994. In addition, the comparative period financial statements
for the nine months ended September 30, 1995 have been restated to conform
with the presentation used in the September 30, 1996 financial statements.
Operating Results for Nine Months Ended September 30, 1996 and 1995
The Company's operating income of $21.2 million for the nine months ended
September 30, 1996 was an $8.0 million increase from the $13.2 million of
operating income recorded for the nine months ended September 30, 1995. The
increase in operating income partially resulted from a $3.9 million increase
in operating income from the Company's operations at DOE's Hanford site,
resulting from higher award fees earned at Hanford in 1996 and activities
associated with the final phase of the Company's work at Hanford (see
"Business Outlook"). An additional $6.8 million of the increase in operating
income was due to earnings (before minority interests) from the Performance
Based Integrating Management Contract at DOE's Rocky Flats Environmental
Technology Site in Colorado ("Rocky Flats"). The Rocky Flats contract was
awarded in April 1995 to Kaiser-Hill Company, LLC ("Kaiser-Hill"), a limited
liability company owned equally by ICF Kaiser and CH2M Hill Companies, Ltd.
("CH2M Hill"). Work under the Rocky Flats contract began on July 1, 1995.
Operating income for the Company's consulting group increased $1.3 million
from 1995 to 1996, primarily due to new contracts and task orders awarded
during 1996 and the recognition of revenue resulting from the acceleration in
the cost approval process (see Note B to the consolidated financial statements
for the nine months ended September 30, 1996). Prior to the third quarter of
1996, the Company had estimated and recorded revenue based on provisional
rates. In 1996, the Company accelerated the procedures for obtaining approval
from the U.S. government for the Company's actual costs incurred in current
periods. As a result, in the third quarter of 1996, the Company's consulting
group was able to accelerate its process of billing on certain cost-
reimbursement contracts.
The Company's operating income also increased $2.3 million for the nine
months ended September 30, 1996 from the comparable period in 1995 as a result
of the 1996 closing of an unprofitable business, and $1.1 million due to
income from the Company's increased economic interest in an entity that owns
the PCI facility. Additionally, the Company realized cost savings of certain
corporate functions, resulting in an improvement in operating income in 1996.
Finally, operating income from international operations increased $0.8
million, primarily due to improved operating results from the Company's
Australian operations.
Partially offsetting the operating income increases discussed above were
declines of $4.6 million in operating income from engineering and construction
operations and $4.2 million in operating income from other federal programs.
The federal programs group had significant increases in its costs associated
with marketing activities in pursuit of large-scale projects, including
approximately $2.1 million of costs in 1996 associated with
29
<PAGE>
the Company's unsuccessful re-compete bid on the Hanford contract (see "--
Business Outlook") and significant costs associated with other DOE proposals.
The engineering and construction group also experienced higher costs in 1996
associated with marketing activities. In addition, the comparative 1995
results for engineering and construction operations had included operating
income from a major transit project in the Philippines.
Operating Results for Ten Months Ended December 31, 1995 and 1994
ICF Kaiser's operating income of $17.5 million for the ten months ended
December 31, 1995 was a $4.6 million increase from the $12.9 million recorded
for the ten months ended December 31, 1994. The increase in operating income
(before minority interests) primarily resulted from a $5.7 million improvement
in engineering and construction operations and $5.3 million in earnings from
the Rocky Flats contract awarded in April 1995 to Kaiser-Hill. The improvement
in engineering and construction operations was partially due to a major
transit project in the Philippines, operating revenue of which had been
previously deferred. Other improvements in engineering and construction
operations were due to substantial growth in the group's industrial sector and
a reduction in the group's overhead.
An additional $3.0 million increase in operating income resulted from the
Company's operations at Hanford because the award fees earned in 1995 were
higher than those earned in 1994.
A $4.9 million decline in the Company's operating income from other
environmental work (excluding the Rocky Flats and Hanford contracts) partially
offset the improvements in operating income discussed above between the ten-
month periods ended December 31, 1995 and 1994. This decrease in other
environmental operations was primarily due to a decline in operating income
from private-sector environmental work, increases in bidding and proposal
efforts required by large scale DOD and DOE contracts, and temporary delays in
Federal environmental projects due to Federal government budgetary
uncertainties.
The Company's consulting operations also experienced a decline in operating
revenues between the ten-month periods ended December 31, 1995 and 1994,
resulting in a $0.9 million decrease in operating income for this group. The
decrease was caused by a delay in task-order assignments under new contract
awards and a significant increase in levels of business development activity.
The Federal government's fiscal 1996 budget was not finalized during the ten
months ended December 31, 1995, which led to the Federal governments operating
under a continuing resolution (including two no-work furlough periods) since
October 1, 1995. While under this resolution, the assignment of work under
task-order contracts was delayed.
A significant company-wide increase in marketing efforts further negatively
impacted operating results for the ten months ended December 31, 1995 as
compared to the ten months ended December 31, 1994. These efforts were in
addition to the marketing activities discussed above within the environmental
and consulting operations. The Company believes that ICF Kaiser's increased
efforts in its business development activities should result in additional
contract awards in both the public and private sectors of its business.
Business Outlook
The Company's contract backlog increased significantly to $4.4 billion at
December 31, 1995 compared to $1.4 billion at February 28, 1995. The increase
in backlog primarily resulted from the April 1995 award of the Rocky Flats
contract, which added $3.0 billion to contract backlog. The fee structure for
this five-year contract provides for a mixture of base and incentive fees
earned through the achievement of cost reductions, attainment of certain
milestones, and accomplishment of other goals. In August 1995, ICF Kaiser
signed a contract estimated at $330 million to perform environmental
restoration work at Federal installations for the U.S. Army Corps of Engineers
("USACE"), Baltimore District. This Total Environmental Restoration Contract
("TERC") is for four years with two, three-year options. The contract is a
cost reimbursement delivery order contract, and the fee structure includes a
combination of cost plus fixed fee, award fee, and incentive fees. In August
1995, ICF Kaiser also signed a five-year contract estimated at $50 million to
provide environmental services to USACE, Savannah District.
30
<PAGE>
The Company's contract backlog was $3.9 billion at September 30, 1996
compared to $4.4 billion at December 31, 1995. The overall reduction in
backlog is primarily due to Hanford (see below). In September 1996, the
Company signed another TERC contract estimated at $260 million to perform
environmental restoration work at federal installations in the South Pacific
Division of the U.S. Army Corps of Engineers, Sacramento District. The TERC
contract is for four years, with two, three-year options and is a cost
reimbursement delivery order contract. The fee structure includes a
combination of cost plus fixed fee, award fee, and incentive fees. In
September 1996, the Company also signed a five-year contract, valued at more
than $60 million, to support EPA's Green Lights and ENERGY STAR programs.
In March 1996, the Company signed a two-year, $102 million contract to
provide engineering and construction services for the initial phase of a mini-
mill project for Nova Hut, an integrated steel maker based in the Ostrava
region of the Czech Republic. The Company is currently negotiating a contract
with Nova Hut for the next phase of the mini-mill project. Earnings associated
with this contract for the next phase of work are expected to be material to
the Company's operating results. Management expects to complete negotiations
on this contract in the first quarter of 1997.
The Company has sold its interest in entities owning and operating the PCI
facility, the earnings and cash flows from which have been significant to the
Company, in order to improve the Company's cash position in light of
substantial near-term cash requirements (see "--Liquidity and Capital
Resources"). The closing occurred in December 1996. The sale will result in a
gain in the period in which the sale was finalized. The Company anticipates
that any cash proceeds resulting from the sale that are not used to satisfy
the substantial near-term cash requirements will be reinvested in the
Company's business. See "Unaudited Pro Forma Consolidated Financial
Statements."
In August 1996, the Company, through its subsidiary, ICF Kaiser Hanford
Company, was informed that the team of which it was a member was unsuccessful
in its bid for DOE's new management and integration contract at Hanford. The
new contract was effective October 1, 1996. The Company's existing contract to
perform services at Hanford expires in March 1997, but was effectively
terminated by DOE on October 1, 1996. As a result, and based on the Company's
current assessment of the closeout of the Hanford contract, management
believes the impact on earnings will be material in the fourth quarter of
1996, as well as future periods, unless replaced. In response to the reduction
and eventual elimination of the Hanford contract, in August 1996 the Company
initiated a significant operational efficiency and cost savings program,
together with management changes, with the objective of minimizing the long-
term impact associated with the termination of the Hanford contract. To date,
the results of the cost savings program have been encouraging. Termination of
the Hanford contract is not expected to significantly impact cash flows in the
fourth quarter but may have a significant impact after 1996 if the cost
savings program is not successful (see "--Liquidity and Capital Resources").
Profitable operating results in the fourth quarter of fiscal year 1996 are
dependent on the success of the Company's ongoing marketing efforts (including
Nova Hut), results from the cost savings program discussed above, and a gain
on sale of the entities owning and operating PCI.
The Company's consulting group showed improvement in operating results
between the nine-month periods ended September 30, 1996 and 1995, aided by the
recognition of revenue resulting from the accelerated cost approval process
(see "--Overview--Operating Results for Nine Months Ended September 30, 1996
and 1995"). EPA historically has been the consulting group's principal federal
government customer; for several years the consulting group has been
diversifying its client base to international, private sector, and non-EPA
federal government entities. EPA now accounts for only approximately 50% of
the consulting group's service revenue. In 1996, the consulting group
increased its business development efforts to diversify its client base and
expects to make further progress in diversification in 1997.
As discussed in Operating Results, the Company's domestic engineering and
construction business has not met its financial goals during 1996. As a
result, the Company continues in its efforts to enhance profitability of these
operations. These efforts include both a continuation of cost reduction
efforts and increases in marketing. In conjunction with the cost reduction
efforts the Company has recently completed a realignment of several of
31
<PAGE>
its offices, including the termination of certain underutilized employees (see
Note G to the consolidated financial statements for the nine months ended
September 30, 1996). The Company will continue to seek other opportunities to
save costs, and future actions may include additional office space
consolidations and terminations.
RESULTS OF OPERATIONS
The following table summarizes key elements in the Consolidated Statements
of Operations for the years ended February 28, 1994 and 1995, the ten months
ended December 31, 1994 and 1995 and the nine months ended September 30, 1995
and 1996.
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 28, DECEMBER 31, SEPTEMBER 30,
--------------- ------------------ -----------------------
1994 1995 1994 1995 1995 1996
------ ------ ----------- ------ ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Gross revenue........... $651.7 $861.5 $732.4 $916.7 $731.8 $1,023.4
Service revenue......... $382.7 $459.8 $392.0 $425.9 $357.6 $ 433.6
Service revenue as a
percentage of gross
revenue................ 58.7% 53.4% 53.5% 46.5% 48.9% 42.4%
Operating expenses as a
percentage of service
revenue:
Direct cost of
services and
overhead............. 84.6% 85.5% 86.0% 84.5% 83.5% 81.8%
Administrative and
general.............. 12.0% 9.5% 8.7% 9.5% 10.8% 11.5%
Depreciation and
amortization......... 2.5% 2.0% 2.0% 2.0% 2.0% 1.8%
Unusual items, net.... 2.3% -- -- (0.1)% -- --
Operating income (loss)
as a percentage of
service revenue........ (1.4)% 3.0% 3.3% 4.1% 3.7% 4.9%
</TABLE>
Gross revenue represents services provided to customers with whom the
Company has a primary contractual relationship. Included in gross revenue are
costs of certain services subcontracted to third parties and other
reimbursable direct project costs, such as materials procured by the Company
on behalf of its customers.
Service revenue is derived by deducting the costs of subcontracted services
and direct project costs from gross revenue and adding the Company's share of
the equity in income of unconsolidated joint ventures and affiliated
companies. The Company believes that it is appropriate to analyze operating
margins and other ratios in relation to service revenue because such revenue
and ratios reflect the work performed directly by the Company.
Operating profits (fees) generated by the Hanford and Rocky Flats contracts
are based on performance and not revenue. A change in revenue between periods
is likely to be disproportionate to the change in the fees earned.
Consequently, changes in revenue may have an exaggerated impact on the
Company's margins as measured on a percentage basis. In addition, because
Kaiser-Hill is a consolidated subsidiary of the Company effective July 1,
1995, operating income includes the portion of income generated under the
Rocky Flats contract attributable to CH2M Hill. CH2M Hill's interest in
Kaiser-Hill is reflected as a minority interest in subsidiaries in the
Company's financial statements (see Note C to the consolidated financial
statements for the nine months ended September 30, 1996.)
Nine Months Ended September 30, 1996 Versus Nine Months Ended September 30,
1995
Revenue. Gross revenue for the nine months ended September 30, 1996
increased $291.6 million, or 39.8%, to $1,023.4 million. The increase in gross
revenue was primarily attributable to the commencement of work under the Rocky
Flats contract which generated a $291.8 million increase in gross revenue
during the nine months ended September 30, 1996.
32
<PAGE>
Service revenue increased by $76.0 million for the nine-month period ended
September 30, 1996 as compared to the nine-month period ended September 30,
1995. The increase was due primarily to an $82.3 million increase in service
revenue generated under the Rocky Flats contract. Service revenue as a
percentage of gross revenue decreased to 42.4% for the nine months ended
September 30, 1996 from 48.9% for the nine months ended September 30, 1995.
The decrease in service revenue as a percentage of gross revenue is a result
of the nature of the Rocky Flats contract. A significant portion of the gross
revenue derived from the Rocky Flats contract includes the costs of services
subcontracted to third parties.
Operating Expense. Direct cost of services and overhead increased $56.2
million between the nine-month periods ended September 30, 1996 and 1995. A
$74.4 million increase in costs on the Rocky Flats contract was partially
offset by a $13.0 million reduction in Hanford costs attributable to federal
budget reductions at the Hanford site. The Company's direct cost of services
and overhead as a percentage of service revenue for the nine months ended
September 30, 1996 was comparable to the same period in the prior year.
Administrative and general expense increased $11.4 million, or 29.4%,
between the nine-month periods ended September 30, 1996 and 1995 and increased
from 10.8% to 11.5% as a percentage of service revenue. The increase in these
costs is primarily attributable to the Company's increased commitment to
marketing activities in 1996, including costs associated with new marketing
positions within the Company and proposing and bidding large-scale domestic
and foreign contracts. The increase in administrative and general expenses as
a percentage of service revenue resulting from increased marketing efforts was
partially offset as a result of the increase in service revenue in 1996 from
the Rocky Flats contract which does not have a proportionate increase in
administrative and general expenses.
Income Tax Expense. The Company's income tax provision was $0.8 million for
the nine months ended September 30, 1996 compared with $1.3 million for the
nine months ended September 30, 1995. The income tax provision for the nine
months ended September 30, 1996 reflects a partial reversal of the valuation
allowance for certain deferred tax assets. This partial reversal reduced tax
expense by approximately $2.0 million for the nine-month period. The Company
expects to have significant taxable income in the near-term from the sale of
certain subsidiaries (see "--Business Outlook"). The remaining valuation
allowance after this partial reversal in 1996 is for foreign tax benefits not
currently assured of realization. Also, the income tax provision for the nine
months ended September 30, 1996 was computed by excluding the minority
interest in Kaiser-Hill's income because Kaiser-Hill is a flow-through entity
for tax purposes and is partially owned by an outside party. This and the
partial reversal of the valuation allowance had the effect of reducing the
Company's effective tax rate. Since Kaiser-Hill commenced operations on July
1, 1995, its effect on the effective tax rate was relatively larger in the
nine months ended September 30, 1996 than in 1995.
Ten Months Ended December 31, 1995 Versus Ten Months Ended December 31, 1994
Revenue. Gross revenue for the ten months ended December 31, 1995 increased
$184.3 million, or 25.2%, to $916.7 million. The increase in gross revenue was
attributable to the commencement of work under the Kaiser-Hill contract which
generated $277.7 million in gross revenue during the ten-month period. The
increase was partially offset by a $98.6 million reduction in gross revenue
under the Hanford contract due to Federal budget reductions at the Hanford
site.
Service revenue increased by $33.9 million for the ten-month period ended
December 31, 1995 as compared to the ten months ended December 31, 1994. The
increase was due primarily to $91.2 million of service revenue generated under
the Rocky Flats contract, offset by a $57.8 million decrease in service
revenue under the Hanford contract. Service revenue as a percentage of gross
revenue decreased to 46.5% for the ten months ended December 31, 1995 from
53.5% for the ten months ended December 31, 1994 as a result of the nature of
the Rocky Flats contract. A significant portion of the gross revenue derived
from the Rocky Flats contract includes the costs of services subcontracted to
third parties.
Operating Expenses. Direct cost of services and overhead increased $22.8
million between the ten-month periods ended December 31, 1995 and 1994. Costs
on the new Rocky Flats contract ($85.3 million) were offset
33
<PAGE>
by a $60.9 million reduction in the Hanford contract costs (attributable to
the Federal budget reductions discussed above). The remainder of the Company's
direct cost of services and overhead as a percentage of service revenue for
the ten months ended December 31, 1995 was comparable to the same period in
the prior year.
Administrative and general expenses increased $6.4 million, or 18.5%,
between the ten-month periods ended December 31, 1995 and 1994 and increased
from 8.7% to 9.5% as a percentage of service revenue. The increase in these
costs was primarily attributable to the Company's increased marketing
activities, including filling several key marketing positions and incurring
relatively high levels of marketing expense associated with proposing and
bidding large-scale DOD and DOE contracts.
Interest Expense. ICF Kaiser's average debt outstanding and average
effective interest rate for the ten months ended December 31, 1994 and 1995
were as follows.
<TABLE>
<CAPTION>
TEN MONTHS ENDED
--------------------------
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Average debt outstanding....................... $122,674,000 $123,701,000
Average effective interest rate................ 12.8% 12.9%
</TABLE>
The average effective interest rate was comparable between the ten-month
periods ended December 31, 1995 and 1994 due to consistent interest rates and
indebtedness outstanding between the ten-month periods. The Company's
principal debt outstanding consists of the Existing Notes (see "--Liquidity
and Capital Resources").
Income Tax Expense. ICF Kaiser's income tax provision was $2.1 million and
$3.0 million for the ten months ended December 31, 1995 and 1994,
respectively. Although pretax income for the ten months ended December 31,
1995 was $3.5 million greater than pretax income for the comparable period
ended December 31, 1994, the Company's effective tax rate decreased due to a
reduction in permanent differences (such as the nondeductibility of goodwill)
as a percentage of pretax income, increased foreign tax benefits, and minority
interest earnings of a consolidated subsidiary (see Note H to the consolidated
financial statements for the ten months ended December 31, 1995). The ten
months ended December 31, 1994 also included a repatriation of overseas funds
to the United States which could not then be currently offset by foreign tax
credits, resulting in additional income taxes for that period (see "--Results
of Operations--Year Ended February 28, 1995 Versus Year Ended February 28,
1994--Income Tax Expense").
Because of the reported losses for the year ended February 28, 1994, a $3.3
million valuation allowance was established in that year for deferred tax
assets. Although the level of pretax income has increased substantially since
that period (with a corresponding increase in taxable income), the Company
maintained the valuation allowance as of December 31, 1995. At December 31,
1995, the Company had deferred tax assets of $0.7 million related to net
operating loss carryforwards, of which $0.5 million expire in the next five
years and $0.2 million expire in 2008. Additionally, the Company had deferred
tax assets of $2.1 million related to tax credit carryforwards, the majority
of which expire in 1998 to 2009.
Unusual Items. During the ten months ended December 31, 1995, the Company
recorded $0.5 million in additional income (net), consisting of the following
unusual items: income in settlement of litigation against the Internal Revenue
Service ("IRS"), associated with an affiliate of an acquired company, net of
an accrual for related expenses ($6.8 million) (see "--Liquidity and Capital
Resources"); a charge to accrue the net settlement cost and legal expenses of
other litigation ($4.6 million); a charge to accrue for severance for the
termination of 110 employees in the engineering and international groups ($1.0
million); and a charge to accrue for consolidation of office space ($0.7
million). Management expects that all actions associated with the termination
of employees and office space consolidation will be completed by December 31,
1996.
Year Ended February 28, 1995 Versus Year Ended February 28, 1994
Revenue. Gross revenue for the year ended February 28, 1995 increased 32.2%
to $861.5 million, while service revenue increased 20.1% to $459.8 million,
versus the year ended February 28, 1994. These increases
34
<PAGE>
were attributable to the work performed at Hanford ($208.8 million of the
gross revenue increase and $97.4 million of the service revenue increase). The
Hanford revenue increases were offset partially by a decrease in the Company's
engineering and construction revenue ($14.1 million gross revenue and $10.8
million service revenue).
Service revenue as a percentage of gross revenue decreased to 53.4% for the
year ended February 28, 1995, from 58.7% for the previous year, primarily
because under an October 1993 amendment to the Hanford contract, the Company
absorbed tasks utilizing a much higher proportion of subcontractors than
Company personnel.
Operating Expenses. The Company's direct cost of services and overhead was
relatively flat as a percentage of service revenue for the year ended February
28, 1995 versus the previous year. Excluding Hanford, direct cost of services
and overhead decreased to 76.2% of service revenue for the year ended February
28, 1995 from 79.2% for the year ended February 28, 1994. Administrative and
general expense decreased $2.1 million. The decrease in these costs was
attributable primarily to management cost-cutting initiatives.
A restructuring plan initiated during the year ended February 28, 1994 to
respond to operating losses included downsizing the work force, consolidating
office space, renegotiating significant leases, and restructuring certain
international operations. All actions have been completed, and there is no
further liability outstanding as of December 31, 1995 associated with this
plan.
Interest Expense. ICF Kaiser's interest expense net of interest income (net
interest) for the year ended February 28, 1995, increased $6.3 million from
the prior year due to a recapitalization that took place in the fourth quarter
of the year ended February 28, 1994 (see "--Liquidity and Capital Resources").
The increase in net interest was impacted favorably by $1.3 million in refunds
of interest from the IRS recorded in the third quarter of the year ended
February 28, 1995 associated with the Company's tax liabilities and those of
an acquired company. The increase in net interest was offset partially by a
reduction in preferred stock dividends.
Income Tax Expense. The Company's income tax provision for the year ended
February 28, 1995 was $2.9 million, even though pretax income was $1.2
million. This is due to several factors including the deemed dividend from the
repatriation of overseas funds to the United States during the year ended
February 28, 1995 that currently could not be offset by foreign tax credits
and permanent differences, such as the nondeductibility of goodwill
amortization. Nondeductible permanent differences comprised a very high
percentage of pretax income. As such, the traditional percentage relationship
between income tax expense and pretax income was not meaningful.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows for Nine Months Ended September 30, 1996
During the nine months ended September 30, 1996, cash and cash equivalents
increased $4.7 million to $21.0 million. Operating activities generated $5.9
million in cash, primarily from operations at Kaiser-Hill which generated $8.8
million. An additional significant operating source of cash was $7.0 million
received from the IRS in settlement of litigation (see "--Results of
Operations--Ten Months Ended December 31, 1995 Versus Ten Months Ended
December 31, 1994--Unusual Items"). Significant operating uses of cash
included $15.4 million in interest payments on the Company's Existing Notes, a
$3.7 million pension payment, and $4.2 million of payments for net settlement
costs and legal expenses of litigation.
The increase in contract receivables, net between December 31, 1995 and
September 30, 1996 was primarily due to an increase in receivables under the
Hanford contract resulting from the closeout of the contract. The decrease in
prepaid expenses and other current assets in 1996 was attributable to
collection from the IRS of $7.0 million, which was accrued in other current
assets at December 31, 1995. The cash received from the IRS settlement is
included in unusual items on the Statement of Cash Flows.
35
<PAGE>
During the nine months ended September 30, 1996, net borrowings under the
Company's Credit Facility provided $8.0 million in cash (see Note E to the
consolidated financial statements for the nine months ended September 30,
1996). Borrowings under the Credit Facility were used to fund operations
(including the pension payment made in September 1996). Other significant uses
of cash in investing and financing activities included purchases of fixed
assets ($4.9 million), payment of dividends ($2.0 million), and investments in
joint ventures and affiliates ($1.2 million ).
In July 1996, EPA approved the Company's provisional billing rates for the
year ended February 28, 1995. This approval permitted the Company to submit
invoices for billing rate variances on cost-plus contracts with U.S.
government agencies for costs incurred during that year. The Company expects
to collect in excess of $1.5 million on these billings in future periods. In
October 1996, the Company also obtained approval for provisional billing rates
for the ten months ended December 31, 1995 which is expected to result in more
than $2.0 million in additional invoicing.
Cash Flows for Ten Months Ended December 31, 1995
During the ten months ended December 31, 1995, cash and cash equivalents
decreased $11.9 million to $16.4 million. Cash was primarily used in investing
and financing activities for acquisitions and investments in joint ventures
and affiliates ($2.0 million); purchases of fixed assets ($1.8 million);
payments of dividends ($1.5 million); repurchases by the Company's insurance
subsidiary of a portion of the Company's outstanding Existing Notes and
related warrants ($1.4 million); and payments of other outstanding debt ($1.2
million). In addition, $6.1 million was used in operating activities. An
interest payment of $7.5 million on the Company's Existing Notes was made in
June 1995. An additional $7.5 million interest payment on the Existing Notes
was due and paid on January 2, 1996.
An increase in contract receivables, net between February 28, 1995 and
December 31, 1995 was primarily due to $71.9 million in receivables from the
commencement of work by Kaiser-Hill under the Rocky Flats contract. An
increase in accounts payable, accrued expenses, and accrued salaries and
employee benefits was also primarily due to the Rocky Flats contract which had
$70.6 million of accounts payable, accrued expenses, and accrued salaries and
employee benefits as of December 31, 1995.
During the year ended February 28, 1995, the EPA approved the Company's
revised provisional billing rates for fiscal years 1991 through 1994, thus
authorizing the Company to submit invoices on cost-plus contracts with U.S.
government agencies for work performed during these approved years. The
Company collected in excess of $4 million as of December 31, 1995 on these
contracts.
Liquidity and Capital Resources Outlook
Effective May 7, 1996, the Company's new $40 million Credit Facility
replaced the then-existing revolving credit facility which was due to expire
October 31, 1996. The Credit Facility contains Eurodollar and alternate base
interest rate alternatives with margins dependent upon the Company's financial
operating results and expires June 30, 1998. Effective December 17, 1996, the
Company signed an amendment to the Credit Facility (the "Amendment") that
approved the Disposition of PCI, provided for a temporary $5.0 million Over
Advance Provision (as defined in the Amendment) and permitted the net proceeds
from the issuance of the Old Notes and borrowings under the Over Advance
Provision to be used to redeem the Series 2D Senior Preferred Stock. See
"Description of the Credit Facility."
The Credit Facility is provided by CoreStates Bank, N.A. as agent bank, and
two other banks (the "Banks") with terms and covenants similar to those under
the former credit facility. ICF Kaiser International, Inc. and certain of its
subsidiaries, which are guarantors of the Credit Facility, granted the Banks a
security interest in their accounts receivable and certain other assets,
including the pledge of the stock of certain subsidiaries. The Credit Facility
limits the payments of cash dividends on common stock and requires the
maintenance of specified financial ratios. Total available credit is
determined from a borrowing base calculation based on eligible accounts
36
<PAGE>
receivable (billed and unbilled). As of September 30, 1996, the Company had
$13.0 million in cash borrowings and $21.3 million of letters of credit
outstanding under the Credit Facility. The letters of credit outstanding under
the Credit Facility are generally required to support performance guarantees,
primarily on international projects. The Company had $5.7 million of
additional credit available under the Credit Facility as of September 30,
1996. As of January 7, 1997, the Company had no cash borrowings outstanding,
$18.6 million of letters of credit outstanding and the additional credit
available under the Credit Facility was $21.4 million.
Kaiser-Hill has a $50 million receivables purchase facility to support its
working capital requirements under the Rocky Flats contract. The receivables
purchase facility requires Kaiser-Hill to maintain a specified tangible net
worth and contains certain default provisions for delinquent receivables.
Program fees consist of 0.30% per annum of the unused portion of the facility
and 0.45% per annum of the used portion of the facility. The receivables
purchase facility is non-recourse to Kaiser-Hill's owners, ICF Kaiser and CH2M
Hill, and expires on June 30, 1998.
The Company has sold its interest in the entities owning and operating PCI,
the earnings and cash flows from which have been significant to the Company
(see "--Overview--Business Outlook").
In January 1994, the Company issued its Existing Notes and 600,000 warrants,
each to purchase one share of the Company's common stock at $5.00 per share.
The net proceeds of the $125 million offering were used, in part, to retire
senior subordinated notes and associated warrants, to repurchase preferred
stock, and to repay the outstanding balance on the Company's then-existing
revolving credit facility. The recapitalization resulted in a $6.0 million
extraordinary charge (net of $0 tax benefit) for the early extinguishment of
debt and a $1.9 million charge to net income available for common shareholders
to repurchase redeemable preferred stock. As noted above, in November 1995,
the Company's insurance subsidiary repurchased $1,450,000 of the Existing
Notes and related warrants for $1.4 million. In March 1996, the interest rate
on the Existing Notes was increased by one percent until the Company achieves
and maintains a specified level of earnings (see Notes F and I to the
consolidated financial statements for the ten months ended December 31, 1995).
The Existing Notes mature on December 31, 2003 with semi-annual interest
payments.
The Company's Series 2D Senior Preferred Stock was subject to mandatory
redemption on January 13, 1997 in the amount of $20 million plus accrued
dividends. Because of technical limitations on the payment of dividends
contained in the Existing Indenture, the Company did not pay the November 30,
1995 and February 29, 1996 accrued dividends in the aggregate amount of
$975,000 until March 1996, following the signing of an amendment to the
Indenture governing the Existing Notes which permitted the payment of all
accrued and future dividends. As consideration for this amendment, the
interest rate on the Existing Notes was increased as discussed above. The
Company repurchased this preferred stock using the net proceeds of the
issuance of the Old Notes and borrowings under the Credit Facility.
As explained in "--Overview--Business Outlook," the loss of the Hanford
contract may have a significant impact on the Company's cash flows after 1996
if the Company's cost savings and marketing programs are not successful. The
Company believes it will be successful in its ability to generate adequate
cash flows to fund operations throughout the next twelve months and in
reducing overhead costs within the operating groups and corporate functions.
IMPACT OF NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) recently issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective for
financial statements for fiscal years beginning after December 15, 1995. It is
the Company's current policy to evaluate all long-lived assets on a periodic
basis for asset impairment. Therefore, the adoption of this statement has no
material adverse effect on the Company's financial position or operations.
37
<PAGE>
The FASB also recently issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which
encourages companies to adopt a fair value method of accounting for employee
stock options and similar equity instruments. The fair value method requires
compensation cost to be measured at the grant date based on the value of the
award and is recognized over the service period. Alternatively, SFAS No. 123
requires the provision of pro forma disclosures of net income and earnings per
share as if the fair value method had been adopted when the fair value method
is not reflected in the financial statements. The Company has elected to
provide pro forma disclosures. Therefore, the adoption of SFAS No. 123 will
not have a material adverse effect on the Company's financial position or
result of operations. The requirements of SFAS No. 123 are effective for
financial statements for fiscal years beginning after December 15, 1995.
38
<PAGE>
BUSINESS
ICF Kaiser International, Inc., through ICF Kaiser Engineers, Inc. and its
other operating subsidiaries, is one of the nation's largest engineering,
construction, program management and consulting services companies. The
Company's Federal Programs, Engineers and Consulting Groups provide fully
integrated services to domestic and foreign clients in the private and public
sectors of the environment, infrastructure and basic metals and mining
industry markets. For the latest twelve-month period ended September 30, 1996,
ICF Kaiser had gross and service revenue of $1,337.5 million and $569.8
million, respectively, and EBITDA (as defined) of $30.8 million. Service
revenue is derived by deducting the costs of subcontracted services and direct
project costs from gross revenue and adding the Company's share of income
(loss) of joint ventures and affiliated companies. As of November 30, 1996,
the Company employed 5,176 people located in more than 80 offices worldwide.
The Company was incorporated in Delaware in 1987 under the name American
Capital and Research Corporation. It is the successor to ICF Incorporated, a
nationwide consulting firm organized in 1969. In 1988, the Company acquired
the Kaiser Engineers business, which dates from 1914. The Company's
headquarters is located at 9300 Lee Highway, Fairfax, Virginia 22031-1207,
telephone number (703) 934-3600.
OVERVIEW OF MARKETS
Environmental. In the environmental market, the Company provides services in
connection with the remediation of hazardous and radioactive waste, waste
minimization and disposal, risk assessment, global warming and acid rain,
alternative fuels and clean up of harbors and waterways. Demand for ICF
Kaiser's environmental consulting and engineering services is driven by a
number of factors, including: the need to improve the quality of the
environment; federal, state and municipal environmental regulation and
enforcement; and increased liability associated with pollution-related injury
and damage. Increasingly strict federal, state, and local government
regulation has forced private industry and government agencies to clean up
contaminated sites, to bring production facilities into compliance with
current environmental regulations, and to minimize waste generation on an
ongoing basis. In addition, ICF Kaiser is well-positioned to take advantage of
the growing market arising from the increased awareness internationally of the
need for additional and/or initial environmental regulations, studies and
remediation.
Significant environmental laws have been enacted in response to public
concern about the environment. These laws and the implementing regulations
affected nearly every industrial activity, and efforts to comply with the
requirements of these laws create demand for the Company's services. The
principal Federal legislation that has created a substantial market for the
Company, and therefore has the most significant effect on the Company's
business, includes the following: The Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") of 1980, as amended by the Superfund
Amendments and Reauthorization Act ("SARA") of 1986, established the Superfund
program to clean up existing, often abandoned hazardous waste sites and
provides for penalties and punitive damages for noncompliance with the EPA
orders. The Resource Conservation and Recovery Act ("RCRA") of 1976, as
amended by the Hazardous and Solid Waste Amendments of 1984 ("HSWA"), provides
a comprehensive scheme for the regulation of hazardous waste from the time of
generation to its ultimate disposal (and sometimes thereafter), as well as the
regulation of persons engaged in the treatment, storage and disposal of
hazardous waste. The Clean Air Act as amended in 1970 empowered the EPA to
establish and enforce National Ambient Air Quality Standards, National
Emission Standards for Hazardous Air Pollutants and limits on the emission of
various pollutants. The 1990 amendments to the Clean Air Act substantially
increase the number of sources emitting a regulated air pollutant which will
be required to obtain an operating permit; the amendments also address the
issues of acid rain, ozone protection, and other areas in which the Company
can provide expanded services. The Clean Water Act of 1972, originally the
Federal Water Pollution Control Act of 1948, established a system of
standards, permits and enforcement procedures for the discharge of pollutants
to surface water from industrial, municipal, and other wastewater sources. The
Toxic Substance Control Act, enacted in 1976, established requirements for
identifying and controlling toxic chemical hazards to human health and the
environment.
39
<PAGE>
Infrastructure. The global infrastructure market is driven by the need to
maintain and expand among other things, ports, roads, highways, mass transit
systems and airports. Increasingly, environmental concerns, such as wastewater
treatment and reducing automotive air pollutant emissions, have become a
driving force behind new infrastructure and transportation initiatives. This
market is primarily funded by government dollars, although the private sector
is seeking an increased role, particularly in international projects. The
Company has capitalized on its specialized technical and environmental skills
to win projects that provide consulting, planning, design and construction
services. Internationally, there is a critical need for infrastructure
projects where population growth of major cities has been and will continue to
be extremely high. The Company provides engineering and construction
management services for mass transit and wastewater treatment facilities in
major metropolitan areas worldwide.
Industry. ICF Kaiser assists its basic metals and mining industry clients by
providing the engineering and construction skills needed to maintain and
retrofit existing plants and replace aging production capacity with newer,
more efficient and more environmentally responsible facilities. The Company's
engineering and construction skills, as well as its access to process
technologies, have helped establish it as a worldwide leader in serving the
basic metals and mining industries, especially aluminum and steel. ICF Kaiser
is currently expanding its operations internationally, particularly
engineering and construction management services related to alumina production
from bauxite, aluminum smelting and other basic industry facilities.
BUSINESS STRATEGY
The Company's business strategy is based primarily on providing its clients:
(i) full front-end capability; (ii) value-added services; (iii) access to
technology; and (iv) the benefits of the Company's strategic relationships.
Full Front-end Capability. The Company's front-end skills include policy
analysis and consulting; scientific analysis and health/risk assessments;
facility siting and environmental assessments; remedial investigations and
feasibility studies; and engineering design. By possessing these skills, the
Company's involvement at the outset of any project places it in a position to
participate in any follow-on engineering and construction work.
Value-added Services. The Company provides value-added services within those
markets that relate to environmental services through specialized
environmental knowledge that (i) helps clients understand environmental
threats and opportunities and alternative ways in which such threats can be
managed and opportunities capitalized on; (ii) allows creation of customized
solutions, including remedial design and remedial action, for the clients'
environmental problems; and (iii) combines problem identification, solution,
and implementation.
Access to Technology. The Company has access to technologies that can assist
clients clean up existing waste sites, reduce waste generated by ongoing and
new production processes, reduce and monitor emissions, improve the quality of
finished products, assist in the production in the basic metal and mining
industries, and reduce costs. To increase its overall participation in
clients' projects, the Company continues to expand its access to leading
environmental and process technologies through various methods, including
licensing and joint ventures.
Strategic Relationships. The Company has established business relationships
through joint ventures, marketing agreements, and direct equity investments
that extend its presence and reduce its business development risks. These
relationships are particularly important in the management of the Company's
international operations, and they help reduce the cost and risks associated
with the Company's entering new geographic regions.
BUSINESS GROUPS
The Company is organized into three business groups: the Federal Programs
Group; the ICF Kaiser Engineers Group; and the Consulting Group.
40
<PAGE>
Federal Programs Group
The Company derives a substantial portion of its revenues from contracts
with various agencies and departments of the Federal government. The Federal
Programs Group's major clients are the DOE and the DOD.
U.S. Department of Energy. An important DOE mission has changed over the
years--from nuclear weapons production to environmental cleanup of former
nuclear weapons production sites. To help accomplish DOE's cleanup goals
pursuant to this new mission, the Company actively supports DOE at the
following facilities: Argonne National Laboratory, Idaho National Engineering
Laboratory, Lawrence Livermore National Laboratory, Los Alamos National
Laboratory, Mound Plant Site, Oak Ridge National Laboratory, two Sandia
National Laboratories, Hanford Site and Rocky Flats. The Company provides many
services at these facilities, including (i) conducting comprehensive
assessments related to environment, safety, and health; (ii) quality
assurance; (iii) security and safeguards; (iv) assessing, managing, and
remediating existing hazardous and solid wastes, mixed wastes, radioactive
materials, highly volatile chemical compounds, unidentified mixed wastes, and
exploded/unexploded munitions; and (v) architect, engineer, construction, and
site operations.
In 1995, the Company, through Kaiser-Hill, won DOE's Performance Based
Integrating Management contract at Rocky Flats. Rocky Flats is a former DOE
nuclear weapons production facility. Under the five-year contract, Kaiser-Hill
oversees plutonium stabilization and storage, environmental restoration, waste
management, decontamination and decommissioning, site safety and security, and
construction activities of subcontractor companies. Under the performance-
based contract signed by Kaiser-Hill, the concept which was developed in the
DOE's 1994 Contract Reform Initiative, 85% of Kaiser-Hill's fees are based on
performance, while only 15% are fixed. Kaiser-Hill's contract commits it to
dealing with urgent risks first, and measurable results in the following
"urgent risk" areas determines its incentive fee: stabilize plutonium and
plutonium residues for specific time frames; consolidate plutonium in a single
building; and clean up and remove all high-risk "hot spot" contamination.
Finally, Kaiser-Hill is expected to reduce the number of employees at the site
by the end of the contract term.
In August 1996, the Company was informed that the team of which it was a
member was unsuccessful in its bid for DOE's new management and integration
contract at the DOE's Hanford Site, Richland, Washington, where the Company
had worked since 1987. The Company's existing contract at Hanford effectively
was terminated by DOE on October 1, 1996. As a result, and based on the
Company's current assessment of the closeout of the Hanford contract,
management believes the impact on earnings will be material in the fourth
quarter of 1996, as well as future periods, unless replaced. In response to
the reduction and eventual elimination of the Hanford contract, in August 1996
the Company initiated a significant operational efficiency and cost savings
program, together with management changes, with the objective of minimizing
the long-term impact associated with the termination of the Hanford contract.
Termination of the Hanford contract is not expected to significantly impact
cash flows in the fourth quarter of fiscal year 1996 but may have a
significant impact after 1996 if the cost savings program is not successful.
Effective October 1, 1996, ICF Kaiser Hanford Company acquired the Hanford
Site General Support Services Contract from the MACTEC Division of Management
Analysis Company of Golden, Colorado. The Company undertook the contract in
order to maintain a presence at Hanford and to further its strategic alliance
with MACTEC. Under the contract, ICF Kaiser provides administrative,
engineering, and technical support services for major DOE projects at the
Hanford Site, including tank waste remediation programs. In addition, the
Company will work closely with DOE to aid its strategic initiatives associated
with site cleanup and facility transition.
U.S. Department of Defense. DOD estimates that its environmental expense
will be directed primarily to cleaning up hundreds of military bases with
thousands of contaminated sites. There is an urgent need to ensure that the
hazardous wastes present at these sites (often located near population
centers) do not pose a threat to the surrounding population, and, in
connection with the closure of many of the bases, there is an economic
incentive
41
<PAGE>
to make sure that the environmental restoration enables the sites of the
former bases to be developed commercially by the private sector.
DOD established the TERC program to clean up contaminated Army sites in a
streamlined and efficient manner by partnering with private contractors. A
TERC contract allows a single contractor to handle all aspects of remediation,
resulting in quicker cleanup, more effective project management, and better
coordination with federal and state regulators and the public. It also helps
to build a culture of cooperation among the USACE, the contractor, the
regulatory community, and the public.
In September 1996, the Company signed a contract estimated at $260 million
to perform environmental restoration work at federal installations in the
South Pacific Division of the USACE. The TERC contract will be managed by the
Sacramento District, lasts for four years with two, three-year options, and
covers cleanup work at the Oakland (California) Army Base and at other Army
bases and federal installations in California, Arizona, Nevada, and Utah. The
Sacramento TERC was the second TERC awarded to ICF Kaiser. In August 1995, ICF
Kaiser won the largest hazardous, toxic, and radioactive waste contract ever
awarded by USACE, a $330 million TERC to remediate contaminated Army sites in
USACE's Baltimore District. ICF Kaiser's Baltimore TERC covers cleanup work at
Picatinny Arsenal in New Jersey, Aberdeen Proving Ground near Baltimore, and
other Army bases and federal installations in New York, New Jersey,
Pennsylvania, Delaware, Maryland, the District of Columbia, Virginia, and West
Virginia. The Baltimore TERC is for four years with two three-year options.
The contract is a cost reimbursement delivery order contract, and the fee
structure includes a combination of cost plus fixed fee, award fee, and
incentive fees.
The Company also provides environmental services to USACE, Savannah
(Georgia) District, under several contracts, including a $50 million contract
to support the Corps' South Atlantic Division, as well as a $2 million
contract under which the company is designing contaminated groundwater
treatment systems at the Milan Army Ammunition Plant in Tennessee.
Other Federal Government Work. Under a variety of smaller contracts, the
Company provides the Federal government with numerous other services. Under an
EPA contract awarded in 1995, the Company will continue to manage the EPA's
quality assurance laboratory in Las Vegas, Nevada, and provide the laboratory
with analytical support. The Company also supports the EPA's Superfund program
under Alternative Remedial Contracting Strategy ("ARCS") contracts for
remedial planning services. Architectural, engineering, and construction
management services for facilities and infrastructure (such as post offices,
court houses, and prisons) are provided to the U.S. Postal Service, Department
of Justice, and General Services Administration.
ICF Kaisers Engineers Group
ICF Kaiser assists clients in private industry by providing the engineering
and construction skills needed to maintain and retrofit existing plants and
replace aging production capacity with newer, more environmentally responsible
facilities. The Company has the engineering and construction skills, as well
as access to process technologies, needed to establish a leadership position
in serving the basic metals and mining industries, including aluminum, steel,
copper, and coal.
All of ICF Kaiser's markets are global in nature. To capitalize on
international opportunities while minimizing its business development risks,
the Company has established international business relationships through joint
ventures, marketing agreements and direct equity investments. The Company has
projects underway in over 25 countries.
Environmental Consulting and Engineering Services. Demand for the Company's
non-Federal environmental consulting and engineering services is driven by a
number of factors, including: the need to improve the quality of the
environment; environmental regulation and enforcement; and increased liability
associated with pollution-related injury and damage. Significant environmental
laws have been enacted in response to public concern over the environment, and
these laws and the implementing regulations affect nearly
42
<PAGE>
every industrial activity. Increasingly strict Federal, state and local
government regulation has forced private industry and state and local agencies
to clean up contaminated sites, to bring production facilities into compliance
with current environmental regulations, and to minimize waste generation on an
ongoing basis. Although growth in this private-sector market is being hampered
by uncertainty over continuing Federal regulations, the Company generates new
business by increasing and expanding the services it sells to existing clients
and by targeting new markets for the Company's full-service capabilities.
The Company's environmental services have progressed beyond study and
analysis to remediation. Following on its established market position in the
consulting and front-end analysis phase of environmental services, the Company
now offers alternative remediation approaches that may involve providing on-
site waste containment, on-site treatment, management of on-site/off-site
remediation, or waste removal. The Company also designs new processes (and
redesigns ongoing production processes) to minimize or eliminate the
generation of hazardous waste. Currently, the Company also provides site
investigations and feasibility studies, compliance planning and audits, risk
assessment, permitting, community relations services, and construction and
construction management. See "--Potential Environmental Liability."
Industry Services. ICF Kaiser's engineering design, project management, and
construction services to the industrial market involve work with the steel,
aluminum, alumina, copper and other minerals and metals industries as well as
chemicals, petrochemicals, and refineries. In the coke, coal, and coal
chemicals area, ICF Kaiser's services have included inspection of coke plants
for environmental compliance, facility design and construction, and equipment
sales and services. The Company has provided services related to coal
cleaning, handling, and environmental controls. The Company recently announced
that it is negotiating to sell the PCI facility that it designed, built,
currently operates and jointly owns under a multiyear tolling agreement.
The international market provides opportunities for the Company's industrial
services. The Company's largest industrial project will be a mini-mill project
for Nova Hut. Under a two-year contract signed in March 1996, the Company will
oversee the construction of the continuous slab caster portion of the mini-
mill as well as future production and environmental upgrades to Nova Hut's
existing integrated steel-making facilities. The Company will provide project
management, engineering, procurement, construction management, start-up,
commissioning, and training services. This initial phase of the mini-mill
project, which is scheduled to initiate production in June 1998, is part of a
two-phase endeavor in which the second phase will provide Nova Hut with a new
rolling mill with the capability of producing one million metric tons per year
of hot rolled steel product. The Company is currently negotiating a contract
with Nova Hut for the second phase of the mini-mill project. The Company
expects earnings from the next phase to be material to the Company's operating
results. Management expects to complete negotiations on this contract in the
first quarter of 1997, although there can be no assurance with respect
thereto. The Company also is assisting the International Finance Corporation
in securing the financing for the next phase of the mini-mill project.
Infrastructure Services. The Company also is helping rebuild the
infrastructure of roads, highways, transit systems, harbors, airports,
facilities, and buildings in domestic and international markets. Budget
constraints at the Federal, state, and local government levels have hindered
domestic infrastructure market growth, but the Company remains active in major
U.S. metropolitan areas: Chicago (light rail transit system); Seattle (light
rail project); San Francisco (commuter rail line extension); Atlanta (general
engineering consulting services to the Metropolitan Atlanta Rapid Transit
Authority); and Miami (Intermodal Transit Center, a project that will tie
together air, light/heavy rail, buses, highway systems, and parking
facilities).
In the international infrastructure market, the Company's large-scale
construction infrastructure skills are at work in Portugal where the Company,
as part of a joint venture, provides project and construction management
services for the modification and reconstruction of the main rail link between
the cities of Lisbon and Oporto. The Company also provides program management
services for the overhaul and upgrade of Portugal's main intercity freight and
passenger rail lines. Those skills also are at work in the Philippines where
the Company, as part of a joint venture, provides front-to-back-end services
for a light rail transit line in Manila. In Brazil, the Company is developing
the plan to remediate and clean up Guanabara Bay.
43
<PAGE>
The major ports of many of the world's cities have serious water pollution
problems, and ICF Kaiser is helping to improve the condition of many harbors
and waterways. In its largest harbor project, the Company continues as the
construction manager of the cleanup of Boston Harbor, one of the largest
environmental projects in the country, under a contract extension that runs
through 1998. Since the inception of the project in 1988, the Company has
served as its construction manager, and currently manages construction
workers, engineers, architects, and support personnel working to construct a
wastewater treatment plant on Deer Island in Boston Harbor.
International Services. ICF Kaiser provides engineering, construction
management, and consulting services through companies managed and staffed by
local professionals in Australia, Taiwan, the Philippines, Mexico, Brazil,
Portugal, France, England, Russia, and the Czech Republic, as well as project
offices throughout the world. International projects include design
engineering for the expansion of a major alumina refinery in Western
Australia; and environmental remediation of hydrocarbon contamination in soil
and groundwater in France and Mexico.
Consulting Group
The Consulting Group serves customers in domestic and international markets,
including both public- and private-sector organizations. Among its major
customers are U.S. government agencies, especially the EPA; U.S. private
sector organizations, particularly major energy producers such as utilities
and oil companies; and governments and businesses around the world, as well as
various multinational banks, development organizations, and treaty
organizations. The Consulting Group draws upon the talents of its multi-
disciplinary professional staff to support customers within four primary lines
of business.
Environmental Consulting Services. This line of business assists customers
in developing plans and policies, evaluating options for managing
environmental responsibilities in the most cost-effective manner, and
identifying and employing the best available technologies and practices. Life-
cycle management strategies are emphasized. The group has special expertise in
such areas as industrial and municipal waste management, air pollution
control, chemical accident prevention, and ground-water and drinking water
management. The Consulting Group also provides technical and regulatory
support to the EPA's Office of Solid Waste, focusing on human health and
ecological risk assessment and waste characterization.
Global environmental issues are also a particular area of focus within the
Consulting Group. Working with U.S. and international organizations that fund
global environmental work and with numerous private sector organizations, the
Consulting Group has conducted projects in over thirty countries and has been
actively involved in supporting international environmental treaties. The
group has achieved great success in implementing technology transfer programs
through the creation of effective public-private partnerships. Working on
global change issues for the EPA for 14 years, the Company supports the EPA's
Global Change Division, providing services related to the reduction of methane
and other greenhouse gases.
In September 1996, the Consulting Group announced that it had signed a five-
year contract, potentially valued at more than $60 million, to provide
technical analysis and implementation support for EPA's Green Lights and
ENERGY STAR programs. The Consulting Group has worked on EPA's voluntary
public-private partnership programs on energy efficiency and methane reduction
since their inception in 1990.
In-career Education and Training Programs. Consulting services in this line
of business range in subject matter from highly technical areas to broader,
skill-based and management-oriented training. The Consulting Group's expertise
in the development and delivery of workplace training, combined with expert
knowledge in a wide variety of technologies and programmatic areas, enables it
to provide high impact training that is specifically tailored to the needs of
each customer organization. Environmental management programs cover
regulation, technology, information reporting, emergency response, and
pollution prevention.
44
<PAGE>
Information Management Programs. The Company assists clients in developing
decision support systems that facilitate the collection and use of information
to track performance, identify opportunities and improve decision making. The
group offers a number of sophisticated simulation models and proprietary
applications. By combining consulting expertise with information technology
skills, the group helps its customers deal with the unique challenges of their
business environment.
Energy and Natural Resource Management Services. This line of business
supports the development of corporate and technical plans for managing power
resources and energy projects, provides economic assessments of short- and
long-term market conditions for various fuels, and serves as an expert
foundation in litigation and regulatory proceedings. The Consulting Group
assists its customers in identifying market opportunities, commercializing new
technologies, and developing public policy. Its contributions involve linking
an in-depth understanding of the energy markets with an ongoing involvement
with energy technology.
COMPETITION AND CONTRACT AWARD PROCESS
The market for the Company's services is highly competitive. The Company and
its subsidiaries compete with many other environmental consulting, engineering
and construction firms ranging from small firms to large multinational firms
having substantially greater financial, management, and marketing resources
than the Company. Other competitive factors include quality of services,
technical qualifications, reputation, geographic presence, price, and the
availability of key professional personnel.
Competition for private-sector work generally is based on several factors,
including quality of work, reputation, price, and marketing approach. The
Company's objective is to establish and maintain a strong competitive position
in its areas of operations by adhering to its basic philosophy of delivering
high-quality work in a timely fashion within its clients' budget constraints.
Most of the Company's contracts with public-sector clients are awarded
through a competitive bidding process that places no limit on the number or
type of offerors. The process usually begins with a government Request for
Proposal (RFP) that delineates the size and scope of the proposed contract.
Proposals are evaluated by the government on the basis of technical merit (for
example, response to mandatory solicitation provisions, corporate and
personnel qualifications, and experience) and cost. The Company believes that
its experience and ongoing work strengthen its technical qualifications and,
thereby, enhance its ability to compete successfully for future government
work.
In both the private and public sectors, the Company, acting either as a
prime contractor or as a subcontractor, may join with other firms to form a
team that competes for a single contract or submits a single proposal. Because
a team of firms almost always can offer a stronger set of qualifications than
any firm standing alone, these teaming arrangements often are very important
to the success of a particular competition or proposal. The Company maintains
a large network of business relationships with other companies and has drawn
repeatedly upon these relationships to form winning teams.
The Company's subsidiaries operate under a number of different types of
contract structures with its private- and public-sector clients, the most
common of which are Cost Plus and Fixed Price. Under Cost Plus contracts, the
Company's costs are reimbursed with a fee (either fixed or percentage of cost)
and/or an incentive or award fee offered to provide inducement for effective
project management. A variation of Cost Plus contracts are time and materials
contracts under which the Company is paid at a specified fixed hourly rate for
direct labor hours worked. Under Fixed Price contracts, the Company is paid a
predetermined amount for all services provided as detailed in the design and
performance specifications agreed to at the project's inception.
CUSTOMERS
The Company's clients include DOE, EPA, and DOD; major corporations in the
energy, transportation, chemical, steel, aluminum, mining, and manufacturing
industries; utilities; and a variety of state and local
45
<PAGE>
government agencies throughout the United States. A substantial portion of the
Company's work is repeat business from existing clients. In many cases, the
Company has worked for the same client for many years, providing different
services at different times. DOE accounted for approximately 68% of the
Company's consolidated gross revenue for the ten months ended December 31,
1995; EPA accounted for another approximately 6%; and DOD and other Federal
agencies collectively accounted for another approximately 4%. The Federal
government accounted for approximately 73% of the Company's consolidated gross
revenue in fiscal year 1995 and 65% in fiscal year 1994.
The Company's international clients include both private firms and foreign
government agencies in such countries as Australia, France, Portugal, and
Taiwan. For the ten months ended December 31, 1995, foreign operations
accounted for approximately 4.7% of the Company's consolidated gross revenue.
For information concerning gross revenue, operating income, and identifiable
assets of the Company's business by geographic area, see Note O to the
Consolidated Financial Statements for the ten months ended December 31, 1995.
BACKLOG
Backlog refers to the aggregate amount of gross contract revenue remaining
to be earned pursuant to signed contracts extending beyond one year. At
September 30, 1996, the Company's contract backlog was approximately $3.9
billion in gross revenue, down from approximately $4.4 billion in gross
revenue at December 31, 1995. The Company expects that approximately 6.4% of
the total backlog at September 30, 1996, will be worked off during the last
fiscal quarter of fiscal year 1996. Because of the nature of its contracts,
the Company is unable to calculate the amount or timing of service revenue
that might be earned pursuant to these contracts. The Rocky Flats contract
with Kaiser-Hill represents approximately $2.3 billion of the Company's $3.9
billion backlog at September 30, 1996. The Company believes that backlog is
not a predictor of future gross or service revenue.
Differences in contracting practices between the public and private sectors
result in the Company's backlog being weighted heavily toward contracts
associated with agencies of the Federal government. Backlog under contracts
with agencies of the Federal government that extend beyond the government's
current fiscal year includes the full contract amount, including in many cases
amounts anticipated to be earned in option periods and certain performance
fees, even though annual funding of the amounts under such contracts generally
must be appropriated by Congress before the agency may expend funds during any
year under such contracts. In addition, the agency must allocate the
appropriated funds to these specific contracts and thereafter authorize work
or task orders to be performed under these specific contracts. Such
authorizations are generally for periods considerably shorter than the
duration of the work the Company expects to perform under a particular
contract and generally cover only a percentage of the contract revenue.
Because of these factors, the amount of Federal government contract backlog
for which funds have been appropriated and allocated, and task orders issued,
at any given date is a substantially smaller amount than the total Federal
government contract backlog as of that date. In the event that option periods
under any given contract are not exercised or funds are not appropriated,
allocated or authorized to be spent under any given contract, the amount of
backlog attributable to that contract would not result in revenue to the
Company. All contracts and subcontracts with agencies of the Federal
government are subject to termination, reduction, or modification at any time
at the discretion of the government agency.
ENVIRONMENTAL REGULATION
Significant environmental laws have been enacted in response to public
concern over the environment. These laws and the implementing regulations
affect nearly every industrial activity. Efforts to comply with the
requirements of these laws have increased demand for the Company's services.
The principal Federal legislation having the most significant effect on the
Company's business includes the following:
The Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"). CERCLA, as amended by the Superfund Amendments and Reauthorization
Act, established the Superfund program to clean
46
<PAGE>
up hazardous waste sites and provides for penalties and punitive damages for
noncompliance with EPA orders. Superfund may impose strict liability (joint
and several as well as individual) on certain hazardous substance waste
owners, operators, disposal "arrangers," transporters, and disposal facility
owners and operators (Potentially Responsible Parties or PRPs) for the costs
of removal or remedial action; for other necessary response costs and damages
for injury, destruction, or loss of natural resources; and for the cost of
health effects study. Under certain circumstances Federal funds may be used to
pay for the cleanup.
The Resource Conservation and Recovery Act ("RCRA"). RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984, provides a comprehensive scheme
for the regulation of hazardous waste from the time of generation to its
ultimate disposal (and sometimes thereafter), as well as the regulation of
persons engaged in the treatment, storage, and disposal of hazardous waste.
The RCRA scheme includes both a permitting and a manifest tracking system and
detailed regulations on the handling, treatment, transportation, storage, and
disposal of hazardous and solid waste. Regulations have been issued pursuant
to RCRA in the following areas (among others) of importance to the Company:
permitting; remediation of releases associated with underground storage tanks;
municipal solid waste disposal; waste minimization; corrective action; and
treatment, transportation, and disposal of hazardous waste. HSWA has increased
the number of hazardous waste generators subject to RCRA. HSWA also imposes
land disposal restrictions/bans on certain listed and characteristic hazardous
wastes that do not meet specified treatment standards.
The Clean Air Act. Under the Clean Air Act, as amended in 1970 and 1990, EPA
is empowered to establish and enforce National Ambient Air Quality Standards,
National Emission Standards for Hazardous Air Pollutants, and limits on the
emissions of various pollutants from specific types of facilities. The 1990
amendments require certain sources emitting an air pollutant regulated under
the Clean Air Act to obtain an operating permit, which includes enforceable
emissions limitations and compliance schedules. The Clean Air Act also
addresses substantial expanded regulation of vehicle emissions, hazardous air
pollutant emissions, stratospheric ozone protection, acid rain minimization
(through the use of limitations on sulfur dioxide and nitrogen oxide
emissions) and related enforcement issues. The use of "marketable allowances"
to establish limits on total emissions while maintaining maximum market
flexibility reflects a shift in environmental policy from command and control
management to a more flexible approach.
Other Statutes. Under the Safe Drinking Water Act of 1974, as amended, EPA
is empowered to set drinking water standards for community water supply
systems and to control subsurface injection of waste. The Clean Water Act, as
amended in 1972 and 1990, established a system of standards, permits, and
enforcement procedures for the discharge of pollutants to surface water from
industrial, municipal and other wastewater sources. Under the Ocean Dumping
Act of 1972, as amended in 1988, regulatory revisions to the Clean Water Act
were made to eliminate ocean dumping of sludge. The Toxic Substance Control
Act of 1976 establishes requirements for identifying and controlling toxic
chemical hazards to human health and the environment. The Federal Insecticide,
Fungicide, and Rodenticide Act of 1947, as amended in 1988, focuses on the
health-based risk of pesticides and requires the registration of all
pesticides, with a heavy emphasis on scientific data and risk assessment. The
Oil Pollution Act of 1990 covers the discharge of oil and hazardous substances
into navigable waters, adjoining shorelines or the exclusive economic zone of
the United States.
POTENTIAL ENVIRONMENTAL LIABILITY
The assessment, analysis, remediation, handling, management, and disposal of
hazardous substances necessarily involve significant risks, including the
possibility of damages or personal injuries caused by the escape of hazardous
materials into the environment, and the possibility of fines, penalties or
other regulatory action. These risks include potentially large civil and
criminal liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients.
Potential Liabilities Arising Out of Environmental Laws and Regulations
All facets of the Company's business are conducted in the context of a
rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to
47
<PAGE>
regulation by a number of Federal agencies, including EPA, the Nuclear
Regulatory Commission and the Occupational Safety and Health Administration,
as well as applicable state and local regulatory agencies.
As discussed above, CERCLA addresses cleanup of sites at which there has
been a release or threatened release of hazardous substances into the
environment. Increasingly, there are efforts to expand the reach of CERCLA to
make environmental contractors responsible for cleanup costs by claiming that
environmental contractors are owners or operators of hazardous waste
facilities or that they arranged for treatment, transportation, or disposal of
hazardous substances. Several recent court decisions have accepted these
claims. Should the Company be held responsible under CERCLA for damages caused
while performing services or otherwise, it may be forced to bear such
liability by itself, notwithstanding the potential availability of
contribution or indemnity from other parties.
RCRA, also discussed above, governs hazardous waste generation, treatment,
transportation, storage, and disposal. RCRA, or EPA-approved state programs at
least as stringent, govern waste handling activities involving wastes
classified as "hazardous." Substantial fees and penalties may be imposed under
RCRA and similar state statutes for any violation of such statutes and the
regulations thereunder.
Potential Liabilities Involving Clients and Third Parties
In performing services for its clients, the Company could potentially be
liable for breach of contract, personal injury, property damage, and
negligence (including improper or negligent performance or design, failure to
meet specifications, and breaches of express or implied warranties). The
damages available to a client, should it prevail in its claims, are
potentially large and could include consequential damages.
Environmental contractors, in connection with work performed for clients,
potentially face liabilities to third parties from various claims, including
claims for property damage or personal injury stemming from a release of
hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including through a sudden and accidental release
or discharge of contaminants or pollutants during the performance of services;
through the inability, despite reasonable care, of a remedial plan to contain
or correct an ongoing seepage or release of pollutants; through the
inadvertent exacerbation of an existing contamination problem; or through
reliance on reports or recommendations prepared by the Company. Personal
injury claims could arise contemporaneously with performance of the work or
long after completion of the project as a result of alleged exposure to toxic
or hazardous substances. In addition, increasing numbers of claimants assert
that companies performing environmental remediation should be adjudged
strictly liable, i.e., liable for damages even though its services were
performed using reasonable care, on the grounds that such services involved
"abnormally dangerous activities."
Clients frequently attempt to shift various of the liabilities arising out
of remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or personal injury to third parties and property and
for environmental fines and penalties. The Company has endeavored to protect
itself from potential liabilities resulting from pollution or environmental
damage by obtaining indemnification from its private-sector clients and
intends to continue this practice in the future. Under most of these
contracts, the Company has been successful in obtaining such indemnification;
however, such indemnification generally is not available if such liabilities
arise as a result of breaches by the Company of specified standards of care or
if the indemnifying party has insufficient assets to cover the liability. The
Company has a wholly owned subsidiary, ICF Kaiser Remediation Company, through
which it intends to increase its remediation activities performed for public-
and private-sector clients. The Company will continue its efforts to minimize
the risks and potential liability associated with its remediation activities
by performing all remediation contracts in a professional manner and by
carefully reviewing any and all remediation contracts it signs in an effort to
ensure that its environmental clients accept responsibility for their own
environmental problems.
For EPA contracts involving field services in connection with Superfund
response actions, the Company is eligible for indemnification under Section
119 of CERCLA, for pollution and environmental damage liability
48
<PAGE>
resulting from release or threatened release of hazardous substances. Some of
the Company's clients (including private clients, DOE, and DOD) are
Potentially Responsible Parties (PRPs) under CERCLA. Under the Company's
contracts with these PRPs, the Company has the right to seek contribution from
these PRPs for liability imposed on the Company in connection with its work at
these clients' CERCLA sites and, with respect to Federal government clients,
generally qualifies for the limitations on liabilities under CERCLA Section
119(a). In addition, in connection with contracts involving field services at
DOE weapons facilities, including the DOE's Hanford site, the Company is
indemnified under the Price-Anderson Act, as amended, against liability claims
arising out of contractual activities involving a nuclear incident. Recently,
EPA has constricted significantly the circumstances under which it will
indemnify its contractors against liabilities incurred in connection with
CERCLA projects. There are other proposals both in Congress and at the
regulatory agencies to further restrict indemnification of contractors from
third-party claims.
As discussed above, Kaiser-Hill signed a Performance Based Integrating
Management contract with DOE. The terms of that contract provide that Kaiser-
Hill shall not be held responsible for, and DOE shall pay all costs associated
with, any liability (including without limitation, a claim involving strict or
absolute liability and any civil fine or penalty, expense, or remediation
cost, but limited to those of a civil nature), which may be incurred by,
imposed on, or asserted against Kaiser-Hill arising out of any act or failure
to act, condition, or exposure which occurred before Kaiser-Hill assumed
responsibility on July 1, 1995 ("pre-existing conditions"). To the extent the
acts or omissions of Kaiser-Hill constitute willful misconduct, lack of good
faith, or failure to exercise prudent business judgment on the part of Kaiser-
Hill's managerial personnel and cause or add to any liability, expense, or
remediation cost resulting from pre-existing conditions, Kaiser-Hill shall be
responsible, but only for the incremental liability, expense, or remediation
caused by Kaiser-Hill.
The Kaiser-Hill contract further provides that Kaiser-Hill shall be
reimbursed for the reasonable cost of bonds and insurance allocable to the
Rocky Flats contract and for liabilities (and expenses incidental to such
liabilities, including litigation costs) to third parties not compensated by
insurance or otherwise. The exception to this reimbursement provision applies
to liabilities caused by the willful misconduct or lack of good faith of
Kaiser-Hill's managerial personnel or the failure to exercise prudent business
judgment by Kaiser-Hill's managerial personnel.
In connection with its services to its environmental, infrastructure, and
industrial clients, the Company works closely with Federal and state
government environmental compliance agencies, and occasionally contests the
conclusions those agencies reach regarding the Company's compliance with
permits and related regulations. To date, the Company never has paid a fine in
a material amount or had material liability imposed on it for pollution or
environmental damage in connection with its services. However, there can be no
assurance that the Company will not have substantial liability imposed on it
for any such damage in the future.
INSURANCE
The Company has a comprehensive risk management and insurance program that
provides a structured approach to protecting the Company. Included in this
program are coverages for general, automobile, pollution impairment, and
professional liability; for workers' compensation; and for employer and
property liability. The Company believes that the insurance it maintains,
including self-insurance, is in such amounts and protects against such risks
as is customarily maintained by similar businesses operating in comparable
markets. At this time, the Company expects to continue to be able to obtain
general, automobile, and professional liability; workers' compensation; and
employers and property insurance in amounts generally available to firms in
its industry. There can be no assurance that this situation will continue, and
if insurance of these types is not available, it could have a material adverse
effect on the Company.
Consistent with industry experience and trends, the Company has obtained
pollution insurance coverage on a claims-made basis, in amounts and on terms
that are economically reasonable, against possible liabilities that may be
incurred in connection with its conduct of its environmental business. An
uninsured claim arising out of the Company's environmental activities, if
successful and of sufficient magnitude, could have a material adverse effect
on the Company.
49
<PAGE>
REGULATION
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. As a result of pending audits relating to fiscal years 1986
forward, the government has asserted, among other things, that certain costs
claimed as reimbursable under government contracts either were not allowable
or not allocated in accordance with federal procurement regulations. The
Company is actively working with the government to resolve these issues. The
Company has provided for the potential effect of disallowed costs for the
periods currently under audit and for periods not yet audited, although the
amounts at issue have not been quantified by the government or the Company.
This provision will be reviewed periodically as discussions with the
government progress. Based on the information currently available, management
believes the potential effects of these pending audits will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of
procurement or other Federal laws and regulations. The Company currently is
the subject of a number of U.S. government investigations and is cooperating
with the responsible government agencies involved. No charges presently are
known to have been filed against the Company by these agencies. Management
does not believe that there will be any material adverse effect on the
Company's financial position, operations, or cashflows as a result of these
investigations.
Federal agencies that are the Company's regular customers (including DOE,
EPA, and DOD) have formal policies against awarding contracts that would
present actual or potential conflicts of interest with other activities of the
contractor. Because the Company provides a broad range of services in
environmental and related fields for the Federal government, state
governments, and private customers, there can be no assurance that government
conflict-of-interest policies will not restrict the Company's ability to
pursue business in the future.
Because some of the Company's subsidiaries provide the Federal government
with nuclear energy and defense-related services, these subsidiaries and a
substantial number of their employees are required to have and maintain
security clearances from the Federal government. These subsidiaries and their
employees have been able to obtain these security clearances in the past, and
the Company has no reason to believe that there would be any problems in this
area in the future. However, there can be no assurance that the required
security clearances will be obtained and maintained in the future. Because of
its nuclear energy and defense-related services, the Company is subject to
foreign ownership, control, and influence ("FOCI") regulations imposed by the
Federal government and designed to prevent the release of classified
information to contractors who are under foreign control or influence. Under
these regulations, FOCI concerns may arise as a result of a variety of
factors, including foreign ownership of substantial percentages of equity
securities or debt, a high percentage of foreign revenue, and the number of
directors and officers who are not U.S. citizens. Subsidiaries of the Company
with facility security clearances or sensitive DOE contracts file reports with
DOD and DOE with respect to events and changes that affect the potential for
FOCI. The Company has implemented procedures designed to insulate such
subsidiaries from any FOCI that might affect the Company. There can be no
assurance that such measures will prevent FOCI policies from affecting the
ability of the Company's subsidiaries to secure and maintain certain types of
DOD and DOE contracts.
EMPLOYEES
As of November 30, 1996, ICF Kaiser employed 5,176 people, and the Company
believes that its relations with its employees are good. Of the total
employees, 2,005 persons are employed at Kaiser-Hill's Rocky Flats site in
Colorado. A total of 1,361 of the Rocky Flats personnel are represented by the
United Steelworkers of America, Local 8031. The Company believes that its
relations with the unions are good.
PROPERTIES
All of the Company's operations are conducted either in leased facilities or
in facilities provided by the Federal government or other clients. As of
September 30, 1996, the Company leased an aggregate of
50
<PAGE>
approximately one million square feet of space. The terms of these leases
range from month-to-month to 15 years, and some may be renewed for additional
periods. Some of the space leased by the Company has been subleased to other
entities under subleases expiring from 1996 to 2000.
The Company's headquarters is located at 9300 Lee Highway, Fairfax, Virginia
22031-1207, and its telephone number is (703) 934-3600. The Company's four
regional headquarters are located at 1800 Harrison St., Oakland, California
94612-3430 Telephone (510) 419-6000; 6440 Southpoint Parkway, Jacksonville, FL
32216 Telephone (904) 279-7200; Gateway View Plaza, 1600 West Carson St.,
Pittsburgh, PA 15220 Telephone (412) 497-2000; and 3D International Tower,
1900 West Loop South, Suite 1350, Houston, TX 77027 Telephone (713) 623-5000.
Other offices include Livermore, Los Angeles; Rancho Cordova, San Diego, San
Francisco, San Rafael and Universal City, CA; Golden and Lakewood, CO;
Washington, DC; Ft. Lauderdale and Miami, FL; Chicago, IL; Gary, IN; Ruston,
LA; Edgewood, Baltimore and Silver Spring, MD; Boston, MA; Las Vegas, NV;
Iselin, NJ; Albuquerque and Los Alamos, NM; Richmond, VA; Richland and
Seattle, WA. The Company's international offices are located in Perth,
Australia; Prague, Czech Republic; London, England; Paris, France; Mexico
City, Mexico; Makatic City and Mandaluyong City, Philippines; Lisbon,
Portugal; Moscow, Russia; and Taipei, Taiwan.
LEGAL AND REGULATORY PROCEEDINGS
The Company and its subsidiaries are involved in a number of lawsuits and
government regulatory proceedings arising in the ordinary course of its
business or arising in connection with the disposition or acquisition of
certain businesses and investments. The Company believes that any ultimate
liability resulting therefrom will not have a material adverse effect on its
financial position, operations, or cash flows.
In the course of the Company's normal business activities, various claims or
charges have been asserted and litigation commenced against the Company
arising from or related to properties, injuries to persons, and breaches of
contract, as well as claims related to acquisitions and dispositions. Claimed
amounts may not bear any reasonable relationship to the merits of the claim or
to a final court award. In the opinion of management, an adequate reserve has
been provided for final judgments, if any, in excess of insurance coverage,
that might be rendered against the Company in such litigation.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of
procurement or other Federal laws and regulations. The Company currently is
the subject of a number of U.S. government investigations and is cooperating
with the responsible government agencies involved. No charges presently are
known to have been filed against the Company by these agencies. Management
does not believe there will be any material adverse effect on the Company's
financial position, operations, or cashflows as a result of these
investigations.
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. As a result of pending audits relating to fiscal years 1986
forward, the government has asserted, among other things, that certain costs
claimed as reimbursable under government contracts either were not allowable
or not allocated in accordance with federal procurement regulations. The
Company is actively working with the government to resolve these issues.
Management has provided for the potential effect of disallowed costs for the
periods currently under audit and for periods not yet audited, although the
amounts at issue have not been quantified by the government or the Company.
This provision will be reviewed periodically as discussions with the
government progress. Based on the information currently available, management
believes the potential effects of these pending audits will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
51
<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...... 53 Chairman of the Board and Chief Executive Officer
Michael K. Goldman.... 44 Executive Vice President and Chief Administrative
Officer
Stephen W. Kahane..... 46 Executive Vice President and President of the
Federal Programs Group
Sudhakar Kesavan...... 42 Executive Vice President and President of the
Consulting Group
Edward V. Lower....... 51 Executive Vice President
Richard K. Nason...... 54 Director, Executive Vice President and Chief
Financial Officer
Marcy A. Romm......... 37 Senior Vice President and Director of Human
Resources
Marc Tipermas......... 48 Director, Executive Vice President and Director of
Corporate Development
David Watson.......... 53 Executive Vice President and President of the ICF
Kaiser Engineers Group
Paul Weeks, II........ 53 Senior Vice President, General Counsel and Secretary
Tony Coelho........... 54 Director
Maynard H. Jackson.... 58 Director
Thomas C. Jorling..... 56 Director
Frederic V. Malek..... 59 Director
Rebecca P. Mark....... 42 Director
Robert W. Page, Sr.... 69 Director
</TABLE>
James O. Edwards has been Chairman of the Board and Chief Executive Officer
of ICF Kaiser International, Inc. since 1987. He also was President of ICF
Kaiser International, Inc. from 1987 to 1990. In 1974, he joined ICF
Incorporated, the predecessor of ICF Kaiser International, Inc. and was its
Chairman and Chief Executive Officer from 1986 until the 1987 establishment of
ICF Kaiser International, Inc. Mr. Edwards graduated from Northwestern
University (B.S.I.E.) and Harvard University (M.B.A., High Distinction, George
F. Baker Scholar).
Michael K. Goldman has been an Executive Vice President since 1990 and the
Chief Administrative Officer of the Company since 1995. He has held senior
management positions in several of the Company's operating subsidiaries since
1980. Prior to joining the Company, Mr. Goldman was in the private practice of
law. Mr. Goldman graduated from Harvard University (B.A., M.B.A. High
Distinction, George F. Baker Scholar) and the University of California at
Berkeley (J.D.).
Stephen W. Kahane has been an Executive Vice President of the Company since
1993 and President of the Company's Federal Programs Group since its creation
in 1995. He has held senior management positions in several of the Company's
operating subsidiaries since 1985. From 1981 to 1985, Dr. Kahane held a number
of management positions at Jacobs Engineering Group, Inc.; he headed
Environmental and Hazardous Waste Programs and was a Vice President when he
left that firm. Dr. Kahane graduated from the University of California, Los
Angeles (B.A., M.S.P.H., D. Env.).
Sudhakar Kesavan has been an Executive Vice President of the Company and
President of the Company's Consulting Group since December 1996. He has held
senior management positions in the Company's Consulting Group since 1983.
Prior to joining the Company, Mr. Kesavan worked for the Indian subsidiary of
the Royal Dutch/Shell company. Mr. Kesavan graduated from the Indian Institute
of Technology (B. Tech), Indian Institute of Management (P.G.D.M.) and the
Massachusetts Institute of Technology (S.M.).
Edward V. Lower has been an Executive Vice President of the Company and a
Group Executive Vice President and Regional Manager (Northeast and Mid-
Atlantic) of the ICF Kaiser Engineers Group since December 1995. In 1991, Dr.
Lower joined EA Engineering, Science and Technology, Inc. as President and
Chief Operating Officer; he became a member of that company's Board of
Directors in 1994. Prior to joining
52
<PAGE>
EA Engineering, Dr. Lower worked for Union Carbide in a variety of positions,
most notably vice president/general manager. Dr. Lower graduated from the
University of Delaware (B.S.), LaSalle University (LL.B.), West Virginia
University (M.B.A.), and New York University (M.A.; Ph.D.).
Richard K. Nason has been an Executive Vice President and the Chief
Financial Officer of the Company since December 1994; he had been a Senior
Vice President and the Treasurer of the Company from April to December 1994.
He joined the Company as Senior Vice President--Internal Audit in June 1993.
From 1991 to 1993, Mr. Nason was Executive Vice President and Chief Financial
Officer for The Artery Organization, Inc., a private real estate development
and management company in Bethesda, Maryland. From 1988 to 1991, Mr. Nason was
Senior Vice President for Finance and Planning for Griffin Homes, a real
estate development and home building company in California. Mr. Nason was
Senior Vice President of Marriott Corporation and its subsidiary Host
International, Inc. from 1977 to 1988. Mr. Nason has been a director of ICF
Kaiser International, Inc. since June 1995. Mr. Nason graduated cum laude from
Washington and Jefferson College (B.A.) and the Wharton Graduate School of
Finance and Commerce, University of Pennsylvania (M.B.A.).
Marcy A. Romm has been Senior Vice President and Director of Human Resources
of the Company since 1993. She has held Human Resources positions at ICF
Kaiser since 1984. Ms. Romm graduated from George Washington University (B.A.,
M.B.A.).
Marc Tipermas has been Executive Vice President and Director of Corporate
Development for ICF Kaiser International, Inc. since 1993. In November 1996 he
accepted line responsibility for the Consulting Group and staff responsibility
for governmental relations. He has held senior management positions in several
of ICF Kaiser's operating subsidiaries since joining the Company in 1981. From
1977 to 1981, Dr. Tipermas was employed by the U.S. Environmental Protection
Agency where he was the Director of the Superfund Policy and Program
Management Office from 1980 to 1981. Prior to joining EPA, he was Assistant
Professor of Political Science at the State University of New York at Buffalo
from 1975 to 1977. Dr. Tipermas has been a director of ICF Kaiser
International, Inc. since 1993. Dr. Tipermas graduated from the Massachusetts
Institute of Technology (S.B.) and Harvard University (A.M., Ph.D.).
David Watson has been an Executive Vice President and President of the
Company's International Operations Group since December 1995. He became
President of the combined Kaiser Engineers and International Groups in
November 1996. From 1989 to November 1995, he was with Day & Zimmerman
International, Inc., an engineering and construction firm. From 1989 to 1993
he was President of that firm's Advanced Dzign Systems; in 1993 he led that
firm's venture into the international marketplace by taking the position of
President of D&Z International, an off-shore international unit, where he
established a strategy to pursue engineering and construction work in China
and Russia. Prior to joining Day & Zimmerman, Mr. Watson was with Stearns
Catalytic, Inc. and Burmah Oil Company. Mr. Watson graduated from Loughborough
University of Technology, Loughborough, Leicestershire, England (B. Tech.).
Paul Weeks, II has been Senior Vice President, General Counsel and Secretary
of ICF Kaiser International, Inc. since 1990. He joined ICF Incorporated in
May 1987 as its Vice President, General Counsel, and Secretary. From 1973 to
1987 he was employed by Communications Satellite Corporation, where from 1983
to 1987 he was Assistant General Counsel for Corporate Matters. Mr. Weeks
graduated from Princeton University (B.S.E.E.) and The National Law Center of
George Washington University (J.D.).
Tony Coelho has been Chairman and Chief Executive Officer of Coelho
Associates, LLC, a financial consulting firm, since July 1995. He also has
been Chairman and Chief Executive Officer of ETC, the Washington, D.C.-based
education, training, and communications subsidiary of Tele-Communications,
Inc. since October 1995. From 1989 to July 1995 he had been a Managing
Director of Wertheim Schroder & Co. Incorporated, a New York-based
international investment banking and securities firm; from 1990 to 1995 he
also served as President and Chief Executive Officer of Wertheim Schroder
Investment Services, Inc. Mr. Coelho was appointed by President Clinton to
serve as Chairman of the President's Committee on Employment of People with
Disabilities in 1994 and to serve as a member of the Commission on the Roles
and Capabilities of the
53
<PAGE>
United States Intelligence Community in 1995. From 1979 to 1989, Mr. Coelho
was a member of the U.S. House of Representatives from California, and from
1986 to 1989, he served as House Majority Whip. Mr. Coelho has been a director
of ICF Kaiser International, Inc. since 1990. He also is a director of Circus
Circus Enterprises, Inc.; Crop Growers Corporation; Specialty Retail Group,
Inc.; Service Corporation International; Tanknology Environmental, Inc.; and
Tele-Communications, Inc. He is a director of the National Foundation for
Affordable Housing Solutions, the National Organization on Disability, the
National Rehabilitation Hospital and Very Special Arts, and is an Honorary
Lifetime Director of the Epilepsy Foundation of America. Mr. Coelho also
serves on Fleishman-Hillard, Inc.'s International Advisory Board.
Maynard H. Jackson has been Chairman of Jackson Securities Incorporated, an
investment banking firm, since 1994. Mr. Jackson returned to private business
in 1994 after completing his third term as mayor of Atlanta. He had served
three terms as mayor, from 1974 to 1982 and again from 1990 to 1994. From 1982
to 1990, Mr. Jackson was a managing partner in public finance with the law
firm of Chapman and Cutler; he also managed his own law firm from 1970 to
1974. Mr. Jackson is a Trustee of Morehouse College and a Trustee of FGIC
Public Trust. Mr. Jackson has been a director of ICF Kaiser International,
Inc. since September 1995. Mr. Jackson graduated from Morehouse College (B.A.)
and the School of Law at North Carolina Central University (J.D.).
Thomas C. Jorling has been Vice President, Environmental Affairs, of
International Paper Company since 1994. Mr. Jorling joined International Paper
Company in 1994 following a 28-year career that included serving for seven
years as the Commissioner of the New York State Department of Environmental
Conservation. Prior to that, Mr. Jorling was a professor of environmental
studies at Williams College and a visiting professor at the University of
California at Santa Cruz. In addition, Mr. Jorling served from 1977 to 1979 as
Assistant Administrator for Water and Hazardous Material at the U.S.
Environmental Protection Agency. Mr. Jorling has been a director of ICF Kaiser
International, Inc. since August 1995. Mr. Jorling graduated from the
University of Notre Dame (B.S.), Washington State University (M.S.), and
Boston College (LL.B.).
Frederic V. Malek has been Chairman of Thayer Capital Partners, a merchant
bank, since April 1993. In 1992, he was Campaign Manager, Bush-Quayle '92; he
also has been Co-chairman of the Board of Directors of CB Commercial Group
(formerly Coldwell Banker Commercial Group) since 1989. He was Vice Chairman
of Northwest Airlines from July 1990 to December 1991. He was President of
Northwest Airlines from October 1989 to July 1990. From September 1978 to
December 1988, Mr. Malek served as Executive Vice President of Marriott
Corporation and from January 1981 to May 1988 as President of Marriott's
Hotels and Resorts Division. Mr. Malek has been a director of ICF Kaiser
International, Inc. since 1989. He also serves as a director of American
Management Systems, Inc.; Automatic Data Processing, Inc.; Avis, Inc.; CB
Commercial Group; FPL Group, Inc.; Intrav, Inc.; Manor Care, Inc.; National
Education Corp.; Northwest Airlines; and Paine Webber Mutual Funds. Mr. Malek
graduated from the United States Military Academy (B.S.) and Harvard
University (M.B.A.).
Rebecca P. Mark has been Chairman and Chief Executive Officer of Enron
Development Corp., the international project development arm of Enron Corp.,
since 1991. She is responsible for Enron's project development activities
worldwide (excluding the U.S.) in power generation, pipelines, LNG, and liquid
fuels. Ms. Mark joined Enron Corp. in 1982 and was a member of Enron Power
Corp.'s executive management team from its establishment in 1986 to 1991.
Before joining Enron, Ms. Mark held executive positions with Continental
Resources Company and First City National Bank of Houston. Ms. Mark has been a
director of ICF Kaiser International, Inc. since 1993. Ms. Mark also is a
director of the Institute of the Americas. Ms. Mark graduated from Baylor
University (B.A. and M.I.M.) and Harvard University (M.B.A.).
Robert W. Page, Sr. retired as an Executive Vice President at McDermott
International, Inc., an energy services company, in 1993. Prior to joining
McDermott in 1990, Mr. Page served as Assistant Secretary of the Army for
Civil Works. He also served as Chairman of the Panama Canal Commission. From
1981 to 1987, Mr. Page worked for Kellogg Rust, Inc., of Houston, Texas, where
he held the positions of Chairman and Chief
54
<PAGE>
Executive Officer. From 1976 to 1981, Mr. Page was President and Chief
Executive Officer of Rust Engineering. Mr. Page has been a director of ICF
Kaiser International, Inc. since 1993. He holds a B.S. in architectural
engineering from Texas A & M University.
COMPENSATION OF OUTSIDE DIRECTORS
Directors who are not employees of the Company are paid $1,000 for
attendance at each meeting of the Board of Directors and $750 for attendance
at each meeting of a committee of the Board of Directors of which the director
is a member. In addition, each non-employee director receives an annual
retainer of $20,000, payable in advance in quarterly installments, and each is
reimbursed for his or her expenses incurred in connection with his or her
Board service. Directors of the Company who also are employees of the Company
are not compensated separately for their service as directors.
Under the ICF Kaiser International, Inc. Non-employee Directors Stock Option
Plan, each director of the Company who is not an employee of the Company
("Non-employee director") receives a five-year option to purchase 3,000 shares
of Common Stock on the day he or she commences his or her initial term of
service as a director. In addition, each Non-employee director elected at or
continuing in office following the Company's Annual Meeting of Shareholders
receives an option to purchase 3,000 shares of Common Stock on the date of the
meeting in each calendar year after the year in which the Non-employee
director received his or her initial option grant. The purchase price of each
share of Common Stock subject to an option granted under the plan is the fair
market value of the Common Stock on the date the option is granted. Each
option becomes fully exercisable at the close of business on the next business
day following the date on which the option was granted. Options are not
assignable or transferable other than by will or by the laws of descent and
distribution. Options are exercisable during an optionee's lifetime only by
the optionee or his or her guardian.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Non-employee directors of the Company who are voting members of the
Compensation Committee are Tony Coelho (Chairman), Thomas C. Jorling, and
Frederic V. Malek. Gian Andrea Botta also was a voting member of the Committee
until his resignation as a director upon the Company's repurchase of the
Series 2D Senior Preferred Stock on December 30, 1996. The full Board of
Directors has designated an employee director of the Company, James O. Edwards
(the CEO of the Company) as an ex-officio, non-voting member of the Committee.
SEC rules require that whenever there is insider or employee participation in
compensation decisions, certain disclosures must accompany the identification
of the participating insiders. The following paragraphs provide these required
disclosures with respect to Mr. Botta (as the representative of EXOR America,
Inc.) and Mr. Edwards (as an employee director). All transactions with Mr.
Botta and Mr. Edwards were on market terms, including then-current market
interest rates.
Gian Andrea Botta. Mr. Botta is the President of EXOR America, Inc., which
was the holder of the Company's Series 2D Senior Preferred Stock. The Company
repurchased the Series 2D Senior Preferred Stock on December 30, 1996. EXOR
America is an affiliate of the former holder of the Company's Series 2D
Warrants, which the Company also repurchased on December 30, 1996. Pursuant to
the terms of the Series 2D Senior Preferred Stock, EXOR America had the right
to designate a nominee for election to the Board of Directors. From March 1,
1993 until December 30, 1996, Mr. Botta was EXOR America's nominee to the
Board of Directors.
James O. Edwards. As part of his employment agreement which is described in
the "Executive Compensation--Agreements and Transactions with Executive
Officers Named in the Summary Compensation Table (Three of Whom also are
Directors)" of this Offering Memorandum, Mr. Edwards' then-outstanding
indebtedness to the Company was restructured effective December 31, 1994. Mr.
Edwards had been indebted to the Company under promissory notes dated January
14, 1991, September 22, 1991, and January 24, 1992, in the respective
principal amounts (and per annum interest rates) of $622,740 (at 9%), $50,000
(at 9%), and $150,000 (at 8%) (collectively, the "Predecessor Notes"). As of
December 31, 1994, the accrued interest on the
55
<PAGE>
Predecessor Notes totaled $205,326.27. All of these loans had been provided to
Mr. Edwards pursuant to his previous compensation agreement with the Company
in return for agreements restricting his ability to sell his stock, were
secured by a pledge of 130,665 shares of ICF Kaiser Common Stock (the "Pledged
Shares"), and were non-recourse to Mr. Edwards. Mr. Edwards signed an amended
and restated promissory note in the amount of $1,028,066.27 dated December 31,
1994, which is a continuation of the Predecessor Notes, bears interest at
6.34% per annum, is secured by the Pledged Shares, is non-recourse to Mr.
Edwards, and is due on December 31, 1997 (with accrued interest from December
31, 1994). The largest aggregate amount of Mr. Edwards' indebtedness to the
Company outstanding at any time since March 1, 1995 was $1,081,816. It is the
Company's intention to retire the debt when the value of the collateral
reaches the amount owed. Executive compensation paid to Mr. Edwards during the
ten-month fiscal period ended December 31, 1995 and fiscal years 1995 and 1994
is described in the "Executive Compensation" section of this Offering
Memorandum.
56
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the compensation received by the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company (the "Named Executive Officers") for the three fiscal periods ended
December 1995. Because of the Company's fiscal year-end change, the fiscal
period that ended December 31, 1995, is only a ten-month period. The table
shows the amounts received by each Named Executive Officer for all three
fiscal periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
-------------------------------- ------------------------------------
(A) (B)
--------- (C) (D) (E) (F) (G) (I)
NAME, PRINCIPAL BONUS OTHER ANNUAL RESTRICTED SECURITIES
POSITION, AND SALARY ($) COMPENSATION STOCK UNDERLYING ALL OTHER
FISCAL PERIOD ($) (1) ($) (2) AWARD(S) ($) OPTIONS/SARS (#) COMPENSATION
--------------- -------- -------- -------------- ------------ ----------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James O. Edwards,
Chairman and CEO(3)
Ten-month 1995......... $295,673 $152,500 (2) 0 0 $111,938(3)
Fiscal 1995............ $324,519 0 (2) 0 53,000 new options $113,166(3)
97,000 repriced options
Fiscal 1994............ $299,519 0 (2) 0 0 $123,596(3)
Stephen W. Kahane,
Executive Vice
President(4)
Ten-month 1995......... $219,808 0 (2) 0 0 $ 12,235(4)
Fiscal 1995............ $249,423 $ 60,000 (2) 0 66,666 new options $ 13,136(4)
33,334 repriced options
Fiscal 1994............ $220,000 0 (2) 0 0 $ 23,007(4)
Richard K. Nason,
Executive Vice
President and CFO(5)
Ten-month 1995......... $190,865 $ 25,000 (2) 0 0 $ 12,558(5)
Fiscal 1995............ $168,749 0 (2) 0 52,000 options $ 13,341(5)
Fiscal 1994............ $100,077 0 (2) 0 0 $ 8,932(5)
Alvin S. Rapp, Executive
Vice President(6)
Ten-month 1995......... $245,096 $ 50,000 (2) 0 0 $ 11,608(6)
Fiscal 1995............ $274,519 $150,000 $200,022(2)(7) 0 0 $278,702(6)
Fiscal 1994............ $ 62,500 $147,159 (2) $418,499 100,000 options $ 35,729(6)
Marc Tipermas, Executive
Vice President(7)
Ten-month 1995......... $248,942 $110,000 (2) 0 0 $ 11,788(7)
Fiscal 1995............ $274,423 $ 45,000 (2) 0 74,463 new options $ 12,878(7)
50,537 repriced options
Fiscal 1994............ $220,000 0 (2) 0 0 $ 22,735(7)
</TABLE>
- -------
NOTE: Because of the Company's fiscal year-end change, the fiscal period
ended December 31, 1995, is only a ten-month period. Fiscal 1995 is a twelve-
month period running from March 1, 1994, through February 28, 1995. Fiscal
1994 is a twelve-month period running from March 1, 1993, through February 28,
1994.
(1) The amounts shown in this column were paid for services rendered during
the ten months ended December 31, 1995, and include amounts paid during
1996 that were attributed to ten-month 1995 service.
(2) Any amounts shown in the "Other Annual Compensation" column do not include
any perquisites and other personal benefits because the aggregate amount
of such compensation for each of the Named Executive Officers did not
exceed the lesser of (i) $50,000 or (ii) 10% of the combined salary and
bonus for the Named Executive Officer for the stated fiscal period.
57
<PAGE>
(3) The amounts shown in column (i) of the table for Mr. Edwards comprise the
following:
<TABLE>
<C> <C> <S>
Ten-month 1995 $100,000 Special cash payment due under Mr. Edwards' previous
December 1990 compensation agreement
$ 9,552 Company contribution under the Company's Retirement
Plan for ten-month 1995 made in September 1996
$ 1,666 Company match under the Company's Section 401(k)
Plan
$ 720 Imputed income for Company-paid life insurance
Fiscal 1995 $100,000 Special cash payment under Mr. Edwards' December
1990 compensation agreement
$ 2,726 Company match under the Company's Section 401(k)
Plan
$ 9,576 Company contribution under the Company's Retirement
Plan for FY95 made in November 1995
$ 864 Imputed income on Company-paid life insurance
Fiscal 1994 $100,000 Special cash payment under Mr. Edwards' December
1990 compensation agreement
$ 16,563 Company contribution under the Company's Retirement
Plan for FY94 made in November 1995
$ 1,452 Company match under the Company's Section 401(k)
Plan
$ 4,717 Company 2% contribution under the Company's Employee
Stock Ownership Plan for FY94 made in November 1994
$ 864 Imputed income on Company-paid life insurance
(4) The amounts shown in column (i) of the table for Dr. Kahane comprise the
following:
Ten-month 1995 $ 2,248 Company match under the Company's Section 401(k)
Plan
$ 9,552 Company contribution under the Company's Retirement
Plan for ten-month 1995 made in September 1996
$ 435 Imputed income for Company-paid life insurance
Fiscal 1995 $ 3,254 Company match under the Company's Section 401(k)
Plan
$ 9,576 Company contribution under the Company's Retirement
Plan for FY95 made in November 1995
$ 306 Imputed income for Company-paid life insurance
Fiscal 1994 $ 16,563 Company contribution under the Company's Retirement
Plan for FY94 made in FY95
$ 1,421 Company match under the Company's Section 401(k)
Plan
$ 4,717 Company 2% contribution under the Company's Employee
Stock Ownership Plan for FY94 made in FY95
$ 306 Imputed income for Company-paid life insurance
(5) Mr. Nason became an executive officer of the Company in December 1994; he
became an employee of the Company in June 1993. The amounts shown in
column (i) of the table for Mr. Nason comprise the following:
Ten-month 1995 $ 614 Imputed income for Company-paid life insurance
$ 9,552 Company contribution under the Company's Retirement
Plan for ten-month 1995 made in September 1996
$ 2,392 Company match under the Company's Section 401(k)
Plan
Fiscal 1995 $ 3,121 Company match under the Company's Section 401(k)
Plan
$ 9,576 Company contribution under the Company's Retirement
Plan for FY95 made in November 1995.
$ 644 Imputed income for Company-paid life insurance
Fiscal 1994 $ 785 Company match under the Company's Section 401(k)
Plan
$ 355 Imputed income for Company-paid life insurance
premium
$ 5,773 Company contribution under the Company's Retirement
Plan for FY94 made in FY95
$ 2,019 Company 2% contribution under the Company's Employee
Stock Ownership Plan for FY94 made in FY95
(6) Mr. Rapp joined the Company in November 1993 (fiscal year 1994). The
amount shown in column (e) for fiscal year 1995 was an amount reimbursed
for the payment of taxes. The amount shown in column (f) for fiscal year
1994 is the value of 88,105 shares of Restricted Stock awarded to Mr. Rapp
under the Company's Stock Incentive Plan determined by multiplying the
number of shares by the $4.75 closing price per share of the Company's
Common Stock on the New York Stock Exchange on November 8, 1993, the date
of the grant. The restriction on these shares was lifted on November 9,
1994, when they vested; Mr. Rapp owns no other shares of Restricted Stock.
The amounts shown in column (i) of the table for Mr. Rapp comprise the
following:
Ten-month 1995 $ 1,778 Company match under the Company's Section 401(k)
Plan
$ 9,552 Company contribution under the Company's Retirement
Plan for ten-month 1995 made in September 1996
$ 278 Imputed income for Company-paid life insurance
Fiscal 1995 $ 2,353 Company match under the Company's Section 401(k)
Plan
$ 46,219 Reimbursed expenses associated with relocation from
California to Virginia
$219,155 Forgiveness of interest-free loans made to
facilitate the sale of Mr. Rapp's California
residence and his purchase of a Virginia residence
(includes imputed interest amounts)
$ 880 Reimbursed accounting expenses associated with tax
considerations for Mr. Rapp's employment arrangement
$ 9,576 Company contribution under Company's Retirement Plan
for FY95 made in November 1995
$ 519 Imputed income for Company-paid life insurance
Fiscal 1994 $ 462 Company match under the Company's Section 401(k)
Plan
$ 35,152 Reimbursed expenses associated with relocation from
California to Virginia
$ 115 Imputed income for Company-paid life insurance
</TABLE>
58
<PAGE>
(7) The amounts shown in column (i) of the table for Dr. Tipermas comprise the
following:
<TABLE>
<S> <C> <C>
Ten-month 1995 $ 2,236 Company match under the Company's Section 401(k) Plan
$ 9,552 Company contribution under the Company's Retirement Plan for ten-month 1995 made in September 1996
Fiscal 1995 $ 3,302 Company match under the Company's Section 401(k) Plan
$ 9,576 Company contribution under the Company's Retirement Plan for FY95 made in November 1995
Fiscal 1994 $16,563 Company contribution under the Company's Retirement Plan for FY94 made in FY95
$ 1,455 Company match under the Company's Section 401(k) Plan
$ 4,717 Company 2% contribution under the Company's Employee Stock Ownership Plan for FY94 made in FY95
</TABLE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR
VALUES
<TABLE>
<CAPTION>
(D)
(B) NUMBER OF SECURITIES (E)
SHARES (C) UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED VALUE OPTIONS/SARS IN-THE-MONEY
(A) ON EXERCISE REALIZED AT 12/31/95(#) OPTIONS/SARS AT 12/31/95
NAME (#) ($) EXERCISABLE/UNEXERCISABLE ($) EXERCISABLE/UNEXERCISABLE(*)
---- ----------- -------- ------------------------- --------------------------------
<S> <C> <C> <C> <C>
James O. Edwards........ 0 0 37,500/112,500 $65,250/$195,750
Stephen W. Kahane....... 0 0 50,000/50,000 $38,500/$38,500
Richard K. Nason........ 0 0 13,834/58,166 $8,898/$21,323
Alvin S. Rapp........... 0 0 40,000/60,000 (**)
Marc Tipermas........... 0 0 62,500/62,500 $48,125/$48,125
</TABLE>
- --------
(*) Calculated using the NYSE closing price of the Common Stock on December
29, 1995 ($4.25 per share) less the per share option exercise price
multiplied by the number of exercisable or unexercisable options, as the
case may be.
(**) Mr. Rapp's options are not in-the-money.
SENIOR EXECUTIVE OFFICERS SEVERANCE PLAN
In April 1994 the Compensation Committee of the Board of Directors approved
the adoption of the Company's Senior Executive Officers Severance Plan (the
"SEOSP"). In December 1994, the SEOSP was amended to clarify (a) that once an
officer becomes a participant in the SEOSP, he or she will continue to be
eligible for SEOSP benefits throughout his or her employment by the Company
and (b) that the SEOSP is intended to set a minimum severance benefit for the
participant. If a participant is entitled to a greater benefit under his or
her employment agreement with the Company, then such arrangement prevails over
the lower SEOSP benefit.
The eligible participants in the SEOSP are the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, the General Counsel, the Senior Vice President and Director of
Human Resources, and any Executive Vice President and other officers of rank
equivalent to Executive Vice President as designated by the Compensation
Committee. As of November 30, 1996, there were eight persons whose severance
payments are governed by the SEOSP.
A participant is eligible to receive severance payments if the Company
terminates his or her employment without "cause" or if the participant
terminates his or her employment for "good reason." "Cause" and "good reason"
are defined in the SEOSP. Severance benefits equal to three months of average
salary will be paid if the participant's length of employment is three years
or less; severance benefits equal to one month of average salary for each year
of service (up to a maximum of 18 months) will be paid if a participant's
length of employment is four or more years. Average salary is defined in the
SEOSP as the participant's average monthly gross salary excluding all bonus
for the nine months prior to employment termination. Severance benefits may be
paid under the SEOSP in two installments or, with the approval of the
Compensation Committee, in a lump sum. The SEOSP provides that severance pay
will not be considered compensation for purposes of the Retirement Plan or the
Section 401(k) Plan; severance pay will not increase Years of Service for
those Plans' purposes. No severance benefits have been paid under the Plan
since the SEOSP was adopted.
59
<PAGE>
AGREEMENTS AND TRANSACTIONS WITH NAMED EXECUTIVE OFFICERS (THREE OF WHOM ALSO
ARE DIRECTORS)
James O. Edwards. Effective December 31, 1994, the Company entered into a
three-year employment agreement with Mr. Edwards for his services as Chairman
and Chief Executive Officer of the Company. In addition to delineating Mr.
Edwards' areas of responsibility and reporting line, the agreement provides
for his salary; annual bonus compensation to be determined by the Compensation
Committee; severance payments as provided under the Company's Senior Executive
Officers Severance Plan; eligibility under the Company's employee benefit
plans; cancellation of 97,000 existing options (89,000 of which were vested)
to purchase the Company's Common Stock at exercise prices ranging from $9.51
to $16.23; the grant of 150,000 options (expiring on November 15, 1999, and
vesting in 37,500 increments over four years beginning May 15, 1995) at fair
market value on the date of grant ($2.51 on September 1, 1994); and a one-year
non-competition period following voluntary or "for cause" employment
termination. The Company's transactions with Mr. Edwards are described in the
"Compensation Committee Interlocks and Insider Participation" section of this
Offering Memorandum.
Stephen W. Kahane. Effective March 1, 1994, the Company entered into a
three-year employment agreement with Dr. Kahane for his services as an
Executive Vice President and as Group President of the Company's re-named
Federal Programs Group. In addition to delineating Dr. Kahane's areas of
responsibility and reporting line, the agreement provides for his annual
salary; annual bonus compensation to be determined by the Compensation
Committee of the Company's Board of Directors (in amounts specified in the
agreement and with minimum cash bonuses of $30,000 to be paid at the beginning
of each of fiscal years 1996 and 1997); severance payments as provided under
the Company's Senior Executive Officers Severance Plan; eligibility under the
Company's employee benefit plans; cancellation of 40,000 existing options to
purchase the Company's Common Stock at exercise prices ranging from $8.25 to
$9.51; the grant of 100,000 options (vesting in 25,000 increments over four
years and expiring on November 15, 1999) at fair market value on the date of
grant ($3.48 on April 4, 1994); and a one-year non-competition period
following voluntary or "for cause" employment termination.
Alvin S. Rapp. In November 1993, the Company entered into an employment
agreement with Mr. Rapp for his services as an Executive Vice President and as
Group President of the Company's re-named ICF Kaiser Engineers Group. In
addition to delineating Mr. Rapp's areas of responsibility and reporting line,
the agreement provides for his salary, bonuses, options, other employee
benefits, and interest-free loans to facilitate the sale of Mr. Rapp's
California residence and the purchase of a new residence near the Company's
Virginia headquarters. As of September 30, 1996, two of these loans had been
forgiven under the terms of the employment agreement because the proceeds from
the sale of Mr. Rapp's California residence were less than anticipated. The
third loan (dated January 20, 1994) has a balance of $300,000 as of September
30, 1996, is secured by Mr. Rapp's Virginia residence, and is due and payable
in full on the earliest to occur of (a) January 20, 1999, (b) termination of
Mr. Rapp's employment by the Company, (c) provision of reasonably satisfactory
substitute collateral, or (d) the occurrence of a defined event of default.
The largest aggregate amount of Mr. Rapp's indebtedness to the Company
outstanding at any time since March 1, 1994 was $648,546. As of November 8,
1996, Mr. Rapp is an employee, but no longer an executive officer, of the
Company.
Marc Tipermas. Effective March 1, 1994, the Company entered into a three-
year employment agreement with Dr. Tipermas for his services as Executive Vice
President and Director of Corporate Development of the Company. Dr. Tipermas
also is a director of the Company. In addition to delineating Dr. Tipermas'
areas of responsibility and reporting line, the agreement provides for his
salary; annual bonus compensation to be determined by the Compensation
Committee of the Company's Board of Directors (in amounts specified in the
agreement); severance payments as provided under the Company's Senior
Executive Officers Severance Plan; eligibility under the Company's employee
benefit plans; cancellation of 60,000 existing options to purchase the
Company's Common Stock at exercise prices ranging from $8.25 to $9.51; the
grant of 125,000 options (vesting in 31,250 increments over four years and
expiring on November 15, 1999) at fair market value on the date of grant
($3.48 on April 4, 1994); and a one-year non-competition period following
voluntary or "for cause" employment termination.
60
<PAGE>
AGREEMENTS AND TRANSACTIONS WITH OTHER EXECUTIVE OFFICERS
Michael K. Goldman. Effective February 28, 1994, the Company and Mr. Goldman
agreed to terminate Mr. Goldman's Amended Executive and Compensation
Agreements originally signed in December 1990. Effective March 1, 1994, the
Company and Mr. Goldman entered into an employment arrangement under which Mr.
Goldman (a) serves as an employee of the Company at a specified annual salary;
(b) received the $50,000 special cash payment provided for in his December
1990 Compensation Agreement; and (c) was designated, with certain specified
restrictions, as a participant in the Senior Executive Officers Severance
Plan. In addition, all then-unvested options previously granted to Mr. Goldman
vested as of March 1, 1994. The Company and Mr. Goldman also agreed to amend
the terms of Mr. Goldman's outstanding loan with the Company as follows: the
principal shall be due upon demand by the Company but no later than February
28, 1999; interest from May 16, 1994, shall accrue on the outstanding
principal at 6% per annum; and payment of interest will be deferred until such
time as the principal is due. No interest shall accrue or be payable on such
deferred interest. Mr. Goldman's loan is secured by 33,134 shares of the
Company's Common Stock and is non-recourse to Mr. Goldman. The Company and Mr.
Goldman agreed that if the value of the pledged stock is less than the then-
outstanding amount of principal and interest at the time of loan repayment
demand (or February 28, 1999, at the latest), then the Company will retire the
principal and interest by considering the pledged shares to have been sold
back to the Company (within the constraints set forth in the Company's debt
and equity instruments). The outstanding balance as of September 30, 1996, was
$191,647, plus accrued interest. The largest aggregate amount of Mr. Goldman's
indebtedness to the Company outstanding at any time since March 1, 1995 was
$191,647.
61
<PAGE>
SECURITY OWNERSHIP
<TABLE>
<CAPTION>
NAME AND ADDRESS OF 5% SHAREHOLDERS, BENEFICIAL PERCENT OF
DIRECTORS, AND EXECUTIVE OFFICERS OWNERSHIP(A) COMMON STOCK
------------------------------------ ------------ ------------
<S> <C> <C>
DIRECTORS
Tony Coelho........................................ 17,000 (b) *
James O. Edwards................................... 424,431 (c) 1.9%
Maynard H. Jackson................................. 6,000 (d) *
Thomas C. Jorling.................................. 6,000 (e) *
Frederic V. Malek.................................. 30,000 (f) *
Rebecca P. Mark.................................... 12,000 (g) *
Richard K. Nason................................... 53,459 (h) *
Robert W. Page, Sr................................. 12,000 (i) *
Marc Tipermas...................................... 260,262 (j) 1.2%
EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION
TABLE
James O. Edwards................................... 424,431 (c) 1.9%
Chairman and Chief Executive Officer
Stephen W. Kahane.................................. 139,447 (k) *
Executive Vice President
Richard K. Nason................................... 53,459 (h) *
Executive Vice President
Alvin S. Rapp...................................... 128,180 (l) *
Executive Vice President
Marc Tipermas...................................... 260,262 (j) 1.2%
Executive Vice President
All Directors and Executive Officers
as a Group (16 persons)............................. 1,195,814 (m) 5.2%
5% COMMON SHAREHOLDERS
ICF Kaiser International, Inc. Employee Stock 1,871,965 (n) 8.4%
Ownership Trust...................................
ICF Kaiser International, Inc. Retirement Plan..... 957,807 (o) 4.3%
State of Wisconsin Investment Board................ 2,055,000 (p) 9.2%
Cowen & Company.................................... 2,422,300 (q) 10.9%
</TABLE>
- --------
* = ownership of less than 1%
(a) Except as noted below, all information in the above table is as of
December 31, 1996. To calculate the voting percentage, it was assumed that
the individual or entity exercised all of his/her/its exercisable options,
but that no other individuals or entities exercised theirs. A person is
deemed to be a beneficial owner of the Company's stock if that person has
voting or investment power (or voting and investment powers) over any
shares of capital stock or has the right to acquire such shares within 60
days from December 30, 1996. With respect to the total number of shares
held by the Company's Employee Stock Ownership Trust (the "ESOP"), the
share information is current as of September 30, 1996; the unaudited
information with respect to the number of shares allocated to individuals'
accounts is current as of September 30, 1996. With respect to ownership of
shares which are held in the Company's Section 401(k) Plan but allocated
to individuals' accounts, the unaudited information is current as of
September 30, 1996. For shares shown in the following footnotes as being
held by the Company's Retirement Plan or in directed investment accounts
in the Company's Retirement Plan, the unaudited information is current as
of September 30, 1996.
(b) Mr. Coelho's share ownership includes 15,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
He also owns 2,000 other shares.
(c) Mr. Edwards' share ownership includes 2,909 shares allocated to his ESOP
account, 4,215 shares allocated to his Section 401(k) Plan account, 62,274
shares in his directed investment account under the Retirement Plan, and
75,000 shares that may be acquired within 60 days of December 31, 1996,
upon the exercise of stock options. He also beneficially owns 280,033
other shares. Mr. Edwards disclaims beneficial ownership of the 2,900
shares of Common Stock owned by his spouse's IRA which are not included in
the total shown for Mr. Edwards in the table. Mr. Edwards is a member of
the ESOP Plan Committee and the Retirement Plan Committee; as such, he has
shared investment power over 1,871,965 and 957,807 shares held by the ESOP
and Retirement Plan, respectively. He has shared voting power over 717,301
shares held by the Retirement Plan that are not held in directed
investment accounts. Mr. Edwards disclaims beneficial ownership of the
shares held by the ESOP and the Retirement Plan.
62
<PAGE>
(d) Mr. Jackson's share ownership includes 6,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
(e) Mr. Jorling's share ownership includes 6,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
(f) Mr. Malek's share ownership includes 15,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
He also owns 15,000 other shares.
(g) Ms. Mark's share ownership includes 12,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
(h) Mr. Nason's share ownership includes 212 shares allocated to his ESOP
account, 12,413 shares allocated to his Section 401(k) Plan account, and
38,834 shares that may be acquired within 60 days of December 31, 1996,
upon the exercise of stock options. He also owns 2,000 other shares.
(i) Mr. Page's share ownership includes 12,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
(j) Dr. Tipermas' share ownership includes 8,028 shares allocated to his ESOP
account, 12,734 shares in his directed investment account under the
Retirement Plan, and 62,500 shares that may be acquired within 60 days of
December 31, 1996, upon the exercise of stock options. He also owns
177,000 other shares.
(k) Dr. Kahane's share ownership includes 7,079 shares allocated to his ESOP
account, 5,946 shares in his directed investment account under the
Retirement Plan, and 50,000 shares that may be acquired within 60 days of
December 31, 1996, upon the exercise of stock options. He also owns 76,422
other shares.
(l) Mr. Rapp's share ownership includes 60,000 shares that may be acquired
within 60 days of December 31, 1996, upon the exercise of stock options.
He also owns 68,180 other shares.
(m) This total includes 39,968 shares allocated to ESOP accounts, 18,823
shares in Section 401(k) Plan accounts, 84,376 shares in directed
investment accounts under the Retirement Plan, and 341,556 shares that may
be acquired within 60 days of December 31, 1996, upon the exercise of
stock options. The 698,091 balance of the shares are owned directly.
(n) The ESOP Trustee is Vanguard Fiduciary Trust Company, 200 Vanguard Blvd.,
Malvern, PA 19355. All of the shares of Common Stock held by the ESOP are
allocated to individual ESOP participants' accounts and are voted by those
participants. The ESOP Plan Committee has investment power over all of the
shares of Common Stock held by the ESOP, the members of which are James O.
Edwards, Michael K. Goldman, and Marcy A. Romm. Each ESOP Plan Committee
member disclaims beneficial ownership of the shares of Common Stock held
by the ESOP. The individual shareholdings of Mr. Edwards are shown above
in footnote (c). Mr. Goldman beneficially owns 94,856 shares of Common
Stock, 11,334 of which are shares that may be acquired within 60 days of
December 31, 1996, upon the exercise of stock options. Ms. Romm
beneficially owns 25,983 shares of Common Stock, 5,813 of which are shares
that may be acquired within 60 days of December 31, 1996, upon the
exercise of stock options. The ESOP Plan Committee's address is 9300 Lee
Highway, Fairfax, VA 22031.
(o) The Retirement Plan Trustee is Vanguard Fiduciary Trust Company, 200
Vanguard Blvd., Malvern, PA 19355. The members of the Retirement Plan
Committee are James O. Edwards, Michael K. Goldman, and Marcy A. Romm; the
individual shareholdings of the members are shown in footnotes (c) and
(n). Mr. Goldman does not have any shares of Common Stock in his directed
investment account under the Retirement Plan; Ms. Romm has 1,973 shares in
her directed investment account. Of the 957,807 shares of Common Stock
held by the Retirement Plan, a total of 240,506 at September 30, 1996,
were held in directed investment accounts in which the participants have
voting and investment powers over their allocated shares. The Retirement
Plan Committee has investment and voting powers over the remaining shares
held by the Retirement Plan in the ICF Stock Fund. The Retirement Plan
Committee's address is 9300 Lee Highway, Fairfax, VA 22031.
(p) State of Wisconsin Investment Board, P.O. Box 7842, Madison, WI 53707. The
information with respect to the shares of Common Stock beneficially owned
by the State of Wisconsin Investment Board is based on a Report on
Schedule 13G (Amendment No. 3 dated February 13, 1996) which was filed
with the SEC and which reports share ownership information as of December
31, 1995.
(q) Cowen & Company, Financial Square, New York, New York, 10005-3597. The
information with respect to the shares of Common Stock beneficially owned
by Cowen & Company is based on a Report on Schedule 13G dated February 13,
1996, which was filed with the SEC reporting share ownership information
as of December 31, 1995.
63
<PAGE>
DESCRIPTION OF THE CREDIT FACILITY
Effective on May 7, 1996, the Company entered into a revolving credit and
letter of credit facility (the "Credit Facility"), with a syndicate of three
banks (the "Banks"). The agent for the Banks (the "Agent") is CoreStates Bank,
N.A. Capitalized terms and acronyms used but not defined in this description
of the Credit Facility have the meanings assigned to them in the agreement
governing the Credit Facility. Effective December 17, 1996, the Company and
the Banks signed an Amendment to the Credit Facility (the "Amendment") that
approved the Disposition of PCI, provided for a temporary Over Advance
Provision (as defined in the Amendment) and permitted the net proceeds from
the issuance of the Old Notes and borrowings under the Over Advance Provision
to be used to redeem the Series 2D Senior Preferred Stock. Material terms of
the Credit Facility and the Amendment are summarized below.
Borrowing Availability and Termination Date. Under the Credit Facility,
loans may be made to the Company and letters of credit may be issued at the
request of the Company for an aggregate amount of the lesser of (i) $40
million or (ii) the Borrowing Base (85% of Eligible Billed Accounts Receivable
and Certain Unbilled Accounts Receivable up to a maximum of $10 million). If
the Company sells assets other than in the ordinary course of business while
the Credit Facility is in effect, the borrowing availability will be reduced
by the net cash proceeds from each sale; however, there is no mandatory
reduction for the first approximately $5 million in aggregate net cash
proceeds. The Credit Facility terminates on June 30, 1998. Under the
Amendment, the Credit Facility has been increased to $45 million until March
31, 1997 and excludes the Disposition of PCI from the mandatory facility
reduction requirement following certain asset sales.
Interest. The Credit Facility and the Amendment contain LIBOR and Base Rate
options, each with applicable margins determined from time to time based on
the ratio of the Company's EBITDA to Consolidated Interest Expense, payable
monthly. Under the Credit Facility and the Amendment, EBITDA is defined, for
any period, as Consolidated Net Income plus the sum of (a) Consolidated
Interest Expense, (b) income tax expense, (c) depreciation expense, (d)
amortization expense, (e) extraordinary or unusual losses or other losses not
incurred in the ordinary course of business included in the calculation of net
income, (f) any non-cash charge against net income required to be recognized
in connection with the issuance of capital stock to employees (whether upon
lapse of vesting restrictions, exercise of employee options or otherwise) and
(g) any non-cash charge against net income required to be recognized in
connection with employee benefit plans less extraordinary or unusual gains or
other gains not incurred in the ordinary course of business included in the
calculation of net income, in each case to the extent such items are taken
into account in determining Consolidated Net Income.
Fee. The Company pays certain fees and commissions to the Banks, including a
commitment fee of 5/8% per annum on the unused portion of the Credit Facility.
Outstanding letters of credit bear a fee equal to the LIBOR applicable margin
in effect over the period, payable quarterly. The Company paid certain fees
and commissions for the Amendment.
Subsidiary Guarantee. Certain Subsidiaries of the Company including the four
Subsidiary Guarantors under the Indentures (the "Credit Facility Subsidiary
Guarantors") entered into a joint and several guarantee of the Company's
payment obligations under the Credit Facility. Each of the Credit Facility
Subsidiary Guarantors also agreed to a number of covenants in favor of the
Agent, including covenants (each with specified exceptions) (i) not to create,
incur or permit to exist any Lien on its Collateral, (ii) not to sell,
transfer, lease, or otherwise dispose of any of its Collateral, (iii) not to
amend, modify, terminate or waive any provision of any agreement giving rise
to an Account in a manner that could have a materially adverse effect upon the
value of the Account as Collateral, and (iv) not to grant discounts,
compromises, or extensions of Accounts except in the ordinary course of
business.
Collateral. To secure the payment and the punctual performance of all of the
Obligations under the Credit Facility, the Company and each of the Credit
Facility Subsidiary Guarantors granted to the Banks a general continuing lien
upon and security interest in all the Collateral. The Collateral is defined as
including all now-
64
<PAGE>
existing or hereafter acquired or arising (i) Accounts, (ii) General
Intangibles, Chattel Paper and Instruments derived from or related to any
Accounts, (iii) guarantees of any Accounts and all other security held for the
payment or satisfaction thereof, (iv) goods or services the sale or lease of
which gave rise to any Account, including returned goods, (v) the balance of
any deposit, agency or other account with any Bank, (vi) Discounted Treasuries
delivered by the Company or the Credit Facility Subsidiary Guarantors to the
Agent pursuant to the Credit Facility and (vii) books, records and other
property at any time evidencing or related to the foregoing, together with all
products and Proceeds (including insurance Proceeds) of any of the foregoing.
Under the Amendment, the Collateral also includes all intangible assets of the
Company. The Company has pledged all of the stock of certain of its domestic
subsidiaries and 65% of the stock of certain foreign subsidiaries as further
security under the Credit Facility.
Financial Covenants. The Credit Facility contains financial covenants that
require the Company to maintain certain financial ratios above or below
specified limits, including, but not limited to, those described below. The
Company has agreed that it will not permit the ratios of (i) EBITDA less
Capital Expenditures plus Consolidated Lease Expenses to Consolidated Fixed
Charges (the "Fixed Charge Coverage Ratio") and (ii) EBITDA to Consolidated
Interest Expense (the "Interest Coverage Ratio"), computed on a consolidated,
rolling four quarters basis to be less than those set forth below:
<TABLE>
<CAPTION>
PERIOD ENDING FIXED CHARGE COVERAGE RATIO INTEREST COVERAGE RATIO
------------- --------------------------- -----------------------
<S> <C> <C>
June 30, 1997........ 1.15:1.00 1.70:1.00
June 30, 1998........ 1.20:1.00 1.75:1.00
</TABLE>
Under the Amendment, the Fixed Charge Coverage Ratio from the date of the
Amendment to September 30, 1997 has been reduced to 1.05:1.00 and the Interest
Coverage Ratio has been reduced to 1.50:1.00 until September 30, 1997.
The Company also covenanted that it will not permit the ratio of Senior
Funded Indebtedness to EBITDA on the last day of any fiscal quarter, as of
such day for the immediately preceding four fiscal quarters, to be greater
than 2.5:1.0. Under the Amendment, the Company agreed that it will not permit
the ratio of Total Funded Indebtedness to EBITDA on the last day of any fiscal
quarter, as of such day for the immediately preceding four fiscal quarters, to
be less than those set forth below:
<TABLE>
<CAPTION>
TOTAL FUNDED INDEBTEDNESS
TEST PERIOD TO EBITDA
----------- -------------------------
<S> <C>
December 31, 1996 through March 30, 1997........ 6.25:1.00
March 31, 1997 through June 30, 1997............ 6.00:1.00
July 1, 1997 through September 30, 1997......... 5.50:1.00
October 1, 1997 through December 31, 1997....... 5.00:1.00
January 1, 1998 through June 30, 1998........... 4.75:1.00
</TABLE>
Finally, the Company covenanted that it will not permit the ratio of
Indebtedness for Borrowed Money to Total Capitalization on the last day of any
fiscal quarter ending in the periods set forth below to be greater than the
ratio set forth opposite such period:
<TABLE>
<CAPTION>
INDEBTEDNESS FOR BORROWED MONEY TO
TEST PERIOD TOTAL CAPITALIZATION RATIO
----------- ----------------------------------
<S> <C>
May 7, 1996 through December 31,
1996............................... 0.77:1.00
January 1, 1997 through June 30,
1998............................... 0.75:1.00
</TABLE>
Under the Amendment, the ratio of Indebtedness for Borrowed Money to Total
Capitalization is 0.86:1.00 from the date of the Amendment through the
termination of the Credit Facility.
Under the Credit Facility as amended by the Amendment, the Company and its
Subsidiaries agreed not to assume, incur, or create any Indebtedness for
Borrowed Money except for (i) the loans and letters of credit under
65
<PAGE>
the Credit Facility, (ii) Subordinated Debt, (iii) Non-Recourse Indebtedness,
(iv) the Notes and (v) certain other Indebtedness for Borrowed Money specified
in the Credit Facility.
Restrictive Covenants. The Credit Facility contains other customary negative
covenants and restrictions, including, without limitation, restrictions on (i)
the creation of liens, (ii) mergers, consolidations, and other extraordinary
transactions, (iii) guarantees, (iv) loans, and (v) transfers and sale of
assets. Investments in project related joint ventures are limited to $500,000
in any 12-month period, and investments in project finance ventures are
limited to an aggregate of $7.5 million. In addition, the Credit Facility
limits Acquisitions to an aggregate of $5 million (excluding the value of the
Company's Capital Stock used for Acquisitions), with any single Acquisition
not to exceed $2 million; the Amendment provides that except for one specified
investment, no acquisitions or investments can be made during the time the
Over Advance Provision is outstanding. The Credit Facility also contains
restrictions against the Company's making any redemptions, repurchases,
dividends or distributions of any kind in respect of its Capital Stock, other
than redemptions, repurchases, dividends or distributions payable in the form
of the Company's Capital Stock or with the net proceeds of the sale of the
Company's Capital Stock (other than to a Subsidiary or employee stock
ownership plan of the Company).
Events of Default. The Credit Facility provides for various events of
default, including, among others: (i) the failure to pay any principal or
interest on, or any other amount owing in respect of any loans under the
Credit Facility when due and payable, (ii) the breach of certain specified
covenants and restrictive covenants contained in the Credit Facility; (iii)
the failure by the Company or any Subsidiary to pay when due any Indebtedness
for Borrowed Money in excess of $1 million (other than that incurred pursuant
to the Credit Facility); (iv) the failure of the Company to observe or perform
any agreement, term, condition, or covenant relating to Indebtedness for
Borrowed Money in the aggregate that remains unpaid, undischarged, unbonded,
in excess of $1 million, where such failure gives the holders the right to
accelerate payment thereof; (v) the occurrence of certain events of insolvency
or bankruptcy (voluntary or involuntary); (vi) the entering of one or more
judgments or decrees against the Company or any Subsidiary involving an
aggregate liability in excess of $1 million in the aggregate that remains
unpaid, undischarged, unbonded, undischarged or unstayed for 30 days; and
(vii) the attachment of or levy or garnishment on assets of the Company or any
Subsidiary in an aggregate amount in excess of $1 million which have not been
dissolved or satisfied within 30 days.
Other Provisions. Affirmative covenants of the Company and its Subsidiaries
include the obligations (i) to provide the Banks with financial statements,
reports, and compliance certificates; (ii) to maintain their necessary and
useful properties in good working order and condition; (iii) to comply in all
material respects with ERISA provisions; (iv) to continue to engage in
businesses of the same general type as now conducted; (v) to maintain
insurance; and (vi) to promptly pay and discharge all of their debt, taxes,
and lawful claims for labor, materials, and supplies.
DESCRIPTION OF $125 MILLION OF 12% SENIOR SUBORDINATED NOTES DUE 2003
On January 11, 1994, the Company completed a sale of $125,000,000 principal
amount of 12% Senior Subordinated Notes due 2003. The terms of these Existing
Notes are identical in all material respects to the terms of the Old Notes and
the Exchange Notes offered pursuant to this Prospectus, except that (i) unlike
the Old Notes, the Existing Notes were registered under the Securities Act and
therefore do not have legends restricting their transfer, (ii) the Holders of
the Existing Notes have priority over the Holders of the Notes with respect to
the repurchase of the Existing Notes from the cash and Cash Equivalent portion
of the Net Proceeds of Asset Sales (capitalized terms have the meanings
assigned to them in the Existing Indenture relating to the Existing Notes),
(iii) certain definitions and covenants included in the Existing Indenture
refer to, or have the effect as of, the date of, or dates preceding the date
of, the Existing Indenture (January 11, 1994), whereas such definitions and
covenants in the Indenture relating to the Old Notes and the Exchange Notes
refer to, or have effect as of, the date of, or dates preceding the date of,
the Indenture (December 23, 1996) and (iv) the Existing Notes are subordinated
in right of payment to all existing and future senior indebtedness of the
Company.
66
<PAGE>
DESCRIPTION OF THE NOTES
The Exchange Notes will be issued pursuant to an Indenture dated as of
December 23, 1996 (the "Indenture") between the Company and The Bank of New
York, as trustee (the "Trustee"), which also serves as the Trustee under the
Existing Indenture. The terms of the Exchange Notes are the same in all
respects (including principal amount, interest rate, maturity, security and
ranking) as the terms of the Old Notes for which they may be exchanged
pursuant to the Exchange Offer, except that the Exchange Notes (i) are freely
transferable by holders thereof (except as provided below) and (ii) are not
entitled to certain registration rights and certain additional interest
provisions that are applicable to the Old Notes under the Registration Rights
Agreement. Unless the context otherwise requires, all references herein to the
"Notes" shall include the Old Notes and the Exchange Notes.
The following is a summary of the material terms and provisions of the
Notes. The terms of the Notes include those set forth in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Notes are subject to all such terms. The following summary does not purport to
be a complete description of the Notes and is subject to the detailed
provisions of, and qualified in its entirety by reference to, the Indenture
and the Notes. Capitalized terms that are used but not otherwise defined
herein have the meanings assigned to them in the Indenture. The Bank Credit
Agreement referred to in the Indenture and herein is the Credit Facility.
Certain definitions from the Indenture are set forth below under "--Certain
Definitions."
GENERAL
The Notes are senior unsecured obligations of the Company. The Notes bear
interest at 12% per annum, payable on June 30 and December 31 of each year, to
holders of record at the close of business on June 15 or December 15, as the
case may be, immediately preceding the relevant interest payment date. The
Notes will mature on December 31, 2003.
The Exchange Notes will bear interest from December 31, 1996. Holders of Old
Notes whose Old Notes are accepted for exchange will be deemed to have waived
the right to receive any payment in respect of interest on the Old Notes
accrued from December 31, 1996 to the date of the issuance of the Exchange
Notes.
The Exchange Notes will be issued only in registered form, without coupons,
in denominations of $1,000 and integral multiples thereof. Principal of,
premium, if any, and interest on the Old Notes is payable and on the Exchange
Notes will be payable, and the Notes may be presented for registration of
transfer or exchange, at the office of the Trustee. Payments may be paid by
check mailed to the registered addresses of the holders of record (the
"Holders") of the Notes. The Holders must surrender their Notes to the Paying
Agent to collect principal payments. The Company may require payment of a sum
sufficient to cover any transfer tax or other governmental charge payable in
connection with certain transfers or exchanges of the Notes. Initially, the
Trustee under the Existing Indenture will be the Paying Agent and the
Registrar under the Indenture. The Company or any of its Subsidiaries
subsequently may act as the Paying Agent and the Registrar, and the Company
may change any Paying Agent and any Registrar without prior notice to the
Holders.
INTEREST RATE INCREASE
The interest rate on the Old Notes is increased and on the Exchange Notes
will be increased by one percent (from 12% to 13%) until the Company achieves
and maintains $36 million of earnings after deducting minority interests and
before interest, taxes, depreciation, and amortization calculated in
accordance with generally accepted accounting principles ("Earnings"). The
Company will measure its Earnings for trailing twelve month periods, each
period to end on the last day of a fiscal quarter and to extend no further
than March 31, 1998 (each a "Quarterly Measurement Period"). If, prior to
March 31, 1998, the Company's Earnings equal or exceed $36 million for two
consecutive Quarterly Measurement Periods, then the interest rate will revert
to 12%. However, if the Company's Earnings do not equal or exceed $36 million
for any subsequent Quarterly Measurement Period, up to and including the
Quarterly Measurement Period ending March 31, 1998, the interest rate will
67
<PAGE>
increase to 13% until the Company's Earnings again equal or exceed $36 million
for one fiscal quarter on a trailing twelve month basis. The Company's
Earnings for the trailing twelve month period ended September 30, 1996, were
approximately $31.3 million.
RANKING
The Old Notes are and the Exchange Notes will be senior unsecured
obligations of the Company, rank senior to all subordinated indebtedness of
the Company and rank pari passu in right of payment with all existing and
future senior indebtedness of the Company, including indebtedness under the
Credit Facility.
SUBSIDIARY GUARANTEES
Four wholly owned subsidiaries of the Company (the "Subsidiary Guarantors")
have unconditionally guaranteed the payment of the principal, premium, if any,
and interest on the Notes. The Subsidiary Guarantors are Cygna Consulting
Engineers and Project Management, Inc., ICF Kaiser Government Programs, Inc.,
PCI Operating Company, Inc. and Systems Applications International, Inc. Cygna
Consulting Engineers and Project Management, Inc. is incorporated under the
laws of the State of California, and the other Subsidiary Guarantors are
incorporated under the laws of the State of Delaware. All four Subsidiary
Guarantors are Subsidiary Guarantors under the Existing Indenture and the Bank
Credit Agreement.
OPTIONAL REDEMPTION OF THE NOTES
The Notes may not be redeemed prior to December 31, 1998, but will be
redeemable at the option of the Company, in whole or in part, at any time on
or after December 31, 1998, at the following redemption prices (expressed as
percentages of principal amount), together with accrued and unpaid interest,
if any, thereon to the redemption date, if redeemed during the 12-month period
beginning December 31:
<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.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will offer (a
"Change of Control Offer") to purchase all outstanding Notes at a purchase
price equal to 101% of the aggregate principal amount of the Notes, plus
accrued and unpaid interest, if any, to the date of purchase.
Within 30 days after any Change of Control, the Company, or the Trustee at
the Company's request, will mail or cause to be mailed to all Holders on the
date of the Change of Control a notice stating: (i) that a Change of Control
has occurred and that the Holders have the right to require the Company to
purchase any or all of the outstanding Notes at a purchase price equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if any, to
the date of purchase; (ii) the circumstances and relevant facts regarding such
Change of Control; (iii) the purchase date; and (iv) the instructions that
Holders must follow in order to have their Notes purchased. Any Change of
Control Offer will be conducted in compliance with applicable tender offer
rules,
68
<PAGE>
including Section 14(e) of the Securities Exchange Act of 1934, as amended,
and Rule 14e-1 thereunder. The Change of Control purchase feature of the Notes
in certain circumstances may discourage a sale or takeover of the Company or
make such a sale or takeover more difficult.
Change of Control is defined to include the sale, lease, conveyance, or
other disposition of all or "substantially all" of the Company's assets.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of Notes to require
the Company to repurchase such Notes as a result of a transfer or lease of the
Company's assets to another person may be uncertain. There can be no assurance
that, at the time of a Change of Control, the Company will have sufficient
cash to repay all amounts due under the Existing Notes and the Notes.
CERTAIN COVENANTS
Limitations on Additional Indebtedness. The Indenture provides that (i) the
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, extend the maturity
of or otherwise become liable with respect to (collectively, "incur"), any
Indebtedness (including without limitation Acquired Indebtedness), other than
(a) Junior Subordinated Indebtedness incurred by the Company in compliance
with the provisions of the immediately following sentence or (b) Indebtedness
between the Company and its Wholly Owned Restricted Subsidiaries (provided
that such Indebtedness of the Company to any Wholly Owned Restricted
Subsidiary is expressly subordinated in right of payment to the Notes) or
among such Wholly Owned Restricted Subsidiaries (provided, however, that any
subsequent issue or transfer of any Capital Stock that results in any such
Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned
Restricted Subsidiary) shall be deemed, in each case, to constitute the
incurrence of such Indebtedness by the Company) and (ii) the Company will not
permit any of its Restricted Subsidiaries to issue (except to the Company or
any of its Wholly Owned Restricted Subsidiaries) any Capital Stock having a
preference in liquidation or with respect to the payment of dividends, unless,
after giving effect thereto, the Company's Consolidated Fixed Charge Coverage
Ratio on the date thereof would be at least:
(1) 2.25 to 1, if such date is on or prior to February 28, 1998; and
(2) 2.50 to 1, if such date is after February 28, 1998,
in each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness or the issuance of such Capital Stock, as the case may
be, and the application of the net proceeds therefrom, had occurred at the
beginning of the four-quarter period used to calculate the Company's
Consolidated Fixed Charge Coverage Ratio. In addition, after the date hereof
the Company will not directly or indirectly incur any Junior Subordinated
Indebtedness unless, after giving effect thereto, the Company's Consolidated
Fixed Charge Coverage Ratio on the date thereof would be at least 1.50 to 1,
in each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness, and the application of the net proceeds therefrom,
had occurred at the beginning of the four-quarter period used to calculate the
Company's Consolidated Fixed Charge Coverage Ratio.
Notwithstanding the immediately preceding paragraph, the Company and its
Restricted Subsidiaries may: (i) incur Indebtedness under the Bank Credit
Agreement in an amount not to exceed $60,000,000; (ii) incur Indebtedness not
otherwise permitted by any other provision hereof, so long as the aggregate
principal amount of Indebtedness incurred under this clause (ii) does not
exceed 7.5% of the Consolidated Tangible Assets of the Company; and (iii)
incur Refinancing Indebtedness. In addition, notwithstanding the provisions of
Section 5.04(a): (A) Subsidiaries of the Company that are not Wholly Owned
Restricted Subsidiaries may incur Indebtedness to the Company of any of its
Wholly Owned Restricted Subsidiaries in the amounts and subject to the
restrictions in Section 5.05(iii) and (B) Single Purpose Subsidiaries of the
Company may incur Non-Recourse Indebtedness to the extent permitted by Section
5.05(iv).
69
<PAGE>
Notwithstanding the two preceding paragraphs, the Company may not incur any
Indebtedness if such Indebtedness is subordinated or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Junior
Subordinated Indebtedness. In addition, the Company may not incur any secured
Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with such secured Indebtedness for so long as such secured Indebtedness is
secured by a Lien.
Limitations on Subsidiary Debt and Preferred Stock. The Indenture further
provides that the Company will not permit any of its Restricted Subsidiaries,
directly or indirectly, to create, incur, assume, guarantee, extend the
maturity of or otherwise become liable with respect to (collectively,
"incur"), any Indebtedness (which, with respect to any Restricted Subsidiary,
includes without limitation preferred stock of such Restricted Subsidiary)
except: (i) guarantees by any Restricted Subsidiary of the payment of the
principal of, premium, if any, and interest on the Indebtedness incurred
pursuant to the Bank Credit Agreement and in compliance with the provisions of
Section 5.11; (ii) Indebtedness issued to and held by the Company or a Wholly
Owned Restricted Subsidiary of the Company (provided, however, that any
subsequent issue or transfer of any Capital Stock that results in any such
Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or any transfer of such Indebtedness (other than to a Wholly Owned
Restricted Subsidiary) shall be deemed, in each case, to constitute the
incurrence of such Indebtedness by such Restricted Subsidiary); (iii)
Indebtedness to the Company or any of its Wholly Owned Restricted Subsidiaries
incurred by Subsidiaries of the Company that are not Wholly Owned Restricted
Subsidiaries that are engaged in Permitted Businesses in an aggregate amount
(together with all Designated Investments made in Subsidiaries that are not
Wholly Owned Restricted Subsidiaries in compliance with the provisions of
Section 5.06(b)(E)) not to exceed 5% of Consolidated Tangible Assets; and (iv)
Non-Recourse Indebtedness incurred by a Single Purpose Subsidiary.
Limitations on Restricted Payments. The Indenture provides that the Company
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, make any Restricted Payment if at the time of such Restricted
Payment:
(i) a Default or Event of Default shall have occurred and be continuing
or shall occur as a consequence thereof;
(ii) the Company would be unable to incur an additional $1.00 of Senior
Indebtedness under the covenant described in the first sentence of the
first paragraph under "Limitations on Additional Indebtedness;" or
(iii) the amount of such Restricted Payment, when added to the aggregate
amount of all Restricted Payments (other than those made pursuant to the
provisions of clause (A), (C), (D), (E) or (G) of the immediately following
paragraph) made after the date of this Indenture exceeds the sum of: (a)
50% of the Company's Consolidated Net Income accrued during the period from
September 30, 1996 to the end of the Company's most recent fiscal quarter
for which financial results have been reported at the time of such
Restricted Payment (or, if such aggregate Consolidated Net Income shall be
a deficit, minus 100% of such aggregate deficit); plus (b) the aggregate
amount of Net Reductions in Investments attributable to Designated
Investments made by the Company or any Subsidiary subsequent to the date of
this Indenture; provided, however, that (1) the Net Reductions in
Investments attributable to any Designated Investment for purposes of this
calculation shall not exceed the amount of such Designated Investment, (2)
to the extent that cash or Cash Equivalents included in any Net Reductions
in Investments pursuant to the definition thereof have been or will be
included in the computation of Consolidated Net Income for purposes of
determining the ability of the Company or any of its Restricted
Subsidiaries to make Restricted Payments under clause (iii)(a) of this
paragraph, such cash or Cash Equivalents shall not also be included in
computing Net Reductions in Investments for purposes of this clause
(iii)(b) and (3) the Company will not be permitted to make any Restricted
Payment described in clause (i) or (ii) of the definition of Restricted
Payment from any Net Reductions in Investments.
70
<PAGE>
Notwithstanding the foregoing, the provisions of clauses (ii) and (iii) of
the immediately preceding paragraph will not prevent:
(A) the Company or any Wholly Owned Restricted Subsidiary from making
Investments in Subsidiaries, in an aggregate amount not to exceed
$4,000,000, pursuant to contractual obligations in existence on the date of
the Indenture or directly related to projects in existence on the date of
the Indenture;
(B) the Company from paying any dividend within 60 days after the date
of its declaration if such dividend could have been paid on the date of its
declaration without violation of this covenant;
(C) the Company from purchasing or redeeming and retiring any shares of
Capital Stock of the Company, and paying accrued and unpaid dividends on
such shares at the time of such repurchase or redemption, in exchange for,
or out of the net proceeds of a substantially concurrent sale (other than
to a Subsidiary of the Company or an employee stock ownership plan) of
shares of Qualified Capital Stock of the Company;
(D) the Company or any Subsidiary from making (1) Investments pursuant to
the provisions of employee benefit plans of the Company or any of its
Subsidiaries in an aggregate amount not to exceed $500,000 in any fiscal
year, or (2) making loans to officers of the Company in connection with any
relocation of residence, approved by a majority of the independent members
of the Board of Directors of the Company, provided that the aggregate
amount of Investments and loans under this clause (D) shall not exceed $1
million in any fiscal year;
(E) the Company or any Wholly Owned Restricted Subsidiary from making
Designated Investments (1) in Subsidiaries that are not Wholly Owned
Restricted Subsidiaries in an aggregate amount (together with Indebtedness
incurred by or on behalf of Subsidiaries that are not Wholly Owned
Restricted Subsidiaries in compliance with the provisions of clause (iii)
of the covenant described under "Limitations on Subsidiary Debt and
Preferred Stock) not to exceed 5% of Consolidated Tangible Assets or (2) in
Joint Ventures in an aggregate amount not to exceed 5% of Consolidated
Tangible Assets, provided that: (x) the Person in whom the Investment is
made is engaged only in Permitted Businesses; (y) the Company, directly or
through Wholly Owned Restricted Subsidiaries of the Company, controls,
under an operating and management agreement or otherwise, the day to day
management and operation of such Person or otherwise has the right to
exercise significant influence over the management and operation of such
Person in all material respects (including without limitation the right to
control or veto any material act or decision); and (z) after giving effect
to such Investment, the aggregate amount of Indebtedness and Investments
made by the Company and its Subsidiaries in such Person does not exceed $5
million;
(F) the Company or any Wholly Owned Restricted Subsidiary from making
Designated Investments in Subsidiaries that are not Wholly Owned Restricted
Subsidiaries or in Joint Ventures; provided that such Designated
Investments are made solely from (1) the net proceeds of a substantially
concurrent sale (other than to a Subsidiary of the Company or an employee
stock ownership plan) of shares of Qualified Capital Stock of the Company,
(2) 50% of the Company's Consolidated Net Income accrued during the period
from September 30, 1996 to the end of the Company's most recent fiscal
quarter for which financial results have been reported at the time of such
Restricted Payment, or (3) the aggregate amount of Net Reductions in
Investments (not to exceed the aggregate amount of such Designated
Investments) made by the Company or any Subsidiary subsequent to the date
of the Indenture;
(G) the Company from redeeming for cash all (but not less than all) of
the outstanding shares of the Company's Series 2D Senior Preferred Stock;
provided, however, that such redemption shall not be at a price in excess
of the redemption price set forth in Section 17.01 of the Company's Amended
and Restated Certificate of Incorporation in effect as of January 11, 1994;
and provided, further, that prior to January 13, 1997, the Company shall
not redeem any of the outstanding shares of the Company's Series 2D Senior
Preferred Stock until the Company delivers to the Trustee an Officers'
Certificate certifying that the Company's earnings before interest and
taxes for the most recent twelve (12) month period calculated in accordance
with generally accepted accounting principles equaled or exceeded $27
million. Nothing contained in this further proviso shall affect the
Company's right to redeem the Series 2D Senior Preferred Stock no later
than January 13, 1997; or
71
<PAGE>
(H) the Company from (1) making all regular quarterly dividends, each
such quarterly dividend payment not to exceed $487,500 in the aggregate or
$2,437.50 per share, on the outstanding shares of the Company's Series 2D
Senior Preferred Stock; and (2) making all payments of any dividends of up
to 9.75% on the aggregate unpaid amount of any regular quarterly dividend
on the outstanding shares of the Company's Series 2D Senior Preferred Stock
from the date such regular quarterly dividend should have been paid to the
date of the payment of such dividend; in consideration thereof, and except
as provided below, the Company increased the Interest payable on the Notes
by one percent (1%) (the "Additional Interest") from the date of the
Indenture, such Additional Interest payable as provided for in the Notes.
The Company files its financial results with the Securities and Exchange
Commission on quarterly and annual reports, and these reports include the
Company's earnings after deducting minority interests and before interest,
taxes, depreciation, and amortization calculated in accordance with
generally accepted accounting principles ("Earnings"). The Company will
measure its Earnings for trailing twelve month periods, each period to end
on the last day of a fiscal quarter and extend no further than March 31,
1998 (each a "Quarterly Measurement Period"). If the Company's Earnings
equal or exceed $36 million for two consecutive Quarterly Measurement
Periods, then the Company is relieved of its obligation to pay any future
Additional Interest. However, if the Company's Earnings do not equal or
exceed $36 million for any subsequent Quarterly Measurement Period, up to
and including the Quarterly Measurement Period ending March 31, 1998, the
Company is obligated to commence paying Additional Interest until the
Company's Earnings again equal or exceed $36 million on a trailing twelve
month basis calculated quarterly.
Limitations on Restrictions on Distributions from Subsidiaries. The
Indenture provides that the Company will not, and will not permit any of its
Restricted Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual Payment Restriction with respect to any of its
Restricted Subsidiaries, except for (i) Payment Restrictions covering not more
than $1,000,000 in the aggregate of retained earnings of ICF Kaiser Servicios
Ambientales, S.A. de C.V., (ii) any such Payment Restriction contained in
Existing Indebtedness or existing contracts to which the Company or any of its
Restricted Subsidiaries are parties, (iii) any such Payment Restriction under
any agreement evidencing any Acquired Indebtedness that was permitted to be
incurred pursuant to the provisions of this Indenture, provided that such
Payment Restriction only applies to assets that were subject to such
restrictions and encumbrances prior to the acquisition of such assets by the
Company or its Restricted Subsidiaries and (iv) any such Payment Restriction
arising in connection with Refinancing Indebtedness; provided that any such
Payment Restrictions that arise under such Refinancing Indebtedness are not,
taken as a whole, more restrictive than those under the agreement creating or
evidencing the Indebtedness being refunded or refinanced.
Limitations on Transactions with Affiliates. The Indenture provides that the
Company will not, and will not permit any of its Restricted Subsidiaries to,
make any loan, advance, guarantee or capital contribution to or for the
benefit of, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to or for the benefit of, or make any Investment in, or
purchase or lease any property or assets from, or enter into or amend any
contract, agreement or understanding with or for the benefit of, any Affiliate
of the Company or any of its Subsidiaries (each an "Affiliate Transaction"),
other than Affiliate Transactions in the ordinary course of business and
consistent with past practice that are fair to the Company of such Restricted
Subsidiary, as the case may be, and are on terms at least as favorable as
would have been obtainable at such time from an unaffiliated party, unless the
Board of Directors of the Company or such Restricted Subsidiary, as the case
may be, pursuant to a Board Resolution reasonably and in good faith determines
that such Affiliate Transaction is fair to the Company or such Restricted
Subsidiary, as the case may be, and is on terms at least as favorable as would
have been obtainable at such time from an unaffiliated party. In addition, the
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any Affiliate Transaction or series of Affiliate Transactions
involving or having a value of more than (i) $1 million unless a majority of
the members of the Board of Directors of the Company who are not affiliated
with any other party to such Affiliate Transaction reasonably and in good
faith shall have determined that such Affiliate Transaction or series of
Affiliate Transactions is fair to the Company or such Restricted Subsidiary,
as the case may be, and is on terms at least as favorable as would have been
obtainable at such time from an unaffiliated party and (ii) $5 million unless
the Company or such
72
<PAGE>
Restricted Subsidiary, as the case may be, has received an opinion from an
Independent Financial Advisor to the effect that the financial terms of such
Affiliate Transaction are fair to the Company or such Restricted Subsidiary,
as the case may be, from a financial point of view.
The provisions of the foregoing paragraph shall not apply to: (i)
transactions exclusively between or among the Company and any of its Wholly
Owned Restricted Subsidiaries or exclusively between or among any of the
Company's Wholly Owned Restricted Subsidiaries, provided that such
transactions are not otherwise prohibited by the Indenture; (ii) arms-length
transactions between the Company or any of its Wholly Owned Restricted
Subsidiaries and the other owners of any Subsidiary or Joint Venture described
in the last sentence of the definition of Affiliate; and (iii) reasonable
compensation, indemnification and other benefits paid or made available to
officers, directors and employees of the Company or any Subsidiary for
services rendered in such Person's capacity as an officer, director or
employee.
Limitations on Asset Sales. The Indenture provides that the Company will
not, and will not permit any of its Restricted Subsidiaries to, consummate any
Asset Sale unless: (i) the Company or its Restricted Subsidiaries receive
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Capital Stock included in such Asset Sale; (ii) the
aggregate fair market value of the consideration from such Asset Sale (other
than consideration in the form of assumption of Indebtedness of the Company or
one or more of its Restricted Subsidiaries from which the Company or such
Restricted Subsidiaries, as the case may be, are released) that is not in the
form of cash or Cash Equivalents shall not, when aggregated with the fair
market value of all other non-cash or non-Cash Equivalent consideration
received by the Company and its Restricted Subsidiaries from all previous
Asset Sales since the date of this Indenture that have not yet been converted
into cash or Cash Equivalents, exceed 5% of Consolidated Tangible Assets of
the Company at the time of such Asset Sale; and (iii) if the aggregate fair
market value of the assets or Capital Stock to be sold in such Asset Sale
exceeds $3 million such Asset Sale has been approved by the Company's Board of
Directors.
Within six months after consummation of any such Asset Sale (the Business
Day closest to the end of such six-month period is referred to as the "Asset
Sale Offer Date"), the Company shall, or shall cause the applicable Restricted
Subsidiary to: (i) reinvest the cash and Cash Equivalent portion of the Net
Proceeds of such Asset Sale in a manner that would constitute a Related
Business Investment; (ii) apply or cause to be applied the cash and Cash
Equivalent portion of the Net Proceeds of such Asset Sale to repay outstanding
Senior Indebtedness of the Company or any Restricted Subsidiary, provided,
however, that any such repayment of Indebtedness under any revolving credit
facility or similar agreement shall result in a permanent reduction in the
lending commitment relating thereto in an amount equal to the principal amount
so repaid; or (iii) apply or cause to be applied the cash and Cash Equivalent
portion of the Net Proceeds of such Asset Sale that is neither reinvested as
provided in clause (i) nor applied to the repayment of Senior Indebtedness as
provided in clause (ii), (x) first to the purchase of Existing Notes tendered
to the Company at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
purchase, pursuant to an offer to purchase made by the Company as set forth in
Article 3 and Section 5.09 of the Existing Indenture and the Indenture (an
"Asset Sale Offer") and (y) second to the purchase of the Notes tendered to
the Company at a purchase price equal to 100% of the principal thereof, plus
accrued and unpaid interest, if any, thereon to the date of purchase, pursuant
to an Asset Sale Offer, provided, however, that the Company may defer the
Asset Sale Offer for the Existing Notes until the amount subject thereto would
be at least $5 million, and provided, further, that the Company may defer the
Asset Sale Offer for the Notes until remaining amount subject thereto would be
at least $5 million.
Notwithstanding the foregoing provisions: (i) to the extent that any or all
of the Net Proceeds of any Foreign Asset Sale are prohibited or delayed by
applicable local law from being repatriated to the United States, the portion
of such Net Proceeds so affected will not be required to be applied in the
manner set forth in this covenant but may be retained by the applicable
Foreign Subsidiary so long, but only so long, as the applicable local law will
not permit repatriation to the United States (the Company hereby agreeing to
cause the applicable Foreign Subsidiary promptly to take all actions required
by the applicable local law to permit such repatriation) and, once such
repatriation of any such affected Net Proceeds is permitted under the
applicable local law, such
73
<PAGE>
repatriation will be immediately effected and such repatriated Net Proceeds
will be applied in a manner set forth in this covenant; and (ii) to the extent
that the Board of Directors has determined in good faith that repatriation of
any or all of the Net Proceeds of any Foreign Asset Sale would have a material
adverse tax consequence, the Net Proceeds so affected may be retained by the
applicable Foreign Subsidiary for so long as such material adverse tax
consequence would continue.
Each Asset Sale Offer: (i) will be mailed to the record Holders of the Notes
as shown on the register of Holders of Notes, with a copy to the Trustee; (ii)
will specify the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed and not later than 240
days after the date of the Asset Sale giving rise to such Asset Sale Offer);
and (iii) otherwise will comply with the procedures set forth in the
Indenture. Upon receiving notice of the Asset Sale Offer, Holders of Notes may
elect to tender their Notes in whole or in part in integral multiples of
$1,000 in exchange for cash. To the extent Holders properly tender Notes in an
amount exceeding the amount of Net Proceeds used to make the Asset Sale Offer,
Notes of tendering Holders will be repurchased on a pro rata basis (based on
amounts tendered).
The Company will comply with the requirements of Section 14(e) under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to any Asset Sale Offer.
Restrictions on Sale of Stock of Subsidiaries. The Indenture provides that
the Company may not sell or otherwise dispose of any of the Capital Stock of
any Restricted Subsidiary of the Company unless: (i) (a) (x) the Company shall
retain ownership of more than 50% of the Common Equity of such Restricted
Subsidiary or (y) all of the Capital Stock of such Restricted Subsidiary shall
be sold or otherwise disposed of, and (b) the Net Proceeds from any such sale
or disposition are applied in a manner consistent with the provisions
described under "Limitations on Asset Sales"; or (ii) the Company elects to
treat the amount of its remaining investment in any such Restricted Subsidiary
that has become a Joint Venture as a result of such sale or other disposition
as an Investment in such Joint Venture subject to the provisions described
under "Limitations on Restricted Payments."
Limitations on Mergers and Certain Other Transactions. The Indenture
provides that the Company, in a single transaction or a series of related
transactions, will not (i) consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or
assign any of its obligations under the Notes or the Indenture, to any Person
or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person
formed by or surviving such consolidation or merger (if other than the
Company) or to which such sale, lease, conveyance or other disposition or
assignment shall be made (or, in the case of a Plan of Liquidation, one Person
to which assets are transferred) (collectively, the "Successor"), is a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia, and the Successor assumes by
supplemental indenture in a form satisfactory to the Trustee all of the
obligations of the Company under the Notes and the Indenture; (b) immediately
prior to and immediately after giving effect to such transaction and the
assumption of the obligations as set forth in clause (a) above and the
incurrence of any Indebtedness to be incurred in connection therewith, no
Default or Event of Default shall have occurred and be continuing; and (c)
immediately after and giving effect to such transaction and the assumption of
the obligations as set forth in clause (a) above and the incurrence of any
Indebtedness to be incurred in connection therewith, and the use of any net
proceeds therefrom on a pro forma basis, (1) the Consolidated Tangible Net
Worth of the Company or the Successor, as the case may be, would be at least
equal to the Consolidated Tangible Net Worth of the Company immediately prior
to such transaction and (2) the Company or the Successor, as the case may be,
could incur at least $1.00 of additional Senior Indebtedness under the
covenant described under "Limitations on Additional Indebtedness."
In addition, the Indenture will provide that the Company will not permit any
Single Purpose Subsidiary that has outstanding Indebtedness to consolidate or
merge with any other Person other than a Person the activities of which are
limited to ownership of a portion of the same project in which the reference
Single Purpose Subsidiary owns an interest.
74
<PAGE>
The foregoing provisions of the Indenture will not prohibit a transaction
the sole purpose of which (as determined in good faith by the Board of
Directors and evidenced by a Board Resolution) is to change the state of
incorporation of the Company or a Single Purpose Subsidiary, as the case may
be, and such transaction does not have as one of its purposes the evasion of
the limitations described above.
Limitations on Guarantees. The Indenture provides that the Company will not
permit any of its Restricted Subsidiaries to guarantee any Indebtedness (other
than (i) the Guarantors and (ii) guarantees delivered pursuant to the Bank
Credit Agreement by Subsidiaries of the Company who have delivered similar
guarantees prior to the date of the Indenture) unless the Company causes each
such Subsidiary to execute and deliver to the Trustee, prior to or
concurrently with the issuance of such guarantee, a supplemental indenture, in
form satisfactory to the Trustee, pursuant to which such Subsidiary
unconditionally guarantees the payment of principal of, premium, if any, and
interest on the Notes. Any such guarantee will be substantially in the form of
the Subsidiary Guarantee included as an Exhibit to the Indenture. See "--
Subsidiary Guarantees."
EVENTS OF DEFAULT
An "Event of Default" is defined in the Indenture as (i) failure by the
Company to pay interest on any of the Notes when it becomes due and payable
and the continuance of any such failure for 30 days; (ii) failure by the
Company to pay the principal or premium of any of the Notes when they become
due and payable, whether at stated maturity, upon redemption, upon
acceleration or otherwise (including failure to make payment pursuant to a
Change in Control Offer or an Asset Sale Offer); (iii) failure by the Company
to comply with any covenant in the Indenture and continuance of such failure
for 60 days after notice of such failure has been given to the Company by the
Trustee or by the Holders of at least 25% of the aggregate principal amount of
the Notes then outstanding; (iv) failure by the Company or any of its
Subsidiaries to make any payment when due or during any applicable grace
period, and the continuation of such failure for seven days, in respect of any
Indebtedness of the Company or any of its Subsidiaries that has an aggregate
outstanding principal amount of $2 million or more, other than Non-Recourse
Indebtedness of a Single Purpose Subsidiary; (v) a default under any
Indebtedness, other than Non-Recourse Indebtedness of a Single Purpose
Subsidiary, if such default results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity and the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness the maturity of which has been
so accelerated, aggregate $2 million or more at any one time outstanding; (vi)
one or more final judgments or orders that exceed $2 million in the aggregate
for the payment of money have been entered by a court or courts of competent
jurisdiction against the Company or any of its Subsidiaries and such judgment
or judgments have not been satisfied, stayed, annulled, or rescinded within 60
days of being entered; and (vii) certain events of bankruptcy, insolvency or
reorganization involving the Company or any of its Subsidiaries.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization involving the Company) occurs and is
continuing under the Indenture, the Trustee by written notice to the Company,
or the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding by written notice to the Company and the Trustee, may declare all
amounts owing under the Notes to be due and payable immediately. If an Event
of Default results from bankruptcy, insolvency or reorganization involving the
Company, all outstanding Notes shall become due and payable without any
further action or notice. In certain cases, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may waive an existing
Default or Event of Default and its consequences, except that a default in the
payment of principal of, premium, if any, and interest on the Notes cannot be
so waived.
The Holders may not enforce the provisions of the Indenture or the Notes
except as provided in the Indenture. Subject to certain limitations, Holders
of a majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power; however, such direction may not
conflict with the terms of the Indenture. The Trustee may withhold from the
Holders notice of any continuing Default or Event of Default (except any
Default or Event of Default in payment of principal of, premium, if any, or
interest on the Notes) if the Trustee determines that withholding such notice
is in the Holders' interest.
75
<PAGE>
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture and, upon any Officer of the Company
becoming aware of any Default or Event of Default, a statement specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
DISCHARGE OF INDENTURE
The Indenture permits the Company to terminate all of its obligations under
the Indenture, other than the obligation to pay the principal of, premium, if
any, and interest on the Notes, and certain other obligations at any time by
(i) depositing in trust with the Trustee, under an irrevocable trust
agreement, money, or U.S. government obligations in an amount sufficient to
pay principal of, premium, if any, and interest on the Notes to their maturity
or redemption, and (ii) complying with certain other conditions, including
delivery to the Trustee of an opinion of counsel or a ruling received from the
Internal Revenue Service to the effect that Holders will not recognize income,
gain, or loss for Federal income tax purposes as a result of the Company's
exercise of such right and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the
case otherwise.
AMENDMENT, SUPPLEMENT AND WAIVER
Unless the consent of each Holder affected has been obtained, the Company
may not: (i) extend the maturity of any Note; (ii) affect the terms of any
scheduled payment of interest on or principal of the Notes (including without
limitation any redemption provisions); (iii) modify or eliminate any of the
provisions of the Indenture relating to a Change of Control; or (iv) reduce
the percentage of Holders necessary to consent to an amendment, supplement, or
waiver to the Indenture.
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented, and any existing Default under, or compliance with any provision
of, the Indenture may be waived (other than any continuing Default or Event of
Default in the payment of the principal of, premium, if any, or interest on
the Notes or that resulted from the failure to comply with the covenant
described under "Change of Control") with the consent of Holders of at least a
majority in principal amount of the then outstanding Notes.
Without the consent of any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Company's
obligations to Holders in the case of a merger or acquisition, or to make any
change that does not adversely affect the rights of any Holder.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee is permitted to engage in
other transactions; however, if it acquires any conflicting interest as
defined in the Indenture, it must eliminate such conflict or resign. The
Indenture provides that, in case an Event of Default occurs and is not cured,
the Trustee is required, in the exercise of its power, to use the degree of
care of a prudent person in similar circumstances in the conduct of his own
affairs. Subject to such provisions, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to the Trustee.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms that are used
in the Indenture. Reference is made to the Indenture for the full definition
of all such terms and certain other terms.
76
<PAGE>
"Acquired Indebtedness" means: (i) with respect to any Person that becomes a
direct or indirect Subsidiary of the Company after the date of this Indenture,
Indebtedness of such Person and its Subsidiaries existing at the time such
Person becomes a Subsidiary of the Company that was not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary of the
Company; and (ii) with respect to the Company or any of its Subsidiaries, any
Indebtedness assumed by the Company or any of its Subsidiaries in connection
with the acquisition of an asset from another Person that was not incurred by
such other Person in connection with, or in contemplation of, such
acquisition.
"Affiliate" of any Person means any Person (i) which directly or indirectly
controls or is controlled by, or is under direct or indirect common control
with, the referent Person, (ii) which beneficially owns or holds 10% or more
of any class of the Voting Stock of the referent Person or (iii) of which 10%
or more of the Voting Stock (or, in the case of a Person which is not a
corporation, 10% or more of the equity interest) is beneficially owned or held
by the referent Person. For purposes of this definition, control of a Person
shall mean the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, the term "Affiliate"
shall not include, with respect to the Company or any Wholly Owned Subsidiary
of the Company, (a) any Wholly Owned Subsidiary of the Company or (b) any
Subsidiary of the Company that is not a Wholly Owned Subsidiary or any Joint
Venture, provided that such Subsidiary or Joint Venture is not under the
control of, and does not have any Capital Stock (other than directors'
qualifying shares) or Indebtedness owned or held by, any Affiliate of the
Company.
"Asset Sale" for any Person means the sale, lease, transfer or other
disposition or series of sales, leases, transfers or other dispositions
(including without limitation by merger or consolidation, and whether by
operation of law or otherwise) of any of that Person's assets (including
without limitation the sale or other disposition of Capital Stock of any
Subsidiary of such Person, whether by such Person or by such Subsidiary),
whether owned on the date of this Indenture of subsequently acquired,
excluding, however: (i) any sale, lease, transfer or other disposition between
the Company and any of its Wholly Owned Restricted Subsidiaries; (ii) any
transfer of assets of the Company or any of its Restricted Subsidiaries that
constitutes and is treated as a Designated Investment; (iii) any transfer of
assets of the Company or any of its Restricted Subsidiaries that constitutes a
Change of Control and that is governed by and effected in accordance with the
provisions of Section 5.03 and Article 6; and (iv) any sale, lease, transfer
or other disposition, or series of sales, leases, transfers or other
dispositions, of assets having a purchase price or transaction value, as the
case may be, of $1,000,000 or less, provided that no Default or Event of
Default exists at the time of such sale.
"Attributable Indebtedness", when used with respect to any Sale and
Leaseback Transaction, means, as at the time of determination, the greater of
(i) the fair market value of the property subject to such Sale and Leaseback
Transaction and (ii) the present value (discounted at a rate equivalent to the
Company's then-current weighted average cost of funds for borrowed money as at
the time of determination, compounded on a semi-annual basis) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in any such Sale and Leaseback Transaction.
"Bank Credit Agreement" means the Credit Agreement dated as of May 6, 1996
among the Company, certain banks and CoreStates Bank, N.A. as such agreement
has been and may be amended, restated, supplemented or otherwise modified from
time to time, and includes any successor bank credit agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or
foreign law for the relief of debtors.
"Board Resolution" for any Person means a duly adopted resolution of the
Board of Directors of such Person.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participations or
other equivalents of or interests in (however designated) the equity
77
<PAGE>
(including without limitation common stock, preferred stock and partnership
and joint venture interests) of such Person.
"Capitalized Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined
in accordance with GAAP.
"Cash Equivalents" means: (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof or
obligations issued by any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America; (ii) commercial paper
rated the highest grade by Moody's Investors Service, Inc. and Standard &
Poor's Corporation and maturing not more than one year from the date of
creation thereof; and (iii) readily marketable direct obligations issued by
any state of the United States of America or any political subdivision thereof
having one of the two highest rating categories obtainable from either Moody's
Investors Service, Inc. or Standard & Poor's Corporation.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) in one or a
series of transactions, provided that a transaction where the holders of all
classes of Common Equity of the Company immediately prior to such transaction
own, directly or indirectly, more than 50% of the aggregate voting power of
all classes of Common Equity of such Person or group immediately after such
transactions shall not be a Change of Control; (ii) the acquisition by the
Company and any of its Subsidiaries of 50% or more of all classes of Common
Equity of the Company in one transaction or a series of related transactions;
(iii) the approval by the Company of a Plan of Liquidation of the Company;
(iv) any transaction or series of transactions (as a result of a tender offer,
merger, consolidation or otherwise) that results in, or that is in connection
with, (a) any Person, including a "group" (within the meaning of Section
13(d)(3) of the Exchange Act) that includes such Person, acquiring "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% or more of the aggregate voting power of all classes of
Common Equity of the Company or any Person that possesses "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% or more of the aggregate voting power of all classes of
Common Equity of the Company, or (b) less than 50% (measured by the aggregate
voting power of all classes) of the Company's Common Equity being registered
under Section 12(b) or 12(g) of the Exchange Act; or (v) a majority of the
Board of Directors of the Company not being comprised of Continuing Directors.
"Common Equity" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will
control the management and policies of such Person.
"Consolidated Amortization Expense" of any Person for any period means the
amortization expense of such Person and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income
of such Person), determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" of any Person for any period means the
depreciation expense of such Person and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income
of such Person), determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, with respect
to any determination date, the ratio of (i) EBITDA for such Person's prior
four full fiscal quarters for which financial results have been reported
immediately preceding the determination date to (ii) the aggregate Fixed
Charges of such Person for such four fiscal quarters; provided, however, that
if any calculation of the Company's Consolidated Fixed Charge Coverage Ratio
requires the use of any quarter beginning prior to the date of this Indenture,
such
78
<PAGE>
calculation shall be made on a pro forma basis, giving effect to the issuance
of the Notes and the use of the net proceeds therefrom as if the same had
occurred at the beginning of the four-quarter period used to make such
calculation; and provided, further, that if any such calculation requires the
use of any quarter prior to the date that any Asset Sale was consummated, or
that any Indebtedness was incurred, or that any acquisition was effected, by
the Company or any of its Restricted Subsidiaries, such calculation shall be
made on a pro forma basis, giving effect to each such Asset Sale, incurrence
of Indebtedness or acquisition, as the case may be, and the use of any
proceeds therefrom, as if the same had occurred at the beginning of the four-
quarter period used to make such calculation.
"Consolidated Income Tax Expense" means, for any Person for any period, the
provision for taxes based on income and profits of such Person and its
Restricted Subsidiaries to the extent such income or profits were included in
computing Consolidated Net Income of such Person for such period.
"Consolidated Net Income" of any Person for any period means the net income
(or loss) of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that
there shall be excluded from such net income (to the extent otherwise included
therein), without duplication: (i) the net income (or loss) of any Person
(other than a Restricted Subsidiary of the reference Person) in which any
Person other than the referent Person has an ownership interest, except to the
extent that any such income has actually been received by the referent Person
or any of its Wholly Owned Restricted Subsidiaries in the form of cash
dividends or similar cash distributions during such period; (ii) except to the
extent includible in the consolidated net income of the referent Person
pursuant to the foregoing clause (i), the net income (or loss) of any Person
that accrued prior to the date that (a) such Person becomes a Restricted
Subsidiary of the referent Person or is merged into or consolidated with the
referent Person or any of its Restricted Subsidiaries or (b) the assets of
such Person are acquired by the referent Person or any of its Restricted
Subsidiaries; (iii) the net income (or loss) of any Restricted Subsidiary of
the referent Person to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary of that income is not
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary during such period (provided that the
amount of loss excluded pursuant to this clause (iii) shall not exceed that
amount of net income excluded pursuant to this clause (iii)); (iv) any gain
(but not loss, except pursuant to clause (vii) below), together with any
related provisions for taxes on any such gain, realized during such period by
the referent Person or any of its Restricted Subsidiaries upon (a) the
acquisition of any securities, or the extinguishment of any Indebtedness, of
the referent Person or any of its Restricted Subsidiaries or (b) any Asset
Sale by the referent Person or any of its Restricted Subsidiaries; (v) any
extraordinary gain (but not extraordinary loss, except pursuant to clause
(vii) below), together with any related provision for taxes on any such
extraordinary gain, realized by the referent Person or any of its Restricted
Subsidiaries during such period; (vi) in the case of a successor to such
Person by consolidation, merger or transfer of its assets, any earnings of the
successor prior to such merger, consolidation or transfer of assets; and (vii)
in the case of the Company, any extraordinary loss directly related to the
repurchase or repayment, substantially concurrently with the sale of the
Notes, of (a) the Company's 13.5% Senior Subordinated Notes due 1999 and
warrants issued in connection with the issuance of such notes, (b) the Bank
Credit Agreement and (c) the Company's Series 2C Senior Preferred Stock and
related Series 2C Warrants.
"Consolidated Net Tangible Assets" of any Person as of any date means the
Consolidated Tangible Assets of such Person and its Restricted Subsidiaries
less the total current liabilities of such Person and its Restricted
Subsidiaries, on a consolidated basis as of such date.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Restricted Subsidiaries (excluding any assets
that would be classified as "intangible assets" under GAAP) on a consolidated
basis at such date, determined in accordance with GAAP, less all write-ups
subsequent to September 30, 1996 in the book value of any asset owned by such
Person or any of its Restricted Subsidiaries.
"Consolidated Tangible Net Worth" of any Person as of any date means the
stockholders' equity (including any preferred stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and
79
<PAGE>
its Restricted Subsidiaries (excluding any equity adjustment for foreign
currency translation for any period subsequent to September 30, 1996 and any
assets that would be classified as "intangible assets" under GAAP) on a
consolidated basis at such date, as determined in accordance with GAAP, less
all write-ups subsequent to September 30, 1996 in the book value of any asset
owned by such Person or any of its Restricted Subsidiaries.
"Continuing Director" of the Company as of any date means a member of the
Board of Directors of the Company who (i) was a member of the Board of
Directors of the Company on the date of this Indenture or (ii) was nominated
for election or elected to the Board of Directors of the Company with the
affirmative vote of at least a majority of the directors who were Continuing
Directors at the time of such nomination or election.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Designated Investments" means Investments made after the date of this
Indenture in (i) any Subsidiary of the Company that is not a Wholly Owned
Restricted Subsidiary or (ii) any Joint Venture, provided that such Subsidiary
or Joint Venture is engaged in one or more Permitted Businesses.
"Disqualified Stock" means any Capital Stock that, by its terms, by the
terms of any agreement related thereto or by the terms of any security into
which it is convertible, puttable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased by the issuer thereof or any of its Subsidiaries, whether or not
at the option of the holder thereof, or matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, in whole or in part, on or
prior to the final maturity date of the Notes.
"EBITDA" means, with respect to any Person for any period, without
duplication, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Income Tax Expense, (iii) Consolidated Amortization
Expense (but only to the extent not included in Fixed Charges), (iv)
Consolidated Depreciation Expense, (v) Fixed Charges and (vi) all other non-
cash items reducing the Consolidated Net Income of such Person and its
Restricted Subsidiaries, in each case determined on a consolidated basis in
accordance with GAAP (provided, however, that the amounts set forth in clauses
(ii) through (vi) shall be included only to the extent such amounts reduce
Consolidated Net Income), less the aggregate amount of all non-cash items,
determined on a consolidated basis, to the extent such items increase
Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means all of the Indebtedness of the Company and its
Restricted Subsidiaries that is outstanding on the date of this Indenture.
"Existing Indenture" means the Indenture dated as of January 11, 1994, as
such Indenture has been and may be amended, restated, supplemented or
otherwise modified from time to time.
"Fixed Charges" means, with respect to any Person for any period, the
aggregate amount of (i) interest, whether expensed or capitalized, paid,
accrued or scheduled to be paid or accrued during such period (except to the
extent accrued in a prior period) in respect of all Indebtedness of such
Person and its Restricted Subsidiaries (including (a) original issue discount
on any Indebtedness and (b) the interest portion of all deferred payment
obligations, calculated in accordance with the effective interest method, in
each case to the extent attributable to such period) and (ii) dividend
requirements on preferred stock of such Person and its Subsidiaries (whether
in cash or otherwise), but not including dividends payable solely in shares of
Qualified Capital Stock, paid, accrued or schedules to be paid or accrued
during such period (except to the extent accrued in a prior period), and
excluding items eliminated in consolidation. For purposes of this definition,
(1) interest on a Capitalized Lease Obligation shall be deemed to accrue at
the rate of interest implicit in such Capitalized Lease Obligation in
accordance with GAAP, (2) interest on Indebtedness that is determined on a
fluctuating basis shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest of such Indebtedness in effect on the last day
80
<PAGE>
of the period with respect to which Fixed Charges are being calculated, (3)
interest on Indebtedness that may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate or other rates, shall be deemed to have been based upon the rate
actually chosen, or, if none, then based upon such optional rate chosen as
such Person may designate and (4) Fixed Charges shall be increased or reduced
by the net cost (including without limitation amortization of discount) or
benefit associated with Hedging Obligations attributable to such period. For
purposes of clause (ii) above, dividend requirements (other than dividends
payable solely in shares of Qualified Capital Stock) shall be increased to any
amount representing the pretax earnings that would be required to cover such
dividend requirements; accordingly, the increased amount shall be equal to a
fraction, the numerator of which is such dividend requirements and the
denominator of which is 1 minus the applicable actual combined Federal, state,
local and foreign income tax rate of such Person and its Subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Fixed Charges.
"Foreign Asset Sale" means any Asset Sale in respect of the Capital Stock or
assets of a Foreign Subsidiary.
"Foreign Subsidiary" means any Subsidiary of the Company that is organized
under the laws of any jurisdiction other than the United States of America,
any state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on January 11, 1994.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign
exchange rates.
"Indebtedness" of any Person at any date means, without duplication: (i) all
liabilities, contingent or otherwise, of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof); (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto), other than
standby letters of credit issued for the benefit of, or surety or performance
bonds issued by, such Person in the ordinary course of business to the extent
such letters of credit are not drawn upon; (iv) all obligations of such Person
with respect to Hedging Obligations; (v) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred by such Person in the ordinary course
of business in connection with obtaining goods, materials or services, which
payable is not overdue according to industry practice or the original terms of
sale unless such payable is being contested in good faith; (vi) the maximum
fixed repurchase price of all Disqualified Stock of such Person; (vii) all
Capitalized Lease Obligations of such Person; (viii) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person, other than a pledge by a Single
Purpose Subsidiary of the Capital Stock of an Unrestricted Subsidiary or Joint
Venture of such Single Purpose Subsidiary to secure Indebtedness of such
Unrestricted Subsidiary or Joint Venture incurred to finance a project
constituting one or more Permitted Businesses; (ix) all Indebtedness of others
guaranteed by, or otherwise the Liability of, such Person to the extent of
such guarantee or Liability; and (x) all Attributable Indebtedness. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above, the maximum
liability of such Person for any such contingent obligations at such date and,
in the case of clause (viii), the fair market value of any asset subject to a
Lien securing the Indebtedness of others on the date that the Lien attaches.
For purposes of the first sentence hereof, the "maximum fixed repurchase
price" of any Disqualified Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Stock as
if such Disqualified Stock were purchased on any date on which Indebtedness
shall
81
<PAGE>
be required to be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the fair market value of such Disqualified Stock
(or any equity security for which it may be exchanged or converted), such fair
market value shall be determined in good faith by the Board of Directors of
such Person, which determination shall be evidenced by a Board Resolution.
"Independent Financial Advisor" means an accounting, appraisal or investment
banking firm of nationally recognized standing that is, in the reasonable
judgment of the Company's Board of Directors, qualified to perform the task
for which it has been engaged and disinterested and independent with respect
to the Company and its Affiliates.
"Investments" of any Person means (i) all investments by such Person in any
other Person in the form of loans, advances or capital contributions or
similar credit extensions constituting Indebtedness of such Person, and any
guarantee of Indebtedness of any other Person, (ii) all purchases (or other
acquisitions for consideration) by such Person of Indebtedness, Capital Stock
or other securities of any other Person and (iii) all other items that would
be classified as investments (including without limitation purchases of assets
outside the ordinary course of business) on a balance sheet of such Person
prepared in accordance with GAAP; provided, however, that advances to non-
executive employees and extensions of trade credit and advances to customers
and suppliers and other contractual and trade relationships, requiring
repayment within reasonable commercial periods, to the extent made in the
ordinary course of business consistent with past practice and in accordance
with normal industry practice, shall not be deemed to constitute Investments.
"Joint Venture" means (i) a corporation of which less than a majority of the
aggregate voting power of all classes of the Common Equity is owned by the
Company or its Restricted Subsidiaries and (ii) any entity other than a
corporation in which the Company and its Restricted Subsidiaries own less than
a majority of the Common Equity of such entity.
"Junior Subordinated Indebtedness" of the Company at any date means
Indebtedness of the Company which by its terms, or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued, (i) is
expressly subordinated in right of payment to the Notes and (ii) provides that
no payment of principal of such Indebtedness by way sinking fund, mandatory
redemption, defeasance or otherwise is required to be made by the Company
(including without limitation at the option of the holder hereof) at any time
prior to the maturity of the Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or other similar encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including without limitation any conditional sale or other title
retention agreement, and any lease in the nature thereof, any option or other
agreement to sell, and any filing of, or agreement to give, any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Proceeds" with respect to any Asset Sale by any Person means the
aggregate net proceeds received by such Person from such Asset Sale (including
without limitation the amount of cash applied to repay Indebtedness secured by
any asset involved in such Asset Sale or otherwise received as consideration
for the assumption or incurrence of liabilities incurred in connection with or
in anticipation of such Asset Sale) after (i) provision for all income or
other taxes measured by or resulting from such Asset Sale or the transfer of
the proceeds of such Asset Sale to such Person and (ii) payment of all
brokerage commissions and the underwriting and other fees and expenses related
to such Asset Sale, whether such proceeds are in cash or property (valued at
the fair market value thereof at the time of receipt as determined in good
faith by the Board of Directors of such Person, which determination shall be
evidenced by a Board Resolution).
"Net Reductions in Investments" means the amount of cash and Cash
Equivalents, less all fees and expenses incurred or accrued in connection with
the realization or collection of such cash and Cash Equivalents, and after
giving effect to all taxes payable with respect thereto, received with respect
to any Designated Investment, whether from the payment of interest on
Indebtedness, dividends, repayments of loans or advances
82
<PAGE>
or other transfers of assets from the Person in which such Designated
Investment was made, but only to the extent that such cash or Cash Equivalents
have been paid to the Company or one or more Wholly Owned Restricted
Subsidiaries of the Company in compliance with all applicable laws, rules and
regulations and all relevant documents, agreements and instruments.
"Non-Recourse Indebtedness" of a Single Purpose Subsidiary means
Indebtedness for which (i) the sole legal recourse for collection of
principal, premium, if any, and interest on such Indebtedness is against (a)
the specific property identified in the instruments evidencing or securing
such Indebtedness and such property was acquired with the proceeds of such
Indebtedness or such Indebtedness was incurred within 90 days of the
acquisition of such property or (b) the Capital Stock of such Single Purpose
Subsidiary, provided that such Single Purpose Subsidiary has no assets other
than the specific property acquired with the proceeds of such Indebtedness
plus a reasonable amount of working capital, (ii) no assets of such Single
Purpose Subsidiary, other than those assets identified in clause (i)(a) of
this definition, may be realized upon in collection of principal, premium, if
any, or interest on such Indebtedness and (iii) neither the Company nor any
Restricted Subsidiary of the Company, other than the referent Single Purpose
Subsidiary, is directly or indirectly liable to make any payment thereon, has
made any guarantee or payment or performance of such Indebtedness or has
pledged or granted any lien or encumbrances on any assets as collateral or
security with respect thereto, other than the Capital Stock of the referent
Single Purpose Subsidiary.
"Payment Restriction", with respect to a Subsidiary of any Person, means any
encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation, on the ability of (i) such
Subsidiary to (a) pay dividends or make other distributions on its Capital
Stock or make payments on any obligation, liability or Indebtedness owed to
such Person or any other Subsidiary of such Person, (b) make loans or advances
to such Person or any other Subsidiary of such Person or (c) transfer any of
its properties or assets to such Person or any other Subsidiary of such Person
or (ii) such Person or any other Subsidiary of such Person to receive or
retain any such (a) dividends, distributions or payments, (b) loans or
advances or (c) transfer of properties or assets.
"Permitted Businesses" means the businesses of providing consulting,
engineering or construction services to public and private sector clients in
the environment, energy, infrastructure and industry markets.
"Permitted Investments" means: (i) direct obligations of the United States
of America or any agency thereof, or obligations guaranteed by the United
States of America or any agency thereof, in each case maturing within 180 days
of the date of acquisition thereof; (ii) certificates of deposit or Eurodollar
deposits, due within 180 days of the date of acquisition thereof, with a
commercial bank which is organized under the laws of the United States of
America or any state thereof having capital funds of at least $500,000,000 or
more; and (iii) commercial paper given the highest rating by two established
national credit rating agencies and maturing not more than 180 days from the
date of acquisition thereof.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Plan of Liquidation", with respect to any Person, means a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise): (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety
or substantially as an entirety; and (ii) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and all or substantially all of the remaining assets of such
Person to Holders of Capital Stock of such Person.
"Qualified Capital Stock" means Capital Stock that is not Disqualified
Stock.
83
<PAGE>
"Refinancing Indebtedness" means Indebtedness of the Company or a Restricted
Subsidiary of the Company issued in exchange for, or the proceeds from the
issuance and sale of disbursement of which are used substantially concurrently
to repay, redeem, refund, refinance, discharge or otherwise retire for value,
in whole or in part (collectively, "repay"), or constituting an amendment,
modification or supplement to or a deferral or renewal of (collectively, an
"amendment"), any Indebtedness of the Company or any of its Restricted
Subsidiaries existing immediately after the original issuance of the Notes or
incurred pursuant to the provisions of Section 5.40 in a principal amount not
in excess of the principal amount of the Indebtedness so refinanced; provided
that: (i) the Refinancing Indebtedness is the obligation of the same Person,
and is subordinated to the Notes, if at all, to the same extent, as the
Indebtedness being repaid; (ii) the Refinancing Indebtedness is scheduled to
mature either (a) no earlier than the Indebtedness being repaid or (b) after
the maturity date of the Notes; and (iii) the portion, if any, of the
Refinancing Indebtedness that is scheduled to mature on or prior to the
maturity date of the Notes has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred that is equal to or greater than the
Weighted Average Life to Maturity of the portion of the Indebtedness being
repaid that is scheduled to mature on or prior to the maturity date of the
Notes.
"Related Business Investment" means any Investment directly by the Company
or one or more of its Wholly Owned Restricted Subsidiaries in any business
that is closely related to or complements the business of the Company and its
Subsidiaries as such business exists on the date hereof.
"Restricted Debt Payment" means any purchase, redemption, defeasance
(including without limitation in substance or legal defeasance) or other
acquisition or retirement for value, directly or indirectly, by the Company or
a Subsidiary of the Company, prior to the scheduled maturity or prior to any
scheduled repayment of principal or sinking fund payment, as the case may be,
in respect of Indebtedness of the Company that is subordinate in right of
payment to the Notes other than a Restricted Debt Payment made with the
proceeds of a substantially concurrent sale (other than to a Subsidiary of the
Company or an employee stock ownership plan) of the Company's Qualified
Capital Stock, provided that all Indebtedness so purchased, redeemed, defeased
or otherwise acquired or retired for value promptly is surrendered for
cancellation to the trustee for such Indebtedness.
"Restricted Investment", with respect to any Person, means any Investment by
such Person in any of its Affiliates or in any Person other than a Wholly
Owned Restricted Subsidiary other than (i) a Permitted Investment or (ii) an
Investment made with the proceeds of a substantially concurrent sale (other
than to a Subsidiary of the Company or an employee stock ownership plan) of
the Company's Qualified Capital Stock.
"Restricted Payment" means with respect to any Person: (i) the declaration
of any dividend (other than a dividend declared by a Wholly Owned Restricted
Subsidiary to holders of its Common Equity) or the making of any other payment
or distribution of cash, securities or other property or assets in respect of
such Person's Capital Stock, except that a dividend payable solely in
Qualified Capital Stock of such Person shall not constitute a Restricted
Payment (for purposes of this clause (i), the declaration of any such
dividend, or the making of any other such distribution, by any Restricted
Subsidiary shall only constitute an Restricted Payment to the extent of the
amounts paid or payable to Persons other than the Company or a Wholly Owned
Restricted Subsidiary); (ii) any payment on account of the purchase,
redemption, retirement or other acquisition for value of such Person's Capital
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly); (iii) any Restricted Investment; or (iv) any
Restricted Debt Payment.
"Restricted Subsidiary" means each of the Subsidiaries of the Company which,
as of the determination date, is not an Unrestricted Subsidiary of the
Company.
"Sale and Leaseback Transaction" means with respect to any Person an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person or any of its Subsidiaries of any property or asset of such Person or
any of its Subsidiaries which has been or is being sold or transferred by such
Person or such Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the
security of such
84
<PAGE>
property or asset. Notwithstanding the foregoing, no transaction exclusively
between the Company and any Wholly Owned Restricted Subsidiary shall be deemed
to constitute a Sale and Leaseback Transaction.
"Senior Indebtedness" means all Indebtedness of the Company other than
Indebtedness that is specifically designated, by the terms of the instrument
creating or evidencing the same, as not being senior in right of payment to
the Notes.
"Single Purpose Subsidiary" of any Person means a Subsidiary of such Person
which has no Subsidiaries other than Unrestricted Subsidiaries and the
activities of which are limited to (i) ownership of all or a portion of the
interests in a single project constituting one or more Permitted Businesses,
either directly or through the ownership of Capital Stock of another Person
and (ii) the development, engineering, design, project management,
construction or operation of such project.
"Subsidiary" of any Person means (i) any corporation of which at least a
majority of the aggregate voting power of all classes of the Common Equity is
owned by such Person directly or through one or more other Subsidiaries of
such Person and (ii) any entity other than a corporation in which such Person,
directly or indirectly, owns at least a majority of the Common Equity of such
entity.
"Unrestricted Subsidiary" means American Venture Holdings, Inc., a Delaware
corporation, American Venture Investments Incorporated, a Delaware
corporation, Excell Development Construction, Inc., a Delaware corporation,
ICF Kaiser Holdings Unlimited, Inc., a Delaware corporation, ICF Leasing
Corporation, Inc., a Delaware corporation, International Systems, Inc., a
Colorado corporation, Cygna Consulting Engineers and Project Management, Inc.,
a California corporation, ICF Kaiser Engineers Eastern Europe, Inc., a
Delaware corporation, and ICF Kaiser Netherlands, B.V., a Netherlands
corporation, and each of the other Subsidiaries of the Company so designated
by a resolution adopted by the Board of Directors of the Company and whose
creditors have no direct or indirect recourse (including without limitation
recourse with respect to the payment of principal of or interest on
Indebtedness of such Subsidiary) to the Company or a Restricted Subsidiary
other than a Lien on the Capital Stock of such Unrestricted Subsidiary;
provided, however, that (a) no Subsidiary may be an Unrestricted Subsidiary if
it owns any Capital Stock of a Restricted Subsidiary and (b) the Board of
Directors of the Company will be prohibited after the date of this Indenture
from designating as an Unrestricted Subsidiary any Subsidiary existing on the
date of this Indenture. The Board of Directors of the Company may designate an
Unrestricted Subsidiary to be a Restricted Subsidiary, provided that (i) any
such designation shall be deemed to be an incurrence by the Company and its
Restricted Subsidiaries of the Indebtedness (if any) of such designated
Subsidiary for purposes of the provisions of Section 5.04 as of the date of
such designation and (ii) immediately after giving effect to such designation
and the incurrence of any such additional Indebtedness, the Company and its
Restricted Subsidiaries could incur $1.00 of additional Senior Indebtedness
pursuant to the provisions of Section 5.04. Any such designation or
redesignation by the Board of Directors shall be evidenced to the Trustee by
the filing with the trustee of a certified copy of the Board Resolution of the
Company giving effect to such designation or redesignation and an Officers'
Certificate certifying that such designation or redesignation complied with
the foregoing conditions and setting forth the underlying calculations of such
Officers' Certificate, and upon which certificate the trustee shall
conclusively rely without any investigation whatsoever.
"Voting Stock", with respect to any Person, means securities of any class of
Capital Stock of such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock has voting power by reason
of any contingency) to vote in the election of members of the board of
directors of such Person.
"Weighted Average Life to Maturity", when applied to any Indebtedness at any
date, means the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment by (ii) the then outstanding
principal amount of such Indebtedness.
85
<PAGE>
"Wholly Owned Restricted Subsidiary" of the Company means a Restricted
Subsidiary of the Company, of which 100% of the Common Equity (except for
directors' qualifying shares of certain minority interests owned by other
Persons solely due to local law requirements that there be more than one
stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by the Company or through one or more Wholly Owned
Restricted Subsidiaries of the Company.
"Wholly Owned Subsidiary" of the Company means a Subsidiary of the Company,
of which 100% of the Common Equity (except for directors' qualifying shares or
certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is
not in excess of what is required for such purpose) is owned directly by the
Company or one or more Wholly Owned Subsidiaries of the Company.
86
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material United States Federal
income tax consequences relevant to the exchange of Old Notes for Exchange
Notes and the ownership and disposition of the Exchange Notes by holders
acquiring Exchange Notes pursuant to the Exchange Offer, and represents the
opinion of Crowell & Moring LLP, special tax counsel to the Company, insofar
as it relates to matters of law and legal conclusions. The discussion is based
on the current provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury Regulations, judicial authority and
administrative rulings and practice. Any of such authorities are subject to
change at any time by legislative, judicial or administrative action. Any such
changes may be applied retroactively in a manner that could adversely affect a
holder of the Exchange Notes. Further, there can be no assurance that the
Internal Revenue Service (the "IRS") will not take a contrary view, and no
rulings from the IRS have been or will be sought. This summary is for general
informational purposes only and does not purport to address specific tax
consequences that may be relevant to certain persons (including, for example,
foreign persons, financial institutions, broker-dealers, insurance companies
or tax-exempt organizations and persons in special situations such as those
who hold Exchange Notes as part of a straddle).
EACH HOLDER OF OLD NOTES IS URGED TO CONSULT ITS OWN TAX ADVISORS WITH RESPECT
TO FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE SPECIFIC TO IT, AS WELL AS
WITH RESPECT TO ANY STATE, LOCAL OR FOREIGN TAX CONSIDERATIONS OF THE EXCHANGE
OF OLD NOTES FOR EXCHANGE NOTES AND OF HOLDING OR DISPOSING OF THE EXCHANGE
NOTES.
EXCHANGE OF NOTES
The exchange of Exchange Notes for Old Notes pursuant to the Exchange Offer
should not be treated as a taxable exchange for federal income tax purposes
because, other than the fact that the Exchange Notes will be registered, the
terms of the Exchange Notes will be identical in all material respects to the
terms of the Old Notes. The Holder must continue to include interest and
original issued discount in income as if the exchange had not occurred.
INTEREST AND ORIGINAL ISSUE DISCOUNT
In general, a Holder of a debt instrument issued with original issue
discount ("OID") must include a portion of the OID in gross income as interest
in each taxable year or portion thereof in which the Holder holds the debt
instrument even if the Holder has not received a cash payment in respect of
such OID.
Because the original Holders of the Old Notes also purchased warrants, each
Old Note will be treated as part of an "investment unit" for federal income
tax purposes. Under Treasury Regulations regarding OID (the "OID
Regulations"), the issue price of an investment unit is equal to the first
price at which a substantial amount of units are sold to the public (not
including bond houses, brokers, or similar persons or organizations acting in
the capacity of an underwriter, placement agent or wholesaler). The issue
price of a unit is then allocated between the securities comprising each unit
based on their relative fair market values. Under the OID Regulations, the
issuer's allocation is binding on all holders of the securities, unless a
holder explicitly discloses to the IRS that its allocation differs from that
of the issuer.
The Company has allocated approximately $1.00 as the issue price of each
warrant. This allocation reflects the Company's judgment as to the value of
the warrants at the time of issuance. This allocation is not binding on the
IRS.
Each Old Note bears OID equal to the excess of its "stated redemption price
at maturity" over its "issue price." The stated redemption price at maturity
of an Old Note and of an Exchange Note is the sum of its stated principal
amount and all other payments including interest payments due thereunder. The
OID Regulations, as modified by the contingent payment debt instrument rules
described below, will apply to the Exchange Notes.
87
<PAGE>
A Holder is generally required to include OID in income periodically over
the term of an Exchange Note without regard to when the cash or other payments
attributable to such income are received. In general, a Holder must include in
gross income for Federal income tax purposes the sum of the daily portions of
OID with respect to the Exchange Note for each day during the taxable year on
which such Holder holds the Exchange Note ("Accrued OID"). The daily portion
is determined by allocating to each day of any accrual period within a taxable
year a pro rata portion of the OID allocable to such accrual period. The
amount of such OID is equal to the adjusted issue price of the Exchange Note
(the issue price of the Old Note increased by the Accrued OID for all prior
accrual periods and decreased by any cash payments on the Old Note and the
Exchange Note) at the beginning of the accrual period multiplied by the yield
to maturity of the Exchange Note. For purposes of computing OID, the Company
will use six-month accrual periods that generally correspond to the
stated interest payment periods of the Exchange Notes, with the exception of
an initial short accrual period. Any payment made under an Exchange Note will
be treated first as a payment of OID (which was previously includable in
income) to the extent of OID that has accrued as of the date of payment and
has not been allocated to prior payments and second as a payment of principal
(which, generally, is not includable in income).
CONTINGENT PAYMENT DEBT INSTRUMENTS
The Exchange Notes provide that if certain Earnings targets are achieved by
the Company, the Temporary Interest Rate of 13 percent will be reduced to 12
percent. See "Description of the Notes--Interest Rate Increase." Because the
Exchange Notes provide for a change in the interest rate in the event a
contingency is satisfied, the Exchange Notes will be treated as contingent
payment debt instruments and will be subject to different OID rules than debt
instruments providing only for noncontingent payments.
Treasury Regulations provide that, with respect to a contingent payment debt
instrument issued for money such as the Exchange Notes (the "Contingent
Payment Debt Regulations"), interest on an Exchange Note must be taken into
account under the so-called noncontingent bond method, whether or not the
amount of any interest payment is fixed or determinable. The amount of
interest that is taken into account for each accrual period is determined by
constructing a projected payment schedule for the debt instrument and applying
rules similar to those described above for accruing OID on a noncontingent
debt instrument. If the actual amount of a contingent payment is not equal to
the projected amount, appropriate adjustments are made to reflect the
difference.
Under this method, the amount of income, deductions, gain and loss with
respect to an Exchange Note has been computed based on the following steps:
Step 1: The Company has determined the "comparable yield" of an Exchange
Note by computing the yield at which the Company could issue a fixed-rate
debt instrument with terms and conditions similar to those of the Exchange
Notes.
Step 2: A "projected payment schedule" which will produce the comparable
yield has been determined by the Company. The projected payment schedule
includes each noncontingent payment on an Exchange Note and an amount for
each contingent payment based on the expected value of the contingent
payment as of the issue date.
Step 3: The daily portions of interest on an Exchange Note for a taxable
year have been determined by multiplying the comparable yield times the
adjusted issue price of an Exchange Note at the beginning of an accrual
period, and allocating to each day in the accrual period the ratable
portion of interest accruing in the period. The "adjusted issue price" of
an Exchange Note is equal to the Exchange Note's issue price (as defined
above), increased by any interest previously accrued (without regard for
adjustments described in the following paragraph), and decreased by the
amount of any noncontingent payment and the projected amount of any
contingent payment previously made on the Exchange Note.
Step 4: Adjustments are then made to the amount of interest attributable
to an Exchange Note during a taxable year for any differences between
projected and actual contingent payments. A positive adjustment is made if
the amount of a contingent payment is more than the projected amount of the
contingent payment. A negative adjustment is made if the amount of a
payment is less than the projected amount of the payment.
88
<PAGE>
Positive and negative adjustments are netted at the end of a tax year, and
a net positive adjustment is treated as additional interest to a Holder,
while a net negative adjustment would reduce the amount of interest that a
Holder would otherwise account for with respect to an Exchange Note.
The Company's calculation of the comparable yield on the Exchange Notes and
the Company's projected payment schedule are used to determine a Holder's
interest, accruals and adjustments unless these determinations are
unreasonable and the Holder explicitly discloses to the IRS that its projected
payment schedule differs from that of the issuer. The Company will provide the
projected payment schedule to the Trustee for distribution to Holders of the
Exchange Notes.
SALE OR RETIREMENT OF NOTES
A Holder's basis in an Exchange Note will be increased by the interest
previously accrued by the Holder on the Exchange Note as described above
(determined without regard for any adjustments), and decreased by the amount
of any noncontingent payment and the projected amount of any contingent
payment previously made on the Exchange Note. Upon the sale, exchange,
retirement or other disposition of an Exchange Note, a Holder will generally
recognize gain or loss equal to the difference between the amount realized on
the disposition and the Holder's adjusted tax basis in the Exchange Note. If
any contingent payment remains unpaid at the time of sale, exchange or
retirement of the Note, including a contingent payment due on the retirement
of an Exchange Note, then any gain recognized by a Holder is treated as
ordinary interest income for federal income tax purposes. Any loss recognized
by a Holder on the sale, exchange or retirement of an Exchange Note is
ordinary loss to the extent that the Holder's total interest inclusions on the
Exchange Note exceed the total net negative adjustments on the Exchange Note
that the Holder took into account as ordinary loss.
BOND PREMIUM, MARKET DISCOUNT, ACQUISITION PREMIUM NOT TO APPLY
The Contingent Payment Debt Regulations provide that the premium and
discount rules of the OID Regulations do not apply to Contingent Payment Debt
Instruments. Instead, a Holder that purchases an Exchange Note for more or
less than the Exchange Note's adjusted issue price accrues interest on the
Exchange Notes based on the projected payment schedule determined as of the
issue date by the Company. However, upon acquisition, the Holder must allocate
any difference between the Exchange Note's adjusted issue price and the
Exchange Note's basis to daily portions of interest or to projected payments
over the remaining term of the Exchange Note. Where a Holder's basis is
greater than the Exchange Note's adjusted issue price, the allocation is
treated as a negative adjustment as described above. Where a Holder's basis is
less than the Exchange Note's adjusted issue price, the allocation is treated
as a positive adjustment as described above.
The Contingent Payment Debt Regulations are very complex and this summary
does not purport to be a complete analysis or listing of all the potential tax
consequences which may be relevant to a decision to purchase the Exchange
Notes. Investors are urged to consult their own tax advisers regarding the
application of the Contingent Payment Debt Regulations to an investment in the
Exchange Notes.
BACKUP WITHHOLDING
A Holder of an Exchange Note may be subject to backup withholding at the
rate of 31% with respect to interest paid on an Exchange Note and gross
proceeds upon the sale or retirement of an Exchange Note unless such holder
(a) is a corporation or other exempt recipient and, when required,
demonstrates this fact or (b) provides, when required, a correct taxpayer
identification number, certifies that backup withholding is not in effect and
otherwise complies with applicable requirements of the backup withholding
rules. Furthermore, a Holder of an Exchange Note that does not provide the
Company with the Holder's correct taxpayer identification number may be
subject to penalties imposed by the IRS. Backup withholding will be made when
cash payments are made with respect to the Exchange Notes. Backup withholding
is not an additional tax; any amounts so withheld are creditable against the
Holder's federal income tax liability.
89
<PAGE>
OLD NOTES REGISTRATION RIGHTS; ADDITIONAL INTEREST
The Company and the Initial Purchaser have entered into a registration
rights agreement (the "Registration Rights Agreement") pursuant to which the
Company agreed, for the benefit of the holders of the Old Notes, that it
would, at its own cost, (i) within 45 days after the date of original issuance
of the Old Notes (December 23, 1996) (the "Issue Date"), file this
Registration Statement with respect to this Exchange Offer for the Exchange
Notes, which will have terms identical in all material respects to the Old
Notes (except that the Exchange Notes will not contain terms with respect to
transfer restrictions), (ii) use its best efforts to cause this Registration
Statement to be declared effective under the Securities Act within 135 days
after the Issue Date and (iii) use its best efforts to consummate the Exchange
Offer within 180 days after the Issue Date. The Company will keep the Exchange
Offer open for not less than 20 business days (or longer if required by
applicable law) after the date notice of the Exchange Offer is mailed to the
holders of the Old Notes. For each Old Note surrendered to the Company
pursuant to the Exchange Offer, the holder of such Old Note will receive an
Exchange Note having a principal amount equal to that of the surrendered Old
Note. Interest on each Exchange Note will accrue from December 31, 1996, the
last interest payment date on which interest was paid on the Old Notes
surrendered pursuant to the Exchange Offer.
The Registration Rights Agreement also provides an agreement to include in
this Prospectus certain information necessary to allow a broker-dealer who
holds Old Notes that were acquired for its own account as a result of market-
making activities or other ordinary course trading activities (other than Old
Notes acquired directly from the Company or one of its Affiliates) and any
other person subject to the prospectus delivery requirements of the Securities
Act to exchange such Old Notes pursuant to the Exchange Offer and to satisfy
the prospectus delivery requirements in connection with resales of Exchange
Notes received by such person in the Exchange Offer and to maintain the
effectiveness of this Registration Statement and to amend and supplement this
Prospectus contained therein for such purposes for a period not to exceed 180
days after consummation of the Exchange Offer.
Under existing interpretations of the Commission contained in several no-
action letters to third parties, the Exchange Notes would in general be freely
tradable after the Exchange Offer without further registration under the
Securities Act. However, any holder of Old Notes who is an Affiliate of the
Company within the meaning of the Securities Act or who intends to participate
in the Exchange Offer for the purpose of distributing the Exchange Notes (i)
will not be able to rely on the interpretation of the staff of the Commission,
(ii) will not be able to tender its Old Notes in the Exchange Offer and (iii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Old Notes unless
such sale or transfer is made pursuant to an exemption from such requirements.
Each holder of Old Notes who participates in the Exchange Offer will be
required to represent that at the time of commencement of the Exchange Offer
such holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Notes in violation of the
provisions of the Securities Act and that such holder is not an Affiliate of
the Company within the meaning of the Securities Act and is not acting on
behalf of any persons or entities who could not truthfully make the foregoing
representations.
In the event that (i) any changes in law or the applicable interpretations
of the staff of the Commission do not permit the Company to effect the
Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days
after the Issue Date, (iii) if, under certain circumstances, after the
consummation of the Exchange Offer, the Initial Purchaser continues to hold
Exchange Notes and so requests, (iv) the holders of not less than a majority
in aggregate principal amount of the Registrable Notes (as defined in the
Registration Rights Agreement) determine that the interests of the holders
would be materially adversely affected by consummation of the Exchange Offer
or (v) in the case of any holder that participates in the Exchange Offer, such
holder does not receive Exchange Notes on the date of the exchange that may be
sold without restriction under state and Federal securities laws (other than
due solely to the status of such holder as an Affiliate of the Company within
the meaning of the Securities Act), then the Company shall promptly deliver to
the holders and the Trustee written notice thereof and, at its cost, as
promptly as reasonably practicable, file the Shelf Registration Statement.
90
<PAGE>
The Company shall use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act as promptly as
reasonably practicable and to keep the Shelf Registration Statement
continuously effective under the Securities Act until three years after the
Issue Date or such shorter period ending when all Old Notes covered by the
Shelf Registration Statement have been sold in the manner set forth and as
contemplated in the Shelf Registration Statement. The Company will, in the
event of the filing of a Shelf Registration Statement, provide to each holder
of the Old Notes copies of the prospectus that is a part of the Shelf
Registration Statement, notify each such holder when the Shelf Registration
Statement for the Old Notes has become effective and take certain other
actions as are required to permit unrestricted resales of the Old Notes. A
holder of Old Notes that sells such Old Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
securityholder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such a
holder (including certain indemnification obligations). In addition, each
holder of the Old Notes will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on
the Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have its Old Notes included in the
Shelf Registration Statement and to benefit from the provisions regarding
liquidated damages set forth in the following paragraph.
Although the Company intends that this Registration Statement become
effective, there can be no assurance that it will become effective. If the
Company fails to comply with the above provisions or if the Registration
Statement fails to become effective, then, as liquidated damages, additional
interest (the "Additional Interest") shall become payable in respect of the
Old Notes as follows:
(i) if this Registration Statement or the Shelf Registration Statement is
not filed within 45 days after the Issue Date, Additional Interest shall be
accrued on the Old Notes over and above the stated interest at a rate of
0.50% per annum for the first 90 days immediately following the 45th day
after the Issue Date, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period;
(ii) if this Registration Statement or the Shelf Registration Statement
is not declared effective within 135 days after the Issue Date, then,
commencing on the 136th day after the Issue Date, Additional Interest shall
be accrued on the Old Notes over and above the stated interest at a rate of
0.50% per annum for the first 90 days immediately following the 135th day
after the Issue Date, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period; or
(iii) if either (A) the Company has not exchanged the Exchange Notes for
all Old Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to 180 days after the Issue Date, or (B) this
Registration Statement ceases to be effective at any time prior to the time
that the Exchange Offer is consummated or (C) if applicable, the Shelf
Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
third anniversary of the Issue Date, then Additional Interest shall accrue
on the Old Notes (over and above any interest otherwise payable on the Old
Notes) at a rate of .50% per annum for the first 90 days commencing on (x)
the 181st day after the Issue Date, in the case of clause (A) above, or (y)
the date this Registration Statement ceases to be effective without being
declared effective within five business days, in the case of clause (B)
above, or (z) the day the Shelf Registration Statement ceases to be
effective, in the case of clause (C) above, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
subsequent 90-day period:
provided, however, that the Additional Interest rate on the Old Notes may not
exceed 2% per annum in the aggregate; provided further, that (1) upon the
filing of this Registration Statement or a Shelf Registration Statement (in
the case of clause (i) above), (2) upon the effectiveness of this Registration
Statement or a Shelf Registration Statement (in the case of clause (ii)
above), or (3) upon the exchange of Exchange Notes for all Old Notes tendered
(in the case of clause (iii)(A) above) or upon the effectiveness of this
Registration Statement that has ceased to remain effective (in the case of
clause (iii)(B) above), or upon the effectiveness of the Shelf Registration
Statement that has ceased to remain effective (in the case of clause (iii)(C)
above), Additional
91
<PAGE>
Interest on the Old Notes as a result of such clause (i), (ii) or (iii) above
(or the relevant subclause thereof), as the case may be, shall cease to
accrue.
Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii)
above will be payable in cash, semiannually on each June 30 and December 31 of
each year, commencing with the first such date occurring after any such
Additional Interest commences to accrue. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by
the principal amount of the Notes, multiplied by a fraction, the numerator of
which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360-day year consisting of
twelve 30-day months) and the denominator of which is 360.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is an exhibit to this Registration Statement and is
available without charge by writing to the Company at 9300 Lee Highway,
Fairfax, Virginia, 22031, Attention: Secretary or by telephone at (703) 934-
3600.
OLD NOTES TRANSFER RESTRICTIONS
Because the following restrictions will apply to any Old Notes held by
holders who do not participate in the Exchange Offer, holders of Old Notes are
advised to consult legal counsel prior to making any offer, resale, pledge or
transfer of any of the Old Notes.
None of the Old Notes have been registered under the Securities Act and they
may not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act. Accordingly, the Old Notes were sold only (i) to a limited number of
"qualified institutional buyers" (as defined in Rule 144A promulgated under
the Securities Act) ("QIBs") in compliance with Rule 144A; (ii) to a limited
number of other institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) promulgated under the Securities Act) ("Accredited
Investors") that, prior to their purchase of any Old Notes delivered to the
Initial Purchaser a letter containing certain representations and agreements;
and (iii) outside the United States to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) in reliance upon Regulation
S under the Securities Act. As used herein, the term "United States" and "U.S.
person" have the meanings given to them in Regulation S under the Securities
Act.
Each purchaser of Old Notes has been deemed to have represented and agreed
as follows:
1. It purchased the Old Notes (and the related guarantees) for its own
account or account with respect to which it exercises sole investment
discretion and that it and any such account is (i) a QIB, and is aware that
the sale to it is being made in reliance on Rule 144A; (ii) an Accredited
Investor; or (iii) a foreign purchaser that is outside the United States
(or a foreign purchaser that is a dealer or other fiduciary as referred to
above).
2. It acknowledged that the Old Notes have not been registered under the
Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except as set forth
below.
3. It shall not resell or otherwise transfer any of such Old Notes within
three years after the original issuance of the Notes except (i) to the
Company or any subsidiary thereof, (ii) inside the United States to a QIB
in compliance with Rule 144A, (iii) inside the United States to an
Accredited Investor that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Trustee a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Old Notes (the form of which letter can be
obtained from the Trustee), (v) outside the United States in compliance
92
<PAGE>
with Regulation S under the Securities Act, (v) pursuant to the exemption
from registration provided by Rule 144 promulgated under the Securities Act
(if available), or (vi) pursuant to an effective registration under the
Securities Act.
4. It agreed that it will give to each person to whom it transfers Old
Notes notice of any restrictions on transfer of such Old Notes.
5. It understands that the Old Notes bear, and if not exchanged pursuant
to the Exchange Offer will continue to bear, a legend substantially to the
following effect unless otherwise agreed by the Company and the holder
thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a) (1), (2), (3) OR (7)
PROMULGATED UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER
THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
6. It acknowledged that the Trustee will not be required to accept for
registration of transfer any Old Note acquired by it, except upon
presentation of evidence satisfactory to the Company and the Trustee that
the restrictions set forth herein have been complied with.
7. It acknowledged that the Company, the Initial Purchaser and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agreed that if any of the
acknowledgments, representations or agreements deemed to have been made by
its purchase of Old Notes are no longer accurate, it shall promptly notify
the Company and the Initial Purchaser. If it acquired any Notes as a
fiduciary or agent for one or more investor accounts, it represented that
it has sole investment
93
<PAGE>
discretion with respect to each such account and it has full power to make
the foregoing acknowledgments, representations and agreements on behalf of
each account.
Holders of Old Notes shall not sell or transfer Old Notes to, and each
purchaser of Old Notes represented and covenanted that it did not acquire the
Old Notes for or on behalf of, any pension or welfare plan (as defined in
Section 3 or the Employee Retirement Income Security Act of 1974 ("ERISA")),
except that such a purchase for or on behalf of a pension or welfare plan
shall be permitted:
(1) to the extent such purchase is made by or on behalf of a bank
collective investment fund maintained by the purchaser in which no plan
(together with any other plans maintained by the same employer or
employee organization) has an interest in excess of 10% of the total
assets in such collective investment fund and the applicable conditions
of Prohibited Transaction Exemption 91-38 issued by the Department of
Labor are satisfied;
(2) to the extent such purchase is made by or on behalf of an
insurance company pooled separate account maintained by the purchaser
in which, at any time while the Units are outstanding, no plan
(together with any other plans maintained by the same employer or
employee organization) has an interest in excess of 10% of the total of
all assets in such pooled separate account and the applicable
conditions of Prohibited Transaction Exemption 90-1 issued by the
Department of Labor are satisfied;
(3) to the extent such purchase is made on behalf of a plan by (A) an
investment adviser registered under the Investment Advisers Act of 1940
that had as of the last day of its most recent fiscal year total assets
under its management and control in excess of $50,000,000 and had
shareholders' or partners' equity in excess of $750,000, as shown in
its most recent balance sheet prepared in accordance with generally
accepted accounting principles, or (B) a bank as defined in Section
202(a) of the Investment Advisers Act of 1940 with equity capital in
excess of $1,000,000 as of the last day of its most recent fiscal year
and, in either case, such investment adviser or bank is otherwise a
qualified professional asset manager, as such term is used in
Prohibited Transaction Exemption 84-14 issued by the Department of
Labor, and the assets of such plan when combined with the assets of
other plans established or maintained by the same employer (or
affiliate thereof) or employee organization and manager by such
investment advisor or bank, do not represent more than 20% of the total
client assets managed by such investment advisor or bank and the
applicable conditions of Prohibited Transaction Exemption 84-14 are
otherwise satisfied; or
(4) to the extent such plan is a governmental plan (as defined in
Section 3 of ERISA) which is not subject to the provisions of Title I
of ERISA or Section 4975 of the Code.
Each purchaser of Old Notes also represented that (a) if it is an insurance
company, no part of the funds used to purchase the Old Notes purchased by it
constitutes assets allocated to any separate account maintained by it such
that the use of such funds constitutes a transaction in violation of Section
406 of ERISA or a Prohibited Transaction, as such term is defined in Section
4975 of the Code, which could be subject to, respectively, a civil penalty
assessed pursuant to Section 502 of ERISA or a tax imposed by Section 4975 of
the Code and (b) if it is not an insurance company, that no part of the funds
used to purchase the Old Notes purchased by it constitutes assets allocated to
any trust, plan or account which contains the assets of any employee pension
benefit plan, welfare plan or account prohibited pursuant to the preceding
paragraph of this "Transfer Restrictions."
Holders of Old Notes are advised that the Prohibited Transaction Exemptions
described above do not relieve a fiduciary or other party from all prohibited
transaction provisions of the Code and ERISA and from ERISA's general
fiduciary responsibilities including, but not limited to, a fiduciary's
obligation to discharge his, her, or its duties solely in the interests of
participants and beneficiaries. As a result of the foregoing restrictions,
holders of Old Notes are advised to consult legal counsel prior to making any
offer, resale, pledge, hypothecation or other transfer or disposition of the
Old Notes or any interest therein.
94
<PAGE>
BOOK-ENTRY; DELIVERY AND FORM
Old Notes are represented by a single, global Old Note in registered form,
registered in the name of the nominee of DTC. The Exchange Notes exchanged for
Old Notes represented by the global Old Note will be represented by one or
more global Exchange Notes in registered form (the "Global Note"), registered
in the name of the nominee of DTC. Exchange Notes issued to persons other than
QIBs or Accredited Investors in exchange for Old Notes held by such investors
will be issued only in certificated, fully registered, definitive form
("Certificated Notes"). Except as described herein, Exchange Notes in the form
of Certificated Notes will not be issued in exchange for the Global Note or
interests therein.
THE GLOBAL NOTE
The Company expects that pursuant to procedures established by the DTC (i)
upon deposit of the Global Note, DTC or its custodian will credit, on its
internal system, portions of the Global Note which shall comprise the
corresponding respective principal amount of the Global Note to the respective
accounts of Persons who have accounts with such depository and (ii) ownership
of the Exchange Notes will be shown on, and the transfer of ownership thereof
will be effected only through, records maintained by DTC or its nominee (with
respect to interests of participants) and the records of participants (with
respect to interests of Persons other than participants). Ownership of
beneficial interests in the Global Note will be limited to Persons who have
accounts with DTC ("participants") or Persons who hold interests through
participants. QIBs may hold their interests in the Global Note directly
through DTC if they are participants in such system, or indirectly through
organizations that are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Note, DTC or such nominee will be considered the sole owner or holder
of the Exchange Notes represented by the Global Note for all purposes under
the Indenture. No beneficial owner of an interest in the Global Note will be
able to transfer such interest except in accordance with DTC's applicable
procedures, in addition to those provided for under the Indenture.
Payments of the principal of, premium (if any) and interest on, the Global
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects DTC or its nominee, upon receipt of any payment of the
principal of, premium (if any) and interest on, the Global Note, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Note as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in any such Global
Note held through such participants will be governed by standing instructions
and customary practice, as is now the case with securities held for the
accounts of customers registered in the names of nominees for such customers.
Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and be settled in clearinghouse funds. If a
holder requires physical delivery of a Certificated Note for any reason,
including to sell Exchange Notes to Persons in states that require physical
delivery of such Exchange Notes or to pledge such Exchange Notes, such holder
must transfer its interest in the Global Note in accordance with the normal
procedures of DTC and the procedures set forth in the Indenture.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Note is credited
and only in respect
95
<PAGE>
of such portion of the aggregate principal amount of Exchange Notes as to
which such participant or participants has or have given such direction.
However, if there is an Event of Default under the Indenture, DTC will
exchange the Global Note for Certificated Notes which it will distribute to
its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither of the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depository for
the Global Note and a successor depository is not appointed by the Company
within 90 days, the Company will issue Certificated Notes in exchange for the
Global Note.
PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Company believes that Exchange Notes issued pursuant to
the Exchange Offer in exchange for the Old Notes may be offered for resale,
resold and otherwise transferred by holders thereof (other than any holder
that is (i) an Affiliate of the Company, (ii) a broker-dealer who acquired Old
Notes directly from the Company or (iii) a broker-dealer who acquired Old
Notes as a result of market-making or other trading activities) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such Exchange Notes are acquired in the ordinary
course of such holders' business, and such holders are not engaged in, and do
not intend to engage in, and have no arrangement or understanding with any
person to participate in, a distribution of such Exchange Notes; provided that
broker-dealers ("Participating Broker-Dealers") receiving Exchange Notes in
the Exchange Offer will be subject to a prospectus delivery requirement with
respect to resales of such Exchange Notes. To date, the Staff has taken the
position that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to transactions involving an exchange of
securities such as the exchange pursuant to the Exchange Offer (other than a
resale of an unsold allotment from the sale of the Old Notes to the Initial
Purchaser) by means of this Prospectus. Pursuant to the Registration Rights
Agreement, the Company has agreed to permit Participating Broker Dealers and
other persons, if any, subject to similar prospectus delivery requirements to
use this Prospectus in connection with the resale of such Exchange Notes. The
Company has agreed that, for a period of 180 days after the Exchange Date, it
will make this Prospectus, and any amendment or supplement to this Prospectus,
available to any broker-dealer that requests such documents in the Letter of
Transmittal.
Each holder of the Old Notes who wishes to exchange its Old Notes for
Exchange Notes in the Exchange Offer will be required to make certain
representations to the Company as set forth in "The Exchange Offer--Terms and
Conditions of the Letter of Transmittal." In addition, each holder who is a
broker-dealer and who
96
<PAGE>
receives Exchange Notes for its own account in exchange for Old Notes that
were acquired by it as a result of market-making activities or other trading
activities will be required to acknowledge that it will deliver a prospectus
in connection with any resale by it of such Exchange Notes.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such Exchange Notes.
Any broker-dealer that resells Exchange Notes that were received by it for its
own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
The Company has agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concession of any brokers or dealers and will
indemnify holders of Registrable Notes (as defined in the Registration Rights
Agreement) (including any brokers-dealers) against certain liabilities,
including liabilities under the Securities Act, as set forth in the
Registration Rights Agreement.
LEGAL MATTERS
Matters relating to the legality of the Exchange Notes and the related
Guarantees have been passed upon for the Company by Paul Weeks, II, Esq.,
Senior Vice President, General Counsel and Secretary of the Company. As of
December 31, 1996, Mr. Weeks owned 36,011 shares of Common Stock, of which
6,474 are held by the Company's ESOP and allocated to his ESOP account and 862
of which are held in a directed investment account under the Company's
Retirement Plan. As of December 31, 1996, Mr. Weeks had options to purchase
26,667 shares of Common Stock (11,667 of which are exercisable during the 60-
day period beginning December 31, 1996).
EXPERTS
The ICF Kaiser International, Inc. and Subsidiaries consolidated balance
sheets as of December 31, 1995, and February 28, 1995, and the consolidated
statements of operations, shareholders' equity and cash flows for the ten
months ended December 31, 1995, and for each of the two years in the period
ended February 28, 1995, are included in this Prospectus in reliance on the
report of Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
97
<PAGE>
ICF KAISER INTERNATIONAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Consolidated Balance Sheets--September 30, 1996 and December 31, 1995.. F-2
Consolidated Statements of Operations--Nine Months Ended September 30,
1996 and 1995......................................................... F-3
Consolidated Statements of Cash Flows--Nine Months Ended September 30,
1996 and 1995......................................................... F-4
Notes to Consolidated Financial Statements............................. F-5-9
Report of Independent Accountants...................................... F-10
Consolidated Balance Sheets as of December 31, 1995, and February 28,
1995.................................................................. F-11
Consolidated Statements of Operations for the ten months ended December
31, 1995,
and for the years ended February 28, 1995 and February 28, 1994....... F-12
Consolidated Statements of Shareholders' Equity for the ten months
ended December 31, 1995,
and for the years ended February 28, 1995 and February 28, 1994....... F-13
Consolidated Statements of Cash Flows for the ten months ended December
31, 1995,
and for the years ended February 28, 1995 and February 28, 1994....... F-14
Notes to Consolidated Financial Statements............................. F-15-38
</TABLE>
F-1
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents......................... $ 21,022 $ 16,357
Contract receivables, net......................... 234,168 228,239
Prepaid expenses and other current assets......... 10,780 20,911
Deferred income taxes............................. 11,938 11,934
-------- --------
Total Current Assets............................ 277,908 277,441
-------- --------
Fixed Assets
Furniture, equipment, and leasehold improvements.. 48,839 42,909
Less depreciation and amortization................ (36,595) (33,369)
-------- --------
12,244 9,540
-------- --------
Other Assets
Goodwill, net..................................... 50,510 49,259
Investments in and advances to affiliates......... 12,168 10,213
Due from officers and employees................... 986 1,053
Other............................................. 20,719 22,011
-------- --------
84,383 82,536
-------- --------
$374,535 $369,517
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt................. $ -- $ 5,041
Accounts payable and subcontractors payable....... 76,304 86,429
Accrued salaries and employee benefits............ 59,721 53,060
Accrued interest.................................. 4,061 7,414
Other accrued expenses............................ 14,869 18,594
Income taxes payable.............................. 399 801
Deferred revenue.................................. 14,648 14,327
Other............................................. 5,897 7,186
-------- --------
Total Current Liabilities....................... 175,899 192,852
-------- --------
Long-term Liabilities
Long-term debt, less current portion.............. 133,384 120,112
Other............................................. 5,679 5,706
-------- --------
139,063 125,818
-------- --------
Commitments and Contingencies
Minority Interests in Subsidiaries.................. 6,441 2,633
Redeemable Preferred Stock, Liquidation value
$20,000............................................ 19,940 19,787
Common Stock, par value $.01 per share:
Authorized--90,000,000 shares
Issued and outstanding--22,351,209 and 21,263,828
shares........................................... 224 213
Additional Paid-in Capital.......................... 67,158 64,654
Notes Receivable related to Common Stock............ (1,732) (1,732)
Retained Earnings (Deficit)......................... (30,805) (32,894)
Cumulative Translation Adjustment................... (1,653) (1,814)
-------- --------
$374,535 $369,517
======== ========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
---------- ---------
(UNAUDITED)
<S> <C> <C>
GROSS REVENUE.......................................... $1,023,410 $ 731,795
Subcontract and direct material costs................ (592,295) (377,281)
Equity in income of joint ventures and affiliated
companies........................................... 2,532 3,068
---------- ---------
SERVICE REVENUE........................................ 433,647 357,582
OPERATING EXPENSES
Direct cost of services and overhead................. 354,658 298,466
Administrative and general........................... 49,979 38,619
Depreciation and amortization........................ 7,840 7,326
---------- ---------
OPERATING INCOME....................................... 21,170 13,171
OTHER INCOME (EXPENSE)
Interest income...................................... 944 1,488
Interest expense..................................... (12,829) (12,117)
---------- ---------
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS...... 9,285 2,542
Income tax provision................................. 840 1,300
---------- ---------
INCOME BEFORE MINORITY INTERESTS....................... 8,445 1,242
Minority interests in net income of subsidiaries..... 4,725 1,315
---------- ---------
NET INCOME (LOSS)...................................... 3,720 (73)
Preferred stock dividends and accretion.............. 1,631 1,616
---------- ---------
NET INCOME (LOSS) AVAILABLE FOR COMMON SHAREHOLDERS.... $ 2,089 $ (1,689)
========== =========
Primary and Fully Diluted Net Income (Loss) Per Common
Share................................................. $ 0.10 $ (0.08)
========== =========
Primary and Fully Diluted Weighted Average Common and
Common Equivalent Shares Outstanding.................. 21,955 21,427
========== =========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1996 1995
-------- ---------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................ $ 3,720 $ (73)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................... 7,840 7,326
Provision for losses on contract receivables............ 1,255 1,382
Provision for deferred income taxes..................... (386) 916
Earnings in excess of cash distributions from joint
ventures and affiliated companies...................... (282) (1,547)
Unusual items, net...................................... 1,498 --
Minority interests in net income of subsidiaries........ 4,725 1,315
Changes in operating assets and liabilities, net of
acquisitions:
Contract receivables, net.............................. (7,379) (105,645)
Prepaid expenses and other current assets.............. 2,139 (10,885)
Other assets........................................... (1,293) (3,841)
Accounts payable and accrued expenses.................. (4,698) 101,017
Income taxes payable................................... (402) (1,210)
Deferred revenue....................................... 546 2,350
Other liabilities...................................... (1,510) 380
Other operating activities.............................. 156 --
-------- ---------
Net Cash Provided by (Used in) Operating Activities.. 5,929 (8,515)
-------- ---------
INVESTING ACTIVITIES:
Purchase of fixed assets................................. (4,905) (1,720)
Sale of fixed assets..................................... 22 768
Sale of subsidiaries and subsidiary assets............... -- 735
Investments in subsidiaries and affiliates, net of cash
acquired................................................ (1,241) (2,240)
-------- ---------
Net Cash Used in Investing Activities................ (6,124) (2,457)
-------- ---------
FINANCING ACTIVITIES:
Borrowings under credit facility agreement............... 65,000 13,000
Principal payments on credit facility agreement.......... (57,000) (13,000)
Principal payments on other borrowings................... -- (1,238)
Reacquisition of senior subordinated notes and related
warrants................................................ (46) --
Distribution of income to minority interest.............. (823) --
Subsidiary capital contribution from minority interest... -- 500
Proceeds from issuances of common stock.................. 313 383
Repurchases of common stock.............................. -- (256)
Preferred stock dividends................................ (1,965) (975)
Debt issuance costs...................................... (449) --
Other financing activities............................... (247) 55
-------- ---------
Net Cash Provided by (Used in) Financing Activities.. 4,783 (1,531)
-------- ---------
Effect of Exchange Rate Changes on Cash.................. 77 (863)
-------- ---------
Increase (Decrease) in Cash and Cash Equivalents......... 4,665 (13,366)
Cash and Cash Equivalents at Beginning of Period......... 16,357 27,967
-------- ---------
Cash and Cash Equivalents at End of Period............... $ 21,022 $ 14,601
======== =========
SUPPLEMENTAL INFORMATION:
Cash payments for interest............................... $ 16,182 $ 15,712
Cash payments (refunds) for income taxes................. $ 945 $ (28)
NON-CASH TRANSACTIONS:
Issuance of common stock in connection with
acquisitions............................................ $ 1,600 $ 765
Issuance of common stock pursuant to an agreement with a
former employee......................................... $ 500 $ --
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A--BASIS OF PRESENTATION
The accompanying consolidated financial statements of ICF Kaiser
International, Inc. and subsidiaries (the Company) (including Kaiser-Hill
Company, LLC, effective July 1, 1995), except for the December 31, 1995
balance sheet, are unaudited and have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. These statements should be read in
conjunction with the Company's audited consolidated financial statements and
footnotes thereto for the ten months ended December 31, 1995 and the
information included in the Company's Transition Report to the Securities and
Exchange Commission on Form 10-K for the ten months ended December 31, 1995.
Certain reclassifications have been made to the prior period financial
statements to conform to the presentation used in the September 30, 1996
financial statements.
NOTE B--SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities (see Note F) at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
In 1996, the Company accelerated the procedures for obtaining approval from
the U.S. government for the Company's actual costs incurred in current
periods. As a result, in the third quarter of 1996, the Company's consulting
group was able to accelerate its process of billing on certain cost-
reimbursement contracts. The net effect of this accelerated process is the
recognition of an additional $2.3 million of operating income in the third
quarter of 1996.
NOTE C--MINORITY INTERESTS IN SUBSIDIARIES
Certain of the Company's subsidiaries are partially owned by outside
parties. For financial reporting purposes, the assets, liabilities, results of
operations, and cash flows of these subsidiaries are included in the Company's
consolidated financial statements and the outside parties' interests are
reflected as minority interests.
NOTE D--NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed using net income (loss)
available for common shareholders, as adjusted under the modified treasury
stock method, and the weighted average number of common stock and common stock
equivalents outstanding during the periods presented. Common stock equivalents
include stock options and warrants and additional shares which will be or may
be issued in connection with acquisitions. The adjustments required by the
modified treasury stock method and for acquisition-related contingencies were
anti-dilutive for the loss period presented and immaterial to the income
periods presented. Therefore, the adjustments were excluded from earnings per
share computations.
NOTE E--LONG-TERM DEBT
The Company's $40 million revolving credit facility became effective May 7,
1996, replacing the former credit facility which was due to expire October 31,
1996. The new credit facility expires June 30, 1998 and is provided by
CoreStates Bank, as agent bank, and two other banks (the Banks) with terms and
covenants similar to those under the former credit facility. ICF Kaiser
International, Inc. and certain of its subsidiaries, which are guarantors of
the new credit facility, have granted the Banks a security interest in their
accounts receivable and
F-5
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
certain other assets. The new credit facility limits the payments of cash
dividends on common stock and requires the maintenance of specified financial
ratios. Total available credit is determined from a borrowing base calculation
based on eligible accounts receivable (billed and unbilled).
NOTE F--CONTINGENCIES
In the course of the Company's normal business activities, various claims or
charges have been asserted and litigation commenced against the Company
arising from or related to properties, injuries to persons, and breaches of
contract, as well as claims related to acquisitions and dispositions. Claimed
amounts may not bear any reasonable relationship to the merits of the claim or
to a final court award. In the opinion of management, an adequate reserve has
been provided for final judgments, if any, in excess of insurance coverage,
that might be rendered against the Company in such litigation.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of
procurement or other federal laws and regulations. The Company currently is
the subject of a number of U.S. government investigations and is cooperating
with the responsible government agencies involved. No charges presently are
known to have been filed against the Company by these agencies. Management
does not believe that there will be any material adverse effect on the
Company's financial position, results of operations, or cash flows as a result
of these investigations.
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. As a result of pending audits relating to fiscal years 1986
forward, the government has asserted, among other things, that certain costs
claimed as reimbursable under government contracts either were not allowable
or not allocated in accordance with federal procurement regulations. The
Company is actively working with the government to resolve these issues.
Management has provided for the potential effect of disallowed costs for the
periods currently under audit and for periods not yet audited, although the
amounts at issue have not been quantified by the government or the Company.
This provision will be reviewed periodically as discussions with the
government progress. Based on the information currently available, management
believes the potential effects of these pending audits will not have a
material adverse effect on the Company's financial position, results of
operations, or cash flows.
NOTE G--UNUSUAL ITEMS
During the ten months ended December 31, 1995, the Company recorded $0.5
million in additional income (net), consisting of the following unusual items:
income in settlement of litigation against the IRS, associated with an
affiliate of an acquired company, net of an accrual for related expenses ($6.8
million); a charge to accrue the net settlement cost and legal expenses of
other litigation ($4.6 million); a charge to accrue for severance for the
termination of 110 employees in the engineering and international groups ($1.0
million); and a charge to accrue for consolidation of office space ($0.7
million). During the nine months ended September 30, 1996, the net litigation
income was received and $4.2 million of net settlement costs and legal
expenses were paid. As of September 30, 1996, the Company had substantially
completed its termination of employees in the Company's engineering group and
its consolidation of office space. The termination of employees in several
foreign offices within the international group is approximately 50% complete
as of September 30, 1996 and management expects that all actions will be
completed by December 31, 1996. As of September 30, 1996, a $0.1 million
accrual remains outstanding associated with the termination of employees in
the international group.
F-6
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
NOTE H--GUARANTOR SUBSIDIARIES
In connection with the registration of 12% Senior Notes due 2003, Series B
(Exchange Notes), the Company is required to provide financial information for
four wholly owned subsidiaries of ICF Kaiser International, Inc. (Subsidiary
Guarantors). The Subsidiary Guarantors unconditionally guarantee the payment
of the principal, premium, if any, and interest on the Company's $15 million
of 12% Senior Notes due 2003, Series A issued in December 1996 (Series A
Notes) and the Exchange Notes. The Company is offering to exchange the
Exchange Notes for the Series A Notes. The Subsidiary Guarantors are Cygna
Consulting Engineers and Project Management, Inc., ICF Kaiser Government
Programs, Inc., PCI Operating Company, Inc., and Systems Applications
International, Inc.
Presented below is condensed consolidating financial information for ICF
Kaiser International, Inc. (Parent Company), the Subsidiary Guarantors, and
the non-guarantor subsidiaries as of and for the nine months ended September
30, 1996.
Investments in subsidiaries have been presented using the equity method of
accounting. ICF Kaiser International, Inc. does not have a formal tax sharing
arrangement with its subsidiaries and has allocated taxes to its subsidiaries
based on the Company's effective tax rate. In the Company's opinion, separate
financial statements for Subsidiary Guarantors would not provide additional
information that is material to investors. Therefore, the Subsidiary
Guarantors are combined in the presentation below.
F-7
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
ICF KAISER
PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ---------- ------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents.......... $ (327) $ 8,272 $ 14,546 $ (1,469) $ 21,022
Contract receivables,
net.................. (4,311) 73,179 165,300 -- 234,168
Intercompany
receivables, net..... 129,572 (7,055) (122,517) -- --
Prepaid expenses and
other current
assets............... 4,696 732 8,377 (3,025) 10,780
Deferred income
taxes................ 13,119 (789) (392) -- 11,938
-------- ------- --------- -------- --------
Total Current
Assets............. 142,749 74,339 65,314 (4,494) 277,908
-------- ------- --------- -------- --------
Fixed Assets
Furniture, equipment,
and leasehold
improvements......... 6,843 3,556 38,440 -- 48,839
Less depreciation and
amortization......... (3,167) (2,919) (30,509) -- (36,595)
-------- ------- --------- -------- --------
3,676 637 7,931 -- 12,244
-------- ------- --------- -------- --------
Other Assets
Goodwill, net......... -- -- 50,510 -- 50,510
Investments in and
advances to
affiliates........... 58,899 41 13,292 (60,064) 12,168
Due from officers and
employees............ 353 144 489 -- 986
Other................. 4,642 2,700 13,377 -- 20,719
-------- ------- --------- -------- --------
63,894 2,885 77,668 (60,064) 84,383
-------- ------- --------- -------- --------
$210,319 $77,861 $ 150,913 $(64,558) $374,535
======== ======= ========= ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of
long-term debt....... $ -- $ -- $ -- $ -- $ --
Accounts payable and
other accrued
expenses............. 12,778 34,634 46,200 (2,439) 91,173
Accrued salaries and
employee benefits.... (798) 30,650 29,869 -- 59,721
Accrued interest...... 4,143 -- 4 (86) 4,061
Income taxes payable.. (2,622) -- 3,021 -- 399
Deferred revenue...... (103) 518 14,233 -- 14,648
Other................. 4,077 31 1,789 -- 5,897
-------- ------- --------- -------- --------
Total Current
Liabilities........ 17,475 65,833 95,116 (2,525) 175,899
-------- ------- --------- -------- --------
Long-term Liabilities
Long-term debt, less
current portion...... 135,301 -- 45 (1,962) 133,384
Other................. 2,758 -- 2,921 -- 5,679
-------- ------- --------- -------- --------
138,059 -- 2,966 (1,962) 139,063
-------- ------- --------- -------- --------
Minority Interests in
Subsidiaries........... -- 6,441 -- -- 6,441
Redeemable Preferred
Stock.................. 19,940 -- -- -- 19,940
Common Stock............ 224 108 167 (275) 224
Additional Paid-in
Capital................ 67,158 224 44,825 (45,049) 67,158
Notes Receivable Related
to Common Stock........ (1,732) -- -- -- (1,732)
Retained Earnings
(Deficit).............. (30,805) 5,255 9,492 (14,747) (30,805)
Cumulative Translation
Adjustment............. -- -- (1,653) -- (1,653)
-------- ------- --------- -------- --------
$210,319 $77,861 $ 150,913 $(64,558) $374,535
======== ======= ========= ======== ========
</TABLE>
F-8
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
ICF KAISER
PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ---------- ------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
Gross Revenue........... $ 1,165 $ 442,478 $ 581,405 $ (1,638) $1,023,410
Subcontract and direct
material costs....... (524) (302,444) (289,327) -- (592,295)
Equity in income of
joint ventures and
affiliated companies
and subsidiaries..... 11,707 -- 3,127 (12,302) 2,532
-------- --------- --------- -------- ----------
Service Revenue......... 12,348 140,034 295,205 (13,940) 433,647
Operating Expenses
Operating expenses.... (4,771) 130,515 280,534 (1,641) 404,637
Depreciation and
amortization......... 1,638 904 5,298 -- 7,840
-------- --------- --------- -------- ----------
Operating Income........ 15,481 8,615 9,373 (12,299) 21,170
Interest income....... 223 286 675 (240) 944
Interest expense...... (12,832) (129) (54) 186 (12,829)
-------- --------- --------- -------- ----------
Income Before Income
Taxes and Minority
Interests.............. 2,872 8,772 9,994 (12,353) 9,285
Income tax (provision)
benefit.............. 848 (789) (899) -- (840)
-------- --------- --------- -------- ----------
Income Before Minority
Interests.............. 3,720 7,983 9,095 (12,353) 8,445
Minority interests in
net income of
subsidiaries......... -- (4,725) -- -- (4,725)
-------- --------- --------- -------- ----------
Net Income.............. 3,720 3,258 9,095 (12,353) 3,720
Preferred stock
dividends and
accretion............ 1,631 -- -- -- 1,631
-------- --------- --------- -------- ----------
Net Income Available for
Common Shareholders.... $ 2,089 $ 3,258 $ 9,095 $(12,353) $ 2,089
======== ========= ========= ======== ==========
<CAPTION>
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Cash Provided by
(Used in) Operating
Activities............. $ (7,619) $ 9,014 $ 4,639 $ (105) $ 5,929
-------- --------- --------- -------- ----------
INVESTING ACTIVITIES
Investments in
subsidiaries and
affiliates, net of cash
acquired............... -- -- (1,241) -- (1,241)
Purchases of fixed
assets................. (2,488) (257) (2,160) -- (4,905)
Proceeds from sale of
fixed assets........... -- -- 22 -- 22
-------- --------- --------- -------- ----------
Net Cash Used in
Investing
Activities........... (2,488) (257) (3,379) -- (6,124)
-------- --------- --------- -------- ----------
FINANCING ACTIVITIES
Borrowings under credit
facility agreement..... 65,000 -- -- -- 65,000
Principal payments on
credit facility and
other borrowings....... (57,247) -- 247 -- (57,000)
Reacquisition of senior
subordinated notes and
related warrants....... -- -- (46) -- (46)
Distribution of income
to minority interest... -- (823) -- -- (823)
Proceeds from issuances
of common stock........ 313 -- -- -- 313
Preferred stock
dividends.............. (1,965) -- -- -- (1,965)
Debt issuance costs..... (449) -- -- -- (449)
Other financing
activities............. -- -- (247) -- (247)
-------- --------- --------- -------- ----------
Net Cash Provided by
(Used in) Financing
Activities........... 5,652 (823) (46) -- 4,783
-------- --------- --------- -------- ----------
Effect of Exchange Rate
Changes on Cash........ -- -- 77 -- 77
-------- --------- --------- -------- ----------
Increase (Decrease) in
Cash and Cash
Equivalents............ (4,455) 7,934 1,291 (105) 4,665
Cash and Cash
Equivalents at
Beginning of Period.... 4,128 1,015 12,578 (1,364) 16,357
-------- --------- --------- -------- ----------
Cash and Cash
Equivalents at End of
Period................. $ (327) $ 8,949 $ 13,869 $ (1,469) $ 21,022
======== ========= ========= ======== ==========
</TABLE>
F-9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
ICF Kaiser International, Inc.
We have audited the consolidated balance sheets of ICF Kaiser International,
Inc. and subsidiaries as of December 31, 1995 and February 28, 1995, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the ten months ended December 31, 1995 and the years ended February
28, 1995 and 1994 and the related financial statement Schedule II, Valuation
and Qualifying Accounts. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ICF Kaiser
International, Inc. and subsidiaries as of December 31, 1995 and February 28,
1995, and the consolidated results of their operations and their cash flows
for the ten months ended December 31, 1995, and for each of the two years in
the period ended February 28, 1995, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
Washington, D.C.
March 8, 1996, except for Note T,
as to which the date is January 7, 1997
F-10
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28,
1995 1995
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents.......................... $ 16,357 $ 28,233
Contract receivables, net.......................... 228,239 139,860
Prepaid expenses and other current assets.......... 20,911 10,872
Deferred income taxes.............................. 11,934 13,553
-------- --------
Total Current Assets............................. 277,441 192,518
-------- --------
Fixed Assets
Furniture, equipment, and leasehold improvements... 42,909 42,557
Less depreciation and amortization................. (33,369) (29,648)
-------- --------
9,540 12,909
-------- --------
Other Assets
Goodwill, net...................................... 49,259 47,945
Investments in and advances to affiliates.......... 10,213 8,022
Due from officers and employees.................... 1,053 1,826
Other.............................................. 22,011 18,202
-------- --------
82,536 75,995
-------- --------
$369,517 $281,422
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt.................. $ 5,041 $ 578
Accounts payable and subcontractors payable........ 86,429 33,452
Accrued salaries and employee benefits............. 53,060 30,549
Accrued interest................................... 7,414 2,528
Other accrued expenses............................. 18,594 13,359
Income taxes payable............................... 801 644
Deferred revenue................................... 14,327 11,013
Other.............................................. 7,186 8,755
-------- --------
Total Current Liabilities........................ 192,852 100,878
-------- --------
Long-term Liabilities
Long-term debt, less current portion............... 120,112 126,733
Other.............................................. 5,706 6,397
-------- --------
125,818 133,130
-------- --------
Commitments and Contingencies
Minority Interests in Subsidiaries................... 2,633 173
Redeemable Preferred Stock, liquidation value
$20,000............................................. 19,787 19,617
Common Stock, par value $.01 per share:
Authorized--90,000,000 shares
Issued and outstanding--21,263,828 and 21,011,369
shares............................................ 213 210
Additional Paid-in Capital........................... 64,654 63,786
Notes Receivable Related to Common Stock............. (1,732) (1,732)
Retained Earnings (Deficit).......................... (32,894) (33,343)
Cumulative Translation Adjustment.................... (1,814) (1,297)
-------- --------
$369,517 $281,422
======== ========
</TABLE>
See notes to consolidated financial statements.
F-11
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED FEBRUARY 28,
DECEMBER 31, ------------------------
1995 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
GROSS REVENUE........................... $ 916,744 $ 861,518 $ 651,657
Subcontract and direct material
costs................................ (493,971) (405,819) (272,169)
Equity in income of joint ventures and
affiliated companies................. 3,123 4,087 3,220
--------- ----------- -----------
SERVICE REVENUE......................... 425,896 459,786 382,708
OPERATING EXPENSES
Direct cost of services and overhead.. 359,887 393,096 323,828
Administrative and general............ 40,647 43,770 45,842
Depreciation and amortization......... 8,357 9,232 9,559
Unusual items, net.................... (500) -- 8,709
--------- ----------- -----------
OPERATING INCOME (LOSS)................. 17,505 13,688 (5,230)
OTHER INCOME (EXPENSE)
Gain (loss) on sale of investment..... -- 551 (925)
Interest income....................... 2,053 1,799 1,490
Interest expense...................... (13,255) (14,799) (8,212)
--------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTERESTS, AND EXTRAORDINARY
ITEM................................... 6,303 1,239 (12,877)
Income tax provision (benefit)........ 2,091 2,900 (349)
--------- ----------- -----------
INCOME (LOSS) BEFORE MINORITY INTERESTS
AND EXTRAORDINARY ITEM................. 4,212 (1,661) (12,528)
Minority interests in net income of
subsidiaries......................... 1,960 -- --
--------- ----------- -----------
NET INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM................................... 2,252 (1,661) (12,528)
Extraordinary loss on early
extinguishment of debt............... -- -- (5,969)
--------- ----------- -----------
NET INCOME (LOSS)....................... 2,252 (1,661) (18,497)
Preferred stock dividends and
accretion............................ 1,803 2,154 4,896
Redemption of redeemable preferred
stock................................ -- -- 1,929
--------- ----------- -----------
NET INCOME (LOSS) AVAILABLE FOR COMMON
SHAREHOLDERS........................... $ 449 $ (3,815) $ (25,322)
========= =========== ===========
Primary and Fully Diluted Net Income
(Loss) Per Common Share:
Before extraordinary item............. $ 0.02 $ (0.18) $ (0.92)
Extraordinary loss on early
extinguishment of debt............... -- -- (0.29)
--------- ----------- -----------
Total............................... $ 0.02 $ (0.18) $ (1.21)
========= =========== ===========
Primary and Fully Diluted Weighted
Average Common and Common Equivalent
Shares Outstanding..................... 21,517 20,957 20,886
========= =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-12
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
SERIES 1 JUNIOR NOTES
CONVERTIBLE RECEIVABLE
PREFERRED STOCK COMMON STOCK ADDITIONAL RELATED RETAINED CUMULATIVE ESOP
---------------- --------------------- PAID-IN TO COMMON EARNINGS TRANSLATION GUARANTEED
SHARES PAR VALUE SHARES PAR VALUE CAPITAL STOCK (DEFICIT) ADJUSTMENT BANK LOAN
------ --------- ---------- --------- ---------- ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 1, 1993.. 69 $6,900 21,303,807 $213 $65,040 $(2,725) $ (4,206) $(1,701) $(5,000)
Net loss............... -- -- -- -- -- -- (18,497) -- --
Preferred stock
dividends............. -- -- -- -- -- -- (4,670) -- --
Preferred stock
accretion............. -- -- -- -- -- -- (226) -- --
Redemption of
redeemable preferred
stock................. -- -- -- -- -- -- (1,929) -- --
Repurchase of preferred
stock................. (69) (6,900) -- -- 2,050 -- -- -- --
Issuances of common
stock................. -- -- 231,249 2 1,056 -- -- -- --
Repurchases of common
stock................. -- -- (610,468) (6) (3,716) -- -- -- --
Issuance of warrants... -- -- -- -- 900 -- -- -- --
Repurchase of
warrants.............. -- -- -- -- (1,909) -- -- -- --
Payments received on
notes receivable...... -- -- -- -- -- 993 -- -- --
Decrease in loan
balance............... -- -- -- -- -- -- -- -- 5,000
Foreign currency
translation
adjustment............ -- -- -- -- -- -- -- (40) --
Other.................. -- -- -- -- 151 -- -- -- --
--- ------ ---------- ---- ------- ------- -------- ------- -------
Balance, February 28,
1994................... -- -- 20,924,588 209 63,572 (1,732) (29,528) (1,741) --
Net loss............... -- -- -- -- -- -- (1,661) -- --
Preferred stock
dividends............. -- -- -- -- -- -- (1,950) -- --
Preferred stock
accretion............. -- -- -- -- -- -- (204) -- --
Issuances of common
stock................. -- -- 161,781 2 393 -- -- -- --
Repurchases of common
stock................. -- -- (75,000) (1) (179) -- -- -- --
Foreign currency
translation
adjustment............ -- -- -- -- -- -- -- 444 --
--- ------ ---------- ---- ------- ------- -------- ------- -------
Balance, February 28,
1995................... -- -- 21,011,369 210 63,786 (1,732) (33,343) (1,297) --
Net income............. -- -- -- -- -- -- 2,252 -- --
Preferred stock
dividends............. -- -- -- -- -- -- (1,633) -- --
Preferred stock
accretion............. -- -- -- -- -- -- (170) -- --
Issuances of common
stock................. -- -- 314,422 4 1,167 -- -- -- --
Repurchases of common
stock................. -- -- (61,963) (1) (256) -- -- -- --
Foreign currency
translation
adjustment............ -- -- -- -- -- -- -- (517) --
Other................... -- -- -- -- (43) -- -- -- --
--- ------ ---------- ---- ------- ------- -------- ------- -------
Balance, December 31,
1995................... -- $ -- 21,263,828 $213 $64,654 $(1,732) $(32,894) $(1,814) $ --
=== ====== ========== ==== ======= ======= ======== ======= =======
</TABLE>
See notes to consolidated financial statements.
F-13
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED FEBRUARY 28,
DECEMBER 31, ------------------------
1995 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)....................... $ 2,252 $ (1,661) $ (18,497)
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization.......... 8,357 9,232 9,559
Provision for losses on contract
receivables........................... 601 1,320 2,241
Provision for deferred income taxes.... 1,253 2,500 (714)
Earnings less than (in excess of) cash
distributions from joint ventures and
affiliated companies.................. (1,105) 972 (1,708)
Minority interests in net income of
subsidiaries.......................... 1,960 -- --
(Gain) loss on sale of investment...... -- (551) 925
Unusual items, net of cash............. (500) -- 7,786
Extraordinary loss on early
extinguishment of debt................ -- -- 5,969
Premium paid on reacquisition of senior
subordinated notes.................... -- -- (4,250)
Changes in operating assets and
liabilities, net of acquisitions:
Contract receivables, net............. (88,743) (13,014) 26,292
Prepaid expenses and other current
assets............................... (3,826) 4,471 4,614
Other assets.......................... (4,953) (1,268) (745)
Accounts payable and accrued
expenses............................. 78,801 2,218 (10,233)
Income taxes payable.................. 157 297 (2,478)
Deferred revenue...................... 3,314 2,551 (2,412)
Other liabilities..................... (3,625) (5,103) (2,660)
Other operating activities............. -- 219 418
-------- ----------- -----------
Net Cash Provided by (Used in)
Operating Activities............... (6,057) 2,183 14,107
-------- ----------- -----------
INVESTING ACTIVITIES
Investments in subsidiaries and
affiliates, net of cash acquired....... (2,010) (622) (2,755)
Sales of subsidiaries and subsidiary
assets................................. 735 2,600 --
Purchases of fixed assets............... (1,759) (2,426) (1,388)
Proceeds from sales of fixed assets..... 1,035 -- --
Other investing activities.............. -- (600) --
-------- ----------- -----------
Net Cash Used in Investing
Activities......................... (1,999) (1,048) (4,143)
-------- ----------- -----------
FINANCING ACTIVITIES
Borrowings under credit facility
agreement.............................. 16,000 5,000 10,000
Principal payments on credit facility
agreement and other borrowings......... (17,173) (1,172) (47,010)
Proceeds from issuance of senior
subordinated notes and related
warrants............................... -- -- 121,488
Reacquisition of senior subordinated
notes and related warrants............. (1,363) -- (31,559)
Repurchases of redeemable preferred
stock and related warrants............. -- (799) (27,363)
Repurchase of preferred stock........... -- -- (4,850)
Subsidiary capital contribution from
minority interest...................... 500 -- --
Proceeds from issuances of common
stock.................................. 406 395 640
Repurchases of common stock............. (257) (180) (3,722)
Principal payments from notes receivable
related to common stock................ -- -- 993
Preferred stock dividends............... (1,471) (1,950) (5,321)
Debt issuance costs..................... -- (149) (6,307)
Other financing activities.............. 55 -- 151
-------- ----------- -----------
Net Cash Provided by (Used in)
Financing Activities............... (3,303) 1,145 7,140
-------- ----------- -----------
Effect of Exchange Rate Changes on
Cash................................... (517) 444 (40)
-------- ----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents............................ (11,876) 2,724 17,064
Cash and Cash Equivalents, Beginning of
Period................................. 28,233 25,509 8,445
-------- ----------- -----------
Cash and Cash Equivalents, End of
Period................................. $ 16,357 $ 28,233 $ 25,509
======== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-14
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--ORGANIZATION AND NATURE OF OPERATIONS
ICF Kaiser International, Inc. (ICF Kaiser or the Company) was formed on
October 19, 1987, as a holding company for the ICF Kaiser family of companies
developed and acquired. These companies provide engineering, construction,
program management, and consulting services primarily to the public and
private environmental, infrastructure, industry, and energy markets
domestically and internationally.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
all subsidiaries (including Kaiser-Hill Company, LLC, effective July 1, 1995)
that are controlled by ICF Kaiser. Certain of ICF Kaiser's subsidiaries are
partially owned by outside parties. For financial reporting purposes, the
assets, liabilities, results of operations, and cash flows of these
subsidiaries are included in ICF Kaiser's consolidated financial statements
and the outside parties' interests are reflected as minority interests.
Investments in unconsolidated joint ventures and affiliated companies are
accounted for using the equity method. The difference between the carrying
value of investments accounted for under the equity method and the Company's
underlying equity is amortized on a straight-line basis over the lives of the
underlying assets. All significant intercompany balances and transactions have
been eliminated.
Significant Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Change in Fiscal Year: The Company changed from a fiscal year ending
February 28 to a fiscal year ending December 31, effective December 31, 1995.
As a result, the accompanying financial statements include consolidated
operations for the ten months ended December 31, 1995 and for the years ended
February 28, 1995 and 1994.
Revenue Recognition: Revenue is recorded on cost-type contracts as costs are
incurred. Revenue on time-and-materials contracts is recognized to the extent
of billable rates times hours delivered plus materials expense incurred.
Revenue on long-term, fixed-price contracts is recognized generally using the
percentage-of-completion method and, therefore, includes a proportion of
expected earnings based on costs incurred to total estimated costs.
Foreign Currency Translation: Results of operations for foreign entities are
translated using the average exchange rates during the period. Assets and
liabilities are translated to U.S. dollars using the exchange rate in effect
at the balance sheet date. Resulting translation adjustments are reflected in
shareholders' equity as cumulative translation adjustment.
Cash Equivalents and Restricted Cash: ICF Kaiser considers all highly liquid
financial instruments purchased with original maturities of three months or
less to be cash equivalents. Other assets as of December 31, 1995 and February
28, 1995 included $600,000 of restricted cash and short-term investments,
which supported a letter of credit for one of ICF Kaiser's subsidiaries.
Fixed Assets: Furniture and equipment are carried at cost, or fair value at
acquisition if acquired through a purchase of a business, and are depreciated
using the straight-line method over their estimated useful lives ranging from
three to ten years. Leasehold improvements are carried at cost and are
amortized using the straight-line method over the remaining lease term.
F-15
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Goodwill: Goodwill represents the excess of cost over the fair value of the
net assets of acquired businesses and is amortized using the straight-line
method over periods ranging from five to 40 years. The Company evaluates the
recoverability of goodwill on an annual basis by examining undiscounted
operating income. Accumulated amortization was $12,785,000 and $11,148,000 at
December 31, 1995 and February 28, 1995, respectively.
Income Taxes: The Company provides for deferred income taxes using the
liability method on temporary differences between financial reporting and
income tax reporting, which primarily relate to reserves for adjustments and
allowances. If necessary, management records a valuation allowance for
deferred tax assets. The most significant permanent differences between book
and taxable income are nondeductible goodwill amortization, minority interest
earnings of a consolidated subsidiary, the effect of foreign taxes, and
differences between the book and tax basis of businesses sold.
Income taxes have not been provided for the undistributed earnings of the
Company's foreign subsidiaries, because the Company intends to continue the
operations and reinvest the undistributed earnings indefinitely. Undistributed
earnings of foreign subsidiaries for which income taxes have not been provided
amounted to approximately $5.7 million at December 31, 1995.
Net Income (Loss) Per Common Share: Net income (loss) per common share is
computed using net income (loss) available for common shareholders, as
adjusted under the modified treasury stock method, and the weighted average
number of common stock and common stock equivalents outstanding during the
periods presented. Common stock equivalents include stock options and warrants
and additional shares which will be or may be issued in connection with
acquisitions. The adjustments required by the modified treasury stock method
and for acquisition-related contingencies were anti-dilutive for all loss
periods presented and immaterial to the income period presented. Therefore,
the adjustments were excluded from earnings per share computations.
Concentrations of Credit Risk: The Company maintains cash balances primarily
in overnight Eurodollar deposits, investment-grade commercial paper, bank
certificates of deposit, and U.S. government securities. ICF Kaiser grants
uncollateralized credit to its customers. Approximately 64% of ICF Kaiser's
contract receivables at December 31, 1995 are from the U.S. government (see
Note D). When practical and in order to mitigate its credit risk to commercial
customers, ICF Kaiser obtains advance funding of costs for industrial
construction work.
Long-Lived Assets: The Financial Accounting Standards Board (FASB) recently
issued Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of", effective for financial statements for fiscal years beginning after
December 15, 1995. It is the Company's current policy to evaluate all long-
lived assets on a periodic basis for asset impairment. Therefore, upon formal
adoption of this statement in 1996, management does not expect that there will
be a material adverse effect on the Company's financial position or
operations.
Stock-Based Compensation: The FASB also recently issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123), which encourages companies to adopt a fair value
method of accounting for employee stock options and similar equity
instruments. The fair value method requires compensation cost to be measured
at the grant date based on the value of the award and is recognized over the
service period. Alternatively, SFAS No. 123 requires the provision of pro
forma disclosures of net income and earnings per share as if the fair value
method had been adopted when the fair value method is not reflected in the
financial statements. The Company has not yet determined whether it will adopt
a fair value method of accounting for stock-based compensation or provide pro
forma disclosures. The impact of the adoption of this statement on the
financial statements cannot be reasonably estimated at this time. The
requirements of SFAS No. 123 are effective for financial statements for fiscal
years beginning after December 15, 1995.
F-16
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Reclassifications: Certain reclassifications have been made to the prior
period financial statements to conform to the presentation used in the
December 31, 1995 financial statements.
NOTE C--DIVESTITURES
The Company sold a 20% interest in a subsidiary during the year ended
February 28, 1995, resulting in a $551,000 pretax gain. During the year ended
February 28, 1994, ICF Kaiser sold a portion of its energy engineering
business, resulting in a $925,000 pretax loss.
NOTE D--CONTRACT RECEIVABLES
Contract receivables consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28,
1995 1995
------------ ------------
<S> <C> <C>
U.S. government agencies:
Currently due................................ $ 26,162 $ 36,752
Retention.................................... 1,870 2,026
Unbilled..................................... 123,890 34,273
-------- --------
151,922 73,051
-------- --------
Commercial clients and state and municipal
governments:
Currently due................................ 64,121 69,317
Retention.................................... 5,361 4,522
Unbilled..................................... 16,270 2,834
-------- --------
85,752 76,673
-------- --------
237,674 149,724
Less allowances for uncollectible receivables.. 9,435 9,864
-------- --------
$228,239 $139,860
======== ========
</TABLE>
U.S. government receivables arise from U.S. government prime contracts and
subcontracts. The significant increase in the unbilled U.S. government
receivables is due primarily to a contract between the U.S. Department of
Energy (DOE) and Kaiser-Hill Company, LLC (Kaiser-Hill) to perform services at
DOE's Rocky Flats Environmental Technology Site in Colorado. Unbilled
receivables result from revenue that has been earned but was not billed as of
the end of the period. The unbilled receivables can be invoiced at
contractually defined intervals and milestones, as well as upon completion of
the contract or the federal government cost audit. Generally, retention is not
expected to be realized within one year; consistent with industry practice,
these receivables are classified as current. Management anticipates that the
remaining unbilled receivables will be substantially billed and collected
within one year.
F-17
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE E--JOINT VENTURES AND AFFILIATED COMPANIES
ICF Kaiser has ownership interests in certain unconsolidated corporate joint
ventures and affiliated companies. The Company's net investments in and
advances to these corporate joint ventures and affiliated companies are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
OWNERSHIP
INTEREST AT
DECEMBER 31, DECEMBER 31, FEBRUARY 28,
1995 1995 1995
------------ ------------ ------------
<S> <C> <C> <C>
Gary PCI Ltd. L.P. ................... 50% $ 5,257 $4,315
LIFAC North America................... 50% 1,535 1,914
Other................................. 20% to 50% 3,421 1,793
------- ------
$10,213 $8,022
======= ======
</TABLE>
Combined summarized financial information of all of ICF Kaiser's corporate
joint ventures and affiliated companies is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28, FEBRUARY 28,
1995 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Current assets........................ $19,082 $15,103 $27,041
Non-current assets.................... 42,400 12,723 6,608
Current liabilities................... 31,703 15,875 19,034
Non-current liabilities............... 446 55 455
Gross revenue......................... 41,262 52,616 51,282
Net income............................ 6,606 8,430 8,908
</TABLE>
NOTE F--LONG-TERM DEBT
ICF Kaiser's long-term debt is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28,
1995 1995
------------ ------------
<S> <C> <C>
12% senior subordinated notes due 2003........... $123,550 $125,000
Revolving credit facility (interest at 9.0% at
December 31, 1995).............................. 5,000 5,000
Other notes, with interest at varying rates,
payable in installments through 1998............ 92 1,209
-------- --------
128,642 131,209
Less unamortized discount on 12% senior
subordinated notes.............................. 3,489 3,898
-------- --------
125,153 127,311
Less current maturities.......................... 5,041 578
-------- --------
Long-term debt................................. $120,112 $126,733
======== ========
</TABLE>
Scheduled maturities of long-term debt outstanding at December 31, 1995, are
as follows: $5,041,000 in 1996, $21,000 in 1997, $30,000 in 1998, and
$123,550,000 in 2003.
On January 11, 1994, ICF Kaiser issued 125,000 Units, each Unit consisting
of $1,000 principal amount of the Company's 12% Senior Subordinated Notes due
2003 (12% Notes) and 4.8 warrants, each to purchase one share of the Company's
common stock at an exercise price of $5.00 per share. The warrants expire on
December 31, 1998, and additional warrants may be issued under certain anti-
dilution provisions. Of the net issue price of
F-18
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
$121,487,500 ($125,000,000 less a $3,512,500 discount), $900,000 was allocated
to the value of the 600,000 warrants and $120,587,500 to the 12% Notes. The
net proceeds were used, in part, to retire the Company's 13.5% Senior
Subordinated Notes due 1999 (13.5% Notes), to repurchase preferred stock, to
repay the outstanding balance on the Company's then-existing revolving credit
facility, and to repurchase warrants associated with the 13.5% Notes and
preferred stock. The recapitalization resulted in a $6.0 million extraordinary
charge (net of $0 tax benefit due to the unanticipated decline in fiscal
1994's fourth-quarter results) for the early extinguishment of debt and a $1.9
million charge to net income available for common shareholders to repurchase
the Series 2C Senior Preferred Stock. In November 1995, the Company's
insurance subsidiary repurchased 1,450 of the Units for $1.4 million. In March
1996, the interest rate on the 12% Notes was increased by one percent until
the Company achieves and maintains a specified level of earnings (see Note I).
The Company's obligations under the 12% Notes are subordinate to its
obligations under the Company's revolving credit facility. Interest payments
are due semiannually. The 12% Notes may not be prepaid at the Company's option
prior to December 31, 1998. Subsequent to that date, the Company may prepay
the 12% Notes at a premium. In addition, the Company agreed to certain
business and financial covenants, including restrictions on indebtedness,
dividends, acquisitions, and certain types of investments and asset sales. At
December 31, 1995, the fair value of the 12% Notes was approximately $116.4
million. The fair value was computed using an average of recently quoted
market prices obtained from financial institutions. Net debt issuance costs of
$3.8 million and $4.2 million associated with the 12% Notes are classified as
other assets at December 31, 1995 and February 28, 1995, respectively, in the
accompanying balance sheets. These costs and the discount on the 12% Notes are
being amortized over the life of the notes.
The Company has a $60 million revolving credit facility (the Credit
Facility) provided by a consortium of banks (the Banks). ICF Kaiser
International, Inc. and certain of its subsidiaries, which are guarantors of
the Credit Facility, granted the Banks a security interest in their accounts
receivable and certain other assets. The Credit Facility limits the payment of
cash dividends, requires the maintenance of specified financial ratios, and
has a $20 million limitation on cash borrowings. Total available credit is
determined from a borrowing base calculation based on accounts receivable. ICF
Kaiser and the Banks entered into amendments in 1995 that modified financial
ratios and other terms of the Credit Facility. As of December 31, 1995, there
were $5.0 million in borrowings outstanding under the Credit Facility, in
addition to letters of credit, and the Company had $23.5 million of available
credit under the Credit Facility. The Credit Facility contains Eurodollar and
alternate base interest rate alternatives with margins dependent upon the
Company's financial operating results, and expires on October 31, 1996. The
outstanding letters of credit were $7.1 million at December 31, 1995, and
issued principally to support performance guarantees under certain contracts.
One of the Company's subsidiaries has a $50 million receivables purchase
facility to support the working capital requirements of the subsidiary under
its contract. The receivables purchase facility requires the subsidiary to
maintain a specified tangible net worth and contains certain default
provisions for delinquent receivables. Program fees consist of 0.30% per annum
of the unused portion of the facility and 0.45% per annum of the used portion
of the facility. The receivables purchase facility is non-recourse to ICF
Kaiser International, Inc. and expires on June 30, 1998.
There are 275,088 common stock warrants that were issued with the 13.5%
Notes that remained outstanding following the repurchase of the other warrants
in January 1994. The warrants expire on May 15, 1999, and are exercisable at
any time for shares of ICF Kaiser Common Stock at $6.87 per share. Additional
warrants may be required to be issued under certain anti-dilution provisions.
F-19
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE G--CONTINGENCIES
In the course of the Company's normal business activities, various claims or
charges have been asserted and litigation commenced against the Company
arising from or related to properties, injuries to persons, and breaches of
contract, as well as claims related to acquisitions and dispositions. Claimed
amounts may not bear any reasonable relationship to the merits of the claim or
to a final court award. In the opinion of management, an adequate reserve has
been provided for final judgments, if any, in excess of insurance coverage,
that might be rendered against the Company in such litigation.
The Company may from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of
procurement or other federal laws and regulations. The Company currently is
the subject of a number of U.S. government investigations and is cooperating
with the responsible government agencies involved. No charges presently are
known to have been filed against the Company by these agencies. Management
does not believe that there will be any material adverse effect on the
Company's financial position, operations, or cash flows as a result of these
investigations.
The Company has a substantial number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. As a result of such audits, the government asserts, from time to
time, that certain costs claimed as reimbursable under government contracts
either were not allowable or not allocated in accordance with federal
procurement regulations. Management believes that the potential effect of
disallowed costs, if any, for the periods currently under audit and for
periods not yet audited, has been provided for adequately and will not have a
material adverse effect on the Company's financial position, operations, or
cash flows.
F-20
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE H--INCOME TAXES
The components of income (loss) before income taxes and minority interests
and the related provision (benefit) for income taxes are as follows (in
thousands):
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED FEBRUARY 28,
DECEMBER 31, -----------------------
1995 1995 1994
------------ ---------- ------------
<S> <C> <C> <C>
Income (loss) before income taxes,
minority interests, and
extraordinary item:
Domestic.......................... $ 7,419 $ 1,217 $ (11,894)
Foreign........................... (1,116) 22 (983)
------- ---------- ------------
$ 6,303 $ 1,239 $ (12,877)
======= ========== ============
Provision (benefit) for income
taxes:
Federal:
Current........................... $ 171 $ 120 $ --
Deferred.......................... 2,020 2,328 (652)
------- ---------- ------------
2,191 2,448 (652)
------- ---------- ------------
State:
Current........................... 258 100 --
Deferred.......................... 293 172 (62)
------- ---------- ------------
551 272 (62)
------- ---------- ------------
Foreign:
Current........................... 409 180 365
Deferred.......................... (1,060) -- --
------- ---------- ------------
(651) 180 365
------- ---------- ------------
$ 2,091 $ 2,900 $ (349)
======= ========== ============
</TABLE>
The tax effects of the principal temporary differences and carryforwards
that give rise to the Company's deferred tax asset are as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28,
1995 1995
------------ ------------
<S> <C> <C>
Reserves for adjustments and allowances........... $ 8,984 $ 8,507
Vacation and incentive compensation accruals...... 6,655 5,443
Litigation settlement............................. (2,676) --
Joint ventures.................................... (1,969) (1,610)
Net operating loss carryforwards.................. 711 2,247
Tax credit carryforwards.......................... 2,077 1,063
Other............................................. 1,482 1,233
------- -------
Deferred income tax asset......................... 15,264 16,883
Valuation allowance............................... (3,330) (3,330)
------- -------
Deferred income tax asset, net.................. $11,934 $13,553
======= =======
</TABLE>
Because of the reported losses for the year ended February 28, 1994, a $3.3
million valuation allowance was established in that year for deferred tax
assets. Although the level of pretax income has increased
F-21
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
substantially since that period (with a corresponding increase in taxable
income), the Company has maintained the valuation allowance. At December 31,
1995, the Company had deferred tax assets of $0.7 million related to net
operating loss carryforwards, of which $0.5 million expire within the next
five years and $0.2 million expire in 2008. Additionally, the Company has
deferred tax assets of $2.1 million related to tax credit carryforwards, the
majority of which expire in 1998 to 2009. Management believes that the
Company's expected levels of pretax earnings, when adjusted for nondeductible
expenses such as goodwill amortization, will generate sufficient future
taxable income to realize the $11.9 million deferred tax asset (net) within
the next five years.
The effective income tax (benefit) rate varied from the federal statutory
income tax rate because of the following differences:
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED
ENDED FEBRUARY 28,
DECEMBER 31, --------------
1995 1995 1994
------------ ------ ------
<S> <C> <C> <C>
Statutory tax rate (benefit)................. 34.0% 34.0% (34.0)%
----- ------ ------
Changes in tax rate (benefit) from:
Goodwill amortization...................... 11.7 69.9 9.9
Minority interest earnings of a consoli-
dated subsidiary.......................... (11.0) -- --
Differences between book and tax basis of
businesses sold........................... -- 7.4 7.3
State income taxes......................... 5.8 14.5 (0.3)
Foreign taxes (benefit).................... (9.2) 67.8 4.8
Valuation allowance........................ -- -- 9.2
Business meals, entertainment, and dues.... 5.1 30.9 1.4
R&D credits................................ (5.5) -- --
Subsidiary preferred dividends............. -- 1.9 0.1
Adjustment of prior years' accruals........ 2.1 3.8 (2.4)
Other...................................... 0.2 3.8 1.3
----- ------ ------
(0.8) 200.0 31.3
----- ------ ------
33.2% 234.0% (2.7)%
===== ====== ======
</TABLE>
One of the Company's consolidated subsidiaries, Kaiser-Hill, is a flow-
through entity for tax purposes and is partially owned by an outside party.
Accordingly, the provision for income taxes in the accompanying financial
statements was computed based on the Company's taxable share of Kaiser-Hill's
income. The tax rate effect of the outside party's share of income is
reflected above as minority interest earnings of a consolidated subsidiary.
Kaiser-Hill began operations during the ten months ended December 31, 1995.
The tax provision for the year ended February 28, 1995 reflects the deemed
dividend from the repatriation of overseas funds to the United States that
currently could not be offset by foreign tax credits. For the past several
years, the Company has had ongoing negotiations, filings, and litigation with
the Internal Revenue Service (IRS) related to settlement of its tax
liabilities and the liabilities associated with affiliates of acquired
companies. During the year ended February 28, 1995, ICF Kaiser's 1989-1992 tax
returns were accepted as filed, resulting in the receipt of refunds from the
IRS with interest. An agreement also was reached with the IRS as to the amount
of interest owed in connection with previously settled years (1977-1986). The
overall impact on pretax earnings for the year ended February 28, 1995 was a
reduction of net interest expense of $1.3 million related to interest refunds.
F-22
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE I--PREFERRED STOCK
Preferred Stock of the Company is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28,
1995 1995
------------ ------------
<S> <C> <C>
Series 2D Senior Preferred Stock, par value
$0.01 per share; liquidation value $20,000,000;
200 shares designated, issued, and outstand-
ing............................................ $20,000 $20,000
Less unamortized discount, warrant value, and
issue costs.................................... (213) (383)
------- -------
Redeemable Preferred Stock.................... $19,787 $19,617
======= =======
</TABLE>
Series 2D Senior Preferred Stock: The Series 2D Senior Preferred Stock
(Series 2D Preferred Stock) together with five-year detachable warrants
(Series 2D Warrants) were issued in fiscal 1992 for a price of $20,000,000
(less a discount of $100,000). Of the net price of $19,900,000, $400,000 was
allocated to the value of the warrants and $19,500,000 was allocated to the
value of the stock. The value of the Series 2D Preferred Stock was reduced
further by issue costs.
Dividends on the Series 2D Preferred Stock are $9,750 per share per annum,
cumulative. Each of the shares has a liquidation preference of $100,000 ($20
million in the aggregate). The issue carries voting rights equal to 2,380,952
shares of ICF Kaiser Common Stock. The Series 2D Preferred Stock may be
redeemed at ICF Kaiser's option at 106.25% of the original price and is
subject to mandatory redemption at liquidation value on January 13, 1997.
Because of technical limitations on the payment of dividends contained in the
Indenture governing the Company's 12% Notes (see Note F), the Company did not
pay the November 30, 1995 and February 29, 1996 accrued dividends in the
aggregate amount of $975,000. Dividends in arrears at December 31, 1995 were
$487,500. If dividends are in arrears in excess of 100 days or redemption does
not occur in January 1997, the holder of the Series 2D Preferred Stock will
have the exclusive right to elect two additional directors and to prohibit or
limit the Company from taking certain specified extraordinary actions without
the holder's consent. In March 1996, the Company and the holders of the 12%
Notes amended the Indenture to permit payment of all accrued but unpaid
dividends (which were then paid) and all future dividends. As consideration
for this amendment, the interest rate on the 12% Notes was increased by one
percent from March 1996 until the Company achieves and maintains a specified
level of earnings.
The Series 2D Warrants expire in November 1997 and may be exercised for
2,680,952 shares of ICF Kaiser Common Stock at an exercise price of $6.90 per
share. In lieu of exercising the warrants, the holder may, at the holder's
option, require the Company to pay it cash or issue shares of ICF Kaiser's
Common Stock equal to the difference between the current market price of the
Company's common stock and 90% of the warrants' current exercise price. In the
event that the Company cannot make a cash payment to the holder of the
warrants without violating certain covenants contained in the Company's
agreements relating to certain indebtedness, the Company will make such
payment in common stock. Additional warrants may be issued under certain anti-
dilution provisions.
Junior Preferred Stock: The Company has authorized 200 shares of Series 1
Junior Convertible Preferred Stock, par value $0.01 per share, with a
liquidation value of $20,000,000 and 500,000 shares of Series 4 Junior
Preferred Stock, par value $0.01 per share, with a liquidation value of
$500,000. There were no shares issued or outstanding on either series as of
December 31, 1995 and February 28, 1995.
F-23
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE J--COMMON STOCK
Notes Receivable Related to Common Stock: Notes receivable related to ICF
Kaiser Common Stock pertain to promissory notes from certain current and
former members of senior management in accordance with their compensation
agreements collateralized by shares of ICF Kaiser Common Stock.
Shareholder Rights Plan: The Shareholder Rights Plan (Rights Plan) is
designed to provide the Board of Directors (the Board) with the ability to
negotiate with a person or group that might, in the future, make an
unsolicited attempt to acquire control of ICF Kaiser, whether through the
accumulation of shares in the open market or through a tender offer that does
not offer an adequate price. The Rights Plan provides for one Right (Right)
for each outstanding share of ICF Kaiser Common Stock. Each Right entitles the
holder to purchase 1/100 of a share of Series 4 Junior Preferred Stock at a
purchase price of $50. The Rights generally may cause substantial dilution to
a person or group that attempts to acquire the Company on terms not approved
by the Board. The Rights should not interfere with any merger or other
business combination approved by the Board because the Board may, at its
option, following the acquisition by any person or group of 20% of the
outstanding shares of ICF Kaiser Common Stock, redeem the Rights upon payment
of the redemption price of $0.01 per Right. The Rights are not triggered by
the acquisition of beneficial ownership of more than 20% of ICF Kaiser Common
Stock by the initial holder of the Series 2D Preferred Stock. Unless redeemed
earlier by the Board, unexercised Rights expire on January 13, 2002.
Other: At December 31, 1995, ICF Kaiser was obligated to issue 396,167
shares of the Company's common stock pursuant to an agreement with a former
employee. Accordingly, this liability has been recognized in the accompanying
financial statements. The shares were issued in March 1996. 275,000 of these
shares are being held by the Company pursuant to a pledge agreement as
security for an amount receivable from the former employee.
NOTE K--LEASES
Future minimum payments on noncancelable operating leases for office space
and on other noncancelable operating leases with initial or remaining terms in
excess of one year are as follows on December 31, 1995 (in thousands):
<TABLE>
<S> <C>
1996......................................................... $ 24,066
1997......................................................... 19,949
1998......................................................... 17,366
1999......................................................... 15,701
2000......................................................... 12,586
Thereafter..................................................... 20,312
--------
$109,980
========
</TABLE>
The total rental expense for all operating leases was $24,950,000,
$31,176,000, and $30,833,000 for the ten months ended December 31, 1995 and
the years ended February 28, 1995 and 1994, respectively. Sublease rental
income was $3,189,000, $3,944,000, and $2,225,000, for the ten months ended
December 31, 1995 and the years ended February 28, 1995 and 1994,
respectively. Minimum future sublease rentals to be received under
noncancelable subleases during 1996 are approximately $1,967,000.
F-24
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE L--STOCK OPTIONS
The ICF Kaiser Stock Incentive Plan provides for the issuance of options,
stock appreciation rights, restricted shares, and restricted stock units of up
to an aggregate of 6,000,000 shares of ICF Kaiser Common Stock. Awards are
made to employees of ICF Kaiser at the discretion of the Compensation
Committee of the Board. The plan provides that the option price is not to be
less than the fair market value on the date of grant.
Stock option activity under this plan and other options granted for the
periods indicated is as follows:
<TABLE>
<CAPTION>
SHARES OPTION PRICE
--------- ---------------
<S> <C> <C>
Balance, March 1, 1993........................... 1,946,000 $5.99 to $17.00
Granted........................................ 390,000 $4.17 to $ 6.79
Canceled....................................... (10,000) $8.25 to $12.83
Expired........................................ (30,000) $5.04 to $12.83
---------
Balance, February 28, 1994....................... 2,296,000 $4.17 to $17.00
Granted........................................ 824,000 $2.34 to $ 4.41
Canceled....................................... (453,000) $2.64 to $16.23
Expired........................................ (250,000) $4.41 to $16.23
---------
Balance, February 28, 1995....................... 2,417,000 $2.34 to $17.00
Granted........................................ 678,000 $3.50 to $ 4.42
Canceled....................................... (257,000) $8.25
Expired........................................ (382,000) $2.64 to $16.23
Exercised...................................... (4,000) $2.64 to $ 2.68
---------
Balance, December 31, 1995....................... 2,452,000 $2.34 to $17.00
=========
Exercisable at December 31, 1995................. 1,090,000 $2.34 to $17.00
=========
</TABLE>
At December 31, 1995, 1,985,835 shares were available for the granting of
options. There were 242,000 exercisable options outstanding at an option price
below the fair market value of ICF Kaiser Common Stock at December 31, 1995.
In March 1995, the Company canceled 257,000 options granted to employees at an
exercise price of $8.25 and granted 86,000 options to them at an exercise
price of $4.09.
NOTE M--EMPLOYEE BENEFIT PLANS
ICF Kaiser and certain of its subsidiaries sponsor a number of benefit plans
covering substantially all employees who meet minimum length of service
requirements. These plans include the ICF Kaiser International, Inc.
Retirement Plan (Retirement Plan), a defined-contribution profit sharing plan
that provides for contributions by the Company based on a percentage of
covered compensation; the ICF Kaiser International, Inc. Section 401(k) Plan
(401(k) Plan), a cash or deferred-compensation arrangement that allows
employees to defer portions of their salary, subject to certain limitations;
and the ICF Kaiser International, Inc. Employee Stock Ownership Plan (ESOP)
under which the Company made contributions based on a percentage of covered
compensation. Effective March 1, 1993, the Company made contributions equal to
20% of the first 4% of employee contributions to the 401(k) Plan and 2% of
covered compensation to the ESOP. Effective March 1, 1994, the Company
increased its matching contribution to the 401(k) Plan to 50% of the first 4%
of employee contributions and discontinued contributions to the ESOP. Total
expense for these plans for the ten months ended December 31, 1995 and the
years ended February 28, 1995 and 1994 was $5,711,000, $6,466,000, and
$8,041,000, respectively. As of December 31, 1995, the Retirement Plan, 401(k)
Plan, and ESOP owned 1,036,437, 175,937, and 2,104,240 shares, respectively,
of ICF Kaiser Common Stock.
F-25
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Certain of the Company's employees are covered by union-sponsored,
collectively bargained, multi-employer pension plans. Contributions and costs
are determined in accordance with the provisions of negotiated labor contracts
or terms of the plans. Pension expense for these plans was $3,676,000,
$2,525,000, and $2,150,000 for the ten months ended December 31, 1995 and the
years ended February 28, 1995 and 1994, respectively.
NOTE N--OTHER POSTRETIREMENT BENEFITS
The Company provides certain postretirement benefits to a limited group of
retirees. The cost of these benefits is funded when paid and limited to a
fixed amount per participant. The Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", as of March 1, 1993, and recorded the
transition obligation on the delayed recognition basis.
The funded status of the plan is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, FEBRUARY 28,
1995 1995
------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligation
(APBO)......................................... $ 7,843 $ 9,537
Unamortized transition obligation............... (11,427) (12,257)
Unrecognized net gain........................... 5,554 4,121
-------- --------
Accrued postretirement benefit cost............. $ 1,970 $ 1,401
======== ========
</TABLE>
The net periodic postretirement benefit cost consists of the following (in
thousands):
<TABLE>
<CAPTION>
TEN MONTHS YEAR ENDED
ENDED FEBRUARY 28,
DECEMBER 31, -------------
1995 1995 1994
------------ ------ ------
<S> <C> <C> <C>
Interest cost..................................... $ 541 $ 920 $ 938
Amortization of transition obligation............. 830 980 981
Amortization of unrecognized net gain............. (214) -- --
------ ------ ------
Net periodic postretirement benefit cost........ $1,157 $1,900 $1,919
====== ====== ======
</TABLE>
All service cost related to the participants' benefits was included in the
transition obligation.
The discount rate at both December 31, 1995 and February 28, 1995 was 7%.
The 1995 health care cost trend rate is 5%, effective until 2008 when the cost
will be in excess of the Company's maximum obligation. If the trend rate was
increased by 1% for each year, the APBO as of December 31, 1995 would increase
by approximately 3%. Due to changes in assumptions made, including reductions
in premiums paid by the Company, the APBO was reduced by approximately $1.6
million during the ten months ended December 31, 1995. These reductions in the
APBO will be amortized over the average remaining life expectancy of the
plan's participants.
F-26
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE O--BUSINESS SEGMENT, MAJOR CUSTOMERS, AND FOREIGN OPERATIONS
Business Segment: ICF Kaiser operates predominantly in one industry segment
in which it provides engineering, construction, program management, and
consulting services.
Major Customers: Gross revenue from major customers is as follows (in
thousands):
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED FEBRUARY 28,
DECEMBER 31, -----------------------
1995 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
U.S. Department of Energy.............. $623,149 $ 517,478 $ 312,889
U.S. Environmental Protection Agency... 55,527 62,783 63,109
Other U.S. government agencies......... 41,182 44,969 49,105
-------- ----------- -----------
Total U.S. government................ $719,858 $ 625,230 $ 425,103
======== =========== ===========
</TABLE>
Foreign Operations: Gross revenue and operating income from foreign
operations and foreign assets of all consolidated subsidiaries and branches
were as follows (in thousands):
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED FEBRUARY 28,
DECEMBER 31, ------------------------
1995 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Foreign gross revenue:
Europe............................. $ 14,237 $ 16,758 $ 11,600
Pacific............................ 28,002 35,189 21,997
Other.............................. 1,189 2,122 2,793
-------- ----------- -----------
43,428 54,069 36,390
Domestic gross revenue............... 873,316 807,449 615,267
-------- ----------- -----------
Total gross revenue.............. $916,744 $ 861,518 $ 651,657
======== =========== ===========
Foreign operating income (loss):
Europe............................. $ 1,426 $ 2,600 $ 1,742
Pacific............................ 2,511 (350) (1,899)
Other.............................. 20 (44) (255)
-------- ----------- -----------
3,957 2,206 (412)
Domestic operating income (loss)..... 13,548 11,482 (4,818)
-------- ----------- -----------
Total operating income (loss).... $ 17,505 $ 13,688 $ (5,230)
======== =========== ===========
Foreign assets:
Europe............................. $ 12,905 $ 9,950 $ 6,410
Pacific............................ 11,024 14,813 14,626
Other.............................. 137 182 14
-------- ----------- -----------
24,066 24,945 21,050
Domestic assets...................... 345,451 256,477 260,148
-------- ----------- -----------
Total assets..................... $369,517 $ 281,422 $ 281,198
======== =========== ===========
</TABLE>
F-27
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE P--UNUSUAL ITEMS
During the ten months ended December 31, 1995, the Company recorded $0.5
million in additional income (net), consisting of the following unusual items:
income in settlement of litigation against the IRS, associated with an
affiliate of an acquired company, net of an accrual for related expenses ($6.8
million); a charge to accrue the net settlement cost and legal expenses of
other litigation ($4.6 million); a charge to accrue for severance for the
termination of 110 employees in the engineering and international groups ($1.0
million); and a charge to accrue for consolidation of office space ($0.7
million). As a part of management's continuing efforts to identify areas in
which costs can be reduced, the Company has chosen to terminate a group of
underutilized employees and consolidate office space. Management expects that
all actions associated with the termination of employees and office space
consolidation will be completed by December 31, 1996.
During the year ended February 28, 1994, the Company completed a corporate
reorganization, performed a comprehensive review of its key business lines and
its cost structure, and designed and implemented action plans intended to
return the Company to long-term profitability. As a result, the Company
recorded an $8.7 million pretax charge to cover the cost of downsizing the
work force ($2.5 million), consolidating office space and renegotiating
significant leases ($5.1 million), and restructuring certain international
operations ($1.1 million). All actions have been completed, and there is no
further liability outstanding as of December 31, 1995 associated with this
plan.
NOTE Q--SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows (in thousands):
<TABLE>
<CAPTION>
TEN MONTHS
ENDED YEAR ENDED FEBRUARY 28,
DECEMBER 31, ------------------------
1995 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Cash payments for interest.......... $7,898 $ 14,961 $ 10,565
Cash payments (refunds) for income
taxes.............................. 1,306 (1,026) (106)
Non-cash transactions:
Issuance of common stock in
connection with an acquisition... 765 -- --
Decrease of ESOP guaranteed bank
loan............................. -- -- (5,000)
Sale of investment................ -- 735 2,600
</TABLE>
F-28
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE R--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for full fiscal quarters for the ten months
ended December 31, 1995 and the year ended February 28, 1995 is presented in
the following tables (in thousands, except per share amounts):
Ten Months Ended December 31, 1995:
<TABLE>
<CAPTION>
THIRD SECOND FIRST
QUARTER QUARTER QUARTER
-------- -------- --------
<S> <C> <C> <C> <C>
Gross revenue...................... $319,870 $268,274 $192,983
Service revenue.................... $147,391 $117,645 $105,498
Operating income................... $ 5,815 $ 5,497 $ 3,762
Net income......................... $ 896 $ 575 $ 163
Primary and fully diluted net
income (loss) per common share.... $ 0.02 $ 0.00 $ (0.02)
Market price per share:
High............................. $ 4.75 $ 4.63 $ 5.00
Low.............................. $ 3.25 $ 3.75 $ 3.75
Year Ended February 28, 1995:
<CAPTION>
FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross revenue...................... $206,154 $235,912 $208,961 $210,491
Service revenue.................... $111,372 $125,345 $109,919 $113,150
Operating income................... $ 3,234 $ 2,962 $ 3,273 $ 4,219
Net income (loss).................. $ (943) $ (323) $ (613) $ 218
Primary and fully diluted net
income (loss) per common share.... $ (0.07) $ (0.04) $ (0.05) $ (0.02)
Market price per share:
High............................. $ 4.38 $ 4.13 $ 2.63 $ 3.88
Low.............................. $ 2.63 $ 2.38 $ 2.00 $ 2.25
</TABLE>
At February 29, 1996 there were 21,398,053 shares of common stock
outstanding held by 1,356 holders of record.
F-29
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE S--COMPARATIVE STATEMENT OF OPERATIONS INFORMATION (UNAUDITED)
Unaudited operating results for the ten months ended December 31, 1994 are
as follows (in thousands):
<TABLE>
<S> <C>
GROSS REVENUE................................................. $ 732,370
Subcontract and direct material costs....................... (343,369)
Equity in income of joint ventures and affiliated
companies.................................................. 2,995
---------
SERVICE REVENUE............................................... 391,996
OPERATING EXPENSES
Direct cost of services and overhead........................ 337,120
Administrative and general.................................. 34,292
Depreciation and amortization............................... 7,688
---------
OPERATING INCOME.............................................. 12,896
OTHER INCOME (EXPENSE)
Gain on sale of investment.................................. 551
Interest income............................................. 1,492
Interest expense............................................ (12,138)
---------
INCOME BEFORE INCOME TAXES.................................... 2,801
Income tax provision........................................ 2,962
---------
NET LOSS...................................................... $ (161)
=========
</TABLE>
NOTE T--GUARANTOR SUBSIDIARIES
In connection with the registration of 12% Senior Notes due 2003, Series B
(Exchange Notes), the Company is required to provide financial information for
four wholly owned subsidiaries of ICF Kaiser International, Inc. (Subsidiary
Guarantors). The Subsidiary Guarantors unconditionally guarantee the payment
of the principal, premium, if any, and interest on the Company's $15 million
of 12% Senior Notes due 2003, Series A issued in December 1996 (Series A
Notes) and the Exchange Notes. The Company is offering to exchange the
Exchange Notes for the Series A Notes. The Subsidiary Guarantors are Cygna
Consulting Engineers and Project Management, Inc., ICF Kaiser Government
Programs, Inc., PCI Operating Company, Inc., and Systems Applications
International, Inc.
Presented below is condensed consolidating financial information for ICF
Kaiser International, Inc. (Parent Company), the Subsidiary Guarantors, and
the non-guarantor subsidiaries as of and for the ten months ended December 31,
1995, and the years ended February 28, 1995 and 1994.
Investments in subsidiaries have been presented using the equity method of
accounting. ICF Kaiser International, Inc. does not have a formal tax sharing
arrangement with its subsidiaries and has allocated taxes to its subsidiaries
based on the Company's effective tax rate. In the Company's opinion, separate
financial statements for Subsidiary Guarantors would not provide additional
information that is material to investors. Therefore, the Subsidiary
Guarantors are combined in the presentation below.
F-30
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ICF KAISER
PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ---------- ------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents.......... $ 4,128 $ 1,015 $ 12,578 $ (1,364) $ 16,357
Contract receivables,
net.................. (2,970) 75,407 155,802 -- 228,239
Intercompany
receivables, net..... 145,228 (8,516) (136,712) -- --
Prepaid expenses and
other current
assets............... 5,093 4,092 12,942 (1,216) 20,911
Deferred income
taxes................ 12,169 -- (235) -- 11,934
-------- ------- --------- -------- --------
Total Current
Assets............. 163,648 71,998 44,375 (2,580) 277,441
-------- ------- --------- -------- --------
Fixed Assets
Furniture, equipment,
and leasehold
improvements......... 2,957 1,507 38,445 -- 42,909
Less depreciation and
amortization......... (2,555) (788) (30,026) -- (33,369)
-------- ------- --------- -------- --------
402 719 8,419 -- 9,540
-------- ------- --------- -------- --------
Other Assets
Goodwill, net......... -- -- 49,259 -- 49,259
Investments in and
advances to
affiliates........... 45,592 1 10,782 (46,162) 10,213
Due from officers and
employees............ 294 188 571 -- 1,053
Other................. 5,520 3,624 12,867 -- 22,011
-------- ------- --------- -------- --------
51,406 3,813 73,479 (46,162) 82,536
-------- ------- --------- -------- --------
$215,456 $76,530 $ 126,273 $(48,742) $369,517
======== ======= ========= ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of
long-term debt....... $ 5,000 $ 4 $ 37 $ -- $ 5,041
Accounts payable and
other accrued
expenses............. 16,250 47,127 42,776 (1,130) 105,023
Accrued salaries and
employee benefits.... 10,053 24,505 18,502 -- 53,060
Accrued interest...... 7,500 -- -- (86) 7,414
Income taxes payable.. (1,729) -- 2,530 -- 801
Deferred revenue...... 15 212 14,100 -- 14,327
Other................. 3,779 38 3,369 -- 7,186
-------- ------- --------- -------- --------
Total Current
Liabilities........ 40,868 71,886 81,314 (1,216) 192,852
-------- ------- --------- -------- --------
Long-term Liabilities
Long-term debt, less
current portion...... 121,470 -- 51 (1,409) 120,112
Other................. 3,090 -- 2,616 -- 5,706
-------- ------- --------- -------- --------
124,560 -- 2,667 (1,409) 125,818
-------- ------- --------- -------- --------
Minority Interests in
Subsidiaries........... -- 2,539 94 -- 2,633
Redeemable Preferred
Stock.................. 19,787 -- -- -- 19,787
Common Stock............ 213 108 165 (273) 213
Additional Paid-in
Capital................ 64,654 -- 43,225 (43,225) 64,654
Notes Receivable Related
to Common Stock........ (1,732) -- -- -- (1,732)
Retained Earnings
(Deficit).............. (32,894) 1,997 622 (2,619) (32,894)
Cumulative Translation
Adjustment............. -- -- (1,814) -- (1,814)
-------- ------- --------- -------- --------
$215,456 $76,530 $ 126,273 $(48,742) $369,517
======== ======= ========= ======== ========
</TABLE>
F-31
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
TEN MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON- ICF KAISER
PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------- ---------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
Gross Revenue $ 1,539 $ 285,037 $ 630,168 $ -- $ 916,744
Subcontract and direct
material costs....... (1,037) (189,607) (303,327) -- (493,971)
Equity in income of
joint ventures and
affiliated companies
and subsidiaries..... 754 -- 3,358 (989) 3,123
------- --------- --------- ----- ---------
Service Revenue......... 1,256 95,430 330,199 (989) 425,896
Operating Expenses
Operating expenses.... (2,502) 90,502 312,589 (55) 400,534
Depreciation and
amortization......... 1,349 850 6,158 -- 8,357
Usual items, net...... 1,700 -- (2,200) -- (500)
------- --------- --------- ----- ---------
Operating Income........ 709 4,078 13,652 (934) 17,505
Interest income....... 488 269 1,319 (23) 2,053
Interest expense...... 1,147 (475) (13,950) 23 (13,255)
------- --------- --------- ----- ---------
Income Before Income
Taxes and Minority
Interests.............. 2,344 3,872 1,021 (934) 6,303
Income tax provision.. (92) (556) (1,443) -- (2,091)
------- --------- --------- ----- ---------
Income (Loss) Before
Minority Interests..... 2,252 3,316 (422) (934) 4,212
Minority interests in
net (income) loss of
subsidiaries......... -- (2,039) 79 -- (1,960)
------- --------- --------- ----- ---------
Net Income (Loss)....... 2,252 1,277 (343) (934) 2,252
Preferred stock
dividends and
accretion............ 1,803 -- -- -- 1,803
------- --------- --------- ----- ---------
Net Income (Loss)
Available for Common
Shareholders........... $ 449 $ 1,277 $ (343) $(934) $ 449
======= ========= ========= ===== =========
</TABLE>
F-32
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
TEN MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON- ICF KAISER
PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------- ---------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
Net Cash Provided by
(Used in) Operating
Activities............. $(6,297) $ 655 $ 949 $(1,364) $(6,057)
------- ------ ------- ------- -------
INVESTING ACTIVITIES
Investments in
subsidiaries and
affiliates, net of cash
acquired............... (1,000) -- (1,010) -- (2,010)
Sale of subsidiaries and
subsidiary assets...... -- -- 735 -- 735
Purchases of fixed
assets................. (92) (148) (1,519) -- (1,759)
Proceeds from sale of
fixed assets........... -- -- 1,035 -- 1,035
------- ------ ------- ------- -------
Net Cash Used in
Investing
Activities......... (1,092) (148) (759) -- (1,999)
------- ------ ------- ------- -------
FINANCING ACTIVITIES
Borrowings under credit
facility agreement..... 16,000 -- -- -- 16,000
Principal payments on
credit facility and
other borrowings....... (16,000) -- (1,173) -- (17,173)
Reacquisition of senior
subordinated notes and
related warrants....... -- -- (1,363) -- (1,363)
Subsidiary capital
contribution from
minority interest...... -- 500 -- -- 500
Proceeds from issuance
of common stock........ 406 -- -- -- 406
Repurchases of common
stock.................. (257) -- -- -- (257)
Preferred stock
dividends.............. (1,471) -- -- -- (1,471)
Other financing
activities............. -- -- 55 -- 55
------- ------ ------- ------- -------
Net Cash Provided by
(Used in) Financing
Activities......... (1,322) 500 (2,481) -- (3,303)
------- ------ ------- ------- -------
Effect of Exchange Rate
Changes on Cash........ -- -- (517) -- (517)
------- ------ ------- ------- -------
Increase (Decrease) in
Cash and Cash
Equivalents............ (8,711) 1,007 (2,808) (1,364) (11,876)
Cash and Cash
Equivalents at
Beginning of Period.... 12,839 8 15,386 -- 28,233
------- ------ ------- ------- -------
Cash and Cash
Equivalents at End of
Period................. $ 4,128 $1,015 $12,578 $(1,364) $16,357
======= ====== ======= ======= =======
</TABLE>
F-33
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
FEBRUARY 28, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ICF KAISER
PARENT SUBSIDIARY NON-GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ---------- ------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash
equivalents.......... $ 12,839 $ 8 $ 15,386 $ -- $ 28,233
Contract receivables,
net.................. (3,331) 4,593 138,598 -- 139,860
Intercompany
receivables, net..... 133,776 (3,856) (129,920) -- --
Prepaid expenses and
other current
assets............... 5,349 137 6,058 (672) 10,872
Deferred income
taxes................ 13,788 -- (235) -- 13,553
-------- ------ -------- -------- --------
Total Current
Assets............. 162,421 882 29,887 (672) 192,518
-------- ------ -------- -------- --------
Fixed Assets
Furniture, equipment,
and leasehold
improvements......... 2,865 1,359 38,333 -- 42,557
Less depreciation and
amortization......... (2,196) (441) (27,011) -- (29,648)
-------- ------ -------- -------- --------
669 918 11,322 -- 12,909
-------- ------ -------- -------- --------
Other Assets
Goodwill, net......... -- -- 47,945 -- 47,945
Investments in and
advances to
affiliates........... 42,797 -- 8,848 (43,623) 8,022
Due from officers and
employees............ 262 -- 1,564 -- 1,826
Other................. 5,766 83 12,353 -- 18,202
-------- ------ -------- -------- --------
48,825 83 70,710 (43,623) 75,995
-------- ------ -------- -------- --------
$211,915 $1,883 $111,919 $(44,295) $281,422
======== ====== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of
long-term debt....... $ -- $ 4 $ 574 $ -- $ 578
Accounts payable and
other accrued
expenses............. 17,766 494 29,223 (672) 46,811
Accrued salaries and
employee benefits.... 7,255 280 23,014 -- 30,549
Accrued interest...... 2,528 -- -- -- 2,528
Income taxes payable.. 42 -- 602 -- 644
Deferred revenue...... -- 256 10,757 -- 11,013
Other................. 5,934 21 2,800 -- 8,755
-------- ------ -------- -------- --------
Total Current
Liabilities........ 33,525 1,055 66,970 (672) 100,878
-------- ------ -------- -------- --------
Long-term Liabilities
Long-term debt, less
current portion...... 126,102 -- 631 -- 126,733
Other................. 3,750 -- 2,647 -- 6,397
-------- ------ -------- -------- --------
129,852 -- 3,278 -- 133,130
-------- ------ -------- -------- --------
Minority Interests in
Subsidiaries........... -- -- 173 -- 173
Redeemable Preferred
Stock.................. 19,617 -- -- -- 19,617
Common Stock............ 210 108 159 (267) 210
Additional Paid-in
Capital................ 63,786 -- 41,674 (41,674) 63,786
Notes Receivable Related
to Common Stock........ (1,732) -- -- -- (1,732)
Retained Earnings
(Deficit).............. (33,343) 720 962 (1,682) (33,343)
Cumulative Translation
Adjustment............. -- -- (1,297) -- (1,297)
-------- ------ -------- -------- --------
$211,915 $1,883 $111,919 (44,295) $281,422
======== ====== ======== ======== ========
</TABLE>
F-34
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON- ICF KAISER
PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------- ---------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
Gross Revenue........... $ 1,293 $10,220 $851,586 $(1,581) $861,518
Subcontract and direct
material costs....... (711) (4,463) (400,645) -- (405,819)
Equity in income of
joint ventures and
affiliated companies
and subsidiaries..... (3,168) -- 4,753 2,502 4,087
------- ------- -------- ------- --------
Service Revenue......... (2,586) 5,757 455,694 921 459,786
Operating Expenses
Operating expenses.... (18,357) 4,381 452,423 (1,581) 436,866
Depreciation and
amortization......... 1,616 324 7,292 -- 9,232
------- ------- -------- ------- --------
Operating Income
(Loss)................. 14,155 1,052 (4,021) 2,502 13,688
Gain on sale of
investment........... -- -- 551 -- 551
Interest income....... 954 11 971 (137) 1,799
Interest expense...... (14,683) -- (253) 137 (14,799)
------- ------- -------- ------- --------
Income (Loss) Before
Income Taxes........... 426 1,063 (2,752) 2,502 1,239
Income tax provision.. (2,087) (397) (416) -- (2,900)
------- ------- -------- ------- --------
Net Income (Loss)....... (1,661) 666 (3,168) 2,502 (1,661)
Preferred stock
dividends and
accretion............ 2,154 -- -- -- 2,154
------- ------- -------- ------- --------
Net Income (Loss)
Available for Common
Shareholders........... $(3,815) $ 666 $ (3,168) $ 2,502 $ (3,815)
======= ======= ======== ======= ========
</TABLE>
F-35
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED FEBRUARY 28, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON- ICF KAISER
PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES CONSOLIDATED
------- ---------- ------------ -------------------
<S> <C> <C> <C> <C>
Net Cash Provided by
(Used in) Operating
Activities.............. $(3,942) $ 990 $ 5,135 $ 2,183
------- ----- ------- -------
INVESTING ACTIVITIES
Investments in
subsidiaries and
affiliates, net of cash
acquired................ -- -- (622) (622)
Sale of subsidiaries and
subsidiary assets....... -- -- 2,600 2,600
Purchases of fixed
assets.................. (13) (992) (1,421) (2,426)
Other investing
activities.............. (600) -- -- (600)
------- ----- ------- -------
Net Cash Provided by
(Used in) Investing
Activities............ (613) (992) 557 (1,048)
------- ----- ------- -------
FINANCING ACTIVITIES
Borrowings under credit
facility agreement...... 5,000 -- -- 5,000
Principal payments on
other borrowings........ -- -- (1,172) (1,172)
Repurchases of redeemable
preferred stock and
related warrants........ -- -- (799) (799)
Proceeds from issuances
of common stock......... 395 -- -- 395
Repurchases of common
stock................... (180) -- -- (180)
Preferred stock
dividends............... (1,950) -- -- (1,950)
Debt issuance costs...... (149) -- -- (149)
------- ----- ------- -------
Net Cash Provided by
(Used in) Financing
Activities............ 3,116 -- (1,971) 1,145
------- ----- ------- -------
Effect of Exchange Rate
Changes on Cash......... -- -- 444 444
------- ----- ------- -------
Increase (Decrease) in
Cash and Cash
Equivalents............. (1,439) (2) 4,165 2,724
Cash and Cash Equivalents
at Beginning of Period.. 14,278 10 11,221 25,509
------- ----- ------- -------
Cash and Cash Equivalents
at End of Period........ $12,839 $ 8 $15,386 $28,233
======= ===== ======= =======
</TABLE>
F-36
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 28, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON- ICF KAISER
PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ---------- ------------ ------------ -------------------
<S> <C> <C> <C> <C> <C>
Gross Revenue $ 804 $18,337 $633,940 $(1,424) $651,657
Subcontract and direct
material costs....... (443) (4,850) (266,876) -- (272,169)
Equity in income of
joint ventures and
affiliated companies
and subsidiaries..... (16,834) -- 328 19,726 3,220
-------- ------- -------- ------- --------
Service Revenue......... (16,473) 13,487 367,392 18,302 382,708
Operating Expenses
Operating expenses.... (17,630) 16,776 371,948 (1,424) 369,670
Depreciation and
amortization......... 1,770 207 7,582 -- 9,559
Usual items, net...... 6,580 -- 2,129 -- 8,709
-------- ------- -------- ------- --------
Operating Loss.......... (7,193) (3,496) (14,267) 19,726 (5,230)
Loss on sale of
investment........... -- -- (925) -- (925)
Interest income....... 843 6 641 -- 1,490
Interest expense...... (7995) (28) (189) -- (8,212)
-------- ------- -------- ------- --------
Loss Before Income Taxes
and Extraordinary
Item................... (14,345) (3,518) (14,740) 19,726 (12,877)
Income tax (provision)
benefit.............. 1,817 626 (2,094) -- 349
-------- ------- -------- ------- --------
Net Loss Before
Extraordinary Item..... (12,528) (2,892) (16,834) 19,726 (12,528)
Extraordinary loss on
early extinguishment
of debt.............. (5,969) -- -- -- (5,969)
-------- ------- -------- ------- --------
Net Loss................ (18,497) (2,892) (16,834) 19,726 (18,497)
Preferred stock
dividends and
accretion............ 4,896 -- -- -- 4,896
Redemption of
redeemable preferred
stock................ 1,929 -- -- -- 1,929
-------- ------- -------- ------- --------
Net Loss Available for
Common Shareholders.... $(25,322) $(2,892) $(16,834) $19,726 $(25,322)
======== ======= ======== ======= ========
</TABLE>
F-37
<PAGE>
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
ICF KAISER INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED FEBRUARY 28, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON- ICF KAISER
PARENT SUBSIDIARY GUARANTOR INTERNATIONAL, INC.
COMPANY GUARANTORS SUBSIDIARIES CONSOLIDATED
-------- ---------- ------------ -------------------
<S> <C> <C> <C> <C>
Net Cash Provided by
Operating Activities... $ 3,057 $ 16 $11,034 $ 14,107
-------- ---- ------- --------
INVESTING ACTIVITIES
Investments in
subsidiaries and
affiliates, net of cash
acquired............... -- -- (2,755) (2,755)
Purchases of fixed
assets................. (553) (15) (820) (1,388)
-------- ---- ------- --------
Net Cash Used in
Investing
Activities......... (553) (15) (3,575) (4,143)
-------- ---- ------- --------
FINANCING ACTIVITIES
Borrowings under credit
facility agreement..... 10,000 -- -- 10,000
Principal payments on
credit facility and
other borrowings....... (45,070) -- (1,940) (47,010)
Proceeds from issuance
of senior subordinated
notes and related
warrants............... 121,488 -- -- 121,488
Reacquisition of senior
subordinated notes and
related warrants....... (31,559) -- -- (31,559)
Repurchases of
redeemable preferred
stock and related
warrants............... (26,564) -- (799) (27,363)
Repurchase of preferred
stock.................. (4,850) -- -- (4,850)
Proceeds from issuances
of common stock........ 640 -- -- 640
Repurchases of common
stock.................. (3,722) -- -- (3,722)
Principal payments from
notes receivable
related to common
stock.................. 993 -- -- 993
Preferred stock
dividends.............. (5,321) -- -- (5,321)
Debt issuance costs..... (6,307) (6,307)
Other financing
activities............. 151 -- -- 151
-------- ---- ------- --------
Net Cash Provided by
(Used in) Financing
Activities......... 9,879 -- (2,739) 7,140
-------- ---- ------- --------
Effect of Exchange Rate
Changes on Cash........ -- -- (40) (40)
-------- ---- ------- --------
Increase in Cash and
Cash Equivalents....... 12,383 1 4,680 17,064
Cash and Cash
Equivalents at
Beginning of Period.... 1,895 9 6,541 8,445
-------- ---- ------- --------
Cash and Cash
Equivalents at End of
Period................. $ 14,278 $ 10 $11,221 $ 25,509
======== ==== ======= ========
</TABLE>
F-38
<PAGE>
================================================================================
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS EXCHANGE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECU-
RITY OTHER THAN THOSE TO WHICH IT RELATES NOR DOES IT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE OTHER INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 7
Use of Proceeds.......................................................... 13
The Exchange Offer....................................................... 14
Capitalization........................................................... 22
Selected Consolidated Financial Data..................................... 23
Unaudited Pro Forma Consolidated Financial Statements.................... 24
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 29
Business................................................................. 39
Management............................................................... 52
Executive Compensation................................................... 57
Security Ownership....................................................... 62
Description of the Credit Facility....................................... 64
Description of $125 Million of 12% Senior Subordinated Notes due 2003.... 66
Description of the Notes................................................. 67
Certain Federal Income Tax Considerations................................ 87
Old Notes Registration Rights; Additional Interest....................... 90
Old Notes Transfer Restrictions.......................................... 92
Book Entry; Delivery and Form............................................ 95
Plan of Distribution..................................................... 96
Legal Matters............................................................ 97
Experts.................................................................. 97
Index to Consolidated Financial Statements............................... F-1
</TABLE>
================================================================================
================================================================================
---------------------------
PROSPECTUS
---------------------------
[LOGO OF IFC KAISER APPEARS HERE]
OFFER TO EXCHANGE $1,000
PRINCIPAL AMOUNT OF ITS
12% SENIOR SUBORDINATED NOTES
DUE 2003, SERIES B
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR EACH $1,000
PRINCIPAL AMOUNT OF ITS OUTSTANDING
12% SENIOR SUBORDINATED NOTES
DUE 2003, SERIES A
The Exchange Agent for the
Exchange Offer is:
Bankers Trust Company
By Facsimile:
(212) 250-6961 or (212) 250-6392
Confirmation by Telephone:
(800) 735-7777
By Mail:
Bankers Trust Company
Corporate Trust and Agency Group
Reorganization Department
P.O. Box 1458, Church Street Station
New York, NY 10008-1458
By Hand/Overnight Delivery:
Bankers Trust Company
Corporate Trust and Agency Group
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Registrants with
respect to the offering described in this Registration Statement, all of which
expenses, except for the Commission registration fee, are estimates:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $ 4,568.18
Legal fees and expenses....................................... 50,000.00
Printing and engraving fees and expenses...................... 50,000.00
Accounting fees and expenses.................................. 10,000.00
Blue Sky fees and expenses.................................... 10,000.00
Exchange Agent fees and expenses.............................. 1,000.00
Miscellaneous expenses........................................ 5,000.00
-----------
Total..................................................... $130,568.18
===========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Delaware General Corporation Law ("Delaware Law"), a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to an action by reason of the person's past or present service as a
director, officer, employee, or agent of the corporation or of the person's
past or present service, at the corporation's request, as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust,
or other enterprise. Under the Delaware Law, a corporation may indemnify such
persons against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement that are actually and reasonably incurred by that
person in connection with such action. The Delaware Law provides, however,
that such person must have acted in good faith and in a manner that such
person reasonably believed to be in (or not opposed to) the corporation's best
interests. In respect of any criminal action or proceeding, an indemnifiable
person must have no reasonable cause to believe such conduct to be unlawful.
In addition, the Delaware Law permits no indemnification in any action by or
in the right of the corporation where such person has been adjudged liable to
the corporation, unless, and only to the extent that, a court determines that
such person fairly and reasonably is entitled to indemnity for costs the court
deems proper in spite of liability adjudication.
The sections of the Company's Restated Certificate of Incorporation and
Amended and Restated By-laws, and of the Certificates of Incorporation and By-
laws of each of the Subsidiary Guarantors incorporated in the state of
Delaware, relating to indemnification of directors and officers provide for
mandatory indemnification of directors and officers on generally the same
terms as permitted by the Delaware Law.
The California General Corporation Law provides for the indemnification of
directors and officers in terms sufficiently broad to indemnify directors of
Cygna Consulting Engineers and Project Management, Inc. ("Cygna") under
certain circumstances from liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. Cygna's Bylaws provide for the
indemnification of directors and officers against monetary damages to the
fullest extent permissible under California law.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On March 21, 1995, in connection with the termination of the employment of
Mr. John G. Balch from the employ of a subsidiary of the Registrant, the
Registrant agreed to issue 396,167 shares of Common Stock to Mr. Balch; all of
the 396,167 shares were issued on November 15, 1995. All of the shares are
restricted and legended against transfer. The issuance of the shares was
effected without registration, in reliance upon the exemption available under
Section 4(2) of the Securities Act. The shares subsequently were registered
for resale (No. 33-64655).
II-1
<PAGE>
On July 28, 1995, in connection with the acquisition of EDA Incorporated,
the Registrant issued an aggregate of 722,500 shares of Common Stock to a
total of five former shareholders of such company, each of whom gave an
investment representation with respect to the Registrant's shares acquired by
him. All of the shares are restricted and legended against transfer. The
issuance of the shares was effected without registration, in reliance upon the
exemption available under Section 4(2) of the Securities Act. The shares
subsequently were registered for resale (No. 33-64655).
On January 31, 1996, in connection with the acquisition of the assets of The
IPC Company, the Registrant issued an aggregate of 100,000 shares of Common
Stock to The IPC Company which indicated an intent subsequently to distribute
all of the 100,000 shares to five of its shareholders. The IPC Company and the
five IPC shareholders each gave an investment representation with respect to
the Registrant's shares acquired by it or him. All of the shares are
restricted and legended against transfer. The issuance of the shares was
effected without registration, in reliance upon the exemption available under
Section 4(2) of the Securities Act. The shares subsequently were registered
for resale (No. 33-64655).
On July 1, 1996, in connection with the acquisition of Georgia A. Wilson &
Associates, Inc., the Registrant issued an aggregate of 454,545 shares of
Common Stock to a total of three former shareholders of such company, each of
whom gave an investment representation with respect to the Registrant's shares
acquired by her or him. All of the shares are restricted and legended against
transfer. The issuance of the shares was effected without registration, in
reliance upon the exemption available under Section 4(2) of the Securities
Act. These shares subsequently were registered for resale (No. 333-16937).
On December 23, 1996, the Company sold 15,000 Units consisting of
$15,000,000 aggregate principal amount of its 12% Senior Notes due 2003,
Series A, and Warrants to purchase 105,000 shares of the Company's Common
Stock. The Units were sold to BT Securities Corporation, as Initial Purchaser,
pursuant to a Purchase Agreement, dated December 19, 1996. The aggregate
offering price for the Units was $14,700,000, and the aggregate Initial
Purchaser's Discount was $499,500. The issuance of the Units was effected
without registration, in reliance upon the exemption available under Section
4(2) of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits and financial statement schedule are filed as part of
this Registration Statement.
(A) EXHIBITS
Exhibit No. 3--Articles of Incorporation and By-laws
<TABLE>
<C> <S>
3(a) Restated Certificate of Incorporation of ICF Kaiser International, Inc.
(restated through June 26, 1993) (Incorporated by reference to Exhibit
No. 3(a) to Quarterly Report on Form 10-Q (Registrant No. 1-12248) for
the second quarter of fiscal 1994 filed with the Commission on October
15, 1993)
3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as
amended through June 23, 1995) (Incorporated by reference to Exhibit
No. 3(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for
the second quarter of fiscal 1995 filed with the Commission on October
13, 1995)
3(c) Articles of Incorporation of Cygna Consulting Engineers and Project
Management, Inc.
3(d) By-laws of Cygna Consulting Engineers and Project Management, Inc.
3(e) Certificate of Incorporation of ICF Kaiser Government Programs, Inc.
3(f) By-laws of ICF Kaiser Government Programs, Inc.
3(g) Certificate of Incorporation of PCI Operating Company, Inc.
3(h) By-laws of PCI Operating Company, Inc.
3(i) Certificate of Incorporation of Systems Applications International,
Inc.
3(j) By-laws of Systems Applications International, Inc.
Exhibit No. 4--Instruments Defining the Rights of Security Holders, including
Indentures
4(a) Indenture dated as of January 11, 1994, between ICF Kaiser
International, Inc. and The Bank of New York, as Trustee (Incorporated
by reference to Exhibit No. 4(a) to Quarterly Report on Form 10-Q
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
Registrant No. 1-12248 for the third quarter of fiscal 1994 filed
with the Commission on January 14, 1994)
1. First Supplemental Indenture dated as of February 17, 1995.
(Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report
on Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed
with the Commission on May 23, 1995)
2. Second Supplemental Indenture dated September 1, 1995
(Incorporated by reference to Exhibit No. 4(a) (2) to Registration
Statement on Form S-1 Registration No. 33-64655 filed with the
Commission on November 30, 1995)
3. Third Supplemental Indenture dated October 20, 1995 (Incorporated
by reference to Exhibit No. 4(a)(3) to Registration Statement on
Form S-1 Registration No. 33-64655 filed with the Commission on
November 30, 1995)
4. Fourth Supplemental Indenture dated as of March 8, 1996
(Incorporated by reference to Exhibit No. 4 (a) (4) to Transition
Report on Form 10-K Registrant No. 1-12248 for the transition
period from March 1, 1995 to December 31, 1995 filed with the
Commission on March 29, 1996)
5. Fifth Supplemental Indenture dated as of June 24, 1996
(Incorporated by reference to Exhibit No. 4(a)(5) to Registration
Statement on Form S-1 Registration No. 333-16937 filed with the
Commission on November 27, 1996)
4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by
reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the third quarter of fiscal 1994 filed
with the Commission on January 14, 1994)
4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as
amended and restated through January 11, 1994) (Incorporated by
reference to Exhibit No. 4(e) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the third quarter of fiscal 1994 filed
with the Commission on January 14, 1994)
4(d) Rights Agreement, dated as of January 13, 1992, between ICF Kaiser
International, Inc. and Office of the Secretary, ICF Kaiser
International, Inc. as Rights Agent, including
1. Form of Certificate of Designations of Series 4 Junior Preferred
Stock
2. Form of Rights Certificate
3. Summary of Rights to Purchase Preferred Stock (Incorporated by
reference to Exhibit No. 4(h) to Quarterly Report on Form 10-Q
Registrant No. 0-18025 for the third quarter of fiscal 1992 filed
with the Commission on January 14, 1992)
4(e) Warrant Agreement dated as of January 11, 1994, between ICF Kaiser
International, Inc. and The Bank of New York, as Warrant Agent
(Incorporated by reference to Exhibit No. 4(c) to Quarterly Report
on Form 10-Q Registrant No. 1-12248 for the third quarter of
fiscal 1994 filed with the Commission on January 14, 1994)
4(f) Form of Warrant expiring December 31, 1998 issued under Warrant
Agreement dated as of January 11, 1994 (Incorporated by reference
to Exhibit No. 4(d) to Quarterly Report on Form 10-Q Registrant
No. 1-12248 for the third quarter of fiscal 1994 filed with the
Commission on January 14, 1994)
4(g) Indenture dated as of December 23, 1996, between ICF Kaiser
International, Inc. and The Bank of New York, as Trustee,
including Guarantees, dated December 23, 1996, by each of the
Subsidiary Guarantors
4(h) Form of 12% Senior Note due 2003, Series A
4(i) Form of 12% Senior Note due 2003, Series B
4(j) Warrant Agreement dated as of December 23, 1996, between ICF
Kaiser International, Inc. and The Bank of New York, as Warrant
Agent
4(k) Form of Warrant expiring December 31, 1999 issued under Warrant
Agreement dated as of December 23, 1996
4(l) Registration Rights Agreement dated as of December 23, 1996
between ICF Kaiser International, Inc. and BT Securities
Corporation, as Initial Purchaser
</TABLE>
II-3
<PAGE>
Exhibit No. 5 -- Opinion and Consent of Paul Weeks, II
Exhibit No. 8 -- Opinion of Crowell & Moring LLP as to tax matters
Exhibit No. 10 -- Material Contracts
<TABLE>
<C> <S>
10(a) Credit Agreement dated as of May 6, 1996, with CoreStates N.A., as
agent (Incorporated by reference to Exhibit No. 10(r) to Quarterly
Report on Form 10-Q Registrant No. 1-12248 for the second quarter of
fiscal 1996 filed with the Commission on August 14, 1996)
1. Amendment No. 1 to Credit Agreement dated as of December 17, 1996
10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as
amended and restated as of March 1, 1993) (and further amended with
respect to name change only as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1-
12248 for fiscal 1995 filed with the Commission on May 23, 1995)
2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference
to Exhibit No. 10(b)(2) to Transition Report on Form 10-K Registrant
No. 1-12248 for the transition period from March 1, 1995 to December
31, 1995 filed with the Commission on March 29, 1996)
3. Amendment No. 3 dated December 13, 1996
10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
August 31, 1995, for ICF Kaiser International Employee Stock
Ownership Plan (Incorporated by reference to Exhibit No. 10(c) to
Registration Statement on Form S-1 Registrant No. 33-64655 filed
with the Commission on November 30, 1995)
10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(d) to Quarterly Report on Form 10-Q Registrant No. 1-
12248 for the second quarter of fiscal 1994 filed with the
Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(d)(1) to Annual Report on Form 10-K Registrant No. 1-
12248 filed with the Commission on May 23, 1995.)
2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference
to Exhibit No. 10(d)(2) to Transition Report on Form 10-K Registrant
No. 1-12248 for the transition period from March 1, 1995 to December
31, 1995 filed with the Commission on March 29, 1996)
3. Amendment No. 3 dated December 13, 1996
10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan
(Incorporated by reference to Exhibit No. 10(e) to Registration
Statement on Form S-1 (Registrant No. 33-64655) filed with the
Commission on November 30, 1995)
10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF Kaiser
Incorporated (as Tenant), dated January 30, 1987, for the lease of
the Registrant's headquarters in Fairfax, Virginia (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
1. First Amendment entered into August 31, 1987 (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
2. Second Amendment entered into September 23, 1987 (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
3. Third Amendment entered into as of February 12, 1990 (Incorporated
by reference to Exhibit No. 10(a) to Annual Report on Form 10-K
Registrant No. 0-18025 filed with the Commission on April 25, 1990)
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10(g) Lease Agreement between HMCE Associates Limited Partnership (as
Landlord) and American Capital and Research Corporation (as Tenant),
dated April 27, 1988, for the lease of space in the building
adjacent to the Registrant's headquarters in Fairfax, Virginia
(Incorporated by reference to Exhibit No. 10(b) to Registration
Statement on Form S-1 (No. 33-31473) filed with the Commission on
October 6, 1989)
1. First Amendment entered into July 29, 1988. (Incorporated by
reference to Exhibit No. 10(b) to Annual Report on Form 10-K
(Registrant No. 0-18025) filed with the Commission on April 25,
1990)
2. Second Amendment entered into as of February 12, 1990 (Incorporated
by reference to Exhibit No. 10(b) to Annual Report on Form 10-K
Registrant No. 0-18025 filed with the Commission on April 25, 1990)
3. Third Amendment entered into as of December 22, 1992 (Incorporated
by reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K
Registrant No. 1-12248 for the fiscal year ended February 28, 1993
filed with the Commission on May 21, 1993)
10(h) Amended and Restated Lease Agreement by and between Kaiser
Engineers, Inc. and 1800 Harrison Limited Partnership, dated as of
July 1, 1988, for the lease of the Registrant's offices in Oakland,
California (Incorporated by reference to Exhibit No. 10(c) to
Registration Statement on Form S-1 (No. 33-31576) filed with the
Commission on October 13, 1989)
1. First Amendment made as of March 27, 1991 (Incorporated by reference
to Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q (Registrant
No. 0-18025) for the first quarter of fiscal 1993 filed with the
Commission on July 10, 1992)
2. Second Amendment made as of June 1992 (Incorporated by reference to
Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q (Registrant
No. 0-18025) for the first quarter of fiscal 1993 filed with the
Commission on July 10, 1992)
3. Third Amendment made as of April 27, 1993 (Incorporated by reference
to Exhibit No. 10(i)(3) to Annual Report on Form 10-K (Registrant
No. 1-12248) for the fiscal year ended February 28, 1993 filed with
the Commission on May 21, 1993)
10(i) Guaranty provided by American Capital and Research Corporation to
1800 Harrison Limited Partnership, dated as of March 27, 1991, and
First Amendment thereto dated as of June 1992, guaranteeing the
performance of Kaiser Engineers, Inc. under an Amended and Restated
Lease Agreement by and between Kaiser Engineers, Inc. and the
California Public Employee's Retirement System, dated as of July 1,
1988, for the lease of the Registrant's offices in Oakland,
California (Incorporated by reference to Exhibit No. 10(b) to
Quarterly Report on Form 10-Q Registrant No. 0-18025 for the first
quarter of fiscal 1993 filed with the Commission on July 10, 1992)
10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and
restated through March 1, 1996) (Incorporated by reference to
Exhibit No. 10(j) to Registration Statement on Form S-1 Registration
No. 333-16937 filed with the Commission on November 27, 1996)
10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by
Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE
Reference No. DE-AC06-87RL1930) (Incorporated by reference to
Exhibit No. 10(m) to Annual Report on Form 10-K Registrant
No. 1-12248 for fiscal year 1995 filed with the Commission on May
23, 1995)
10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser
Engineers Hanford Company, and Westinghouse Hanford Company, with an
effective date of October 1, 1993 (Contract No. DE-A06-93RL12359)
(Incorporated by reference to Exhibit No. 10(a) to Quarterly Report
on Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal
1994 filed with the Commission on October 15, 1993)
1. Modification No. 1 dated October 25, 1993 (Incorporated by reference
to Exhibit No. 10(n)(1) to Annual Report on Form 10-K Registrant No.
1-12248 filed with the Commission on May 25, 1994).
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
10(n) Hanford Termination Notice effective October 1, 1996, from the U.S.
Department of Energy.
10(o) Massachusetts Water Resources Authority Agreement with ICF Kaiser
Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser
Engineers of Massachusetts, Inc. for construction management
services for Boston Harbor Project--Deer Island Related Facilities,
Contract No. 5622 (June 1990) (Incorporated by reference to Exhibit
No. 10(h) to Quarterly Report on Form 10-Q Registrant No. 0-18025
for the second quarter of fiscal 1991 filed with the Commission on
October 12, 1990) (Amendment Nos. 1-3 incorporated by reference to
Exhibit No. 10(n)(1-3) to Annual Report on Form 10-K Registrant No.
0-18025 for the fiscal year ended February 28, 1993 filed with the
Commission on May 21, 1993).
1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993
[IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO.
10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for
fiscal 1994 FILED IN PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A
CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference
thereto]
2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE 202
OF REGULATION S-T, THIS EXHIBIT NO. 10(n)(2) to Annual Report on
Form 10-K Registrant No. 1-12248 for fiscal 1995 FILED IN PAPER ON
MAY 23, 1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION
is incorporated herein by reference thereto]
3. Amendment No. 6 to the Agreement with the Massachusetts Water
Resources Authority for Construction Management Services (January
1996) (Amendment No. 6 incorporated by reference to Exhibit No.
10(n)(3) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for
the fiscal quarter ended March 31, 1996 filed with the Commission on
May 15, 1996).
10(p) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a
subsidiary of the Corporation, and the U.S. Department of Energy
dated as of April 4, 1995. [IN ACCORDANCE WITH RULE 202 OF
REGULATION S-T, THIS EXHIBIT NO. 10(o) WAS FILED IN PAPER ON MAY 23,
1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is
incorporated herein by reference thereto]
1. Modifications to Contract #DE-AC3495RF00825. (Incorporated by
reference to Exhibit No. 10(p)(1) to Registration Statement on Form
S-1 Registration No. 333-16937 filed with the Commission on November
27, 1996)
10(q) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(f) to Quarterly Report on Form 10-Q Registrant No. 1-
12248 (Registrant No. 1-12248) for the second quarter of fiscal 1994
filed with the Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(p)(1) to Annual Report on Form 10-K Registrant No. 1-
12248 for fiscal 1995 filed with the Commission on May 23, 1995).
2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference
to Exhibit No. 10(p)(2) to Transition Report on Form 10-K Registrant
No. 1-12248 for the transition period from March 1, 1995 to December
31, 1995 filed with the Commission on March 29, 1996).
3. Amendment No. 3 dated December 13, 1996
10(r) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
March 1, 1989, for the ICF Kaiser International, Inc. Section 401(k)
Plan (Incorporated by reference to Exhibit No. 28(b) to Registration
Statement on Form S-8 (Registration No. 33-51460) filed with the
Commission on August 31, 1992).
Exhibit No. 10--Material Contracts (management contracts, compensatory plans,
or arrangements.)
10(aa) Employment Agreement with James O. Edwards dated as of December 31,
1994 (Incorporated by reference to Exhibit No. 10 (bb) to Annual
Report on Form 10-K for fiscal 1995 Registrant
No. 1-12248 filed with the Commission on May 23, 1995).
</TABLE>
II-6
<PAGE>
<TABLE>
<C> <S>
10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation Plan:
Annual Incentive Plan (dated as of September 29, 1993) (Incorporated
by reference to Exhibit No. 10(aa) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993).
10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option
Plan (as amended and restated as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q
(Registrant No. 1-12248) for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993).
10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the
Registrant, dated November 1, 1993 (Incorporated by reference to
Exhibit No. 10(ll) to Amendment No. 1 to Registration Statement on
Form S-1 (No. 33-70986) filed with the Commission on November 22,
1993).
10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of
the Registrant, effective as of March 1, 1994 (Incorporated by
reference to Exhibit No. 10(ll) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on May 25, 1994).
10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice President
of the Registrant, effective as of March 1, 1994 (Incorporated by
reference to Exhibit No. 10(mm) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on May 25, 1994).
10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance
Plan as approved by the Compensation Committee of the Board of
Directors on April 4, 1994, and adopted by the Board of Directors on
May 5, 1994 (Incorporated by reference to Exhibit No. 10(nn) to
Annual Report on Form 10-K (Registrant No. 1-12248) filed with the
Commission on May 25, 1994).
10(hh) Employment Agreement with Michael K. Goldman, Executive Vice
President of the Registrant, effective as of February 28, 1994.
(Incorporated by reference to Exhibit No. 10(jj) to Annual Report on
Form 10-K Registrant No. 1-12248 for fiscal 1995 filed with the
Commission on May 23, 1995).
10(ii) Employment Agreement dated May 17, 1993, and February 1, 1995, with
Richard K. Nason, Executive Vice President and Chief Financial
Officer of the Registrant (Incorporated by reference to Exhibit No.
10(ii) to Transition Report on Form 10-K Registrant No. 1-12248 for
the transition period from March 1, 1995 to December 31, 1995 filed
with the Commission on March 29, 1996).
10(jj) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and
restated through March 1, 1996) (Incorporated by reference to Exhibit
No. 10(j) to Registration Statement on Form S-1 Registration No. 333-
16937 filed with the Commissionon November 27, 1996)
Exhibit No. 11--Computation of Primary and Fully Diluted Earnings Per Share
(Incorporated by reference to Exhibit No. 11 to (a) Transition Report on Form
10-K Registrant No. 1-12248 for the transition period from March 1, 1995 to
December 31, 1995, filed with the Commission on March 29, 1996, and (b)
Quarterly Report on Form 10-Q Registrant No. 1-12248 for the third quarter
ended September 30, 1996 filed with the Commission on November 14, 1996).
Exhibit No. 12--Statement re Computation of Ratio of Earnings to Fixed Changes
Exhibit No. 21--Consolidated Subsidiaries of the Registrant as of December 31,
1996
Exhibit No. 23--Consents
23(a) Consent of Coopers & Lybrand L.L.P.
23(b) Consent of Paul Weeks, II, is contained in Exhibit No. 5
23(c) Consent of Crowell & Moring LLP is contained in Exhibit No. 8
Exhibit No. 24--Powers of Attorney (see pages II-10 through II-16).
</TABLE>
II-7
<PAGE>
Exhibit No. 25--Statement of Eligibility and Qualification on Form T-1 under
the Trust Indenture Act of 1939 of The Bank of New York, as Trustee of the
Indenture relating to the 12% Senior Notes due 2003, Series B
Exhibit No. 99--Additional Exhibits
<TABLE>
<S> <C>
99(a) Letter of Transmittal
99(b) Notice of Guaranteed Delivery
99(c) Letter to Securities Dealers, Commercial Banks, Trust Companies and Other Nominees
99(d) Letter to Clients
99(e) Guidelines for Certification of Taxpayer Identification Number on Form W-9
</TABLE>
(B) FINANCIAL STATEMENT SCHEDULE
The following Supplemental Schedule Relating to the Consolidated Financial
Statements of ICF Kaiser International, Inc. and Subsidiaries for each of the
ten months ended December 31, 1995 and for the two years in the period ended
February 28, 1995.
<TABLE>
<C> <S> <C>
a. Schedule II: Valuation and qualifying accounts ................... S-1
</TABLE>
All Schedules except the one listed above have been omitted because they are
not applicable or not required or because the required information is included
elsewhere in the financial statements in this filing.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a)(l) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include a prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or event arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(h) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that
II-8
<PAGE>
a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE
COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996.
ICF Kaiser International, Inc.
(Registrant)
Date: December 31, 1996
By /s/ James O. Edwards
----------------------------------
JAMES O. EDWARDS,
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc
Tipermas, Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway,
and each of them severally, his or her true and lawful attorneys to
execute (in the name of and on behalf of and as attorneys for the
undersigned) this Registration Statement and any and all amendments to
this Registration Statement, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
(1) Principal executive officer
Date: December 31, 1996
By /s/ James O. Edwards
----------------------------------
JAMES O. EDWARDS,
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
(2) Principal financial and accounting officer
Date: December 31, 1996
By /s/ Richard K. Nason
----------------------------------
RICHARD K. NASON,
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
II-10
<PAGE>
POWER OF ATTORNEY
EACH OF THE UNDERSIGNED HEREBY APPOINTS JAMES O. EDWARDS, MARC TIPERMAS,
RICHARD K. NASON, PAUL WEEKS, II, AND CYNTHIA L. HATHAWAY, AND EACH OF THEM
SEVERALLY, HIS OR HER TRUE AND LAWFUL ATTORNEYS TO EXECUTE (IN THE NAME OF
AND ON BEHALF OF AND AS ATTORNEYS FOR THE UNDERSIGNED) THIS REGISTRATION
STATEMENT AND ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO
FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) The Board of Directors
Date: December 31, 1996
By /s/ Tony Coelho
----------------------------------
TONY COELHO,
DIRECTOR
Date: December 31, 1996
By /s/ James O. Edwards
----------------------------------
JAMES O. EDWARDS,
DIRECTOR
Date: December 31, 1996
By /s/ Maynard H. Jackson
----------------------------------
MAYNARD H. JACKSON,
DIRECTOR
Date: December 31, 1996
By /s/ Thomas C. Jorling
----------------------------------
THOMAS C. JORLING,
DIRECTOR
Date: December 31, 1996
By /s/ Frederic V. Malek
----------------------------------
FREDERIC V. MALEK,
DIRECTOR
Date: December 31, 1996
By /s/ Rebecca P. Mark
----------------------------------
REBECCA P. MARK,
DIRECTOR
Date: December 31, 1996
By /s/ Richard K. Nason
----------------------------------
RICHARD K. NASON,
DIRECTOR
Date: December 31, 1996
By /s/ Robert W. Page, Sr.
----------------------------------
ROBERT W. PAGE, SR.,
DIRECTOR
Date: December 31, 1996
By /s/ Marc Tipermas
----------------------------------
MARC TIPERMAS,
DIRECTOR
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE
COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996.
Cygna Consulting Engineers and
Project Management, Inc.
(Registrant)
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
PRESIDENT
POWER OF ATTORNEY
EACH OF THE UNDERSIGNED HEREBY APPOINTS JAMES O. EDWARDS, MARC TIPERMAS,
RICHARD K. NASON, PAUL WEEKS, II, AND CYNTHIA L. HATHAWAY, AND EACH OF THEM
SEVERALLY, HIS OR HER TRUE AND LAWFUL ATTORNEYS TO EXECUTE (IN THE NAME OF
AND ON BEHALF OF AND AS ATTORNEYS FOR THE UNDERSIGNED) THIS REGISTRATION
STATEMENT AND ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO
FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
(1) Principal executive officer
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN,
PRESIDENT
(2) Principal financial and accounting officer
Date: December 31, 1996
By /s/ Richard K. Nason
----------------------------------
RICHARD K. NASON,
TREASURER
POWER OF ATTORNEY
EACH OF THE UNDERSIGNED HEREBY APPOINTS JAMES O. EDWARDS, MARC TIPERMAS,
RICHARD K. NASON, PAUL WEEKS, II, AND CYNTHIA L. HATHAWAY, AND EACH OF THEM
SEVERALLY, HIS OR HER TRUE AND LAWFUL ATTORNEYS TO EXECUTE (IN THE NAME OF
AND ON BEHALF OF AND AS ATTORNEYS FOR THE UNDERSIGNED) THIS REGISTRATION
STATEMENT AND ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT, AND TO
FILE THE SAME, WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) The Board of Directors
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
SOLE DIRECTOR
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE
COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996.
ICF Kaiser Government Programs, Inc.
(Registrant)
Date: December 31, 1996
By /s/ James O. Edwards
----------------------------------
JAMES O. EDWARDS
PRESIDENT
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas,
Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of
them severally, his or her true and lawful attorneys to execute (in the
name of and on behalf of and as attorneys for the undersigned) this
Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
(1) Principal executive officer
Date: December 31, 1996
By /s/ James O. Edwards
----------------------------------
JAMES O. EDWARDS
PRESIDENT
(2) Principal financial and accounting officer
Date: December 31, 1996
By /s/ Richard K. Nason
----------------------------------
RICHARD K. NASON
TREASURER
II-13
<PAGE>
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas,
Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of
them severally, his or her true and lawful attorneys to execute (in the
name of and on behalf of and as attorneys for the undersigned) this
Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission.
(3) The Board of Directors
Date: December 31, 1996
By /s/ James O. Edwards
----------------------------------
JAMES O. EDWARDS
DIRECTOR
Date: December 31, 1996
By /s/ Marc Tipermas
----------------------------------
MARC TIPERMAS
DIRECTOR
Date: December 31, 1996
By /s/ Kenneth A. Schweers
----------------------------------
KENNETH A. SCHWEERS
DIRECTOR
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE
COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996.
PCI Operating Company, Inc.
(Registrant)
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas,
Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of
them severally, his or her true and lawful attorneys to execute (in the
name of and on behalf of and as attorneys for the undersigned) this
Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
(1) Principal executive officer
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
CHIEF EXECUTIVE OFFICER
(2) Principal financial and accounting officer
Date: December 31, 1996
By /s/ Richard K. Nason
----------------------------------
RICHARD K. NASON
TREASURER
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas,
Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of
them severally, his or her true and lawful attorneys to execute (in the
name of and on behalf of and as attorneys for the undersigned) this
Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission.
(3) The Board of Directors
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
SOLE DIRECTOR
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE COUNTY OF FAIRFAX, THE
COMMONWEALTH OF VIRGINIA, ON THIS 31ST DAY OF DECEMBER, 1996.
Systems Applications International, Inc.
(Registrant)
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas,
Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of
them severally, his or her true and lawful attorneys to execute (in the
name of and on behalf of and as attorneys for the undersigned) this
Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
(1) Principal executive officer
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN,
CHIEF EXECUTIVE OFFICER
(2) Principal financial and accounting officer
Date: December 31, 1996
By /s/ Cheryl R. Aratoon
----------------------------------
CHERYL R. ARATOON,
SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
POWER OF ATTORNEY
Each of the undersigned hereby appoints James O. Edwards, Marc Tipermas,
Richard K. Nason, Paul Weeks, II, and Cynthia L. Hathaway, and each of
them severally, his or her true and lawful attorneys to execute (in the
name of and on behalf of and as attorneys for the undersigned) this
Registration Statement and any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission.
(3) The Board of Directors
Date: December 31, 1996
By /s/ Michael K. Goldman
----------------------------------
MICHAEL K. GOLDMAN
SOLE DIRECTOR
II-16
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------------------------------------------------------------------------------------
Additions
------------------------
Balance at Charged to Balance at
beginning costs and end of
Description of period expenses Other Deductions period
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ten months ended December 31, 1995:
Deducted from asset account
Allowance for doubtful accounts $9,864 $601 $62 (4) $1,092 (1) $9,435
Deducted from asset account and
included in other liabilities
Provision for future losses
on contracts 843 1,119 545 (5) 233 (3) 2,274
--------------------------------------------------------------------------
$10,707 $1,720 $607 $1,325 $11,709
==========================================================================
Year ended February 28, 1995:
Deducted from asset account
Allowance for doubtful accounts $10,197 $1,406 -- $1,739 (1) $9,864
Deducted from asset account and
included in other liabilities
Provision for future losses
on contracts 179 664 -- -- 843
--------------------------------------------------------------------------
$10,376 $2,070 -- $1,739 $10,707
==========================================================================
Year ended February 28, 1994:
Deducted from asset account
Allowance for doubtful accounts $8,977 $2,509 -- $1,289 (2) $10,197
Included in other liabilities
Provision for future losses
on contracts 464 -- -- 285 (3) 179
--------------------------------------------------------------------------
$9,441 $2,509 -- $1,574 $10,376
==========================================================================
</TABLE>
(1) Reflects amounts written of against the allowance and related accounts
receivable accounts and settlement of doubtful accounts.
(2) Reflects amounts written off against the allowance and related accounts
receivable accounts.
(3) Reflects losses charged against the provision for contract losses.
(4) Reflects net allowance for doubtful accounts from the purchase of a
subsidiary.
(5) Reflects provision for future contract losses provided for in connection
with the purchase of a subsidiary.
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
Exhibit No. 3--Articles of Incorporation and By-laws
<C> <S>
3(a) Restated Certificate of Incorporation of ICF Kaiser International,
Inc. (restated through June 26, 1993) (Incorporated by reference to
Exhibit No. 3(a) to Quarterly Report on Form 10-Q (Registrant
No. 1-12248) for the second quarter of fiscal 1994 filed with the
Commission on October 15, 1993)
3(b) Amended and Restated By-laws of ICF Kaiser International, Inc. (as
amended through June 23, 1995) (Incorporated by reference to Exhibit
No. 3(b) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for
the second quarter of fiscal 1995 filed with the Commission on October
13, 1995)
3(c) Articles of Incorporation of Cygna Consulting Engineers and Project
Management, Inc.
3(d) By-laws of Cygna Consulting Engineers and Project Management, Inc.
3(e) Certificate of Incorporation of ICF Kaiser Government Programs, Inc.
3(f) By-laws of ICF Kaiser Government Programs, Inc.
3(g) Certificate of Incorporation of PCI Operating Company, Inc.
3(h) By-laws of PCI Operating Company, Inc.
3(i) Certificate of Incorporation of Systems Applications International,
Inc.
3(j) By-laws of Systems Applications International, Inc.
Exhibit No. 4--Instruments Defining the Rights of Security Holders, including
Indentures
4(a) Indenture dated as of January 11, 1994, between ICF Kaiser
International, Inc. and The Bank of New York, as Trustee (Incorporated
by reference to Exhibit No. 4(a) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with
the Commission on January 14, 1994)
1. First Supplemental Indenture dated as of February 17, 1995.
(Incorporated by reference to Exhibit No. 4(a)(1) to Annual Report on
Form 10-K Registrant No. 1-12248 for fiscal year 1995 filed with the
Commission on May 23, 1995)
2. Second Supplemental Indenture dated September 1, 1995 (Incorporated by
reference to Exhibit No. 4(a) (2) to Registration Statement on Form S-
1 Registration No. 33-64655 filed with the Commission on November 30,
1995)
3. Third Supplemental Indenture dated October 20, 1995 (Incorporated by
reference to Exhibit No. 4(a)(3) to Registration Statement on Form S-1
Registration No. 33-64655 filed with the Commission on November 30,
1995)
4. Fourth Supplemental Indenture dated as of March 8, 1996 (Incorporated
by reference to Exhibit No. 4 (a) (4) to Transition Report on Form 10-
K Registrant No. 1-12248 for the transition period from March 1, 1995
to December 31, 1995 filed with the Commission on March 29, 1996)
5. Fifth Supplemental Indenture dated as of June 24, 1996 (Incorporated
by reference to Exhibit No. 4(a)(5) to Registration Statement on Form
S-1 Registration No. 333-16937 filed with the Commission on November
27, 1996)
4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated by
reference to Exhibit No. 4(b) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with
the Commission on January 14, 1994)
4(c) Form of Common Stock Purchase Warrant expiring May 15, 1999 (as
amended and restated through January 11, 1994) (Incorporated by
reference to Exhibit No. 4(e) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the third quarter of fiscal 1994 filed with
the Commission on January 14, 1994)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
4(d) Rights Agreement, dated as of January 13, 1992, between ICF Kaiser
International, Inc. and Office of the Secretary, ICF Kaiser
International, Inc. as Rights Agent, including
1. Form of Certificate of Designations of Series 4 Junior Preferred Stock
2. Form of Rights Certificate
3. Summary of Rights to Purchase Preferred Stock (Incorporated by
reference to Exhibit No. 4(h) to Quarterly Report on Form 10-Q
Registrant No. 0-18025 for the third quarter of fiscal 1992 filed with
the Commission on January 14, 1992)
4(e) Warrant Agreement dated as of January 11, 1994, between ICF Kaiser
International, Inc. and The Bank of New York, as Warrant Agent
(Incorporated by reference to Exhibit No. 4(c) to Quarterly Report on
Form 10-Q Registrant No. 1-12248 for the third quarter of fiscal 1994
filed with the Commission on January 14, 1994)
4(f) Form of Warrant expiring December 31, 1998 issued under Warrant
Agreement dated as of January 11, 1994 (Incorporated by reference to
Exhibit No. 4(d) to Quarterly Report on Form 10-Q Registrant No. 1-
12248 for the third quarter of fiscal 1994 filed with the Commission
on January 14, 1994)
4(g) Indenture dated as of December 23, 1996, between ICF Kaiser
International, Inc. and The Bank of New York, as Trustee, including
Guarantees, dated December 23, 1996, by each of the Subsidiary
Guarantors
4(h) Form of 12% Senior Note due 2003, Series A
4(i) Form of 12% Senior Note due 2003, Series B
4(j) Warrant Agreement dated as of December 23, 1996, between ICF Kaiser
International, Inc. and The Bank of New York, as Warrant Agent
4(k) Form of Warrant expiring December 31, 1999 issued under Warrant
Agreement dated as of December 23, 1996
4(l) Registration Rights Agreement dated as of December 23, 1996 between
ICF Kaiser International, Inc. and BT Securities Corporation, as
Initial Purchaser
Exhibit No. 5 -- Opinion and Consent of Paul Weeks, II
Exhibit No. 8 -- Opinion of Crowell & Moring LLP as to tax matters
Exhibit No. 10 -- Material Contracts
10(a) Credit Agreement dated as of May 6, 1996, with CoreStates N.A., as
agent (Incorporated by reference to Exhibit No. 10(r) to Quarterly
Report on Form 10-Q Registrant No. 1-12248 for the second quarter of
fiscal 1996 filed with the Commission on August 14, 1996)
1. Amendment No. 1 to Credit Agreement dated as of December 17, 1996
10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan (as
amended and restated as of March 1, 1993) (and further amended with
respect to name change only as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(c) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(l)(1) to Annual Report on Form 10-K Registrant No. 1-
12248 for fiscal 1995 filed with the Commission on May 23, 1995)
2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to
Exhibit No. 10(b)(2) to Transition Report on Form 10-K Registrant No.
1-12248 for the transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996)
3. Amendment No. 3 dated December 13, 1996
10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
August 31, 1995, for ICF Kaiser International Employee Stock Ownership
Plan (Incorporated by reference to Exhibit No. 10(c) to Registration
Statement on Form S-1 Registrant No. 33-64655 filed with the
Commission on November 30, 1995)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
10(d) ICF Kaiser International, Inc. Retirement Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(d) to Quarterly Report on Form 10-Q Registrant No. 1-
12248 for the second quarter of fiscal 1994 filed with the Commission
on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(d)(1) to Annual Report on Form 10-K Registrant No. 1-
12248 filed with the Commission on May 23, 1995.)
2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to
Exhibit No. 10(d)(2) to Transition Report on Form 10-K Registrant No.
1-12248 for the transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996)
3. Amendment No. 3 dated December 13, 1996
10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
August 31, 1995, for ICF Kaiser International, Inc. Retirement Plan
(Incorporated by reference to Exhibit No. 10(e) to Registration
Statement on Form S-1 (Registrant No. 33-64655) filed with the
Commission on November 30, 1995)
10(f) Lease Agreement between HMCE Associates (as Landlord) and ICF Kaiser
Incorporated (as Tenant), dated January 30, 1987, for the lease of the
Registrant's headquarters in Fairfax, Virginia (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
1. First Amendment entered into August 31, 1987 (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
2. Second Amendment entered into September 23, 1987 (Incorporated by
reference to Exhibit No. 10(a) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
3. Third Amendment entered into as of February 12, 1990 (Incorporated by
reference to Exhibit No. 10(a) to Annual Report on Form 10-K
Registrant No. 0-18025 filed with the Commission on April 25, 1990)
10(g) Lease Agreement between HMCE Associates Limited Partnership (as
Landlord) and American Capital and Research Corporation (as Tenant),
dated April 27, 1988, for the lease of space in the building adjacent
to the Registrant's headquarters in Fairfax, Virginia (Incorporated by
reference to Exhibit No. 10(b) to Registration Statement on Form S-1
(No. 33-31473) filed with the Commission on October 6, 1989)
1. First Amendment entered into July 29, 1988. (Incorporated by reference
to Exhibit No. 10(b) to Annual Report on Form 10-K (Registrant No. 0-
18025) filed with the Commission on April 25, 1990)
2. Second Amendment entered into as of February 12, 1990 (Incorporated by
reference to Exhibit No. 10(b) to Annual Report on Form 10-K
Registrant No. 0-18025 filed with the Commission on April 25, 1990)
3. Third Amendment entered into as of December 22, 1992 (Incorporated by
reference to Exhibit No. 10(h)(3) to Annual Report on Form 10-K
Registrant No. 1-12248 for the fiscal year ended February 28, 1993
filed with the Commission on May 21, 1993)
10(h) Amended and Restated Lease Agreement by and between Kaiser Engineers,
Inc. and 1800 Harrison Limited Partnership, dated as of July 1, 1988,
for the lease of the Registrant's offices in Oakland, California
(Incorporated by reference to Exhibit No. 10(c) to Registration
Statement on Form S-1 (No. 33-31576) filed with the Commission on
October 13, 1989)
1. First Amendment made as of March 27, 1991 (Incorporated by reference
to Exhibit No. 10(a)(1) to Quarterly Report on Form 10-Q (Registrant
No. 0-18025) for the first quarter of fiscal 1993 filed with the
Commission on July 10, 1992)
2. Second Amendment made as of June 1992 (Incorporated by reference to
Exhibit No. 10(a)(2) to Quarterly Report on Form 10-Q (Registrant No.
0-18025) for the first quarter of fiscal 1993 filed with the
Commission on July 10, 1992)
3. Third Amendment made as of April 27, 1993 (Incorporated by reference
to Exhibit No. 10(i)(3) to Annual Report on Form 10-K (Registrant No.
1-12248) for the fiscal year ended February 28, 1993 filed with the
Commission on May 21, 1993)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
10(i) Guaranty provided by American Capital and Research Corporation to 1800
Harrison Limited Partnership, dated as of March 27, 1991, and First
Amendment thereto dated as of June 1992, guaranteeing the performance
of Kaiser Engineers, Inc. under an Amended and Restated Lease
Agreement by and between Kaiser Engineers, Inc. and the California
Public Employee's Retirement System, dated as of July 1, 1988, for the
lease of the Registrant's offices in Oakland, California (Incorporated
by reference to Exhibit No. 10(b) to Quarterly Report on Form 10-Q
Registrant No. 0-18025 for the first quarter of fiscal 1993 filed with
the Commission on July 10, 1992)
10(j) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and
restated through March 1, 1996) (Incorporated by reference to Exhibit
No. 10(j) to Registration Statement on Form S-1 Registration No. 333-
16937 filed with the Commission on November 27, 1996)
10(l) Purchase Order dated March 8, 1995 (WHC-380393, Mod. 1) issued by
Westinghouse Hanford Company to ICF Kaiser Hanford Company (DOE
Reference No. DE-AC06-87RL1930) (Incorporated by reference to Exhibit
No. 10(m) to Annual Report on Form 10-K Registrant No. 1-12248 for
fiscal year 1995 filed with the Commission on May 23, 1995)
10(m) Assignment Agreement between the U.S. Department of Energy, Kaiser
Engineers Hanford Company, and Westinghouse Hanford Company, with an
effective date of October 1, 1993 (Contract No. DE-A06-93RL12359)
(Incorporated by reference to Exhibit No. 10(a) to Quarterly Report on
Form 10-Q Registrant No. 1-12248 for the second quarter of fiscal 1994
filed with the Commission on October 15, 1993)
1. Modification No. 1 dated October 25, 1993 (Incorporated by reference
to Exhibit No. 10(n)(1) to Annual Report on Form 10-K Registrant No.
1-12248 filed with the Commission on May 25, 1994).
10(n) Hanford Termination Notice effective October 1, 1996, from the U.S.
Department of Energy.
10(o) Massachusetts Water Resources Authority Agreement with ICF Kaiser
Engineers, Inc. through its wholly owned subsidiary of ICF Kaiser
Engineers of Massachusetts, Inc. for construction management services
for Boston Harbor Project--Deer Island Related Facilities, Contract
No. 5622 (June 1990) (Incorporated by reference to Exhibit No. 10(h)
to Quarterly Report on Form 10-Q Registrant No. 0-18025 for the second
quarter of fiscal 1991 filed with the Commission on October 12, 1990)
(Amendment Nos. 1-3 incorporated by reference to Exhibit No. 10(n)(1-
3) to Annual Report on Form 10-K Registrant No. 0-18025 for the fiscal
year ended February 28, 1993 filed with the Commission on May 21,
1993).
1. Amendment No. 4 and Amendment No. 4A each dated December 2, 1993
[IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO.
10(n)(1) to Annual Report on Form 10-K Registrant No. 1-12248 for
fiscal 1994 FILED IN PAPER ON MAY 20, 1994, ON FORM SE PURSUANT TO A
CONTINUING HARDSHIP EXEMPTION is incorporated herein by reference
thereto]
2. Amendment No. 5 dated December 6, 1994 [IN ACCORDANCE WITH RULE 202 OF
REGULATION S-T, THIS EXHIBIT NO. 10(n)(2) to Annual Report on Form 10-
K Registrant No. 1-12248 for fiscal 1995 FILED IN PAPER ON MAY 23,
1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is
incorporated herein by reference thereto]
3. Amendment No. 6 to the Agreement with the Massachusetts Water
Resources Authority for Construction Management Services (January
1996) (Amendment No. 6 incorporated by reference to Exhibit No.
10(n)(3) to Quarterly Report on Form 10-Q Registrant No. 1-12248 for
the fiscal quarter ended March 31, 1996 filed with the Commission on
May 15, 1996).
10(p) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a
subsidiary of the Corporation, and the U.S. Department of Energy dated
as of April 4, 1995. [IN ACCORDANCE WITH RULE 202 OF REGULATION S-T,
THIS EXHIBIT NO. 10(o) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE
PURSUANT TO A CONTINUING HARDSHIP EXEMPTION is incorporated herein by
reference thereto]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
1. Modifications to Contract #DE-AC3495RF00825. (Incorporated by
reference to Exhibit No. 10(p)(1) to Registration Statement on Form S-
1 Registration No. 333-16937 filed with the Commission on November 27,
1996)
10(q) ICF Kaiser International, Inc. Section 401(k) Plan (as amended and
restated as of March 1, 1993) (and further amended with respect to
name change only as of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(f) to Quarterly Report on Form 10-Q Registrant No. 1-
12248 (Registrant No. 1-12248) for the second quarter of fiscal 1994
filed with the Commission on October 15, 1993)
1. Amendment No. 1 dated April 24, 1995 (Incorporated by reference to
Exhibit No. 10(p)(1) to Annual Report on Form 10-K Registrant No. 1-
12248 for fiscal 1995 filed with the Commission on May 23, 1995).
2. Amendment No. 2 dated December 15, 1995 (Incorporated by reference to
Exhibit No. 10(p)(2) to Transition Report on Form 10-K Registrant No.
1-12248 for the transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996).
3. Amendment No. 3 dated December 13, 1996
10(r) Trust Agreement with Vanguard Fiduciary Trust Company dated as of
March 1, 1989, for the ICF Kaiser International, Inc. Section 401(k)
Plan (Incorporated by reference to Exhibit No. 28(b) to Registration
Statement on Form S-8 (Registration No. 33-51460) filed with the
Commission on August 31, 1992).
Exhibit No. 10--Material Contracts (management contracts, compensatory plans,
or arrangements.)
10(aa) Employment Agreement with James O. Edwards dated as of December 31,
1994 (Incorporated by reference to Exhibit No. 10 (bb) to Annual
Report on Form 10-K for fiscal 1995 Registrant
No. 1-12248 filed with the Commission on May 23, 1995).
10(bb) ICF Kaiser International, Inc. Corporate Incentive Compensation Plan:
Annual Incentive Plan (dated as of September 29, 1993) (Incorporated
by reference to Exhibit No. 10(aa) to Quarterly Report on Form 10-Q
Registrant No. 1-12248 for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993).
10(cc) ICF Kaiser International, Inc. Non-employee Director Stock Option Plan
(as amended and restated as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(bb) to Quarterly Report on Form 10-Q
(Registrant No. 1-12248) for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993).
10(dd) Agreement with Alvin S. Rapp, Executive Vice President of the
Registrant, dated November 1, 1993 (Incorporated by reference to
Exhibit No. 10(ll) to Amendment No. 1 to Registration Statement on
Form S-1 (No. 33-70986) filed with the Commission on November 22,
1993).
10(ee) Employment Agreement with Marc Tipermas, Executive Vice President of
the Registrant, effective as of March 1, 1994 (Incorporated by
reference to Exhibit No. 10(ll) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on May 25, 1994).
10(ff) Employment Agreement with Stephen W. Kahane, Executive Vice President
of the Registrant, effective as of March 1, 1994 (Incorporated by
reference to Exhibit No. 10(mm) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on May 25, 1994).
10(gg) ICF Kaiser International, Inc. Senior Executive Officers Severance
Plan as approved by the Compensation Committee of the Board of
Directors on April 4, 1994, and adopted by the Board of Directors on
May 5, 1994 (Incorporated by reference to Exhibit No. 10(nn) to Annual
Report on Form 10-K (Registrant No. 1-12248) filed with the Commission
on May 25, 1994).
10(hh) Employment Agreement with Michael K. Goldman, Executive Vice President
of the Registrant, effective as of February 28, 1994. (Incorporated by
reference to Exhibit No. 10(jj) to Annual Report on Form 10-K
Registrant No. 1-12248 for fiscal 1995 filed with the Commission on
May 23, 1995).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
10(ii) Employment Agreement dated May 17, 1993, and February 1, 1995, with
Richard K. Nason, Executive Vice President and Chief Financial Officer
of the Registrant (Incorporated by reference to Exhibit No. 10(ii) to
Transition Report on Form 10-K Registrant No. 1-12248 for the
transition period from March 1, 1995 to December 31, 1995 filed with
the Commission on March 29, 1996).
10(jj) ICF Kaiser International, Inc. Stock Incentive Plan (as amended and
restated through March 1, 1996) (Incorporated by reference to Exhibit
No. 10(j) to Registration Statement on Form S-1 Registration No. 333-
16937 filed with the Commissionon November 27, 1996)
Exhibit No. 11--Computation of Primary and Fully Diluted Earnings Per Share
(Incorporated by reference to Exhibit No. 11 to (a) Transition
Report on Form 10-K Registrant No. 1-12248 for the transition
period from March 1, 1995 to December 31, 1995, filed with the
Commission on March 29, 1996, and (b) Quarterly Report on Form 10-
Q Registrant No. 1-12248 for the third quarter ended September 30,
1996 filed with the Commission on November 14, 1996).
Exhibit No. 12--Statement re Computation of Ratio of Earnings to Fixed Changes
Exhibit No. 21--Consolidated Subsidiaries of the Registrant as of December 31,
1996
Exhibit No. 23--Consents
23(a) Consent of Coopers & Lybrand L.L.P.
23(b) Consent of Paul Weeks, II, is contained in Exhibit No. 5
23(c) Consent of Crowell & Moring LLP is contained in Exhibit No. 8
Exhibit No. 24--Powers of Attorney (see pages II-10 through II-16).
Exhibit No. 25--Statement of Eligibility and Qualification on Form T-1 under
the Trust Indenture Act of 1939 of The Bank of New York, as
Trustee of the Indenture relating to the 12% Senior Notes due
2003, Series B
Exhibit No. 99--Additional Exhibits
99(a) Letter of Transmittal
99(b) Notice of Guaranteed Delivery
99(c) Letter to Securities Dealers, Commercial Banks, Trust Companies and
Other Nominees
99(d) Letter to Clients
99(e) Guidelines for Certification of Taxpayer Identification Number on Form
W-9
</TABLE>
<PAGE>
Exhibit 3(c)
FILED
In the office of the Secretary of State
of the State of California
July 25, 1979
RESTATED ARTICLES OF INCORPORATION
OF
EARTHQUAKE ENGINEERING SYSTEMS INC.
BEN K. KACYRA and SANFORD TANDOWSKY certify that:
1. They are the duly elected and acting President and Secretary, respectively,
of said corporation.
2. The Articles of Incorporation of this corporation are amended and restated
to read as follows:
ARTICLE I
The name of this corporation is EARTHQUAKE ENGINEERING SYSTEMS, INC.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity for
which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
This corporation elects to be governed by all the provisions of the General
Corporation Law effective January 1, 1997 not otherwise applicable to it under
Chapter 23 thereof.
ARTICLE IV
This corporation is authorized to issue only one class of shares of stock; and
the total number of shares which this corporation is authorized to issue is
Seven Hundred Fifty Thousand (750,000).
Upon the amendment of this Article IV to read as hereinabove set forth, each
outstanding share of capital stock is divided into ten (10) shares of capital
stock.
3. The foregoing amendment and restatement of Articles of Incorporation has
been duly approved by the Board of Directors of said corporation.
4. The foregoing amendment and restatement of Articles of Incorporation has
been duly approved by the required vote of the shareholders in accordance with
(S)902 of the Corporations Code. The total number of outstanding shares of the
corporation is 10,750. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
/s/ Ben K. Kacyra
------------------
Ben K. Kacyra, President
/s/ Sanford Tandowsky
---------------------
Sanford Tandowsky, Secretary
The undersigned declare under penalty of perjury that the matters set forth in
the foregoing certificate are true of their own knowledge. Executed at San
Francisco, California, on June 13, 1979.
/s/ Ben K. Kacyra
-----------------
Ben K. Kacyra
/s/ Sanford Tandowsky
----------------------
Sanford Tandowsky
<PAGE>
A235567
FILED
In the office of the Secretary of State
of the State of California
July 13, 1981
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
EARTHQUAKE ENGINEERING SYSTEMS, INC.
BEN K. KACRYA and SANFORD TANDOWSKY certify that:
1. They are the Chairman of the Board and the Secretary, respectively, of
EARTHQUAKE ENGINEERING SYSTEMS INC., a California corporation.
2. Article I of the Articles of Incorporation of this corporation is
amended to read as follows:
"The name of this corporation is CYGNA ENERGY SERVICES."
3. The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of the shareholder in accordance with Section 902
of the Corporations Code. The total number of outstanding shares of the
corporation is 107,500. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
/s/ Ben K. Kacyra
-----------------
Ben K. Kacyra
Chairman of the Board
/s/ Sanford Tandowsky
---------------------
Sanford Tandowsky
Secretary
The undersigned declare under penalty of perjury that the matters set forth
in the foregoing Certificate are true of their own knowledge. Executed at San
Francisco, California, on July 10, 1981.
/s/ Ben K. Kacyra
-----------------
Ben K. Kacyra
/s/ Sanford Tandowsky
---------------------
Sanford Tandowsky
CONSENT
-------
CYGNA DEVELOPMENT, a California corporation, does hereby consent to the
change in the corporate name of EARTHQUAKE ENGINEERING SYSTEMS INC., a
California corporation, to CYGNA ENERGY SERVICES.
Dated: July 10, 1981.
CYGNA DEVELOPMENT
By /s/ Ben K. Kacyra
------------------------
Ben K. Kacyra, President
<PAGE>
A313484
FILED
In the office of the Secretary of State
of the State of California
March 20, 1986
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
CYGNA ENERGY SERVICES
RICHARD J. STUART and SANFORD TANDOWSKY certify that:
1. They are the President and the Secretary, respectively, of CYGNA
ENERGY SERVICES, a California corporation.
2. Article IV of the Articles of Incorporation of this corporation is
amended to read as follows:
"This corporation is authorized to issue only one class of shares of
stock; and the total number of shares which this corporation is authorized
to issue is Two Hundred Fifteen (215).
"Upon the amendment of this Article IV to read as hereinabove set
forth, each outstanding share of capital stock is converted into .002
shares of capital stock."
3. The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of the Shareholder in accordance with Section 903
of the Corporations Code. The total number of outstanding shares of the
corporation is 107,500. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate are true and correct
of our own knowledge.
Dated: February 10, 1986.
/s/ Richard J. Stuart
----------------------------
Richard J. Stuart, President
/s/ Sanford Tandowsky
----------------------------
Sanford Tandowsky, Secretary
<PAGE>
A440208
FILED
In the office of the Secretary of State
of the State of California
December 8, 1993
AGREEMENT OF MERGER
This Agreement of Merger (Agreement) is entered into between CYGNA ENERGY
SERVICES (Survivor), a California Corporation, and CYGNA PROJECT MANAGEMENT
(Disappearing), a California Corporation, the constituent corporations in this
merger.
A. The issued and outstanding stock of Disappearing consists of 10,000
common shares.
B. The issued and outstanding stock of Survivor consists of 10,000 common
shares.
C. Survivor owns 100 percent of the issued and outstanding shares of
Disappearing.
Survivor and Disappearing agree that Survivor and Disappearing shall, on
the effective date of the merger stated in this Agreement, be merged into a
single corporation, Survivor, and that the terms and conditions of the merger
are as stated in this Agreement. On the effective date of the merger, the
separate existence of Disappearing shall cease, and Survivor, as the surviving
corporation, shall succeed, without other transfer, to all the rights and
property of Disappearing, and shall be subject to all the debts and liabilities
of Disappearing, in the same manner as if Survivor itself had incurred them.
The Articles of Incorporation of Survivor in effect on the effective date
of the merger shall continue in effect until altered or amended as provided by
the Agreements or by law. The bylaws of Survivor shall not be altered by this
Agreement. The Officers and Board of Directors of Survivor shall not be altered
by this Agreement.
The shares of Survivor outstanding on the effective date shall not be
changed or converted as a result of the merger, but shall remain outstanding as
shares of Survivor. The outstanding shares of Disappearing shall be cancelled,
and no shares of Survivor shall be issued in exchange for them.
An executed counterpart of this Agreement of Merger and Officers'
certificates of each of the constituent corporations shall be filed in the
office of the California Secretary of State.
The merger shall become effective on the date of that filing.
IN WITNESS WHEREOF, Survivor and Disappearing, as duly authorized by their
respective Boards of Directors, have caused this Agreement of Merger to be
executed this 23rd day of November, 1993.
CYGNA ENERGY SERVICES
By: /s/
---------------------------
(Title) Vice President
By: /s/
---------------------------
(Title) Asst. Secretary
CYGNA PROJECT MANAGEMENT
By: /s/
---------------------------
(Title) President
By: /s/
---------------------------
(Title) Asst. Secretary
<PAGE>
OFFICERS' CERTIFICATE OF MERGER
FOR
CYGNA PROJECT MANAGEMENT
We, the undersigned, do certify that:
1. We are, and at all times herein mentioned, were the duly elected or
appointed and qualified President and Assistant Secretary of CYGNA PROJECT
MANAGEMENT, herein called "said corporation," a corporation duly organized and
existing under the laws of the State of California;
2. On November 23, 1993, the Board of Directors of said corporation
approved the attached merger agreement in the form attached.
3. The total number of outstanding shares of each class of said
corporation entitled to vote on the merger described in the Agreement of Merger
hereto attached is:
10,000 COMMON SHARES
4. The merger agreement was entitled to be and was approved by the Board
of Directors of said corporation alone under the provisions of Section 1201 of
the California Corporations Code because shareholder of said corporation
immediately prior to the merger shall own, immediately after the merger, equity
securities other than warrant or right to subscribe or purchase equity
securities of the surviving corporation possessing more than five-sixths of the
voting power of the surviving corporation, to wit: The shareholders of said
corporation immediately before the merger will immediately after the merger own
215 outstanding voting shares of the surviving corporation.
We declare under penalty of perjury that the foregoing is true and correct
of our own knowledge. Executed at Alameda County, California, on December 6,
1993.
/s/ George D. O'Brien
---------------------
George D. O'Brien, President
/s/ Richard E. Bonitz
---------------------
Richard E. Bonitz, Asst. Secretary
<PAGE>
OFFICERS' CERTIFICATE OF MERGER
FOR
CYGNA ENERGY SERVICES
We, the undersigned, do certify that:
1. We are, and at all times herein mentioned, were the duly elected or
appointed and qualified Chief Financial Officer and Assistant Secretary of CYGNA
ENERGY SERVICES, herein called "said corporation, " a corporation duly organized
and existing under the laws of the State of California.
2. On November 23, 1993, the Board of Directors of said corporation
approved the attached merger agreement in the form attached.
3. The total number of outstanding shares of each class of said
corporation entitled to vote on the merger described in the Agreement of Merger
hereto attached is:
215 COMMON SHARES
4. The shareholder vote was unanimous.
We declare under penalty of perjury that the foregoing is true and correct
of our own knowledge. Executed at Alameda County, California, on December 6,
1993.
/s/ John Brusher
----------------
John Brusher, Chief Financial Officer
/s/ Richard E. Bonitz
---------------------
Richard E. Bonitz, Asst. Secretary
<PAGE>
A440209 FILED
In the office of the Secretary of State
of the State of California
December 8, 1993
AGREEMENT OF MERGER
This Agreement of Merger (Agreement) is entered into between CYGNA ENERGY
SERVICES (Survivor), a California Corporation, and CYGNA CONSULTING ENGINEERS
(Disappearing), a California Corporation, the constituent corporations in this
merger.
A. The issued and outstanding stock of Disappearing consists of 10,000
common shares.
B. The issued and outstanding stock of Survivor consists of 215 common
shares.
C. CYGNA GROUP, INC. (Parent) is a Delaware Corporation that owns 100
percent of the issued and outstanding shares of both Disappearing and Survivor.
Survivor and Disappearing agree that Survivor and Disappearing shall, on
the effective date of the merger stated in this Agreement, be merged into a
single corporation, Survivor, and that the terms and conditions of the merger
are as stated in this Agreement. On the effective date of the merger, the
separate existence of Disappearing shall cease, and Survivor, as the surviving
corporation, shall succeed, without other transfer, to all the rights and
property of Disappearing, and shall be subject to all the debts and liabilities
of Disappearing, in the same manner as if Survivor itself had incurred them.
The Articles of Incorporation of Survivor in effect on the effective date
of the merger shall continue in effect until altered or amended as provided by
this Agreement or by law. The bylaws of Survivor shall not be altered by this
Agreement. The Officers and Board of Directors of Survivor shall not be altered
by this Agreement.
The shares of Survivor outstanding on the effective date shall not be
changed or converted as a result of the merger, but shall remain outstanding as
shares of Survivor. The outstanding shares of Disappearing shall be cancelled,
and no shares of Survivor shall be issued in exchange for them.
An executed counterpart of this Agreement of Merger and Officers'
certificates of each of the constituent corporations shall be filed in the
office of the California Secretary of State.
The merger shall become effective on the date of that filing.
IN WITNESS WHEREOF, Survivor and Disappearing, as duly authorized by their
respective Boards of Directors, have caused this Agreement of Merger to be
executed this 23rd day of November, 1993.
CYGNA ENERGY SERVICES CYGNA CONSULTING ENGINEERS
By: /s/ By: /s/
--------------------- ---------------------
(Title) (Title)
By: /s/ By: /s/
--------------------- ---------------------
(Title) (Title)
CYGNA GROUP, INC. hereby consents to
the above Agreement of Merger:
CYGNA GROUP, INC.
By: /s/
---------------------
(Title)
By: /s/
---------------------
(Title)
<PAGE>
OFFICERS' CERTIFICATE OF MERGER
FOR
CYGNA ENERGY SERVICES
We, the undersigned, do certify that:
1. We are, and at all times herein mentioned, were the duly elected or
appointed and qualified Chief Financial Officer and Assistant Secretary of CYGNA
ENERGY SERVICES, herein called "said corporation," a corporation duly organized
and existing under the laws of the State of California.
2. On November 23, 1993, the Board of Directors of said corporation
approved the attached merger agreement in the form attached.
3. The total number of outstanding shares of each class of said corporation
entitled to vote on the merger described in the Agreement of Merger hereto
attached is:
215 COMMON SHARES
4. The merger agreement was entitled to be and was approved by the Board of
Directors of said corporation alone under the provisions of Section 1201 of the
California Corporations Code because shareholder of said corporation immediately
prior to the merger shall own, immediately after the merger, equity securities
other than warrant or right to subscribe or purchase equity securities of the
surviving corporation possessing more than five-sixths of the voting power of
the surviving corporation, to wit: The shareholders of said corporation
immediately before the merger will immediately after the merger own 215 of the
215 outstanding voting shares of the surviving corporation.
We declare under penalty of perjury that the foregoing is true and correct
of our own knowledge. Executed at Alameda County, California, on December 6,
1993.
/s/ John Brusher
----------------
John Brusher, Chief Financial Officer
/s/ Richard E. Bonitz
---------------------
Richard E. Bonitz, Asst. Secretary
<PAGE>
OFFICERS' CERTIFICATE OF MERGER
FOR
CYGNA CONSULTING ENGINEERS
We, the undersigned, do certify that:
1. We are, and at all times herein mentioned, were the duly elected or
appointed and qualified President and Assistant Secretary of CYGNA CONSULTING
SERVICES, herein called "said corporation," a corporation duly organized and
existing under the laws of the State of California;
2. On November 23, 1993, the Board of Directors of said corporation
approved the attached merger agreement in the form attached.
3. The total number of outstanding shares of each class of said corporation
entitled to vote on the merger described in the Agreement of Merger hereto
attached is:
10,000 COMMON SHARES
4. The Shareholder vote was unanimous.
We declare under penalty of perjury that the foregoing is true and correct
of our own knowledge. Executed at Alameda County, California, on December 6,
1993.
/s/ George D. O'Brien
---------------------
George D. O'Brien, President
/s/ Richard E. Bonitz
---------------------
Richard E. Bonitz, Asst. Secretary
<PAGE>
A442238
FILED
in the office of the Secretary of State
of the State of California
February 3, 1994
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF CYGNA ENERGY SERVICES
STEPHEN W. KAHANE and RICHARD E. BONITZ certify that:
1. They are the president and assistant secretary, respectively, of Cygna
Energy Services, a California corporation.
2. The following amendment to the articles of Incorporation of the corporation
has been duly approved by the board of directors of the corporation.
Article I of the Articles of Incorporation of this corporation is amended
to read as follows:
"The name of this corporation is
CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC.
3. The amendment was duly approved by the required vote of shareholders in
accordance with section 902 of the California Corporations Code. The total
number of outstanding shares entitled to vote with respect to the amendment was
215, the favorable vote of a majority of such shares is required to approve the
amendment, and the number of such shares voting in favor of the amendment
equaled or exceeded the required vote.
/s/ Stephen W. Kahane
---------------------
Stephen W. Kahane, President
/s/ Richard E. Bonitz
---------------------
Richard E. Bonitz, Assistant Secretary
The undersigned declare under penalty of perjury that the matters set forth in
the foregoing certificate are true of their own knowledge. Executed at Oakland,
California, on February 1, 1994.
/s/ Stephen W. Kahane
---------------------
Stephen W. Kahane
/s/ Richard E. Bonitz
---------------------
Richard E. Bonitz
<PAGE>
CERTIFICATE OF OWNERSHIP
MICHAEL K. GOLDMAN AND PAUL WEEKS, II, DO HEREBY CERTIFY:
FIRST: That they are the Senior Vice President and Secretary, respectively,
of Cygna Consulting Engineers and Project Management, Inc., a California
corporation (the "Corporation").
SECOND: That the Corporation owns all of the issued and outstanding shares
of capital stock of Cygna Energy Services Michigan, Inc., a Michigan
corporation.
THIRD: That the board of directors of this Corporation duly adopted the
following resolutions:
RESOLVED, that the Corporation merge into itself its wholly owned
subsidiary, Cygna Energy Services Michigan, Inc., a Michigan corporation, and
assume all of said subsidiary's liabilities and obligations (the "Merger"),
pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), attached
as Exhibit A hereto; and
FURTHER RESOLVED, that the Merger Agreement and the transactions
contemplated thereby be, and they hereby are, authorized, adopted, ratified, and
approved as of the Effective Date of the Merger (as set forth in Section 1.02 of
the Merger Agreement); and
FURTHER RESOLVED, that immediately following the Merger the separate
existence of Cygna Energy Services Michigan, Inc. shall terminate and the
Corporation shall be the surviving corporation; and
FURTHER RESOLVED, that the President, any Senior Vice President, any Vice
President, the Treasurer, the Assistant Treasurer, the Secretary, and the
Assistant Secretary of the corporation (each such person an "Authorized Officer"
and collectively, the "Authorized Officers") in their capacities as officers of
the Corporation and without further act or resolution of the Board, be, and each
of them, with full power to act without the others, hereby is, authorized, in
the name and on behalf of the Corporation, (i) to execute and deliver the Merger
Agreement, substantially in the form attached hereto as Exhibit A, with such
changes as any of them me deem necessary or appropriate (as conclusively
presumed from his or her taking such action); (ii) to make, execute and
acknowledge a Certificate of Ownership and Merger setting forth a copy of these
Resolutions to merge Cygna Energy Services Michigan, Inc. with and into the
Corporation; (iii) to execute and deliver the Certificate of Ownership and
Merger and any and all amendments, agreements, understandings, letters,
certificates, schedules, notices, government filings, documents (including, but
not limited to, any and all federal, state, local, international, administrative
agency or like body filings) and an and all other items they may deem necessary
or appropriate (as conclusively presumed from his or her taking such action) in
connection with or to effect the Merger Agreement, these Resolutions and the
transactions contemplated therein, (Iv) to file a Certificate of Ownership and
Merger in the office of the Secretary of State of the States of California and
Michigan, and (v) to take any and all additional steps any of they may deem
necessary or appropriate (as conclusively presumed from his or her taking such
action) to effect the merger and the related transactions contemplated thereby;
and
FURTHER RESOLVED, that pursuant to the immediately preceding Resolutions,
if any form or forms of Resolutions are suggested and/or required by any
government agency or instrumentality (including, without limitation, federal,
state, local and foreign government agencies and instrumentalities) with which
the Corporation has, or proposes to have, business arrangements, than such form
or forms of resolutions are, upon the filing of such form or forms of
resolutions with this Consent of the Board of Directors, hereby are adopted in
iisdem termimis, as Resolutions of this Board, and the proper officers of the
- ------ ---------
Corporation are, and each of them hereby is, authorized, for and in the name of
the Corporation, to complete such resolution, affix the seal of the Corporation
thereto, and to file a copy of such Resolutions with this Consent of the Board
of Directors.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
By: /s/ Michael K. Goldman
----------------------
Michael K. Goldman, Senior Vice President
By: /s/ Paul Weeks, II
------------------
Paul Weeks, II, Secretary
<PAGE>
Exhibit 3(d)
RESTATED BYLAWS FOR THE REGULATION
OF
CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC.
(as of October 4, 1995)
ARTICLE I
---------
Offices
-------
Section 1. Principal Executive Office. The principal executive office of
--------- --------- ------
the corporation designated in these bylaws is located at:
141 Battery Street
San Francisco, California 94111
If no principal executive office is specified above, the Board of Directors
shall fix the location of the principal executive office of the corporation at
any place within or without the State of California. If the principal executive
office is located outside this state and the corporation has one or more
business offices in this state, the Board of Directors shall fix and designate a
principal business office in the State of California.
The Board of Directors is hereby granted full power and authority to fix or
change the location of the principal executive and business offices without
amendment to these bylaws.
Section 2. Other Offices. Branch or subordinate offices may at any time
----- -------
be established by the Board of Directors at any place or places where the
corporation is qualified to do business.
I-1
<PAGE>
ARTICLE II
----------
Meetings of Shareholders
------------------------
Section 1. Place of Meetings. All annual and other meetings of
----- -- --------
shareholders shall be held either at the principal executive office of the
corporation or at any other place within or without the State of California
which may be designated either by the Board of Directors pursuant to authority
hereinafter granted to the Board, or by the written consent of all shareholders
entitled to vote thereat, given either before or after the meeting and filed
with the secretary of the corporation.
Section 2. Annual Meetings. The annual meetings of stockholders, at
------ --------
which Directors shall be elected, shall be held on the first Wednesday following
the first Tuesday in October of each year, at 2:30 p.m. of said day; provided,
however that should said day fall upon a legal holiday, then any such annual
meeting of stockholders shall be held at the same time and place on the next day
thereafter ensuing which is not a legal holiday. At each annual meeting the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting."
Section 3. Special Meetings. Special meetings of the shareholders,
------- --------
for any purpose or purposes whatsoever, may be called at any time by the
president or by the Board of Directors, or by one or more shareholders holding
not less than one-tenth of the voting power of the corporation.
If a special meeting of shareholders is called by any person or persons
other than the Board of Directors, the request shall be in writing and given to
the chairman of the Board, the president, any vice president, or the secretary
of the corporation. The officer receiving the request shall cause notice to be
promptly given shareholders entitled to vote, that a meeting will be held at the
time requested by the person or persons calling the meeting, not less than
thirty-five (35) nor more than sixty (60) days after the receipt of the request.
If the notice is not given within twenty (20) days after receipt of the request,
the person or persons requesting the meeting may give the notice. Nothing
II-1
<PAGE>
contained in this paragraph of this Section 3 shall be construed as limiting,
fixing or affecting the time when a meeting of shareholders called by action of
the Board of Directors may be held.
Notices of or requests for special meetings shall be given in accordance
with the provisions of Section 4 and 5 of this Article II.
Section 4. Notice of Shareholders' Meetings. All notices of meetings
------ -- ------------- --------
of shareholders shall be sent or otherwise given in accordance with Section 5
of this Article II not less than ten (10) nor more than sixty (60) days before
the date of the meeting. The notice shall specify the place, date and hour of
the meeting and (i) in the case of a special meeting, the general nature of the
business to be transacted, or (ii) in the case of the annual meeting, those
matters which the Board of Directors, at the time of giving the notice, intends
to present for action by the shareholders. The notice of any meeting at which
directors are to be elected shall include the name of any nominee or nominees
who, at the time of the notice, management intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California; (ii)
an amendment of the articles of incorporation, pursuant to Section 902 of that
Code; (iii) a reorganization of the corporation, pursuant to Section 1201 of
that Code; (iv) a voluntary dissolution of the corporation, pursuant to Section
1900 of that Code; or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, pursuant to Section 2007 of
that Code, the notice shall also state the general nature of that proposal.
II-2
<PAGE>
Section 5. Manner of Giving Notice:
------ -- ------ ------
Affidavit of Notice. Except in special cases where other
--------- -- ------
express provision is made by statute, notice or request of any meeting of
shareholders shall be given either personally or by first-class mail or
telegraphic or other written communication, charges prepaid. Notice to a
shareholder shall be addressed to the shareholder at the address of that
shareholder appearing on the books of the corporation or given by the
shareholder to the corporation for the purpose of notice. If no such address
appears on the corporation's books or is given, notice shall be deemed to have
been given if sent to that shareholder by first-class mail or telegraphic or
other written communication to the corporation's principal executive office, or
if published at least once in a newspaper of general circulation in the county
where that office is located. Notice shall be deemed to have been given at the
time when delivered personally or deposited in the mail or sent by telegram or
other means of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written demand
of the shareholder at the principal executive office of the corporation for a
period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting may be executed by the secretary, assistant secretary, or
any transfer agent of the corporation giving the notice, and shall be filed and
maintained in the minute book of the corporation.
II-3
<PAGE>
Section 6. Adjourned Meetings and Notice Thereof. Any shareholders'
--------- -------- --- ------ -------
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares represented at the
meeting, either present in person or by proxy. In the absence of a quorum no
other business may be transacted at such meeting, except as stated in Section 8
of this Article II.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at a meeting at which the adjournment is taken,
unless a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, in which case the Board of Directors shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 4 and 5 of this Article II. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 7. Voting. The shareholders entitled to notice of any meeting or
------
to vote at any such meeting shall be only persons in whose name shares stand on
the stock records of the corporation on the record date determined in
accordance with Section 11 of this Article II.
Voting shall in all cases be subject to the provisions of Chapter 7 of the
California General Corporation Law and to the following provisions:
(a) Subject to clause (g), shares held by an administrator, executor,
guardian, conservator or custodian may be voted by such holder either in person
or by proxy, without a transfer of
II-4
<PAGE>
such shares into the holder's name; and the shares held by a trustee may only be
voted by the trustee, either in person or by proxy, if the shares are standing
in the name of the trustee.
(b) Shares standing in the name of a receiver may be voted by such
receiver; and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into the receiver's name if authority
to do so is contained in the order of the court by which such receiver was
appointed.
(c) Subject to the provisions of Section 705 of the Corporations Code of
California, and except where otherwise agreed in writing between the parties, a
shareholder whose shares are pledged shall be entitled to vote such shares until
the shares have been transferred into the name of the pledges, and thereafter
the pledges shall be entitled to vote the shares so transferred.
(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the minor,
in person or by proxy, whether or not the corporation has notice, actual or
constructive, of the nonage, unless a guardian of the minor's property has been
appointed and written notice of such appointment given to the corporation.
(e) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent or proxy holder as the bylaws of
such other corporation may prescribe or, in the absence of such provision, as
the board of directors of such other corporation may determine or, in the
absence of such determination, by the chairman of the board, president or any
vice president of such other corporation, or by any other person authorized to
do so by the board, president or any vice president of such other corporation.
Shares which are purported to be voted or any proxy purported to be executed in
the name of a corporation (whether or not any title of the person signing is
indicated) shall be presumed to be voted or the proxy executed in accordance
with the provisions of this subdivision, unless the contrary is shown.
II-5
<PAGE>
(f) Shares of the corporation owned by its subsidiary shall not be
entitled to vote on any matter.
(g) Shares held by the corporation in a fiduciary capacity, and shares
of the corporation held in a fiduciary capacity by any subsidiary, shall not be
entitled to vote on any matter, except to the extent that the settlor or
beneficial owner possesses and exercises a right to vote or to give the
corporation binding instructions as to how to vote such shares.
(h) If shares stand of record in the names of two or more persons,
whether fiduciaries, members of a partnership, joint tenants, tenants in common,
husband and wife as community property, tenants by the entirety, voting
trustees, persons entitled to vote under a shareholder voting agreement or
otherwise, or if two or more persons (including proxy holders) have the same
fiduciary relationship respecting the same shares, unless the secretary of the
corporation is given written notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the following
effect:
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so voting
binds all;
(iii) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionately.
If the instrument so filed or the registration of the shares shows that any
such tenancy is held in unequal interests, a majority or even split for the
purpose of this section shall be a majority or even split in interest.
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder before the voting has begun. On any matter other than elections of
directors, any shareholder may vote part of the shares in favor of the proposal
and refrain from voting the remaining shares or vote them against the proposal,
but, if the shareholder fails to specify the number of shares which the
shareholder is voting
II-6
<PAGE>
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on any matter (other than the
election of directors) shall be the act of the shareholders, unless the vote of
a greater number or voting by classes is required by California General
Corporation Law or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to cumulate votes (i.e., cast for any one or more
candidates a number of votes greater than the number of the shareholder's
shares) unless the candidates' names have been placed in nomination prior to
commencement of the voting and a shareholder has given notice prior to
commencement of the voting of the shareholder's intention to cumulate votes. If
any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which that shareholder's shares are entitled, or distribute
the shareholder's votes on the same principle among any or all of the
candidates, as the shareholder thinks fit. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
Section 8. Quorum. The presence in person or by proxy of persons entitled
------
to vote a majority of the voting shares at any meeting shall constitute a quorum
for the transaction of business. The shareholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by at
least a majority of the shares required to constitute a quorum.
Section 9. Waiver of Notice; Consent of Absentees. The transaction of any
------ -- ------ ------- -- ---------
meeting of shareholders, either annual or special, however called and noticed,
shall be as valid as though had a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if,
II-7
<PAGE>
either before or after the meeting, each of the shareholders entitled to vote,
not present in person or by proxy, signs a written waiver of notice, or a
consent to the holding of such meeting, or an approval of the minutes thereof.
All such waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of the meeting. Neither the business to be
transacted at nor the purpose of any regular or special meeting of shareholders
need be specified in any written waiver of notice except that if action is taken
or proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 4 of this Article II, the waiver of notice or
consent shall State the general nature of the proposal.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Attendance at a meeting is not a waiver of any right to
object to the consideration of matters required by law to be included in
the notice of the meeting but not so included if that objection is expressly
made at the meeting.
Section 10. Shareholder Action By Written Consent Without A Meeting.
----------- ------ -- ------- ------- ------- - -------
Any action which may be taken at any annual or special meeting of shareholders
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take that action at a meeting at which all shares
entitled to vote on that action were present and voted. In the case of election
of directors, such a consent shall be effective only if signed by the holders of
all outstanding shares entitled to vote for the election of directors; provided,
however, that a director may be elected at any time to fill a vacancy on the
Board of Directors that has not been filled by the directors, by the written
consent of the holders of a majority of the outstanding shares entitled to vote
for the election of directors. All such consents shall be filed with the
secretary of the corporation and shall be maintained in the corporate records.
Any shareholder giving a written consent, or the shareholder's proxy holders,
or a transferee of the
II-8
<PAGE>
shares or a personal representative of the shareholder or their respective proxy
holders, may revoke the consent by a writing received by the secretary of the
corporation before written consents of the number of shares required to
authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing, and if the unanimous written consent of all such
shareholders shall not have been received, the secretary of the corporation
shall give prompt notice of the corporate action approved by the shareholders
without a meeting. This notice shall be given in the manner specified in
Section 5 of this Article II. In the case of approval of a matter listed in the
second paragraph of Section 4 of this Article II (except with respect to
voluntary dissolution), the notice shall be given at least ten (10) days before
the consummation of any action authorized by that approval.
Section 11. Record Date for Shareholder Notice, Voting and Giving
------ ---- --- ----------- ------ ------ --- ------
Consents. For purposes of determining the shareholders
--------
entitled to notice of any meeting or to vote or entitled to give consent to
corporate action without a meeting, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty (60) days nor less than ten
(10) days before the date of any such meeting nor more than sixty (60) days
before any such action without a meeting, and in this event only shareholders of
record on the date so fixed are entitled to notice and to vote or to give
consents, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after the record date, except as otherwise provided in
the California General Corporation Law.
If the Board of Directors does not so fix a record date:
(a) The record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding the day on
which the meeting is held.
(b) The record date for determining shareholders entitled to give consent
to corporate action in writing without a meeting,
II-9
<PAGE>
(i) when no prior action by the Board has been taken, shall be the day on which
the first written consent is given; or (ii) when prior action of the Board has
been taken, shall be at the close of business on the day on which the Board
adopts the resolution relating to that action, or the sixtieth (60th) day before
the date of such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting,
but the Board of Directors shall fix a new record date if the meeting is
adjourned for more than forty-five (45) days from the date set for the original
meeting.
Shareholders on the record date are entitled to notice and to vote or to
receive the dividend, distribution or allotment of rights or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after the record date, except as otherwise provided in
the articles of incorporation or by agreement.
Section 12. Voting by Proxy. Every person entitled to vote for directors or
------ -- -----
on any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy is revoked, or by a
subsequent proxy executed by, or attendance at the meeting and voting in person
by, the person executing the proxy, or (ii) written notice of the death or
incapacity of the maker of that proxy is received by the corporation before the
vote pursuant to that proxy is counted, provided, however, that no proxy shall
be valid after the expiration of eleven (11) months from the date of the proxy,
unless otherwise provided in the proxy. The revocability of a proxy that states
on its face that it is irrevocable shall be governed by the provision of
Sections 705 (a) and 705 (f) of the Corporations Code of California.
II-10
<PAGE>
Section 13. Form of Proxies or Written Consent for
---- -- ------- -- ------- ------- ---
Corporations Having 100 or More Shareholders.
------------ ------ --- -- ---- ------------
(a) If the corporation has outstanding shares held of record by one
hundred (100) or more persons but is not subject to the reporting requirements
of the Securities Exchange Act of 1934, any proxy or form of written consent
distributed to ten (10) or more shareholders must afford the person voting an
opportunity to specify a choice among approval, disapproval, or abstention as to
each matter or group of related matters, other than elections of directors or
officers.
(b) For the purpose of determining whether the corporation has outstanding
shares held of record by one hundred (100) or more persons, shares shall be
deemed to be "held of record" by each person who is identified as the owner of
such shares on the record of shareholders maintained by or on behalf of the
corporation, in accordance with Section 605 of the California Corporations Code.
Section 14. Inspectors of Election. Before any meeting of shareholders,
---------- -- --------
the Board of Directors may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the chairman of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
inspectors of election at the meeting. The number of inspectors shall be either
one (1) or three (3). If inspectors are appointed at a meeting on the request of
one or more shareholders or proxies, the holders of a majority of shares or
their proxies present at the meeting shall determine whether one (1) or three
(3) inspectors are to be appointed. If any person appointed as inspector fails
to appear or fails or refuses to act, the chairman of the meeting may, and upon
the request of any shareholder or a shareholder's proxy shall, appoint a person
to fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum, and the
authenticity, validity and effect of proxies;
II-11
<PAGE>
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or vote
with fairness to all shareholders.
II-12
<PAGE>
ARTICLE III
-----------
Directors
---------
Section 1. Powers. Subject to limitations of the articles of
------
incorporation, the bylaws, and the General Corporation Law of California as to
action which shall be authorized or approved by the shareholders, and subject to
the duties of directors as prescribed by the bylaws, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by, the Board of Directors. Without prejudice
to such general powers, but subject to the same limitations, it is hereby
expressly declared that the directors shall have the following powers to:
(a) Select and remove all the other officers, agents and employees of the
corporation, prescribe such powers and duties for them as may not be
inconsistent with law, articles of incorporation or the bylaws, fix their
compensation, and require from them security for faithful service.
(b) Conduct, manage and control the affairs and business of the
corporation, and make such rules and regulations therefor not inconsistent with
law, or with the articles of incorporation or the bylaws, as they may deem best.
(c) Fix or change the location of the principal executive office,
principal business office or other offices of the corporation as provided in
Sections 1 and 2 of Article I; designate any place within or without the State
of California for the holding of any shareholders' meeting or meetings; adopt,
make and use a corporate seal, prescribe the forms of certificates of stock, and
alter the form of such seal and such certificates from time to time as in their
judgment they may deem best, provided such seal and such certificates shall at
all times comply with the provisions of law.
(d) Authorize the issue of shares of stock of the corporation from time to
time, upon such terms as may be lawful, in consideration of money paid, labor
done or services actually rendered, debts or securities cancelled, or tangible
or intangible property actually received, or as a dividend, upon a stock split
or reverse stock split, reclassification, conversion, or exchange of outstanding
shares into shares of another class or other change affecting outstanding
shares.
III-1
<PAGE>
(e) Borrow money and incur indebtedness for the purposes of the
corporation, and cause to be executed and delivered therefor, in the corporate
name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations or other evidences of debt and securities therefor.
(f) Appoint an executive committee and other committees, and delegate to
the executive committee any of the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation,
except the power to declare dividends and to adopt, amend or repeal bylaws.
The executive committee shall be composed of two or more directors.
Section 2. Number and Qualification of Directors. The Number of Directors
-------------------------------------
shall be not less than one or more than ten. The definite number of directors
may be changed, or an indefinite number of directors may be provided, by
amendment duly adopted by the Board of Directors or the shareholders, to these
bylaws or to the articles of incorporation; provided, however, that if the
number of directors is set forth in the articles of incorporation, the number
may be changed only by an amendment to the articles of incorporation. Prior to
the issuance of shares by the corporation, the amendment may be adopted by the
Board of Directors. After the issuance of shares, the amendment must be
approved by the vote or written consent of holders of a majority of the
outstanding shares entitled to vote; provided however, that an amendment
reducing the number of directors to a number less than five (5) cannot be
adopted if the votes cast against its adoption at a meeting, or the shares not
consenting in the case of action by written consent, are equal to more than
16 2/3% of the outstanding shares entitled to vote.
Section 3. Election and Term of Office, Removal of Directors. The
-------------------------------------------------
directors shall be elected at each annual meeting of shareholders, but if any
such annual meeting is not held, or the directors are not elected thereat, the
directors may be elected at any special meeting of shareholders held for that
purpose. Except as provided below in the case of removal of a director, all
directors shall hold office until the expiration of the term for which elected
and until their respective successors have been elected and qualified.
III-2
<PAGE>
The holders of a majority of the outstanding shares of stock entitled to
vote may, at any time, peremptorily terminate the term of office of all or any
of the directors by vote at a meeting called for such purpose or by a written
statement filed with the secretary of the corporation or, in his absence, with
any other officer. Such removal shall be effective immediately even if
successors are not elected simultaneously, and the vacancies on the Board of
Directors resulting therefrom shall be filled only the shareholders. No
director may be removed (unless the entire Board is removed) when the votes cast
against removal, or not consenting in writing to such removal, would be
sufficient to elect such director if voted cumulatively at an election at which
the same total number of votes were cast (or, if such action is taken by written
consent, all shares entitled to vote were voted) and the entire number of
directors authorized at the time of the directors's most recent election were
then being elected. Votes sufficient to elect such director shall occur when
the shares that are voted against his removal exceed the quotient arrived at by
dividing the total number of outstanding shares entitled to vote by one plus the
authorized number of directors.
When by the provisions of the articles of incorporation the holders of the
shares of any class or series, voting as a class or series, are entitled to
elect one or more directors, any director so elected may be removed only by the
applicable vote of the holders of the shares of that class or series.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of
office.
A director may be removed from office by the superior court of the proper
county at the suit (to which the corporation is made a party) of shareholders
holding at least 10 percent of the number of outstanding shares of any class, in
case of fraudulent or dishonest acts or gross abuse of authority or discretion
with reference to the corporation and may be barred from reelection for a period
prescribed by the court.
Section 4. Vacancies. Vacancies in the Board of Directors may be filled
---------
by a majority of the remaining directors, though less than a quorum, or by a
sole remaining director, except that a vacancy created by the removal of a
III-3
<PAGE>
director by the vote or written consent of the shareholders or by court order
may be filled only by the vote of a majority of the shares entitled to vote
represented at a duly held meeting at which a quorum is present, or by the
written consent of holders of a majority of the outstanding shares entitled to
vote. Each director so elected shall hold office until the next annual meeting
of the shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, resignation, or removal of any director, or if the
Board of Directors by resolution declares vacant the office of a director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the authorized number of directors is increased, or if the shareholders
fail, at any meeting of shareholders at which any director or directors are
elected, to elect the number of directors to be voted for at that meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any director may resign effective on giving written notice to the chairman
of the Board, the president, the secretary, or the Board of Directors, unless
the notice specifies a later time for that resignation to become effective. If
the resignation of a director is effective at a future time, the Board of
Directors may elect a successor to take office when the resignation becomes
effective.
If, after the filling of any vacancy by the directors, the directors then
in office who have been elected by the shareholders shall constitute less than a
majority of the directors then in office, any holder or holders of an aggregate
of five percent (5%) or more of the total number of shares at the time
outstanding having the right to vote for such directors may call a special
meeting of shareholders to be held to elect the entire Board of Directors. The
term of office of any director shall terminate upon such election of a
successor.
III-4
<PAGE>
Section 5. Place of Meeting. Regular meetings of the Board of Directors
----- -- -------
shall be held at any place within or without the State of California which has
been designated from time to time by resolution of the Board or by written
consent of all members of the Board. In the absence of such designation regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the Board may be held either at a place within or without
the State of California so designated or if not stated in the notice or if there
is no notice, at the principal executive office. Any meeting, regular or
special, may be held by conference telephone or similar communication equipment,
so long as all directors participating in the meeting can hear one another, and
all such directors shall be deemed to be present in person at the meeting.
Section 6. Annual Meeting. Immediately following each annual meeting
------ -------
of shareholders, the Board of Directors shall hold a regular meeting for the
purpose of organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 7. Other Regular Meetings. Other regular meetings of the Board
----- ------- --------
of Directors shall be held without notice at such times and places as set forth
in these bylaws or shall be fixed by duly adopted resolution of the Board;
provided, however, should the day of any such regular meeting fall upon a legal
holiday, then said meeting shall be held at the same time on the next day
thereafter ensuing which is not a legal holiday. Notice of all such regular
meetings of the Board of Directors is hereby dispensed with.
Section 8. Special Meetings. Special meetings of the Board of Directors
------- --------
for any purpose or purposes shall be called at any time by the president or, if
he is absent or unable or refuses to act, by any vice president or by any two
directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director, or sent to each director by
first-class mail or by other form of written communication, charges prepaid,
addressed to him
III-5
<PAGE>
at his address as it is shown upon the records of the corporation, or if it is
not so shown upon the records of the corporation or is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. In case such notice is mailed or telegraphed, it shall be deposited in the
United States mail or delivered to the telegraph company in the place in which
the principal executive office of the corporation is located at least four (4)
days prior to the time of the holding of the meeting. In case such notice is
delivered personally as above provided, or by telephone or telegram, it shall be
so delivered at least forty-eight (48) hours prior to the time of the holding of
the meeting. Such mailing, telegraphing or delivery as above provided shall be
due, legal and personal notice to such director. Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving notice has reason to
believe will promptly communicate it to the director. The notice need not
specify the purpose of the meeting nor the place if the meeting is to be held at
the principal executive office of the corporation.
Section 9. Action Without Meeting. Any action required or permitted to
------ ------- -------
be taken by the Board of Directors at a regular or special meeting pursuant to
these bylaws or Division 1 of Title 1 of the Corporation Code of California may
be taken without a meeting if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board.
Section 10. Notice of Adjournment. Notice of the time and place of holding
------ -- -----------
an adjourned meeting need not be given, unless the meeting is adjourned for more
than twenty-four (24) hours, in which case notice of the time and place shall be
given before the time of the adjourned meeting, in the manner specified in
Section 8 of this Article III, to the directors who were not present at the time
of the adjournment.
Section 11. Waiver of Notice. The transactions of any meeting of the Board
------ -- ------
of Directors, however called and noticed or whenever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum be
present, and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding such meeting,
or an approval of the minutes thereof. The waiver of notice or consent
III-6
<PAGE>
need not specify the purpose of the meeting. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Notice of a meeting shall also be deemed given to any
director who attends the meeting without protesting before or at its
commencement, the lack of notice to that director.
Section 12. Quorum. A majority of the authorized number of directors
------
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 13 of this Article III, or except as provided in the
articles of incorporation. Every act or decision done or made by a majority of
the directors present at a meeting duly held at which a quorum is present shall
be regarded as the act of the Board of Directors, subject to the provisions of
Section 310 of the Corporations Code of California (as to approval of contracts
or transactions in which a director has a direct or indirect material financial
interest), Section 311 of that Code (as to appointment of committees), and
Section 317(e) of that Code (as to indemnification of directors). A meeting at
which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, if any action taken is approved by
at least a majority of the required quorum for that meeting.
Section 13. Adjournment. A quorum of the directors may adjourn any
-----------
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors' meeting, either regular or special, may adjourn, from time to time
until the time fixed for the next regular meeting of the Board.
Section 14. Fees and Compensation of Directors. Directors and members of
---- --- ------------ -- ---------
committees may receive such compensation, if any, for their services, and such
reimbursement of expenses, as may be fixed or determined by resolution of the
Board of Directors. This Section 14 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation for those services.
Section 15. Committees of Directors; Procedure. The Board of Directors
---------- -- ---------- ---------
may, by resolution adopted by a majority of
III-7
<PAGE>
the authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the Board. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent member at any meeting of the committee. Any
committee, to the extent provided in the resolution of the Board, shall have all
the authority of the Board, except with respect to:
(a) the approval of any action which, under the General Corporation Law
of California, also requires shareholders' approval or approval of the
outstanding shares;
(b) the filling of vacancies in the Board of Directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
Board or on any committee;
(d) the amendment or repeal of bylaws or the adoption of new bylaws;
(e) the amendment or repeal of any resolution of the Board of Directors
which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation, except at a
rate or in a periodic amount or within a price range determined by the Board of
Directors; or
(g) the appointment of any other committees of the Board of Directors
or the members of these committees.
Meetings and actions of committees shall be governed by, held and taken
in accordance with, the provisions of Article III of these bylaws, Sections 5
(place of meetings), 7 (regular meetings), 8 (special meetings and notice), 9
(action without meeting), 10 (notice of adjournment), 11 (waiver of notice), 12
(quorum), and 13 (adjournment), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the Board of
Directors and its members, except that the time of regular meetings of
committees may be determined either by resolution of the Board of Directors or
by resolution of the committee; special meetings of committees may also be
called by resolution of the Board of Directors; and notice of special meetings
of committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The Board of Directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these bylaws.
III-8
<PAGE>
ARTICLE IV
----------
Officers
--------
Section 1. Officers. The officers of the corporation shall be a
--------
president, a secretary, and a chief financial officer. The corporation may also
have, at the discretion of the Board of Directors, a chairman of the Board, one
or more vice presidents, one or more assistant secretaries, a treasurer, one or
more assistant financial officers or treasurers, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article IV.
One person may hold two or more offices.
Section 2. Election. The officers of the corporation, except such
--------
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this article, shall be chosen by the Board of Directors, and each
shall serve at the pleasure of the Board, subject to the rights, if any, of an
officer under any contract of employment.
Section 3. Subordinate Officers, Etc. The Board of Directors may appoint
----------- --------- ---
such other officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the bylaws, or as the Board of Directors may from time to
time determine.
Section 4. Removal and Resignation. Subject to the right, if any, of an
------- --- -----------
officer under any contract of employment, any officer may be removed, either
with or without cause, by the Board of Directors at the time in office, at any
regular or special meeting of the Board, or, except in case of an officer chosen
by the Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. Any
resignation is without prejudice to the right, if any, of the corporation under
any contract to which the officer is a party.
IV-1
<PAGE>
Section 5. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the bylaws for regular appointments to such office.
Section 6. Chairman of the Board. The Chairman of the Board shall be the
---------------------
chief executive officer of the corporation, shall preside at all meetings of the
Directors at which he is present, and shall perform such other duties as may
from time to time be assigned to him by the Board of Directors.
Section 7. President. The President shall be the chief operating officer
---------
of the corporation and shall have the general powers and duties of supervision
and management of the corporation. The President shall also perform such other
duties as may from time to time be assigned to him by the Board of Directors.
Section 8. Vice Presidents. In the absence or disability of the
---------------
president, the vice presidents in order of their rank as fixed by the Board of
Directors, or if not ranked, the vice president designated by the Board of
Directors, shall perform all the duties of the president, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the bylaws, and the president or the chairman of the
Board.
IV-2
<PAGE>
Section 9. Secretary. The secretary of the corporation shall keep, or
---------
cause to be kept, a book of minutes at the principle office or such other place
as the Board of Directors may order, of all meetings of directors and
shareholders, with the time and place of holding, whether regular or special,
and if special, how authorized, the notice thereof given, the names of those
present at directors' meetings, the number of shares present or represented at
shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a record of shareholders or a
duplicate record of shareholders, showing the names of all shareholders and
their addresses; the number and classes of shares held by each; the number and
date of certificates issued for the same; and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the Board of Directors required by these bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or these bylaws.
Section 10. Chief Financial Officer. The chief financial officer shall be
----- --------- -------
one person. The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or these bylaws.
IV-3
<PAGE>
ARTICLE V
---------
Indemnification of Directors, Officers,
---------------------------------------
Employees and Other Agents
--------------------------
Section 1. Indemnification of Agents Other than Fiduciaries of an
--------------- -- ------ ----- ---- ----------- -- --
Employee Benefit Plan.
-------- ------- ----
The corporation shall, to the maximum extent permitted by the California
Corporations Code, indemnify each of its agents against expenses, costs,
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with any proceeding arising by reason of the fact any such person
is or was an agent of the corporation. For purposes of this Section 1, an
"agent" of the corporation includes any person who is or was a director,
officer, employee or other agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or other agent of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation. This Section 1 shall not apply to any person acting in
a fiduciary capacity with respect to an employee benefit plan.
Section 2. Indemnification of Directors, Officers and Employees who
--------------- -- --------- -------- --- --------- ---
are Fiduciaries of Employee Benefit Plans. The corporation
--- ----------- -- -------- ------- -----
shall, to the maximum extent permitted by law, indemnify and hold harmless each
of its directors, officers and employees who, at the direction or request of the
corporation, act in a fiduciary capacity with respect to any of the employee
benefit plans covering the corporation's employees which is sponsored by the
corporation, by an employer organization, or by an employee organization, from
all liability, expenses, costs, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding arising by
reason of the fact any such person is or was acting in such capacity, except
where such liability, etc., arises from a willful breach of fiduciary duty. The
persons enumerated in this Section 2 shall be considered "agents" for purposes
of Section 3 of this Article V.
V-1
<PAGE>
Section 3. Definitions; Advances; Insurance.
----------- -------- ---------
For purposes of this Article V, "proceeding" means any threatened, pending or
completed action or proceeding, whether civil, criminal, administrative or
investigative; and "expenses" and "costs" include, without limitation,
attorneys' fees and any other expenses or costs of establishing a right to
indemnification under this Article V.
Expenses and costs incurred in defending any such proceeding may be
advanced by this corporation before the final disposition of the proceeding on
receipt of an undertaking by or on behalf of the agent to repay the amount of
the advance unless it shall be determined ultimately that the agent is entitled
to be indemnified as authorized in this Article V.
Upon and in the event of a determination by the Board of Directors of this
corporation to purchase and maintain insurance on behalf of any such agent, this
corporation shall purchase and maintain insurance on behalf of the agent of the
corporation against any liability asserted against or incurred by the agent in
such capacity or arising out of the agent's status as such, whether or not this
corporation would have the power to indemnify the agent against the liability
under the provisions of this Article V.
Section 4. Scope of Indemnification. Nothing contained in this
----- -- ---------------
Article V shall affect any right to indemnification to which persons other than
directors, officers and employees of this corporation or any subsidiary hereof
may be entitled by contract or otherwise.
This Article V does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in that
person's capacity as such, who is not a director, officer or employee of the
corporation, even though that person may also be an agent of the corporation as
defined in this Article V. Nothing contained in this Article V shall limit any
right to indemnification to which such a trustee, investment manager or other
fiduciary may be entitled by contract or otherwise, which shall be enforceable
to the extent permitted by applicable law other than this Article V.
V-2
<PAGE>
ARTICLE VI
----------
Records and Reports
-------------------
Section 1. Maintenance and Inspection of Share Register. The
----------- --- ---------- -- ----- --------
corporation shall keep at its principal executive office, or at the office of
its transfer agent or registrar, if either be appointed and as determined by
resolution of the Board of Directors, a record of its shareholders, giving the
names and addresses of all shareholders and the number and class of shares held
by each shareholder.
A shareholder or shareholders of the corporation holding at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation may (i) inspect and copy the records of shareholders' names and
addresses and shareholdings during usual business hours on five (5) days prior
written demand on the corporation, and (ii) obtain from the transfer agent of
the corporation, on written demand and on the tender of such transfer agent's
usual charges for such list, a list of shareholders' names and addresses, who
are entitled to vote for the election of directors, and their shareholdings, as
of the most recent record date for which that list has been compiled or as of a
date specified by the shareholder after the date of demand. This list shall be
made available to any such shareholder by the transfer agent on or before the
later of five (5) days after the demand is received or the date specified in the
demand as the date as of which the list is compiled. The record of shareholders
shall also be open to inspection on the written demand of any shareholder or
holder of a voting trust certificate, at any time during usual business hours,
for a purpose reasonably related to the holder's interests as a shareholder or
as the holder of a voting trust certificate. Any inspection and copying under
this Section 1 may be made in person or by an agent or attorney of the
shareholder or holder of a voting trust certificate making the demand.
Section 2. Maintenance and Inspection of Bylaws. The corporation shall
----------- --- ---------- -- ------
keep at its principal executive office, or if its principal executive office is
not in the State of California, at its principal business office in this state,
the original or a copy of the bylaws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during office hours. If
the principal executive office of the corporation is outside the State of
California and the corporation has no principal business office in this state,
the secretary shall, upon the written request of any shareholder, furnish to
that shareholder a copy of the bylaws as amended to date.
VI-1
<PAGE>
Section 3. Maintenance and Inspection of Other Corporate Records.
----------- --- ---------- -- ----- --------- -------
The accounting books and records and minutes of proceedings of the shareholders
and the Board of Directors and any committee or committees of the Board of
Directors shall be kept at such place or places designated by the Board of
Directors, or, in the absence of such designation, at the principal executive
office of the corporation. The minutes shall be kept in written form, and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written demand
of any shareholder or holder of a voting trust certificate, at any reasonable
time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney,
and shall include the right to copy and make extracts. These rights of
inspection shall extend to the records of each subsidiary corporation of the
corporation.
Section 4. Inspection by Directors. Every director shall have the
---------- -- ---------
absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the corporation and each
of its subsidiary corporations. This inspection by a director may be made in
person or by an agent or attorney and the right of inspection includes the right
to copy and make extracts of documents.
Section 5. Annual Report to Shareholders. If the corporation
------ ------ -- ------------
has one hundred (100) or more shareholders (determined as provided in paragraph
(b) of Section 13 of Article II) the Board of Directors shall cause an annual
report to be sent to the shareholders not later than one hundred twenty (120)
days after the close of the fiscal year adopted by the corporation. This report
shall be sent at least fifteen (15) days before the annual meeting of
shareholders to be held during the next fiscal year and in the manner specified
in Section 5 of Article II of these bylaws for giving notice to shareholders of
the corporation. The annual report shall contain a balance sheet as of the end
of the fiscal year and an income statement and statement of changes in financial
position for the fiscal year, accompanied by any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation. The annual report is expressly
dispensed with where the corporation has less than one hundred (100)
shareholders.
VI-2
<PAGE>
Section 6. Financial Statements. A copy of any annual financial
--------- ----------
statement and any income statement of the corporation for each quarterly period
of each fiscal year, and any accompanying balance sheet of the corporation as of
the end of each such period, that has been prepared by the corporation shall be
kept on file in the principal executive office of the corporation for twelve
(12) months, and each such statement shall be exhibited at all reasonable times
to any shareholder demanding an examination of any such statement or a copy
shall be mailed to any such shareholder.
If a shareholder or shareholders holding at least five (5%) percent of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and a balance
sheet of the corporation as of the end of that period, the chief financial
officer shall cause that statement to be prepared, if not already prepared, and
shall deliver personally or mail that statement or statements to the person
making the request within thirty (30) days after the receipt of the request. If
the corporation has not sent to the shareholders its annual report for the last
fiscal year, if that report is so required hereunder, this report shall likewise
be delivered or mailed to the shareholder or shareholders within thirty (30)
days after the request.
The corporation shall also, on the written request of any shareholder,
mail to the shareholder a copy of the last annual, semi-annual, or quarterly
income statement which it has prepared, and a balance sheet as of the end of
that period.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
Section 7. Annual Statement of General Information.
------ --------- -- ------- -----------
The corporation shall, during the applicable period in each year, file with the
Secretary of State of the State of California, on the prescribed form, a
statement setting forth the authorized number of directors, the names and
complete business or residence addresses of all incumbent directors, the names
and complete business or residence addresses of the chief executive officer,
secretary, and chief financial officer, the street address of its principal
executive office or principal business office in this state, and the general
type
VI-3
<PAGE>
of business constituting the principal business activity of the corporation,
together with a designation of the agent of the corporation for the purpose of
service of process, all in compliance with Section 1502 of the Corporation Code
of California.
VI-4
<PAGE>
ARTICLE VII
-----------
General Corporate and Miscellaneous Matters
-------------------------------------------
Section 1. Record Date for Purposes Other Than Notice and Voting. For
------ ---- --- -------- ----- ---- ------ --- ------
purposes of determining the shareholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action (other than action by
shareholders by written consent without a meeting), the Board of Directors may
fix, in advance, a record date, which shall not be more than sixty (60) days
before any such action, and in that case only shareholders of record on the date
so fixed are entitled to receive the dividend, distribution, or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date so
fixed, except as otherwise provided in the California General Corporation Law.
If the Board of Directors does not so fix a record date, the record date
for determining shareholders for any such purpose shall be at the close of
business on the day on which the Board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
Section 2. Checks, Drafts, Evidences of Indebtedness. All checks,
------ ------ --------- -- ------------
drafts, or other orders for payment of money, notes, or other evidences of
indebtedness, issued in the name of or payable to the corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the Board of Directors.
Section 3. Corporate Contracts and Instruments; How Executed. The
--------- --------- --- ----------- --- --------
Board of Directors, except as otherwise provided in these bylaws, may authorize
any officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and this
authority may be general or confined to specific instances; and, unless so
authorized or ratified by the Board of Directors or within the agency power of
an officer, no officer, agent, or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
VII-1
<PAGE>
Section 3.A. Engineering Activities, State of Washington. All
----------- ---------- ----- -- ----------
engineering decisions pertaining to any project or engineering activities in the
State of Washington shall be made by an engineer, as designated by resolution of
the Board of Directors, in responsible charge or other responsible engineering
under his direction or supervision.
Section 4. Certificates for Shares. A certificate or certificates
------------ --- ------
for shares of the capital stock of the corporation shall be issued to each
shareholder when any of these shares are fully paid, and the Board of Directors
may authorize the issuance of certificates for shares as partly paid provided
that these certificates shall state the amount of the consideration to be paid
for them and the amount paid. All certificates shall be signed in the name of
the corporation by the chairman of the Board (or the vice chairman thereof) or
the president (or a vice president) and by the chief financial officer or an
assistant treasurer or the secretary or any assistant secretary, certifying the
number of shares and the class or series of shares owned by the shareholders.
Any or all of the signatures on the certificate may be facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an officer,
transfer agent, or registrar at the date of issue.
If the shares of the corporation are classified or if any class of shares
has two or more series, there shall appear on the certificate one of the
following: (a) a statement of the rights, preferences, privileges and
restrictions granted to or imposed upon each class or series of shares
authorized to be issued and upon the holders thereof; (b) a summary of such
rights preferences, privileges and restrictions with reference to the provisions
of the articles of incorporation and any certificates of determination
establishing the same; (c) a statement setting forth the office or agency of
the corporation from which shareholders may obtain, upon request and without
charge, a copy of the statement referred to in (a) above.
There shall also appear on the certificate the statements required by all
of the following clauses to the extent applicable; (1) the fact that the shares
are subject to restrictions upon
VII-2
<PAGE>
transfer; (2) if the shares are assessable or are not fully paid, a statement
that they are assessable or, on partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon; (3) the fact that
the shares are subject to a close corporation voting agreement or an irrevocable
proxy or restrictions upon voting rights contractually imposed by the
corporation; (4) the fact that the shares are redeemable; and (5) the fact that
the shares are convertible and the period for conversion.
Section 5. Lost Certificates. Except as provided in this Section 5,
---- ------------
no new certificates for shares shall be issued to replace an old certificate
unless the latter is surrendered to the corporation and cancelled at the same
time. The Board of Directors may, in case any share certificate or certificate
for any other security is lost, stolen, or destroyed, authorize the issuance of
a replacement certificate on such terms and conditions as the Board may require,
including provision for indemnification of the corporation secured by a bond or
other adequate security sufficient to protect the corporation against any claim
that may be made against it, including expense or liability, on account of the
alleged loss, theft, or destruction of the certificate or the issuance of the
replacement certificate.
Section 6. Representation of Shares of Other Corporations. The
-------------- -- ------ -- ----- ------------
chairman of the Board, the president, or any vice president, or any other person
authorized by resolution of the Board of Directors or by any of the foregoing
designated officers, is authorized to vote on behalf of the corporation any and
all shares of any other corporation or corporations foreign or domestic,
standing in the name of the corporation. The authority granted to these
officers to vote or represent on behalf of the corporation or corporations may
be exercised by any of these officers in person or by any person authorized to
do so by a proxy duly executed by these officers.
Section 7. Construction and Definitions. Unless the context requires
------------ --- -----------
otherwise, the general provisions, rule of construction, and definitions in the
California General Corporation Law shall govern the construction of these
bylaws. Without limiting the generality of this provision,
VII-3
<PAGE>
the singular number includes the plural, the plural number includes the
singular, and the term "person" includes both a corporation and a natural
person.
Section 8. Corporate Seal. If a corporate seal is adopted and unless its
--------- ----
form is otherwise determined or changed by the Board of Directors, it shall
consist of a circular die bearing the name of the corporation and the state and
date of its incorporation. If and when authorized by the Board of Directors, a
duplicate of the corporate seal may be kept and used by such officer or person
as the Board of Directors may designate. Failure to affix the corporate seal
does not affect the validity of any instrument of the corporation.
Section 9. Amendment of Bylaws by Shareholders. New bylaws may be adopted
--------- -- ------ -- ------------
or these bylaws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the articles of incorporation of the corporation set forth the
number of authorized directors of the corporation, the authorized number of
directors may be changed only by an amendment of the articles of incorporation.
Section 10. Amendment of Bylaws by Directors. Subject to the rights of
--------- -- ------ -- ---------
the shareholders as provided in Section 9 of this Article VII, bylaws, other
than a bylaw or an amendment of a bylaw changing the authorized number of
directors, may be adopted, amended, or repealed by the Board of Directors.
VII-4
<PAGE>
Exhibit No. 3(e)
CERTIFICATE OF INCORPORATION
OF
ICF KAISER GOVERNMENT PROGRAMS, INC.
Section 1.01. Name.
The name of the Corporation is ICF Kaiser Government Programs, Inc.
Section 2.01. Registered Office and Agent.
The registered office of the Corporation in the State of Delaware is located in
the County of New Castle, at 1013 Centre Road, Wilmington 19805. Its registered
agent at such address is Corporation Service Company.
Section 3.01. Purposes.
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
Section 4.01. Authorized Shares.
The total number of shares of capital stock which the Corporation shall have
authority to issue is one thousand (1,000) shares of Common Stock having a par
value of one dollar ($1.00) per share.
Section 5.01. Incorporator.
The name and mailing address of the incorporator is Paul Weeks, II, 9300 Lee
Highway, Fairfax, Virginia 22031-1207.
Section 5.02. Duration.
The Corporation is to have perpetual existence.
Section 6.01. Limitation of Liability.
(a) No person shall be liable to the Corporation for any loss or damage suffered
by it on account of any action taken or omitted to be taken by him or her as a
director or officer of the Corporation, if such person (i) in good faith
exercised or used the same degree of diligence, care and skill as an ordinarily
prudent person would have exercised or used under similar circumstances, or (ii)
took, or omitted to take, such action in good faith reliance upon advice of
counsel for the Corporation, or upon books of account or reports made to the
Corporation by any of its officers or by an independent certified public
accountant, or by an appraiser selected with reasonable care by the Board of
Directors or by any committee designated by the Board of Directors, or in good
faith reliance upon other records of the Corporation.
(b) No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that the foregoing shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Section 7.01. Ratification by Stockholders.
Any contract, transaction or act of the Corporation, the Board of Directors, or
a committee of the Board of Directors which shall be approved or ratified by a
majority of a quorum of the stockholders entitled to vote at any meeting or,
without a meeting, by the written consent of the holders of a majority of the
stock entitled to vote shall be as valid and binding as though approved or
ratified by every stockholder of the Corporation; but any failure of the
stockholders to approve or ratify such contract, transaction or act, when and if
submitted, shall not be deemed in any way to invalidate the same or to deprive
the Corporation, its directors or officers, of their right to proceed with such
contract, transaction or act.
<PAGE>
Certificate of Incorporation of
ICF Kaiser Government Programs, Inc.
Page 2
Section 8.01. Indemnification of Directors and Officers for Actions, Suits,
or Proceedings Other Than By or In the Right of the Corporation.
To the full extent permitted by law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he or she is or was or has agreed to
become a director or officer of the Corporation or is or was serving or has
agreed to serve at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans), or by reason of any action alleged to have
been taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her on his or her behalf in
connection with any threatened, pending or completed action, suit or proceeding
and any appeal therefrom, including but not limited to liability and expenses
incurred on account of profits realized by him or her in the purchase or sale of
securities of the Corporation, if and only if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful;
the termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 8.02. Indemnification of Directors and Officers for Actions or Suits
By or In the Right of the Corporation.
To the full extent permitted by law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she is or was
or has agreed to become a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the Corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans), or by reason of any action
alleged to have been taken or omitted in such capacity, against costs, charges
and expenses (including attorneys' fees) actually and reasonably incurred by him
or her on his or her behalf in connection with the defense or settlement of any
threatened, pending or completed action or suit and any appeal therefrom, or the
defense or settlement of any claim, issue or matter, if and only if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings
Other Than By or In the Right of the Corporation.
To the full extent permitted by law, the Corporation, in the sole discretion of
the Board of Directors of the Corporation, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he or she is or was or has agreed to become an employee,
agent or contractor of the Corporation, or is or was serving or
<PAGE>
Certificate of Incorporation of
ICF Kaiser Government Programs, Inc.
Page 3
has agreed to serve at the request of the Corporation as a director, officer,
employee, agent or contractor of another corporation, partnership, joint
venture, trust or other enterprise (including employee benefit plans), or by
reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges, expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her or
on his or her behalf in connection with any threatened, pending or completed
action, suit or proceeding and any appeal therefrom, including but not limited
to liability and expenses incurred on account of profits realized by him or her
in the purchase or sale of securities of the Corporation, if and only if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; the termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 8.04. Indemnification of Others for Actions or Suits By or In the
Right of the Corporation.
To the full extent permitted by law, the Corporation, in the sole discretion of
the Board of Directors of the Corporation, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was or has
agreed to become an employee, agent or contractor of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director, officer, employee, agent or contractor of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans), or by reason of any action alleged to have been taken or omitted
in such capacity, against costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or her or on his or her behalf in
connection with the defense or settlement of any threatened, pending or
completed action or suit and any appeal therefrom, or the defense or settlement
of any claim, issue or matter, if and only if he or she acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such costs, charges and expenses
which the Court of Chancery or such other court shall deem proper.
Section 8.05. Indemnification for Costs, Charges and Expenses of Successful
Party.
Notwithstanding the other provisions of this Certificate, to the extent that a
director or officer of the Corporation or other person indemnified under
Sections 9.01 through 9.04, herein, has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to above, or in
defense of any claim, issue or matter therein, he or she shall be indemnified
against all costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or her or on his or her behalf in connection
therewith.
Section 8.06. Determination of Right to Indemnification.
Unless otherwise ordered by a court, any indemnification under Sections 9.01
through 9.04, herein, shall be paid by the Corporation unless a determination is
made (i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by
<PAGE>
Certificate of Incorporation of
ICF Kaiser Government Programs, Inc.
Page 4
independent legal counsel in a written opinion, or (iii) by the stockholders,
that indemnification of an individual entitled to indemnification under Sections
9.01 through 9.04, herein, is not proper in the circumstances because he or she
has not met the applicable standard of conduct set forth in Sections 9.01
through 9.04, herein.
Section 8.07. Advance Payment of Costs, Charges and Expenses.
To the full extent permitted by law, the Corporation shall, upon request, pay
costs, charges and expenses (including attorneys' fees) incurred by a person
entitled to indemnification pursuant to Sections 9.01 and 9.02, herein, and, if
applicable, pursuant to Sections 9.03 and 9.04, herein, in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding; provided, however, that the payment of such costs,
charges and expenses incurred by a director or officer in his or her capacity as
a director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance of the final
disposition of such action, suit or proceeding shall be made only upon receipt
of an undertaking by or on behalf of the director or officer to repay all
amounts so advanced in the event that it shall ultimately be determined that
such director or officer is not entitled to be indemnified by the Corporation as
authorized in this certificate; such costs, charges and expenses incurred by
other employees, agents and contractors may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 8.08. Procedure for Indemnification.
Any indemnification or advance of costs, charges and expenses provided for in
Sections 9.01 through 9.07, herein, shall be made promptly, and in any event
within sixty days, upon the written request of the person entitled to
indemnification; the right to indemnification or advances as granted by this
Certificate shall be enforceable by a director or officer or other person
indemnified hereunder in any court of competent jurisdiction. If the Corporation
denies such request, in whole or in part, or if no disposition thereof is made
within sixty days, such person's costs, charges and expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such action shall also be indemnified by the Corporation; it
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of costs, charges and expenses pursuant to Section 9.07,
herein, where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set forth in
Sections 9.01 through 9.04, herein. Neither the failure of the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Sections 9.01 through 9.04, herein, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 8.09. Authorization of Corporation Officers.
The proper officers of the Corporation are, and each of them acting without the
other is, authorized to take any action, for and in the name of the Corporation,
which the officer deems necessary or appropriate (as conclusively presumed from
the taking of such action) to carry out and effect the foregoing Sections 9.01
through 9.08.
Section 8.10. Other Rights; Continuation of Right to Indemnification.
The indemnification and advancement of expenses provided by this Certificate
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(present or future, common or statutory), by-law, agreement, vote of
stockholders or
<PAGE>
Certificate of Incorporation of
ICF Kaiser Government Programs, Inc.
Page 5
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding office or while
employed by or acting as an agent for the Corporation, and shall continue as to
a person who has ceased to serve in the capacity making him or her eligible for
indemnification, and shall inure to the benefit of the estate, heirs, executors
and administrators of such person; all rights to indemnification under this
Certificate shall be deemed to be a contract between the Corporation and each
director and officer of the Corporation and, as applicable, any other person
indemnified hereunder who serves or served in such capacity at any time while
this Certificate as well as the relevant provisions of the Delaware General
Corporation Law or any other applicable laws are or were in effect; any repeal
or modification hereof or of such provisions of such law shall not in any way
diminish any rights to indemnification of such director or officer or other
person entitled to indemnification or the obligations of the Corporation arising
hereunder.
Section 8.11. Savings Clause.
If this Certificate or any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Corporation shall nevertheless
indemnify each director and officer, and may indemnify any other person entitled
to indemnification, as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this Certificate that shall
not have been invalidated and to the full extent permitted by applicable law. To
the full extent permitted by law, the Corporation may enter into and perform
agreements with persons, including, without limitation, present and former
officers, directors and employees of the Corporation and of companies acquired
by or merged with the Corporation, obligating the Corporation, among other
things, to provide indemnification and advancement of costs, charges and
expenses to such persons in addition to any indemnification or advancement which
may be available to such person under Sections 9.01 through 9.10 of this
Certificate.
Section 8.12. Insurance.
The Board of Directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise
(including employee benefit plans), against any liability asserted against such
person and incurred in any such capacity or arising out of such status, whether
or not the Corporation would have the power to indemnify such person.
Section 8.13. Adoption of By-laws.
The Board of Directors may from time to time adopt By-laws with respect to
indemnification and may amend such By-laws to provide at all times the fullest
indemnification permitted by the General Corporation Law of the State of
Delaware.
Section 9.01. Settlement of Debts.
Whenever a compromise or arrangement is proposed between this Corporation and
its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors
<PAGE>
Certificate of Incorporation of
ICF Kaiser Government Programs, Inc.
Page 6
or class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be, agree to any compromise or arrangement and
to any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
Section 10.01. Elections of Directors.
Elections of directors need not be by written ballot unless the By-laws of the
Corporation shall so provide.
Section 11.01. Stockholders Meetings, Records.
Stockholders meetings may be held within or without the State of Delaware, as
the By-laws may provide. The books of the Corporation may be kept (subject to
any provision in the General Corporation Law of the State of Delaware) outside
of the State of Delaware at such place or places as may be designated from time
to time by the Board of Directors (or duly authorized committee of the Board of
Directors) or in the By-laws of the Corporation.
Section 12.01. By-laws.
The Board of Directors (or a duly authorized committee of the Board of
Directors) of the Corporation shall have the power to make and, except as may be
expressly stated in the By-laws, to alter and repeal its By-laws.
Section 13.01. Amendment of Certificate of Incorporation.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate, in the manner now or hereafter
prescribed by the General Corporation Law of Delaware, and all rights conferred
upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF the undersigned, being the incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereto set my signature this 11th day of October 1994.
/s/ Paul Weeks, II
Paul Weeks, II
<PAGE>
Exhibit No. 3(f)
BY-LAWS OF
ICF KAISER GOVERNMENT PROGRAMS, INC.
ARTICLE I
Offices
Section 1.01. Registered Office in Delaware. The registered office shall be in
Wilmington, Delaware. The name of the registered agent of the Corporation at
such location is Corporation Service Company.
Section 1.02. Principal Office. The Board of Directors is granted full power
and authority to fix and thereafter change the location of the principal office
of the Corporation at any location within the United States.
Section 1.03. Other Offices. The Corporation may have such other offices
either within or without the State of Delaware as the Board of Directors may
from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 2.01. Time and Place of Meeting. Annual meetings of the stockholders
for the purpose of electing directors, making reports of the affairs of the
Corporation and transacting such other business as may properly come before the
meeting shall be held at such place, within or without the State of Delaware, on
such date and at such time as the Board of Directors shall each year fix, which
date shall be within thirteen months subsequent to the later of the date of
incorporation or the last annual meeting of stockholders. Meetings of
stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as shall be fixed by the Board of Directors
and stated in the notice of meeting. If no other place is fixed by the Board of
Directors, meetings of stockholders shall be held at the principal executive
office of the Corporation. Failure to hold the annual meeting at the designated
time shall not work a forfeiture or dissolution of the Corporation.
Section 2.02. Notice of Meeting. Written notice of meetings of stockholders,
stating the place, date and hour thereof, and in the case of a special meeting,
the purpose or purposes for which the meeting is being called, shall be given
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote thereat.
Section 2.03. Qualified Voters. The officer who has charge of the stock ledger
of the Corporation shall prepare, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder for any purpose germane to
the meeting during ordinary business hours for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present and entitled to
vote.
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 2
Section 2.04. Special Meetings. Special meetings of the stockholders may be
called by the Board of Directors or by the President or by a writing signed by
stockholders owning a majority in amount of the entire capital stock of the
Corporation issued and outstanding and entitled to vote at such meeting. Such
call shall state the purpose or purposes of the proposed meeting. The Secretary
shall give notice of such meeting to the stockholders entitled to vote thereat,
in accordance with such call.
Section 2.05. Business at Special Meetings. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 2.06. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time without notice other than announcement at
the meeting (if the adjournment is not for more than thirty days and a new
record date for the determination of stockholders entitled to vote is not
fixed), until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 2.07. Vote Required. When a quorum is present at any meeting, the vote
of the holders of a majority of the shares of stock having voting power voting,
in person or by proxy, on a question shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
statutes, the Certificate of Incorporation or these By-laws a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 2.08. Proxies. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date unless the proxy provides for a
longer period. No proxy or power of attorney to vote shall be used to vote at a
meeting of the stockholders unless it shall have been filed with the Secretary
of the meeting when required by the inspectors of election. All questions
regarding the qualification of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by two inspectors of election
who shall be appointed by the Board of Directors, or if not so appointed, then
by the presiding officer of the meeting.
Section 2.09. Presiding Officer. The President of the Corporation shall
preside over all meetings of stockholders.
Section 2.10. Consent. Whenever the vote of stockholders at a meeting thereof
is required or permitted to be taken in connection with any corporate action by
any provisions of the statutes, the By-laws or the Certificate of Incorporation,
the meeting and vote may be dispensed with if the number of stockholders who
would have been entitled to vote upon the action if such meeting were held,
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting, shall consent in writing to such
corporate action being taken. Prompt
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 3
notice shall be given by the Secretary to all stockholders of the taking of
corporate action without a meeting by less than unanimous written consent.
ARTICLE III
Directors
Section 3.01. Number and Election. The number of directors which shall
constitute the whole Board shall be no less than one (1) or more than ten (10).
By amendment of this By-law, the number may be increased or decreased from time
to time by the Board of Directors or stockholders within the limits permitted by
law, but no decrease in the number of directors shall change the term of any
director in office at the time thereof. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 3.02, and each
director shall hold office until his successor is elected and accepts office
unless he earlier resigns or is removed. Directors need not be stockholders. A
director may resign at any time upon written notice to the Corporation or orally
at any meeting of the directors or stockholders.
Section 3.02. Removal and Vacancies. A director may be removed with or without
cause by a majority vote of the holders of the outstanding shares entitled to
vote. [Subject to any Stockholder's Agreement] Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and accept office, unless
sooner displaced.
Section 3.03. Management, The business of the Corporation shall be managed by
its Board of Directors, which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these By-laws directed or required to be
exercised or done by the stockholders.
Section 3.04. Place of Meetings. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Meetings may be held by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 3.05. Annual Meeting. The first meeting of each newly elected Board of
Directors shall be held immediately following the adjournment of the annual
meeting of stockholders and at the place thereof. No notice of such meeting
shall be necessary to the directors in order legally to constitute the meeting,
provided a quorum is present. In the event such meeting is not so held, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.
Section 3.06. Notice for Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
Section 3.07. Special Meetings. Special meetings of the Board of Directors may
be called by a majority of the Board of Directors or the President and shall be
held on notice by letter mailed or delivered for transmission not later than on
the third day immediately preceding the day of such
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 4
meeting, or by written notice delivered or received not later than the day
immediately preceding the day of such meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.
Section 3.08. Quorum. At meetings of the Board of Directors, a majority of the
full number of directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 3.09. Chairman of the Board. At its first meeting after each annual
meeting of stockholders, the Board of Directors shall elect from among its
members a Chairman. The Board of Directors may also choose a Vice Chairman from
among its members. The Chairman shall preside at all meetings of the Board of
Directors, and shall perform such other duties as the Board may prescribe. The
Chairman may participate and act in any meeting of the Board of Directors as a
director. The Vice Chairman, if any, shall act under the direction of the
Chairman and in the absence or disability of the Chairman shall perform the
duties and exercise the powers of the Chairman. The Chairman and the Vice
Chairman, if any, (i) shall hold their respective offices at the pleasure of the
Board of Directors, and (ii) may be removed with or without cause at any time by
the Board of Directors. Any vacancy occurring in the office of the Chairman or
Vice Chairman by death, resignation, removal or otherwise shall be filled by the
Board of Directors.
Section 3.10. Committees. The Board of Directors may, by resolution adopted by
a majority of the whole Board, designate one or more committees of the Board of
Directors, each committee to consist of one or more of the directors of the
Corporation, which, to the extent provided in the resolution, may have and
exercise any or all the powers of the Board of Directors in the management of
the business and affairs of the Corporation including, but not limited to, the
power and authority of the Board of Directors: (i) to authorize the seal of the
Corporation to be affixed to all papers; (ii) to declare a dividend; (iii) to
authorize the issuance of stock; (iv) to adopt a certificate of ownership and
merger pursuant to Section 253, of Title 8, Delaware Code; and (v) to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors as provided in Section 151(a) of
Title 8, Delaware Code, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for
shares of any other class or classes or any other series of the same of any
other class or classes of stock of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by the Board of Directors. The member or members of any such committee present
at any meeting and not disqualified from voting may, whether or not they
constitute a quorum, unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member. At meetings of such committees, a majority of the members or alternate
members at any meeting at which there is a quorum shall be the act of the
committee.
Section 3.11. Committee Minutes. The committees shall keep regular minutes of
their proceedings and report the same to the Board of Directors.
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 5
Section 3.12. Consent. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board of Directors or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
Section 3.13. Compensation. The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of committees of the Board of Directors may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
Notices
Section 4.01. Notice. Notices to directors and stockholders mailed to them at
their addresses appearing on the books of the Corporation shall be deemed to be
given at the time when deposited in the United States mail, postage prepaid. An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
Section 4.02. Waiver. Whenever any notice is required to be given under the
provisions of the statute, the Certificate of Incorporation or of these By-laws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purposes
of, any meeting need be specified in such waiver. Attendance at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE V
Officers
Section 5.01. Election. The officers of the Corporation shall be chosen by the
Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a President, a Secretary and a Treasurer. The Board
of Directors may also choose one or more Vice Presidents and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be held
by the same person.
Section 5.02. Other Officers. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 5.03. Salaries. The salaries of all officers of the Corporation shall
be fixed by or under the direction of the Board of Directors.
Section 5.04. Vacancies. The officers of the Corporation shall hold office at
the pleasure of the Board of Directors. Any officer may be removed with or
without cause at any time by the Board
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 6
of Directors. Each officer shall hold his office until his successor is elected
and qualified or until his earlier resignation or removal. The Board of
Directors may fill any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise.
Section 5.05. President. The President shall serve as Chief Executive Officer
of the Corporation, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute on behalf of the
Corporation, and may affix or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation. He shall perform such additional duties and have such
additional powers as the Board of Directors may from time to time prescribe.
Section 5.06. Vice Presidents. The Vice Presidents shall act under the
direction of the President and in the absence or disability of the President
shall perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more Executive Vice Presidents or may otherwise specify the
order of seniority of the Vice Presidents. The duties and powers of the
President shall descend to the Vice Presidents in such specified order of
seniority.
Section 5.07. Secretary. The Secretary shall act under the direction of the
President. Subject to the direction of the President, he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings in a book to be kept for that purpose. He shall perform
like duties for committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the
President or the Board of Directors. He shall keep in safe custody the seal of
the Corporation and, when authorized by the President or the Board of Directors,
cause it to be affixed to any instrument requiring it.
Section 5.08. Assistant Secretaries. The Assistant Secretaries shall act under
the direction of the President. In the order of their seniority, unless
otherwise determined by the President or the Board of Directors, they shall, in
the absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
Section 5.09. Treasurer. The Treasurer shall act under the direction of the
President. Subject to the direction of the President he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. He may affix or cause to be affixed the seal of the Corporation to
documents so requiring.
Section 5.10. Assistant Treasurers. The Assistant Treasurers in the order of
their seniority, unless otherwise determined by the President or the Board of
Directors, shall, in the absence or disability
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 7
of the Treasurer, perform the duties and exercise the powers of the Treasurer.
They shall perform such other duties and have such other powers as the President
or the Board of Directors may from time to time prescribe.
ARTICLE VI
Certificates of Stock
Section 6.01. Certificate. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the Chairman or Vice-Chairman of the
Board of Directors, or the President or a Vice President, and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the Corporation.
Every such certificate shall contain a statement of the restrictions provided in
Section 4 of this Article.
Section 6.02. Facsimile Signature. Any or all the signatures on the
certificate may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may be issued with the same effect as
though the person had not ceased to be such officer, transfer agent or
registrar. The seal of the Corporation or a facsimile thereof may, but need
not, be affixed to certificates of stock.
Section 6.03. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 6.04. Transfer. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books,
provided, however, the Corporation shall have no obligation to issue new
certificates, cancel old certificates or record transactions unless and until it
is satisfied that (i) all provisions of the Certificate of Incorporation, these
By-laws and any legends on the certificate regarding transfer of shares and
restrictions on such transfers have been complied with, and (ii) all other
applicable restrictions, including restrictions imposed by law, including
federal and state securities law, and by any stockholders agreement to which the
Corporation is a party, have been complied with.
Section 6.05. Record Date. The Board of Directors may fix in advance a date,
not more than sixty days nor less than ten days preceding the date of any
meeting of stockholders, or not more than sixty days before the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining a consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 8
receive payment of any such dividend, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent, and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 6.06. Recognition of Ownership. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends, and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII
Miscellaneous
Section 7.01. Reserves. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
may from time to time, in its absolute discretion, think proper, as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for the purchase of additional
property, or for such other purpose as the directors shall think conducive to
the interest of the Corporation, and the Board of Directors may modify or
abolish any such reserve.
Section 7.02. Checks, Demands and Notes. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 7.03. Fiscal Year. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.
Section 7.04. Seal. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE VIII
Indemnification
Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or
Proceedings Other Than By Or In The Right of the Corporation. To the full
extent permitted by law, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans) or by reason of any action alleged to have been taken or omitted
in such capacity against costs, charges, expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 9
reasonably incurred by him or on his behalf in connection with any threatened,
pending or completed action, suit or proceeding and any appeal therefrom
including but not limited to liability and expenses incurred on account of
profits realized by him in the purchase or sale of securities of the
Corporation, if and only if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful; the termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 8.02. Indemnification of Directors and Officers for Actions or Suits By
Or In The Right of the Corporation. To the full extent permitted by law, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise (including employee benefit plans), or by
reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or on his behalf in connection with the defense or
settlement of any threatened, pending or completed action or suit and any appeal
therefrom, or the defense or settlement of any claim, issue or matter, if and
only if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings
Other Than By Or In The Right of the Corporation. To the full extent permitted
by law, the Corporation, in the sole discretion of the Board of Directors of the
Corporation, may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
is or was or has agreed to become an employee, agent or contractor of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee, agent or contractor of another
corporation, partnership, joint venture, trust or other enterprise (including
employee benefit plans), or by reason of any action alleged to have been taken
or omitted in such capacity, against costs, charges, expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any threatened,
pending or completed action, suit or proceeding and any appeal therefrom,
including but not limited to liability and expenses incurred on account of
profits realized by him in the purchase or sale of securities of the
Corporation, if and only if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 10
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; the termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 8.04. Indemnification of Others for Actions or Suits By Or In The Right
of the Corporation. To the full extent permitted by law, the Corporation, in
the sole discretion of the Board of Directors of the Corporation, may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was or has agreed to become an employee, agent or contractor of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee, agent or contractor of another
corporation, partnership, joint venture, trust or other enterprise (including
employee benefit plans), or by reason of any action alleged to have been taken
or omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of any threatened, pending or
completed action or suit and any appeal therefrom, or the defense or settlement
of any claim, issue or matter, if and only if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs, charges and expenses which the
Court of Chancery or such other court shall deem proper.
Section 8.05. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of these By-laws, to the extent
that a director or officer of the Corporation or other person indemnified under
Sections 8.01 through 8.04, herein, has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
all costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or on his behalf in connection therewith.
Section 8.06. Determination of Right to Indemnification. Unless otherwise
ordered by a court, any indemnification under Sections 8.01 through 8.04,
herein, shall be paid by the Corporation unless a determination is made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders, that indemnification of an individual entitled to
indemnification under Sections 8.01 through 8.04, herein, is not proper in the
circumstances because he has not met the applicable standard of conduct set
forth in Sections 8.01 through 8.04, herein.
Section 8.07. Advance Payment of Costs, Charges and Expenses. To the full
extent permitted by law, the Corporation shall, upon request, pay costs, charges
and expenses (including attorneys' fees)
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 11
incurred by a person entitled to indemnification pursuant to Sections 8.01 and
8.02, herein, and, if applicable, pursuant to Sections 8.03 and 8.04, herein, in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding; provided, however, that the
payment of such costs, charges and expenses incurred by a director or officer in
his capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer) in
advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by or on behalf of the director or
officer to repay all amounts so advanced in the event that it shall ultimately
be determined that such director or officer is not entitled to be indemnified by
the Corporation as authorized in these By-laws; such costs, charges and expenses
incurred by other employees, agents and contractors may be so paid upon such
terms and conditions, if any, as the Board of Directors deems appropriate.
Section 8.08. Procedure for Indemnification. Any indemnification or advance of
costs, charges and expenses provided for in Sections 8.01 through 8.07, herein,
shall be made promptly, and in any event within sixty (60) days, upon the
written request of the person entitled to indemnification; the right to
indemnification or advances as granted by these By-laws shall be enforceable by
a director or officer or other person indemnified hereunder in any court of
competent jurisdiction. If the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within sixty (60) days, such person's
costs, charges and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation; it shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses pursuant to Section 8.07, herein, where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Sections 8.01 through
8.04, herein, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 8.01 through 8.04, herein, nor the
fact that there has been an actual determination by the Corporation (including
its Board of Directors, its independent legal counsel, and its stockholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 8.09. Authorization of Corporation Officers. The proper officers of
the Corporation are, and each of them acting without the other is, authorized to
take any action, for and in the name of the Corporation, which he deems
necessary or appropriate (as conclusively presumed from the taking of such
action) to carry out and effect the foregoing Sections 8.01 through 8.08.
Section 8.10. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by these By-laws shall not
be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(present or future, common or statutory), by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office or
while employed by or acting as agent for the Corporation, and shall continue as
to a person who has ceased to serve in the capacity making him eligible for
indemnification, and shall inure to the benefit of the estate, heirs, executors
and administrators of such person; all rights to indemnification under these By-
laws shall be deemed to be a contract
<PAGE>
BY-LAWS OF ICF KAISER GOVERNMENT PROGRAMS, INC.
Page 12
between the Corporation and each director and officer of the Corporation and, as
applicable, any other person indemnified hereunder who serves or served in such
capacity at any time while these By-laws as well as the relevant provisions of
the Delaware General Corporation Law or any other applicable laws are or were in
effect; any repeal or modification hereof or of such provisions of such law
shall not in any way diminish any rights to indemnification of such director or
officer or other person entitled to indemnification or the obligations of the
Corporation arising hereunder.
Section 8.11. Savings Clause. If Sections 8.01 through 8.10 of these By-laws
or any portion hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall nevertheless indemnify each
director and officer, and may indemnify any other person entitled to
indemnification, as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of these By-laws that shall not have been
invalidated and to the full extent permitted by applicable law. To the full
extent permitted by law, the Corporation may enter into and perform agreements
with persons, including, without limitation, present and former officers,
directors and employees of the Corporation and of companies acquired by or
merged with the Corporation, obligating the Corporation, among other things, to
provide indemnification and advancement of costs, charges and expenses to such
persons in addition to any indemnification or advancement which may be available
to such person under Sections 8.01 through 8.10 of these By-laws.
Section 8.12. Insurance. The Board of Directors may cause the Corporation to
purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust or
other enterprise (including employee benefit plans) against any liability
asserted against such person and incurred in any such capacity or arising out
of such status, whether or not the Corporation would have the power to indemnify
such person.
Section 8.13. Amendment of By-laws. The Board of Directors may from time to
time adopt further By-laws with respect to indemnification and may amend these
and such By-laws to provide at all times the fullest indemnification permitted
by the General Corporation Law of the State of Delaware.
ARTICLE IX
Amendments
Section 9.01. Amendment by Stockholders. These By-laws may be amended by a
majority vote of all the stock issued and outstanding and entitled to vote at
any annual or special meeting of the stockholders, provided notice of intention
to amend shall have been contained in the notice of the meeting.
Section 9.02. Amendment by Board of Directors. The Board of Directors by a
majority vote of the whole Board at any meeting may amend these By-laws,
including By-laws adopted by the stockholders, but the stockholders may from
time to time specify particular provisions of the By-laws which shall not be
amended by the Board of Directors.
<PAGE>
Exhibit 3(g)
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF ICF KAISER ENGINEERS OPERATING CO., INC. FILED IN THIS OFFICE
ON THE FIRST DAY OF APRIL, A.D. 1991, AT 9 O'CLOCK A.M.
* * * * * * * * * * * * * * * * * *
/s/ Michael Harkins
------------------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: *3006397
DATE: 04/03/1991
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ICF Kaiser Engineering Operating Co., Inc.
Section 1.01. Name.
- ------------ ----
The name of the Corporation is ICF Kaiser Engineers Operating Co., Inc.
Section 2.01. Registered Office and Agent.
- ------------ ---------------------------
The registered office of the Corporation in the State of Delaware is located in
the County of New Castle, at 1013 Centre Road, Wilmington 19085. Its registered
agent at such address is Corporation Service Company.
Section 3.01. Purposes.
- ------------ --------
The purpose of the Corporation is to engage in (i) the construction,
development, maintenance, operation and management of, and otherwise deal, with
that certain pulverized coal injection plant to be located and constructed at
that certain steel complex in Gary, Indiana, currently owned and operated by USX
Corporation; (ii) any lawful act or activity related or incidental to the
foregoing for which corporations may be organized under the General Corporation
Law of Delaware; and (iii) no purposes other than those specified in (i) or
(ii).
Section 4.01. Authorized Shares.
- ------------ -----------------
The total number of shares of capital stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock having a par
value of One Cent ($0.01) per share.
Section 5.01 Incorporator.
- ------------ ------------
The name and mailing address of the incorporator is Colin W. Craik, Crowell &
Moring, 1001 Pennsylvania Avenue, N.W., Washington, D.C. 20004-2595. The powers
of the incorporator shall terminate upon the filing of the Certificate of
Incorporation.
Section 5.02. Duration.
- ------------ --------
The Corporation is to have perpetual existence.
Section 6.01 Initial Board of Directors.
- ------------ --------------------------
-2-
<PAGE>
The name and mailing address of the person who is to serve as the sole director
of the Corporation until the first annual meeting of stockholders or until his
successors are elected and qualify is:
Paul Weeks, II
9300 Lee Highway
Fairfax, VA 22031
Section 7.01. Limitation of Liability.
- ------------ -----------------------
(a) No person shall be liable to the Corporation for any loss or damage suffered
by it on account of any action taken or omitted to be taken by him or her as a
director or officer of the Corporation, if such person (i) in good faith
exercised or used the same degree of diligence, care and skill as an ordinarily
prudent person would have exercised or used under similar circumstances, or (ii)
took, or omitted to take, such action in good faith reliance upon advice of
counsel for the Corporation, or upon books of account or reports made to the
Corporation by any of its officers or by an independent certified public
accountant, or by an appraiser selected with reasonable care by the Board of
Directors or by any committee designated by the Board of Directors, or in good
faith reliance upon other records of the Corporation.
(b) No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that the foregoing shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Section 8.01. Ratification by Stockholders.
- ------------ ----------------------------
Any contract, transaction or act of the Corporation, the Board of Directors, or
a committee of the Board of Directors which shall be approved or ratified by a
majority of a quorum of the stockholders entitled to vote at any meeting or,
without a meeting, by the written consent of the holders of a majority of the
stock entitled to vote shall be as valid and binding as though approved or
ratified by every stockholder of the Corporation; but any failure of the
stockholders to approve or ratify such contract, transaction or act, when and if
submitted, shall not be deemed in any way to invalidate the same or to deprive
the Corporation, its directors or officers, of their right to proceed with such
contract, transaction or act.
Section 9.01. Indemnification of Directors and Officers for Actions,
- ------------ ------------------------------------------------------
Suits, or Proceedings Other Than By or In the Right of the
----------------------------------------------------------
Corporation.
-----------
To the full extent permitted by law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit
-3-
<PAGE>
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation), by reason of the fact
that he or she is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise (including employee benefit plans), or by
reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges, expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her on
his or her behalf in connection with any threatened, pending or completed
action, suit or proceeding and any appeal therefrom, including but not limited
to liability and expenses incurred on account of profits realized by him or her
in the purchase or sale of securities of the Corporation, if and only if he or
--------------
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful; the termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
---------------
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
Section 9.02 Indemnification of Directors and Officers for Action or
- ------------ -------------------------------------------------------
Suits By or In the Right of the Corporation.
-------------------------------------------
To the full extent permitted by law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she is or was
or has agreed to become a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the Corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans), or by reason of any action
alleged to have been taken or omitted in such capacity, against costs, charges
and expenses (including attorneys' fees) actually and reasonably incurred by him
or her on his or her behalf in connection with the defense or settlement of any
threatened, pending or completed action or suit and any appeal therefrom, or the
defense or settlement of any claim, issue or matter, if and only if he or she
--------------
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation except that no
indemnification shall be made in respect of any claim issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
-4-
<PAGE>
Section 9.03 Indemnification of Others for Actions, Suits or Proceedings
- ------------ -----------------------------------------------------------
Other Than By or In the Right of the Corporation
------------------------------------------------
To the full extent permitted by law, the Corporation, in the sole discretion of
the Board of Directors of the Corporation, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he or she is or was or has agreed to become an employee,
agent or contractor of the Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as a director, officer, employee, agent
or contractor of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans), or by reason of any action
alleged to have been taken or omitted in such capacity, against costs, charges,
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her or on his or her
behalf in connection with any threatened, pending or completed action, suit or
proceeding and any appeal therefrom, including but not limited to liability and
expenses incurred on account of profits realized by him or her in the purchase
or sale of securities of the Corporation, if and only if he or she acted in good
--------------
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful; the
termination of any action, suit or proceeding by judgment, order settlement,
conviction, or upon a pleas of nolo contendere or its equivalent shall not, of
---- ----------
itself, create a presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 9.04 Indemnification of Others for Actions or Suits By or In
- ------------ -------------------------------------------------------
the Right of the Corporation.
----------------------------
To the full extent permitted by law, the Corporation, in the sole discretion of
the Board of Directors of the Corporation, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was or has
agreed to become an employee, agent or contractor of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director, officer, employee, agent or contractor of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans), or by reasons of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or her or on his or her
behalf in connection with the defense or settlement of any threatened, pending
or completed action or suit and any appeal therefrom, or the defense or
settlement of any claim, issue or matter, if and only if he or she acted in good
--------------
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the Corporation except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless
-5-
<PAGE>
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of such liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
costs, charges and expenses which the Court of Chancery or such other court
shall deem proper.
Section 9.05. Indemnification for Costs, Charges and Expenses of
- ------------ --------------------------------------------------
Successful Party.
----------------
Notwithstanding the other provisions of this Certificate, to the extent that a
director or officer of the Corporation or other person indemnified under Section
9.01 through 9.04, herein, has been successful on the merits or otherwise,
including, without limitation, the dismissal of an action without prejudice, in
defense of any action, suit or proceeding referred to above, or in defense of
any claim, issue or matter therein, he or she shall be indemnified against all
costs, charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or her or on his or her behalf in connection therewith.
Section 9.06. Determination of Right to Indemnification.
- ------------ -----------------------------------------
Unless otherwise ordered by a court, any indemnification under Section 9.01
through 9.04, herein, shall be paid by the Corporation unless a determination is
made (i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders, that indemnification of an individual
entitled to indemnification under Section 9.01 through 9.04, herein, is not
proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in Section 9.01 through 9.04, herein.
Section 9.07. Advance Payment of Costs, Charges and Expenses.
- ------------ ----------------------------------------------
To the full extent permitted by law, the Corporation shall, upon request, pay
costs, charges and expenses (including attorneys' fees) incurred by a person
entitled to indemnification pursuant to Sections 9.01 and 9.02, herein, and, if
applicable, pursuant to Sections 9.03 and 9.04, herein, in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding; provided, however, that the payment of such costs,
-------- -------
charges and expenses incurred by a director or officer in his or her capacity as
a director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance of the final
disposition of such action, suit or proceeding shall be made only upon receipt
of an undertaking by or on behalf of the director or officer to repay all
amounts so advanced in the event that it shall ultimately be determined that
such director or officer is not entitled to be indemnified by the Corporation as
authorized in this certificate; such costs, charges and expenses is incurred by
other employees, agents and contractors may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
-6-
<PAGE>
Section 9.08. Procedure of Indemnification.
- ------------ ----------------------------
Any indemnification or advance of costs, charges and expenses provided for in
Sections 9.01 through 9.07, herein, shall be made promptly, and in any event
within sixty days, upon the written request of the person entitled to
indemnification; the right to indemnification or advances as granted by this
Certificate shall be enforceable by a director or officer or other person
indemnified hereunder in any court of competent jurisdiction. If the
Corporation denies such request, in whole or in part, or if no disposition
thereof is made within sixty days, such person's costs, charges and expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation; it shall be a defense to any such action (other
than an action brought to enforce a claim for the advance of costs, charges and
expenses pursuant to Section 9.07, herein, where the required undertaking, if
any, has been received by the Corporation) that the claimant has not met the
standard of conduct set forth in Section 9.01 through 9.04, herein. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in Sections 9.01 through 9.04, herein, nor the fact that there has
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 9.09. Authorization of Corporation Officers.
- ------------ -------------------------------------
The proper officers of the Corporation are, and each of them acting without the
other is, authorized to take any action, for and in the name of the Corporation,
which the officer deems necessary or appropriate (as conclusively presumed from
the taking of such action) to carry out and effect the foregoing Sections 9.01
through 9.08.
Section 9.10. Other Rights; Continuation of Right to Indemnification.
- ------------ ------------------------------------------------------
The indemnification and advancement of expenses provided by this Certificate
shall not be deemed exclusive of any other rights which a person seeking
indemnification nor advancement of expenses may be entitled under any law
(present or future, common or statutory), by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding
office or while employed by or acting as an agent for the Corporation, and shall
continue as to a person who has ceased to serve in the capacity making him or
her eligible for indemnification, and shall inure to the benefit of the estate,
heirs, executors and administrators of such person; all rights to
indemnification under this Certificate shall be deemed to be a contract between
the Corporation and each director and officer of the Corporation and, as
applicable, any other person indemnified hereunder who serves or served in such
capacity at any time while this Certificate as well as the relevant provisions
of the Delaware General Corporation Law or any other
-7-
<PAGE>
applicable laws are or were in effect; any repeal or modification hereof or of
such provisions of such law shall not in any way diminish any rights to
indemnification of such director or officer or other person entitled to
indemnification or the obligations of the Corporation arising hereunder.
Section 9.11. Savings Clause.
- ------------ --------------
If this Certificate or any portion hereof shall be invalidated on any ground by
a court of competent jurisdiction, then the Corporation shall nevertheless
indemnify each director and officer, and may indemnify any other person entitled
to indemnification, as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this Certificate that shall
not have been invalidated and to the full extent permitted by applicable law.
To the full extent permitted by law, the Corporation may enter into and perform
agreements with persons, including, without limitation, present and former
officers, directors and employees of the Corporation and of companies acquired
by or merged with the Corporation, obligating the Corporation, among other
things, to provide indemnification and advancement of costs, charges and
expenses to such persons in addition to any indemnification or advancement which
may be available to such person under Sections 9.01 through 9.10 of the
Certificate.
Section 9.12. Insurance.
- ------------ ---------
The Board of Directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or was serving at the request of the Corporation
as a director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise (including employee
benefit plans), against any liability asserted against such person and incurred
in any such capacity or arising out of such status, whether or not the
Corporation would have the power to indemnify such person.
Section 9.13. Adoption of By-laws.
- ------------ -------------------
The Board of Directors may from time to time adopt By-laws with respect to
indemnification and may amend such By-laws to provide at all times the fullest
indemnification permitted by the General Corporation Law of the State of
Delaware.
Section 10.01. Settlement of Debts.
- ------------- -------------------
Whenever a compromise or arrangement is proposed between this Corporation and
its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application
-8-
<PAGE>
of any receiver or receivers appointed for this Corporation under the provisions
of Section 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for this Corporation
under the provisions of Section 279 of Title 8 of the Delaware Code, order a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
Section 11.01. Elections of Directors.
- ------------- ----------------------
Elections of directors need not be by written ballot unless the By-laws of the
corporation shall so provide.
Section 12.01. Stockholders Meetings, Records.
- ------------- ------------------------------
Stockholders meetings may be held within or without the State of Delaware, as
the By-laws may provide. The books of the Corporation may be kept (subject to
any provision in the General Corporation Law of the State of Delaware) outside
of the State of Delaware at such place or places as may be designated from time
to time by the Board of Directors (or duly authorized committee of the Board of
Directors) or in the By-laws of the Corporation.
Section 13.01. By-laws.
- ------------- -------
The Board of Directors (or a duly authorized committee of the Board of
Directors) of the Corporation shall have the power to make and, except as may be
expressly stated in the By-laws, to alter and repeal its By-laws.
-9-
<PAGE>
Section 14.01 Amendment of Certificate of Incorporation.
- ------------- -----------------------------------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate, in the manner now or hereafter
prescribed by the General Corporation Law of Delaware, and all rights conferred
upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF the undersigned, being the incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, does make this certificate hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereto set my signature this 28th day of March 1991.
/s/ Colin W. Craik
-----------------------------------------
Colin W. Craik
-10-
<PAGE>
District of Columbia:
BE IT REMEMBERED that on March 28, 1991, personally came before me, a
Notary Public for the District of Columbia, Colin W. Craik, the subscriber to
the foregoing Certificate of Incorporation, known to me personally to be such,
and acknowledged the said Certificate to be his act and deed and that the facts
therein stated are truly set forth.
Given under my hand and seal of office the day and year aforesaid.
[Seal] /s/ Anne S. Parke
--------------------------------
Notary Public
My Commission Expires June 14, 1992
-11-
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------------------------
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "ICF KAISER ENGINEERS OPERATING CO., INC." FILED IN THIS OFFICE ON
THE FIFTH DAY OF MAY, A.D. 1992, AT 9 O'CLOCK A.M.
* * * * * * * * * * * * * * * * * *
/s/ Michael Ratchford
-----------------------------------------------
Michael Ratchford, Secretary of State
AUTHENTICATION: *3441317
DATE: 05/07/92
<PAGE>
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
ICF KAISER ENGINEERS OPERATING CO., Inc.
ICF Kaiser Engineers Operating Co., Inc., a corporation organized and
existing under the General Corporation Law of Delaware (the "Corporation"),
hereby does certify:
FIRST: That the Board of Directors of the Corporation, by the written
consent of all of its members, filed with minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment of the
Certificate of Incorporation of the Corporation:
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by deleting Section 1.01 in its entirety and inserting in its place the
following new language:
Section 1.01. Name. The name of the Corporation is PCI Operating
------------ ----
Company.
SECOND: That in lieu of a meeting and vote of the stockholders, the
sole stockholder of the Corporation has given written consent to said amendment
in accordance with the provisions of Section 228 of the General Corporation Law
of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, ICF Kaiser Engineers Operating Co., Inc. has
caused this Certificate to be signed by Kenneth A. Schweers, its President, and
attested by Paul Weeks, II, its Secretary, this 5th day of May, 1992.
ICF Kaiser Engineers Operating, Co., Inc.
(now: PCI Operating Company)
SEAL
By: /s/ Kenneth A. Schweers
------------------------------------
Kenneth A. Schweers, President
Attest:
By: /s/ Paul Weeks, II
-----------------------------------------
Paul Weeks, II, Secretary
-13-
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "PCI OPERATING COMPANY" FILED IN THIS OFFICE ON THE TWENTY-SIXTH
DAY OF MARCH, A.D. 1993, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
* * * * * * * * * * * * * * * * * *
/s/ William T. Quillen
-----------------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *3840267
DATE: 03/30/1993
<PAGE>
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
PCI OPERATING COMPANY
PCI Operating Company, a corporation organized and existing under the
General Corporation Law of Delaware (the "Corporation"), hereby does certify:
FIRST: That the Board of Directors of the Corporation, by the written
consent of all of its members, filed with minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment of the
Certificate of Incorporation of the Corporation:
RESOLVED, that the Certificate of Incorporation of the Corporation be
amended by deleting Section 1.01 in its entirety and inserting in its place
the following new language:
Section 1.01 Name. The name of the Corporation is PCI Operating Company,
------------ ----
Inc.
SECOND: That in lieu of a meeting and vote of the stockholders, the sole
stockholder of the Corporation has given written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, PCI Operating Company has caused this Certificate to be
signed by Kenneth A. Schweers, its President, and attested by Paul Weeks, II,
its Secretary, this 24th day of March, 1993.
PCI Operating Company
(now: PCI Operating Company, Inc.)
SEAL
By: /s/ Kenneth A. Schweers
------------------------------------
Kenneth A. Schweers, President
Attest:
By: /s/ Paul Weeks, II
--------------------------------------------
Paul Weeks, II, Secretary
-15-
<PAGE>
Exhibit 3(h)
BY-LAWS OF
PCI Operating Company, Inc.
ARTICLE I
---------
Offices
Section 1.01. Registered Office in Delaware. The registered office shall be in
- ------------ -----------------------------
Wilmington, Delaware. The name of the registered agent of the Corporation at
such location is Corporation Service Company.
Section 1.02. Principal Office. The Board of Directors is granted full power
- ------------ ----------------
and authority to fix and thereafter change the location of the principal office
of the Corporation at any location within the United States.
Section 1.03. Other Offices. The Corporation may have such other offices
- ------------ -------------
either within or without the State of Delaware as the Board of Directors may
from time to time determine.
ARTICLE II
----------
Meetings of Stockholders
Section 2.01. Time and Place of Meeting. Annual meetings of the stockholders
- ------------ -------------------------
for the purpose of electing directors, making reports of the affairs of the
Corporation and transacting such other business as may properly come before the
meeting shall be held at such place, within or without the State of Delaware,
on such date and at such time as the Board of Directors shall have each year
fix, which date shall be within thirteen months subsequent to the later of the
date of incorporation or the last annual meeting of stockholders. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be fixed by the Board of Directors and
stated in the notice of meeting. If no other place is fixed by the Board of
Directors, meetings of stockholders shall be held at the principal executive
office of the Corporation. Failure to hold the annual meeting of the designated
time shall not work a forfeiture or dissolution of the Corporation.
Section 2.02. Notice of Meeting. Written notice of meetings of stockholders,
- ------------ -----------------
stating the place, date and hour thereof, and in the case of a special meeting,
the purpose or purposes for which the meeting is being called, shall be given
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote thereat.
Section 2.03. Qualified Voters. The officer who has charge of the stock ledger
- ------------ ----------------
of the Corporation shall prepare, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder for any purpose germane to
the meeting during ordinary business hours for a period of at least ten days
prior to the meeting,
<PAGE>
either at a place within the city where the meeting is to be held, which place
proxy, shall have power to adjourn the meeting from time to time without notice
other than announcement at the meeting (if the adjournment is not for more than
thirty days and a new record date for the determination of stockholders entitled
to vote is not fixed), until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2.07. Vote Required. When a quorum is present at any meeting, the vote
- ------------ -------------
of the holders of a majority of the shares of stock having voting power voting,
in person or by proxy, on a question shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
statutes, the Certificate of Incorporation or these By-laws a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 2.08. Proxies. Each stockholder shall at every meeting of the
- ------------ -------
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted on after three years from its date unless the proxy provides for a
longer period. No proxy or power of attorney to vote shall be used to vote at a
meeting of the stockholders unless it shall have been filed with the Secretary
of the meeting when required by the inspectors of election. All questions
regarding the qualification of voters, the validity of proxies and the
acceptance or rejection of votes shall be decided by two inspectors of election
who shall be appointed by the Board of Directors, or if not so appointed, then
by the presiding officer of the meeting.
Section 2.09. Presiding Officer. The President of the Corporation shall
- ------------ -----------------
preside over all meetings of stockholders.
Section 2.10. Consent. Whenever the vote of stockholders at a meeting thereof
- ------------ -------
is required or permitted to be taken in connection with any corporate action by
any provisions of the statutes, the By-laws or the Certificate of Incorporation,
the meeting and vote may be dispensed with if the number of stockholders who
would have been entitled to vote upon the action if such meeting were held,
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting, shall consent in writing to such
corporate action being taken. Prompt notice shall be given by the Secretary to
all stockholders of the taking of corporate action without meeting by less than
unanimous written consent.
- 2 -
<PAGE>
ARTICLE III
-----------
Directors
Section 3.01. Number and Election. The number of directors which shall
- ------------ -------------------
constitute the whole Board shall be no less than one and no more than ten. By
amendment of this By-law, the number may be increased or decreased from time to
time by the Board of Directors or stockholders within the limits permitted by
law, but no decrease in the number of directors shall change the term of any
director in office at the time thereof. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 3.02, and each
director shall hold office until his successor is elected and accepts office
unless he earlier resigns or is removed. Directors need not be stockholders. A
director may resign at any time upon written notice to the Corporation or orally
at any meeting of the directors or stockholders.
Section 3.02. Removal and Vacancies. A director may be removed with or without
- ------------ ---------------------
cause by a majority vote of the holders of the outstanding shares entitled to
vote. Vacancies and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the directors
then in office, though less than a quorum, and the directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and accept office, unless sooner displaced.
Section 3.03. Management. The business of the Corporation shall be managed by
- ------------ ----------
its Board of Directors, which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these By-laws directed or required to be
exercised or done by the stockholders.
Section 3.04. Place of Meetings. The Board of Directors of the Corporation
- ------------ ------------------
may hold meetings, both regular and special, either within or without the State
of Delaware. Meetings may be held by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Section 3.05. Annual Meeting. The first meeting of each newly elected Board of
- ------------ --------------
Directors shall be held immediately following the adjournment of the annual
meeting of stockholders and at the place thereof. No notice of such meeting
shall be necessary to the directors in order legally to constitute the meeting,
provided a quorum is present. In the event such meeting is not so held, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.
Section 3.06. Notice for Regular Meetings. Regular meetings of the Board of
- ------------ ---------------------------
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors.
- 3 -
<PAGE>
Section 3.07. Special Meetings. Special meetings of the Board of Directors may
- ------------ ----------------
be called by a majority of the Board of Directors or the President and shall be
held on notice by letter mailed or delivered for transmission not later than on
the third day immediately preceding the day of such meeting, or by written
notice delivered or received not later than the day immediately preceding the
day of such meeting. Neither the business to be transacted at, nor the purpose
of, any special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 3.08. Quorum. At meetings of the Board of Directors, a majority of the
- ------------ ------
full number of directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 3.09. Chairman of the Board. At its first meeting after each annual
- ------------ ---------------------
meeting of stockholders, the Board of Directors shall elect from among its
members of a Chairman. The Board of Directors may also choose a Vice Chairman
from among its members. The Chairman shall preside at all meetings of the Board
of Directors, and shall perform such other duties as the Board may prescribe.
The Chairman may participate and act in any meeting of the Board of Directors as
a director. The Vice Chairman, if any, shall act under the direction of the
Chairman and in the absence or disability of the Chairman shall perform the
duties and exercise the powers of the Chairman. The Chairman and the Vice
Chairman, if any, (i) shall hold their respective offices at the pleasure of the
Board of Directors, and (ii) may be removed with or without cause at any time by
the Board of Directors. Any vacancy occurring in the office of the Chairman or
Vice Chairman by death, resignation, removal or otherwise shall be filled by the
Board of Directors.
Section 3.10. Committees. The Board of Directors may, by resolution adopted by
- ------------ ----------
a majority of the whole Board, designate one or more committees of the Board of
Directors, each committee to consist of one or more of the directors of the
Corporation, which, to the extent provided in the resolution, may have and
exercise any or all the powers of the Board of Directors in the management of
the business and affairs of the Corporation including, but not limited to, the
power and authority of the Board of Directors: (i) to authorize the seal of the
Corporation to be affixed to all papers; (ii) to declare a dividend; (iii) to
authorize the issuance of stock; (iv) to adopt a certificate of ownership and
merger pursuant to Section 253, of Title 8, Delaware Code; and (v) to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors as provided in Section 151(a) of
Title 8, Delaware Code, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for
shares of any other class or classes or any other series of the same of any
other class or classes of stock of the Corporation. Such committee or
committees shall have such name or names as may be determined from time to time
by the Board of Directors. The member or members of any such committee present
at any
- 4 -
<PAGE>
meeting and not disqualified from voting may, whether or not they constitute a
quorum, unanimously appoint another member of the Board of Directors to act at
the meeting in the place of any absent or disqualified member. At meetings of
such committees, a majority of the members or alternate members at any meeting
at which there is a quorum shall be the act of the committee.
Section 3.11. Committee Minutes. The committees shall keep regular minutes of
- ------------ -----------------
their proceedings and report the same to the Board of Directors.
Section 3.12. Consent. Any action required or permitted to be taken at any
- ------------ -------
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board of Directors or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
Section 3.13. Compensation. The directors may be paid their expenses of
- ------------ ------------
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of committees of the Board of Directors may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
----------
Notices
Section 4.01. Notice. Notices to directors and stockholders mailed to them at
- ------------ ------
their addresses appearing on the books of the Corporation shall be deemed to be
given at the time when deposited in the United States mail, postage prepaid. An
affidavit of the Secretary or an Assistant Secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
----- -----
Section 4.02. Waiver. Whenever any notice is required to be given under the
- ------------ ------
provisions of the statute, the Certificate of Incorporation or of these By-laws,
a waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Neither the business to be transacted at, nor the purposes
of, any meeting need be specified in such waiver. Attendance at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
- 5 -
<PAGE>
ARTICLE V
---------
Officers
Section 5.01. Election. The officers of the Corporation shall be chosen by the
- ------------ --------
Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a President, a Secretary and a Treasurer. The Board
of Directors may also choose one or more Vice Presidents and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be held
by the same person.
Section 5.02. Other Officers. The Board of Directors may appoint such other
- ------------ --------------
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 5.03. Salaries. The salaries of all officers of the Corporation shall
- ------------- --------
be fixed by or under the direction of the Board of Directors.
Section 5.04. Vacancies. The officers of the Corporation shall hold office at
- ------------ ---------
the pleasure of the Board of Directors. Any officer may be removed with or
without cause at any time by the Board of Directors. Each officer shall hold
his office until his successor is elected and qualified or until his earlier
resignation or removal. The Board of Directors may fill any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise.
Section 5.05. President. The President shall serve as Chief Executive Officer
- ------------ ---------
of the Corporation, shall have general and active management of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute on behalf of the
Corporation, and may affix or cause the seal to be affixed to, all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation. He shall perform such additional duties and have such
additional powers as the Board of Directors may from time to time prescribe.
Section 5.06. Vice Presidents. The Vice Presidents shall act under the
- ------------ ---------------
direction of the President and in the absence or disability of the President
shall perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more Executive Vice Presidents or may otherwise specify the
order of seniority of the Vice Presidents. The duties and powers of the
President shall descend to the Vice Presidents in such specified order of
seniority.
Section 5.07. Secretary. The Secretary shall act under the direction of the
- ------------ ---------
President. Subject to the direction of the President, he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings in a book to be kept for that purpose.
- 6 -
<PAGE>
He shall perform like duties for committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the President or the Board of Directors. He shall keep in safe
custody the seal of the Corporation and, when authorized by the President or the
Board of Directors, cause it to be affixed to any instrument requiring it.
Section 5.08. Assistant Secretaries. The Assistant Secretaries shall act under
- ------------ ---------------------
the direction of the President. In the order of their seniority, unless
otherwise determined by the President or the Board of Directors, they shall, in
the absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.
Section 5.09. Treasurer. The Treasurer shall act under the direction of the
- ------------ ---------
President. Subject to the direction of the President he shall have custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. He may affix or cause to be affixed the seal of the Corporation to
documents so requiring.
Section 5.10. Assistant Treasurers. The Assistant Treasurers in the order of
- ------------ --------------------
their seniority, unless otherwise determined by the President or the Board of
Directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer. They shall perform such other
duties and have such other powers as the President or the Board of Directors may
from time to time prescribe.
ARTICLE VI
----------
Certificates of Stock
Section 6.01. Certificate. Every holder of stock in the Corporation shall be
- ------------ -----------
entitled to have a certificate signed by the Chairman or Vice-Chairman of the
Board of Directors, or the President or a Vice-Chairman of the Board of
Directors, or the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the Corporation.
Every such certificate shall contain a statement of the restrictions provided in
Section 4 of this Article.
Section 6.02. Facsimile Signature. Any or all the signatures on the
- ------------ -------------------
certificate may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall cease to be such officer, transfer agent or register before such
certificate is issued, such certificate may be issued with the same effect as
- 7 -
<PAGE>
though the person had not ceased to be such officer, transfer agent or
registrar. The seal of the Corporation or a facsimile thereof may, but need
not, be affixed to certificates of stock.
Section 6.03. Lost Certificates. The Board of Directors may direct a new
- ------------ -----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 6.04. Transfer. Upon surrender to the Corporation or the transfer
- ------------ --------
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books,
provided, however, the Corporation shall have no obligation to issue new
certificates, cancel old certificates or record transactions unless and until it
is satisfied that (i) all provisions of the Certificate of Incorporation, these
By-laws and any legends on the certificate regarding transfer of shares and
restrictions on such transfers have been complied with, and (ii) all other
applicable restrictions, including restrictions imposed by law, including
federal and state securities law, and by any stockholders agreement to which the
Corporation is a party, have been complied with.
Section 6.05. Record Date. The Board of Directors may fix in advance a date,
- ------------ -----------
not more than sixty days nor less than ten days preceding the date of any
meeting of stockholders, or not more than sixty days before the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining a consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
Section 6.06. Recognition of Ownership. The Corporation shall be entitled to
- ------------ ------------------------
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends, and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
- 8 -
<PAGE>
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
-----------
Miscellaneous
Section 7.01. Reserves. There may be set aside out of any funds of the
- ------------ --------
Corporation available for dividends such sums or sums as the Board of Directors
may from time to time, in its absolute discretion, think proper, as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for the purchase of additional
property, or for such other purpose as the directors shall think conducive to
the interest of the Corporation, and the Board of Directors may modify or
abolish any such reserve.
Section 7.02. Checks, Demands and Notes. All checks or demands for money and
- ------------ -------------------------
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 7.03. Fiscal Year. The fiscal year of the Corporation shall be March 1
- ------------ -----------
through the end of February.
Section 7.04. Seal. The corporate seal shall have inscribed thereon the name
- ------------ ----
of the Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE VIII
------------
Indemnification
Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or
- ------------ ----------------------------------------------------------------
Proceedings Other Than By Or In The Right of the Corporation. To the full
- ------------------------------------------------------------
extent permitted by law, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans) or by reason of any action alleged to have been taken or omitted
in such capacity against costs, charges, expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with any threatened, pending or completed
action, suit or proceeding and any appeal therefrom including but not limited to
liability and expenses incurred on account of profits realized by him in the
purchase or sale of securities of the Corporation, if and only if he acted
--------------
- 9 -
<PAGE>
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful; the
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
---- ----------
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 8.01. Indemnification of Directors and Officers for Actions or Suits By
- ------------ -----------------------------------------------------------------
Or In The Right of the Corporation. To the full extent permitted by law, the
- ----------------------------------
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise (including employee benefit plans), or by
reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or on his behalf in connection with the defense or
settlement of any threatened, pending or completed action or suit and any appeal
therefrom, or the defense or settlement of any claim, issue or matter, if and
------
only if he acted in good faith and in a manner he reasonably believed to be in
- -------
or not opposed to the best interests of the Corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings
- ------------ ------------------------------------------------------------
Other Than By Or In The Right of the Corporation. To the full extent permitted
- ------------------------------------------------
by law, the Corporation, in the sole discretion of the Board of Directors of the
Corporation, may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
is or was or has agreed to become an employee, agent or contractor of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee, agent or contractor of another
corporation, partnership, joint venture, trust or other enterprise (including
employee benefit plans), or by reason of any action alleged to have been taken
or omitted in such capacity, against costs, charges, expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any threatened,
pending or completed action, suit or proceeding and any appeal therefrom,
including but not limited to liability and expenses incurred on account of
profits realized by him in the purchase or sale of securities of the
Corporation, if and only if he acted in good faith and in a
--------------
- 10 -
<PAGE>
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; the termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
---- ----------
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 8.04. Indemnification of Others for Actions or Suits By Or In The Right
- ------------ -----------------------------------------------------------------
of the Corporation. To the full extent permitted by law, the Corporation, in
- ------------------
the sole discretion of the Board of Directors of the Corporation, may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was or has agreed to become an employee, agent or contractor of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee, agent or contractor of another
corporation, partnership, joint venture, trust or other enterprise (including
employee benefit plans), or by reason of any action alleged to have been taken
or omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of any threatened, pending or
completed action or suit and any appeal therefrom, or the defense or settlement
of any claim, issue or matter, if and only if he acted in good faith and in a
--------------
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs, charges and expenses which the
Court of Chancery or such other court shall deem proper.
Section 8.05. Indemnification for Costs, Charges and Expenses of Successful
- ------------ --------------------------------------------------------------
Party. Notwithstanding the other provisions of these By-laws, to the extent
- -----
that a director or officer of the Corporation or other person indemnified under
Sections 8.01 through 8.04, herein, has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
all costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him on or on his behalf in connection therewith.
Section 8.06. Determination of Right to Indemnification. Unless otherwise
- ------------ -----------------------------------------
ordered by a court, any indemnification under Sections 8.01 through 8.04,
herein, shall be paid by the Corporation unless a determination is made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) of such
- 11 -
<PAGE>
a quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders, that indemnification of an individual entitled to
indemnification under Sections 8.01 through 8.04, herein, is not proper in the
circumstances because he has not met the applicable standard of conduct set
forth in Sections 8.01 through 8.04, herein.
Section 8.07. Advance Payment of Costs, Charges and Expenses. To the full
- ------------ ----------------------------------------------
extent permitted by law, the Corporation shall, upon request, pay costs, charges
and expenses (including attorneys' fees) incurred by a person entitled to
indemnification pursuant to Sections 8.01 and 8.02, herein, and, if applicable,
pursuant to Sections 8.03 and 8.04, herein, and in defending a civil or criminal
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding; provided, however, that the payment of such costs, charges
-------- -------
and expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer) in advance of the final disposition of
such action, suit or proceeding shall be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced in the event that it shall ultimately be determined that such director
or officer is not entitled to be indemnified by the Corporation as authorized in
these By-laws; such costs, charges and expenses incurred by other employees,
agents and contractors may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate.
Section 8.08. Procedure for Indemnification. Any indemnification or advance of
- ------------ -----------------------------
costs, charges and expenses provided for in Sections 8.01 through 8.07, herein,
shall be made promptly, and in any event within sixty (60) days, upon the
written request of the person entitled to indemnification; the right to
indemnification or advances as granted by these By-laws shall be enforceable by
a director or officer or other person indemnified hereunder in any court of
competent jurisdiction. If the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within sixty (60) days, such person's
costs, charges and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation; it shall be a defense to
any such action (other than action brought to enforce a claim for the advance of
costs, charges and expenses pursuant to Section 8.07, herein, where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in Sections 8.01 through 8.04, herein,
but the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors; its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Sections 8.01 through 8.04, herein, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
- 12 -
<PAGE>
Section 8.09. Authorization of Corporation Officers. The proper officers of
- ------------ -------------------------------------
the Corporation are, and each of them acting without the other is, authorized to
take any action, for and in the name of the Corporation, which he deems
necessary or appropriate (as conclusively presumed from the taking of such
action) to carry out and effect the foregoing Sections 8.01 through 8.08.
Section 8.10. Other Rights; Continuation of Right to Indemnification. The
- ------------ ------------------------------------------------------
indemnification and advancement of expenses provided by these By-laws shall not
be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(present or future, common or statutory), by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office or
while employed by or acting as agent for the Corporation, and shall continue as
to a person who has ceased to serve in the capacity making him eligible for
indemnification, and shall inure to the benefit of the estate, heirs, executors
and administrators of such person; all rights to indemnification under these By-
laws shall be deemed to be a contract between the Corporation and each director
and officer of the Corporation and, as applicable, any other person indemnified
hereunder who serves or served in such capacity at any time while these By-laws
as well as the relevant provisions of the Delaware General Corporation Law or
any other applicable laws are or were in effect; any repeal or modification
hereof or of such provisions of such law shall not in any way diminish any
rights to indemnification of such director or officer or other person entitled
to indemnification or the obligations of the Corporation arising hereunder.
Section 8.11. Savings Clause. If Sections 8.01 through 8.10 of these By-laws
- ------------ --------------
or any portion hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall nevertheless indemnify each
director and officer, and may indemnify any other person entitled to
indemnification, as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of these By-laws that shall not have been
invalidated and to the full extent permitted by applicable law. To the full
extent permitted by law, the Corporation may enter into and perform agreements
with persons, including, without limitation, present and former officers,
directors and employees of the Corporation and of companies acquired by or
merged with the Corporation, obligating the Corporation, among other things, to
provide indemnification and advancement of costs, charges and expenses to such
persons in addition to any indemnification or advancement which may be available
to such person under Sections 8.01 through 8.10 of these By-laws.
Section 8.12. Insurance. The Board of Directors may cause the Corporation to
- ------------ ---------
purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust or
other enterprise (including employee benefit plans) against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the Corporation would have the power to indemnify
such person.
- 13 -
<PAGE>
Section 8.13. Amendment of By-laws. The Board of Directors may from time to
- ------------ --------------------
time adopt further By-laws with respect to indemnification and may amend these
and such By-laws to provide at all times the fullest indemnification permitted
by the General Corporation Law of the State of Delaware.
ARTICLE IX
----------
Amendments
Section 9.01. Amendment by Stockholders. These By-laws may be amended by a
- ------------ -------------------------
majority vote of all the stock issued and outstanding and entitled to vote at
any annual or special meeting of the stockholders, provided notice of intention
to amend shall have been contained in the notice of the meeting.
Section 9.02. Amendment by Board of Directors. The Board of Directors by a
- ------------ -------------------------------
majority vote of the whole Board at any meeting may amend these By-laws,
including By-laws adopted by the stockholders, but the stockholders may from
time to time specify particular provisions of the By-laws which shall not be
amended by the Board of Directors
- 14 -
<PAGE>
Exhibit 3(i)
CERTIFICATE OF INCORPORATION
OF
SYSTEMS APPLICATIONS INTERNATIONAL, INC.
Section 1.01. Name.
- ------------ ----
The name of the Corporation is Systems Applications International, Inc.
Section 2.01. Registered Office and Agent.
- ------------ ---------------------------
The registered office of the Corporation in the State of Delaware is located in
the County of New Castle, at 1013 Centre Road, Wilmington 19805. Its registered
agent at such address is Corporation Service Company.
Section 3.01. Purposes.
- ------------ --------
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
Section 4.01. Authorized Shares.
- ------------ -----------------
The total number of shares of capital stock which the Corporation shall have
authority to issue is one hundred (100) shares of Common Stock having a par
value of one dollar ($1.00) per share.
Section 5.01. Incorporator.
- ------------ ------------
The name and mailing address of the incorporator is Richard E. Bonitz, 1800
Harrison Street, Oakland, California, 94612.
Section 5.02. Duration. The Corporation is to have perpetual existence.
- ------------ --------
Section 6.01. Limitation of Liability.
- ------------ -----------------------
(a) No person shall be liable to the Corporation for any loss or damage suffered
by it on account of any action taken or omitted to be taken by him or her as a
director or officer of the Corporation, if such person (i) in good faith
exercised or used the same degree of diligence, care and skill as an ordinarily
prudent person would have exercised or used under similar circumstances, or (ii)
took, or omitted to take, such action in good faith reliance upon advice of
counsel for the Corporation, or upon books of account or reports made to the
Corporation by any of its officers or by an independent certified public
accountant, or by an appraiser selected with reasonable care by the Board of
Directors or by any committee designated by the Board of Directors, or in good
faith reliance upon other records of the Corporation.
(b) No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that the foregoing shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Section 7.01. Ratification by Stockholders.
- ------------ ----------------------------
Any contract, transaction or act of the Corporation, the Board of Directors, or
a committee of the Board of Directors which shall be approved or ratified by a
majority of a quorum of the stockholders entitled to vote at any meeting or,
without a meeting, by the written consent of the holders of a majority of the
stock entitled to vote shall be as valid and binding as though approved or
ratified by every stockholder of the Corporation; but any failure of the
stockholders to approve or ratify such contract, transaction or act, when and if
submitted, shall not be deemed in any way to invalidate the same or to deprive
the Corporation, its directors or officers, of their right to proceed with such
contract, transaction or act.
<PAGE>
Certificate of Incorporation of
Systems Applications International, Inc.
Page 2
Section 8.01. Indemnification of Directors and Officers for Actions, Suits, or
- ------------ ----------------------------------------------------------------
Proceedings Other Than By or In the Right of the Corporation.
-------------------------------------------------------------
To the full extent permitted by law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he or she is or was or has agreed to
become a director or officer of the Corporation or is or was serving or has
agreed to serve at the request of the Corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans), or by reason of any action alleged to have
been taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her on his or her behalf in
connection with any threatened, pending or completed action, suit or proceeding
and any appeal therefrom, including but not limited to liability and expenses
incurred on account of profits realized by him or her in the purchase or sale of
securities of the Corporation, if and only if he or she acted in good faith and
--------------
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful;
the termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
---- ----------
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 8.02. Indemnification of Directors and Officers for Actions or Suits By
- ------------ --------------------------------------------- -------------------
or In the Right of the Corporation.
----------------------------------
To the full extent permitted by law, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or she is or was
or has agreed to become a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the Corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans), or by reason of any action
alleged to have been taken or omitted in such capacity, against costs, charges
and expenses (including attorneys' fees) actually and reasonably incurred by him
or her on his or her behalf in connection with the defense or settlement of any
threatened, pending or completed action or suit and any appeal therefrom, or the
defense or settlement of any claim, issue or matter, if and only if he or she
--------------
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 8.03. Indemnification of Others for Actions, Suits, or Proceedings
- ------------ ------------------------------------------------ -----------
Other Than By or In the Right of the Corporation.
------------------------------------------------
To the full extent permitted by law, the Corporation, in the sole discretion of
the Board of Directors of the Corporation, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he or she is or was or has agreed to become an employee,
agent or contractor of the Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as a director, officer, employee, agent
or contractor of another corporation, partnership, joint venture, trust or other
enterprise (including employee benefit plans), or by reason of any action
alleged to have been taken or omitted in such capacity, against costs, charges,
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her or on his or her
behalf in connection with any threatened, pending or completed action, suit or
proceeding and any appeal therefrom, including but not limited to liability and
expenses incurred on account of profits realized by him or her in the purchase
or sale of securities of the Corporation, if and only
-----------
<PAGE>
Certificate of Incorporation of
Systems Applications International, Inc.
Page 3
if he or she acted in good faith and in a manner he or she reasonably believed
- --
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful; the termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
---- ----------
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 8.04. Indemnification of Others for Actions or Suits By or In the Right
- ------------ -----------------------------------------------------------------
of the Corporation.
------------------
To the full extent permitted by law, the Corporation, in the sole discretion of
the Board of Directors of the Corporation, may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was or has
agreed to become an employee, agent or contractor of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director, officer, employee, agent or contractor of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans), or by reason of any action alleged to have been taken or omitted
in such capacity, against costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or her or on his or her behalf in
connection with the defense or settlement of any threatened, pending or
completed action or suit and any appeal therefrom, or the defense or settlement
of any claim, issue or matter, if and only if he or she acted in good faith and
-----------
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such costs, charges and expenses
which the Court of Chancery or such other court shall deem proper.
Section 8.05. Indemnification for Costs, Charges and Expenses of Successful
- ------------ -------------------------------------------------- ----------
Party.
-----
Notwithstanding the other provisions of this Certificate, to the extent that a
director or officer of the Corporation or other person indemnified under
Sections 9.01 through 9.04, herein, has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, in defense of any action, suit or proceeding referred to above, or in
defense of any claim, issue or matter therein, he or she shall be indemnified
against all costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or her or on his or her behalf in connection
therewith.
Section 8.06. Determination of Right to Indemnification.
- ------------ -----------------------------------------
Unless otherwise ordered by a court, any indemnification under Sections 9.01
through 9.04, herein, shall be paid by the Corporation unless a determination is
made (i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders, that indemnification of an individual
entitled to indemnification under Sections 9.01 through 9.04, herein, is not
proper in the circumstances because he or she has not met the applicable
standard of conduct set forth in Sections 9.01 through 9.04, herein.
Section 8.07. Advance Payment of Costs, Charges and Expenses.
- ------------ ----------------------------------------------
To the full extent permitted by law, the Corporation shall, upon request, pay
costs, charges and expenses (including attorneys' fees) incurred by a person
entitled to indemnification pursuant to Sections 9.01 and 9.02, herein, and, if
applicable, pursuant to Sections 9.03 and 9.04, herein, in defending a civil or
criminal action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding; provided, however, that the payment of such costs,
-------- -------
charges and expenses incurred by a director or officer in his or her capacity as
a director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance of the final
<PAGE>
Certificate of Incorporation of
Systems Applications International, Inc.
Page 4
disposition of such action, suit or proceeding shall be made only upon receipt
of an undertaking by or on behalf of the director or officer to repay all
amounts so advanced in the event that it shall ultimately be determined that
such director or officer is not entitled to be indemnified by the Corporation as
authorized in this certificate; such costs, charges and expenses incurred by
other employees, agents and contractors may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 8.08. Procedure for Indemnification.
- ------------ -----------------------------
Any indemnification or advance of costs, charges and expenses provided for in
Sections 9.01 through 9.07, herein, shall be made promptly, and in any event
within sixty days, upon the written request of the person entitled to
indemnification; the right to indemnification or advances as granted by this
Certificate shall be enforceable by a director or officer or other person
indemnified hereunder in any court of competent jurisdiction. If the Corporation
denies such request, in whole or in part, or if no disposition thereof is made
within sixty days, such person's costs, charges and expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such action shall also be indemnified by the Corporation; it
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of costs, charges and expenses pursuant to Section 9.07,
herein, where the required undertaking, if any, has been received by the
Corporation) that the claimant has not met the standard of conduct set forth in
Sections 9.01 through 9.04, herein. Neither the failure of the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Sections 9.01 through 9.04, herein, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 8.09. Authorization of Corporation Officers.
- ------------ -------------------------------------
The proper officers of the Corporation are, and each of them acting without the
other is, authorized to take any action, for and in the name of the Corporation,
which the officer deems necessary or appropriate (as conclusively presumed from
the taking of such action) to carry out and effect the foregoing Sections 9.01
through 9.08.
Section 8.10. Other Rights; Continuation of Right to Indemnification.
- ------------ ------------------------------------------------------
The indemnification and advancement of expenses provided by this Certificate
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(present or future, common or statutory), by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding
office or while employed by or acting as an agent for the Corporation, and shall
continue as to a person who has ceased to serve in the capacity making him or
her eligible for indemnification, and shall inure to the benefit of the estate,
heirs, executors and administrators of such person; all rights to
indemnification under this Certificate shall be deemed to be a contract between
the Corporation and each director and officer of the Corporation and, as
applicable, any other person indemnified hereunder who serves or served in such
capacity at any time while this Certificate as well as the relevant provisions
of the Delaware General Corporation Law or any other applicable laws are or were
in effect; any repeal or modification hereof or of such provisions of such law
shall not in any way diminish any rights to indemnification of such director or
officer or other person entitled to indemnification or the obligations of the
Corporation arising hereunder.
Section 8.11. Savings Clause.
- ------------ --------------
If this Certificate or any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Corporation shall nevertheless
indemnify each director and officer, and may indemnify any other person entitled
to indemnification, as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative,
<PAGE>
Certificate of Incorporation of
Systems Applications International, Inc.
Page 5
including an action by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Certificate that shall not have been
invalidated and to the full extent permitted by applicable law. To the full
extent permitted by law, the Corporation may enter into and perform agreements
with persons, including, without limitation, present and former officers,
directors and employees of the Corporation and of companies acquired by or
merged with the Corporation, obligating the Corporation, among other things, to
provide indemnification and advancement of costs, charges and expenses to such
persons in addition to any indemnification or advancement which may be available
to such person under Sections 9.01 through 9.10 of this Certificate.
Section 8.12. Insurance.
- ------------ ---------
The Board of Directors may cause the Corporation to purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise
(including employee benefit plans), against any liability asserted against such
person and incurred in any such capacity or arising out of such status, whether
or not the Corporation would have the power to indemnify such person.
Section 8.13. Adoption of By-laws.
- ------------ -------------------
The Board of Directors may from time to time adopt By-laws with respect to
indemnification and may amend such By-laws to provide at all times the fullest
indemnification permitted by the General Corporation Law of the State of
Delaware.
Section 9.01. Settlement of Debts.
- ------------ -------------------
Whenever a compromise or arrangement is proposed between this Corporation and
its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
Section 10.01. Elections of Directors.
- ------------- ----------------------
Elections of directors need not be by written ballot unless the By-laws of the
Corporation shall so provide.
Section 11.01. Stockholders Meetings, Records.
- ------------- ------------------------------
Stockholders meetings may be held within or without the State of Delaware, as
the By-laws may provide. The books of the Corporation may be kept (subject to
any provision in the General Corporation Law of the State of Delaware) outside
of the State of Delaware at such place or places as may be designated from time
to time by the Board of Directors (or duly authorized committee of the Board of
Directors) or in the By-laws of the Corporation.
<PAGE>
Certificate of Incorporation of
Systems Applications International, Inc.
Page 6
Section 12.01. By-laws.
- ------------- -------
The Board of Directors (or a duly authorized committee of the Board of
Directors) of the Corporation shall have the power to make and, except as may be
expressly stated in the By-laws, to alter and repeal its By-laws.
Section 13.01. Amendment of Certificate of Incorporation.
- ------------- -----------------------------------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate, in the manner now or hereafter
prescribed by the General Corporation Law of Delaware, and all rights conferred
upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF the undersigned, being the incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereto set my signature this 3rd day of
August 1995.
/s/ Richard E. Bonitz
-----------------------------
Richard E. Bonitz
<PAGE>
Exhibit No. 3(j)
BY-LAWS
OF
SYSTEMS APPLICATIONS INTERNATIONAL, INC.
ARTICLE I
---------
OFFICES
-------
Section l. Principal Office. The Principal office of the Corporation is
---------- -----------------
hereby fixed and located at 9300 Lee Highway in the city of Fairfax, State of
Virginia.
Section 2. Other Offices. The Corporation shall also have a principal
---------- --------------
executive office at 1800 Harrison Street, in the City of Oakland, County of
Alameda, State of California and other offices may at any time be established by
the Board of Directors at and place where the Corporation is qualified to do
business.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section l. Place of Meetings. All annual meetings of stock-holders shall
---------- ------------------
be held at the office of the Corporation in the City of Oakland, County of
Alameda, State of California or at any other place which may be designated
either by the Board of Directors, pursuant to authority hereinafter granted to
said Board or by written consent of all stockholders entitled to vote thereat,
given either before or after the meeting and filed with the Secretary of the
Corporation.
Section 2. Annual Meetings. The annual meeting of stockholders shall be
---------- ----------------
held on the first Wednesday following the first Tuesday in October of each year
at 2:30 in the afternoon of said day or at such other time as the stockholders
may agree; provided, however, that should said day fall upon a legal holiday any
year, then the annual meeting of stockholders for such year shall be held at the
same time and place on the next day of such year thereafter ensuing which is not
a legal holiday.
Not less than ten (10) nor more than sixty (60) days' advance written
notice of the actual date of each such annual meeting shall be given to each
stockholder entitled to vote thereat in the same manner as is provided in
Section 3 of this Article II for the giving of written notice of special
meetings of stockholders.
Section 3. Special Meetings. Special meetings of stockholders, for any
---------- -----------------
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President, and shall be called by the President or Secretary at the request
in writing of a majority of the Board of Directors, or at the request in writing
of stockholders owning not less than one fifth (1/5) of the entire capital stock
of the Corporation issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Except in special cases where other express provision is made by statute,
written notice of such special meetings shall be given to each stockholder
entitled to vote, either personally or by sending a copy of the notice through
the mail or by telegraph, charges prepaid, to his address appearing on the books
of the Corporation or supplied by him to the Corporation for the purpose of
notice. If a stockholder supplies no address, notice shall be deemed to have
been given him if mailed to he place where the principal office
<PAGE>
of the Corporation is situated, or published at least once in some newspaper of
general circulation in the county of said principal office. All such notices
shall be sent to each stockholder entitled thereto not less than ten (10) nor
more than sixty (60) days before each special meeting and shall specify the
place, the day and the hour of such meeting, and the general nature of the
business to be transacted.
Section 4. Adjourned Meetings and Notice Thereof. Any stockholders'
---------- --------------------------------------
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum no other business may be transacted at any such meeting.
When any stockholders meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Save as aforesaid, it shall not be necessary to
give any notice of an adjourned meeting or of the business to be transacted at
an adjourned meeting, other than by announcement at the meeting at which such
adjournment is taken.
Section 5. Entry of Notice. Whenever any stockholder entitled to vote has
---------- ----------------
been absent from any meeting of stockholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of such meeting was
given to such stockholders, as required by law and by the By-Laws of the
Corporation.
Section 6. Voting. At all meetings of stockholders every stockholder
---------- -------
entitled to vote shall have the right to vote in person or by proxy the number
of shares standing in his own name on the stock records of the Corporation.
Such vote may be viva voce or by ballot; provided, however, that all elections
for Directors must be by ballot upon demand made by a stockholder at any
election and before the voting begins.
Every stockholder entitled to vote at any election of Directors shall have
the right to cumulate his votes and give one candidate a number of votes equal
to the number of Directors to be elected multiplied by the number of votes to
which his shares are entitled, or to distribute his votes on the same principal
among as many candidates as he shall think fit. The candidates receiving the
highest number of votes up to the number of Directors to be elected shall be
elected.
Section 7. Quorum. The presence in person or by proxy of the holders of a
---------- -------
majority of the shares entitled to vote at any meeting shall constitute a quorum
for the transaction of business. The stockholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
Section 8. Consent of Absentees. The transactions of any meetings of
---------- ---------------------
stockholders, either annual or special, however called and noticed, shall be as
valid as if transacted at a meeting duly held after regular call and notice, if
a quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the stockholders entitled to vote, not present in person or
by proxy, sign a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 9. Action Without Meeting. Any action, except election of
---------- -----------------------
Directors, which under the provisions of the General Corporation Law of Delaware
may be taken at a meeting of the stockholders, may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power; provided, if any greater proportion of voting power is
required for such action at a meeting, then such greater proportion of written
consents shall be required.
<PAGE>
Section 10. Proxies. Every person entitled to vote or execute consents
---------------------
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the Secretary of the Corporation; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the stockholder executing it specifies therein the length
of time for which such proxy is to continue in force, which is in no case to
exceed seven (7) years from the date of its execution.
ARTICLE III
-----------
DIRECTORS
---------
Section l. Powers. Subject to limitations of the Certificate of
---------- -------
Incorporation, of the By-Laws, and of the Corporation Laws of the State of
Delaware as to action to be authorized or approved by the stockholders, and
subject to the duties of Directors as prescribed by the By-Laws, all corporate
powers shall be exercised by or under the authority of, and the business and
affairs of the Corporation shall be controlled by, the Board of Directors.
Without prejudice to such general powers, but subject to the same limitation, it
is hereby expressly declared that the Directors shall have the following powers,
to wit:
First - To select and remove all the other officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the Certificate of Incorporation or the By-Laws fix
their compensation, and require from them security for faithful service, and to
appoint committees, with such authority, not inconsistent with law, as may be
set forth in the resolution or resolutions establishing the same.
Second - To conduct, manage and control and affairs and business of the
Corporation, and to make such rules and regulations therefore not inconsistent
with law, with the Certificate of Incorporation or the ByLaws, as they may deem
best.
Third - To provide for the establishment of one or more offices within or
without the State of Delaware, and to change such office or offices from one
location to another as provided for in Article I, Section 2, hereof, and by the
laws of the State of Delaware, and as the business of the Corporation may
require; to designate any place within or without the State of Delaware for the
holding of any stockholder's or Directors' meeting or meetings; and to adopt,
make and use a corporate seal, and to prescribe the forms of Certificates of
stock, and to alter the form of such seal and of such certificates from time to
time, in their judgement they may deem best, provided such seal and such
certificates shall at all times comply with the provisions of law.
Fourth - To authorize the issue of shares of stock of the Corporation from time
to time, upon such terms as may be lawful, in consideration of money paid, labor
done, or services actually rendered, debts or securities cancelled, or tangible
or intangible property actually received or in the case of shares issued as a
dividend, against amounts transferred from surplus to stated capital.
Fifth - Borrow money and incur indebtedness for the Corporation, and to cause to
be executed and delivered thereof, in the corporate name, promissory notes,
bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other
evidences of debt and securities therefor.
Section 2. Number and Qualifications of Directors. The Board of Directors
---------- ---------------------------------------
shall consist of not less than one (1) or more than seven (7) the exact number
to be established by resolution of the board of directors and approved by the
shareholders. Directors need not be stockholders.
Section 3. Election and Term of Office. The Directors shall be elected at
---------- ----------------------------
each annual meeting of stockholders, but if any such annual meeting is not held,
or the Directors are not elected thereat, the Directors
<PAGE>
may be elected at any special meeting of stockholders held for that purpose. All
Directors shall hold office until their respective successors are elected.
Section 4. Removal of Directors. Any Director may be removed from office
---------- ---------------------
by the vote or written consent of stockholders owning a majority of the
outstanding shares entitled to voting power.
Section 5. Vacancies. Vacancies in the Board of Directors may be filled
---------- ----------
by the stockholders or by a majority of the remaining Directors, though less
than a quorum, or by a sole remaining Director, and each Director so elected
shall hold office until his successor is elected in accordance with Section 3
above.
A vacancy or vacancies shall be deemed to exist in case of the death,
resignation or removal of any Director, or if the authorized number of Directors
shall be increased, or in case the stockholders fail at any time to elect the
full number of authorized stockholders.
The stockholders may at any time elect Directors to fill the vacancies not
filled by the Directors, and may elect additional Directors at any meeting of
the stockholders at which an Amendment of the By-Laws is voted authorizing an
increase in the number of Directors.
If any Director tenders his resignation to the Board of Directors, the
Board shall have the power to elect a success to the office at such time as the
resignation shall become effective. No reduction of the number of directors
shall have the effect or removing any Director prior to the expiration of his
term of office.
Section 6. Place of Meeting. All meetings of the Board of Directors
-----------------------------
shall be held at the principal office of the Corporation, or any other place
within or without the State of Delaware designated at any time by resolution of
the Board or specified in the notice of the meeting or waiver thereof.
Section 7. Organization Meeting. Immediately following each annual
---------- ---------------------
meeting of stockholders, the Board of Directors may hold a regular meeting for
the purpose of organization, election of officers, and the transaction of other
business. Notice of such meetings is hereby dispensed with.
Section 8. Other Regular Meetings. Other regular meetings of the Board of
---------- -----------------------
Directors shall be held without call at such times as shall from time to time be
determined by the Board of Directors. Notice of all such regular meetings of
the Board of Directors is hereby dispensed with.
Section 9. Special Meetings. Special meetings of the Board of Directors
---------- -----------------
for any purpose or purposes may be called at any time by the President or if he
is absent or unable to, or refuses to act, by any Vice President or by any two
Directors.
Notice of the time and place of meetings shall be delivered personally to
the Directors or given by telephone or by telegraph at least 48 hours prior to
the time of the holding of the meeting, or if mailed shall be mailed at least 4
days prior to the meeting date. If notice is given by letter or by telegram, it
shall be sent charges prepaid, addressed to him at this address as it is shown
upon the records of the Corporation, or it if is not so shown on such records or
is not readily ascertainable, at the place in which the meetings of the
Directors are regularly held. Such mailing, telegraphing, telephoning or
delivery as above provided shall be due, legal and personal notice to such
Director.
Section 10. Adjournment. A majority of the Directors present, whether
----------- ------------
or not a quorum is present, may adjourn any meeting to another time and place.
If a meeting is adjourned for more than 24 hours, notice of the adjourned
meeting shall be given as in the case of an original meeting.
<PAGE>
Section 11. Entry of Notice. Whenever any Director has been absent from
----------- ----------------
any special meeting of the Board of Directors, an entry in the minutes to the
effect that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such special meeting was given to such Director, as
required by law and the By-Laws of the Corporation.
Section 12. Waiver of Notice. The transactions of any meeting of the
----------- -----------------
Board of Directors, whoever called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
Directors not present sign a written waiver of notice or a consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 13. Quorum and Voting Requirements. At all meetings of the Board
----------- -------------------------------
a majority of the authorized number of Directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the Directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors.
Any action of a majority of the authorized number of Directors, although
not at a regularly called meeting, and the record thereof, if assented to in
writing by all the other members of the Board, shall always be as valid and
effective in all respects as if passed by the Board in regular meeting.
Section 14. Fees and Compensation. Directors shall receive such
----------- ----------------------
compensation for their services as Directors as shall be determined form time to
time by resolution of the Board of Directors. Any Director may serve the
Corporation in any other capacity as an officer, agent, employee or otherwise
and receive compensation therefor.
Section 15. Chairman of the Board. The Directors may should they choose
----------- ----------------------
to do so, elect from among their members a chairman of the Board to preside over
meetings of the Board of Directors. Said position of Chairman of the Board
shall not be considered an office of the Corporation under Article IV of the By-
Laws of this Corporation.
Section 16. Committees. There shall be an executive committee of the
----------- -----------
Board of Directors, consisting of three members and there may be other
committees of the Board of Directors. Such committees shall be designated by
resolution or resolutions passed by a majority of the whole Board, and shall
serve at the pleasure of the Board. Such committees shall have such authority
as may be provided in a resolution or resolutions adopted by a majority of the
Board; provided, however, that the Board of Directors shall retain such rights
and privileges as are reserved exclusively to it by law. The executive
committee's authority shall include the exercise of all powers and duties of the
Board of Directors, while it is not in session, with respect to leases, loans
from stockholders, establishment of branch offices, donations, investment of
corporate funds and salaries of corporate personnel.
ARTICLE IV
----------
OFFICERS
--------
Section l. Officers. The officers of the Corporation shall be a
---------- ---------
President, a Vice President, a Secretary, and a Treasurer. The Corporation may
also have at the discretion of the Board of Directors one or more Executive Vice
Presidents, one or more additional Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers as may be
appointed in accordance with provisions of Section 3 of this Article. Officers
need not be Directors. Any person may hold two or more offices.
<PAGE>
Section 2. Election. The officers of the Corporation, except such
---------- ---------
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen annually by the Board of Directors,
and each shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his successor shall be elected and
qualified.
Section 3. Subordinate Officers Etc. The Board of Directors may appoint
---------- -------------------------
such other officers as the business of the Corporation may require, each of whom
shall hold office for such period, have such authority, and perform such duties
as are provided in the By-Laws or as the Board of Directors may from time to
time determine.
Section 4. Removal and Resignation. Any officer may be removed, either
---------- ------------------------
without or with cause, by a majority of the Directors at the time in office, at
any regular or special meeting of the Board, or by any officer upon whom power
of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the President, or to the Secretary of the Corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
---------- ----------
resignation, removal, disqualification or any other cause, shall be filled by
the Board of Directors in the manner prescribed in Section 2 of this Article or
an any regular or special meeting of the Board of Directors.
Section 6. President. Subject to the control of the Board of Directors,
---------- ----------
the President shall have the general powers and duties of management usually
vested in the office of President of the Corporation as well as such other
powers and duties as may be prescribed by the Board of directors or the By-Laws.
The President shall preside at all meetings of the stockholders and in the
absence of the Chairman of the Board he shall preside at all meetings of the
Board of Directors.
Section 7. Vice President. In the absence or disability of the President,
---------- ---------------
the Vice President in order of their rank fixed by the Board of Directors, or if
not ranked, the Vice President designated by the Board of Directors, shall
perform all the duties of the President, and when so acting shall have all the
powers of, and be subject to all restrictions upon, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board of Directors
or the By-Laws.
Section 8. Secretary. The Secretary shall keep, or cause to be kept, a
---------- ----------
book of minutes at the principal office or such other place as the Board of
Directors may order, of all meetings of Directors and stockholders, with the
time and place of holding, whether regular or special, and if special, how
authorized, the notice thereof given, the names of those present at the
Directors' meetings, the number of shares present of represented at stockholders
meetings and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's Transfer Agent, a share register,
or a duplicate share register, showing the names of the stockholders and their
addresses; the number of classes of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the stockholders and of the Board of Directors required by the By-Laws or by
law to be given, and he shall keep the seal of the Corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the By-Laws.
<PAGE>
Section 9. Treasurer. The Treasurer shall deposit all moneys and other
---------- ----------
valuables in the name and to credit of the Corporation with such depositories as
may be designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
Chairman of the Board, the President and Directors, whenever they request it, an
account of all of his transactions as Treasurer and of the financial condition
of the Corporation, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or the By-Laws.
ARTICLE V
---------
MISCELLANEOUS
-------------
Section 1. Record Date and Closing Stock Books. The Board of Directors
---------- ------------------------------------
may fix a time, in the future, not exceeding forty (40) days preceding the date
of any meeting of stockholders, and not exceeding thirty (30) days preceding the
date fixed for the payment of any dividend of distribution, or for the allotment
of rights, or when any change or conversion or exchange of shares shall go into
effect, as a record date for the determination of the stockholders entitled to
notice of an to vote at such a meeting, or entitled to receive any such dividend
or distribution, or any such allotment of rights, or to exercise the right in
respect to any such change, conversion or exchange or shares, and in such case
only stockholders of record on the date so fixed shall be entitled to notice of
and to vote at such meeting, or to receive such dividend, distribution or
allotment of rights, or to exercise such rights, as the case may be
notwithstanding any transfer of any shares of stock on the books of the
Corporation after any record date fixed as aforesaid. The board of Directors
may close the books of the Corporation against transfers during the whole, or
any part, of any such period, except that in the event of the declaration of
dividends the stock transfer books of the Corporation shall not be closed but
the Board of Directors shall fix a record date, as hereinabove provided, as of
which the Transfer Agent of the Corporation will take record of all stockholders
entitled to such dividend.
Section 2. Inspection of Corporate Records. The share register or
---------- --------------------------------
duplicate share register shall be open to inspection upon the written demand of
any stockholder or the holder of a voting trust certificate, at any reasonable
time, and for a purpose reasonably related to his interests as a stockholder,
and shall be exhibited at any time when required by the demand of ten percent
(10%) of the shares represented at any stockholders' meeting. Such inspection
may be made in person or by an agent or attorney, and shall include the right to
make extracts. Demand of inspection other than at a stockholders' meeting and
shall be made in writing upon the President, Secretary or an Assistant Secretary
of the Corporation. Every such demand, unless granted, shall be referred by such
officer to the Board of Directors.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
---------- --------------------
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as from time to time, shall be determined by
resolution of the Board of Directors.
The Board of Directors may by resolution, confer power on the Treasurer, or
any other officer, to open bank accounts with any bank for and in the name of
the Corporation and may confer authority on such Treasurer or other officer to
designate, from time to time, the officer or officers, or person or persons, who
shall be authorized to withdraw money from any account by check or otherwise.
Section 4. Fiscal Year. The fiscal year of the Corporation shall end at
---------- ------------
the close of business on December 31 in each year.
Section 5. Contracts How Executed. The Board of Directors, except as in
---------- -----------------------
the By-Laws otherwise provided, may authorize any officer or officers, agents or
agents, to enter into any contract or execute any instrument in the name of and
on behalf of the Corporation and said officer and agents are further authorized
to delegate said authority to any employee or agent of the Corporation, and such
authority
<PAGE>
may be general or confined to specific instances; and unless so authorized, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit to to render
it liable for any purpose or to any amount.
No contract or other transaction between the Corporation and one or more of
its Directors or between the Corporation and any other Corporation, firm or
association in which one or more of its Directors are Directors or are
financially interested, shall be either void or voidable because such Director
or Directors are present at the meeting of the Board of Directors or a committee
thereof which authorized or approves such contract or transaction or because his
or their votes are counted for such purpose if the circumstances specified in
any one of the following subparagraphs shall exist:
(a) the fact of common directorship or financial interest is disclosed or
known to the Board of Directors or committee and noted in the minutes
and the Board of Directors or committee authorizes, approves or
ratifies the transaction in good faith by a vote of a majority of those
members of such Board or committee who are not interested in the
contract or transaction and are not Directors or financially interested
in the Corporation, firm or association with which the transaction is
made; or
(b) the fact of a common directorship or financial interest is disclosed or
known to the stockholders and they approve or ratify the contract or
transaction in good faith by a majority vote or written consent of
stockholders entitled to vote; or
(c) the contract or transaction is fir as to the Corporation at the time
it is authorized or approved.
Common or interested Directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or a committee thereof which
authorizes, approves, or ratifies a contract or transaction, and if the votes of
the common are interested Directors are not counted at such meeting, then a
majority of the disinterested Directors may authorize, approve or ratify a
contract or transaction.
Section 6. Certificates of Stock. A certificate or certificates for
---------- ----------------------
shares of the capital stock of the Corporation shall be issued to each
stockholder when any such shares are fully paid up. All such certificates shall
be signed by the President or a Vice President and the Secretary or an Assistant
Secretary, or be authenticated by facsimiles of the signatures of the President
and Secretary or a facsimile of the signature of the President and the written
signature of the Secretary or an Assistant Secretary.
Every certificate authenticated by a facsimile or a signature must be
countersigned by a transfer agent or transfer clerk, and be registered by an
incorporated bank or trust company, either domestic or foreign, as registrar of
transfers, before issuance.
Certificated for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board of Directors or the By-Laws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state the amount remaining unpaid and the terms of payment
thereof.
Section 7. Transfer of Stock. Transfer of stock shall be made only upon
---------- ------------------
the proper stock books of the Corporation and must be accompanied by the
surrender of the certificate or certificates representing the transferred stock
duly endorsed by the holder thereof in person or by his duly authorized attorney
or legal representative.
<PAGE>
Section 8. Representation of Shares Held by Other Corporations. Shares
---------- ----------------------------------------------------
of the Corporation standing in the name of another corporation may be voted or
represented and all right incident thereto may be exercised on behalf of such
other corporation, by any officer thereof authorized so to do by resolution of
its board of directors, or by its executive committee, or by its by-laws, or by
any person authorized so to do by proxy or power of attorney duly executed by
the president or vice president and secretary or an assistant secretary of such
other corporation, or by authority of the board of directors thereof.
Section 9. Inspection of By-Laws. The Corporation shall keep in its
----------------------------------
principal executive office for the transaction of business, the original or a
copy of the By-Laws as amended or otherwise altered to date, certified by the
Secretary, which shall be open to inspection by the stockholders at all
reasonable times during office hours.
Section 10. Indemnification. Every person heretofore, now or hereafter
-----------------------------
serving as a Director, officer or employee of the Corporation, and every person
heretofore, now or hereafter serving at the written request of the Corporation
(or at its oral request subsequently confirmed in writing), as a director,
officer, or employee or another corporation or other business association in
which the Corporation owns shares of capital stock or other proprietary interest
or of which the Corporation is a creditor shall be indemnified and held harmless
by the Corporation from and against any and all loss, cost, liability and
expense that may be imposed upon or incurred by him in connection with or
resulting from any claim, action, suit, or proceeding, civil or criminal, in
which he may become involved as a party or otherwise by reason of his being or
having been a director, officer, or employee of the Corporation or other
business association in which the Corporation owns shares of capital stock or
other proprietary interest or of which the Corporation is a creditor, whether or
not he continues to be such at the time such loss, cost, liability or expense
shall have been imposed or incurred. As used herein the term "loss, cost,
liability and expense" shall include all expenses incurred in the defense of
such claim, action, suit or proceeding and amounts of judgements, fines, or
penalties levied or rendered against any such person; provided, however, that no
such person shall be entitled to indemnity hereunder unless the Board of
Directors of the Corporation determine in good faith that such person was action
in good faith within what he reasonably believed to be the scope of his
employment or authority and for a purpose which he reasonably believed to be in
the best interests of the Corporation or its shareholders. Payments authorized
hereunder include amounts paid and expenses incurred in settling any such claim,
action, suit or proceeding whether actually commenced or threatened. Expenses
incurred with respect to any such claim, action suit or proceeding may be
advanced by the Corporation prior to the final disposition thereof upon receipt
of an undertaking satisfactory in form and amount to the Board of Directors by
or on behalf of the recipient to repay such amount unless it is ultimately
determined that he is entitled to indemnification. The foregoing right of
indemnification shall not be deemed exclusive of any other rights to which any
person may be otherwise entitled by contract or as a matter of law.
ARTICLE VI
----------
AMENDMENTS
----------
Section l. Adoption, Amendment, or Repeal of By-Laws. By-Laws may be
------------------------------------------------------
adopted, amended or repealed by the vote of stockholders entitled to exercise a
majority of the voting power of the Corporation or by a written assent of such
stockholders. Subject to the right of stockholders to adopt, or repeal By-Laws,
any and all of the By-Laws may be adopted, amended or repealed by the Board of
Directors.
<PAGE>
Exhibit No. 4(g)
ICF KAISER INTERNATIONAL, INC.,
as Issuer
and
THE BANK OF NEW YORK,
as Trustee
------------------
INDENTURE
Dated as of December 23, 1996
------------------
$15,000,000
12% Senior Notes due 2003, Series A
and
12% Senior Notes due 2003, Series B
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions............................................
Section 1.02 Other Definitions......................................
Section 1.03 Incorporation by Reference of Trust
Indenture Act........................................
Section 1.04 Rules of Construction..................................
ARTICLE 2 THE NOTES
Section 2.01 Form and Dating........................................
Section 2.02 Execution and Authentication...........................
Section 2.03 Registrar and Paying Agent.............................
Section 2.04 Paying Agent to Hold Money in Trust....................
Section 2.05 Registration of Transfer and Exchange..................
Section 2.06 Replacement Notes......................................
Section 2.07 Outstanding Notes......................................
Section 2.08 Treasury Notes.........................................
Section 2.09 Temporary Notes........................................
Section 2.10 Cancellation...........................................
Section 2.11 Defaulted Interest.....................................
Section 2.12 CUSIP Numbers..........................................
Section 2.13 Book-Entry Provisions for Global Notes.................
ARTICLE 3 ASSET SALE OFFER
Section 3.01 Notices to Trustee.....................................
Section 3.02 Notices to Holders.....................................
Section 3.03 Deposit of Purchase Price..............................
Section 3.04 Asset Sale Offer.......................................
ARTICLE 4 OPTIONAL REDEMPTION
Section 4.01 Redemption Date; Redemption Price......................
Section 4.02 Notices to Trustee and Paying Agent....................
Section 4.03 Selection of Notes to be Redeemed......................
Section 4.04 Notice to Holders......................................
Section 4.05 Effect of Notice of Redemption.........................
Section 4.06 Deposit of Redemption Price............................
Section 4.07 Notes Redeemed in Part.................................
ARTICLE 5 COVENANTS
Section 5.01 Payment of Notes.......................................
Section 5.02 Maintenance of Office or Agency........................
Section 5.03 Change of Control......................................
Section 5.04 Limitations on Additional Indebtedness.................
Section 5.05 Limitations on Subsidiary Debt and
Preferred Stock......................................
Section 5.06 Limitations on Restricted Payments.....................
Section 5.07 Limitations on Restrictions on
Distributions from Subsidiaries......................
<PAGE>
Section 5.08 Limitations on Transactions
With Affiliates......................................
Section 5.09 Limitations on Asset Sales.............................
Section 5.10 Restrictions on Sale of Stock of
Subsidiaries.........................................
Section 5.11 Limitations on Guarantees..............................
Section 5.12 SEC Reports............................................
Section 5.13 Corporate Existence....................................
Section 5.14 Stay, Extension and Usury Laws.........................
Section 5.15 Insurance; Books and Records;
Compliance with Law..................................
Section 5.16 Inspection and Confidentiality.........................
Section 5.17 Compliance Certificate.................................
ARTICLE 6 SUCCESSORS
Section 6.01 Limitations on Mergers and
Consolidations.......................................
Section 6.02 Successor Corporation Substituted......................
ARTICLE 7 DEFAULTS AND REMEDIES
Section 7.01 Events of Default......................................
Section 7.02 Acceleration...........................................
Section 7.03 Other Remedies.........................................
Section 7.04 Waiver of Past Defaults................................
Section 7.05 Control by Majority....................................
Section 7.06 Limitations on Suits...................................
Section 7.07 Rights of Holders to Receive Payment...................
Section 7.08 Collection Suit by Trustee.............................
Section 7.09 Trustee May File Proofs of Claim.......................
Section 7.10 Priorities.............................................
Section 7.11 Undertaking for Costs..................................
Section 7.12 Restoration of Rights and Remedies.....................
<PAGE>
ARTICLE 8 TRUSTEE
Section 8.01 Duties of Trustee......................................
Section 8.02 Rights of Trustee......................................
Section 8.03 Individual Rights of Trustee...........................
Section 8.04 Trustee's Disclaimer...................................
Section 8.05 Notice of Defaults.....................................
Section 8.06 Compensation and Indemnity.............................
Section 8.07 Replacement of Trustee.................................
Section 8.08 Successor Trustee by Merger, etc.......................
Section 8.09 Eligibility; Disqualification..........................
Section 8.10 Reports by Trustee to Holders..........................
ARTICLE 9 DISCHARGE OF INDENTURE
Section 9.01 Termination of Company's Obligations...................
Section 9.02 Application of Trust Money.............................
Section 9.03 Repayment to Company...................................
Section 9.04 Reinstatement..........................................
ARTICLE 10 AMENDMENTS
Section 10.01 Without Consent of Holders............................
Section 10.02 With Consent of Holders...............................
Section 10.03 Compliance with Trust Indenture Act...................
Section 10.04 Revocation and Effect of Consents.....................
Section 10.05 Notation on or Exchange of Notes......................
Section 10.06 Trustee to Sign Amendments, etc.......................
ARTICLE 11 MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls..........................
Section 11.02 Notices...............................................
Section 11.03 Certificate and Opinion as to Conditions
Precedent...........................................
Section 11.04 Statements Required in Certificate or
Opinion.............................................
Section 11.05 Rules by Trustee and Agents...........................
Section 11.06 Legal Holidays........................................
Section 11.07 No Recourse Against Others............................
Section 11.08 Governing Law.........................................
Section 11.09 No Adverse Interpretation of Other
Agreements..........................................
Section 11.10 Successors............................................
Section 11.11 Severability..........................................
Section 11.12 Counterpart Originals.................................
Section 11.13 Trustee as Paying Agent and Registrar.................
Section 11.14 Table of Contents, Headings, etc......................
SIGNATURES................................................................
EXHIBIT A FORM OF SERIES A NOTE
EXHIBIT B FORM OF SERIES B NOTE
EXHIBIT C FORM OF LEGEND FOR GLOBAL NOTE
EXHIBIT D TRANSFER CERTIFICATE
EXHIBIT E TRANSFEREE CERTIFICATE FOR INSTITUTIONAL ACCREDITED INVESTORS
EXHIBIT F FORM OF TRANSFEREE CERTIFICATE FOR REGULATION S TRANSFERS
EXHIBIT G FORM OF GUARANTEE
<PAGE>
EXHIBIT H GUARANTEE OF CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC.
EXHIBIT I GUARANTEE OF ICF KAISER GOVERNMENT PROGRAMS, INC.
EXHIBIT J GUARANTEE OF PCI OPERATING COMPANY, INC.
EXHIBIT K GUARANTEE OF SYSTEMS APPLICATIONS INTERNATIONAL, INC.
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section -----------------
- ---------------
<S> <C>
310(a)(1)...................................................................8.09
(a)(2)...................................................................8.09
(a)(3)...................................................................N.A.
(a)(4)...................................................................N.A.
(a)(5).....................................................................**
(b)........................................................................**
(c)......................................................................N.A.
311(a)........................................................................**
(b)........................................................................**
(c)......................................................................N.A.
312(a)........................................................................**
(b)........................................................................**
(c)........................................................................**
313(a)......................................................................8.10
(b)(1)...................................................................8.10
(b)(2)...................................................................8.10
(c)......................................................................8.10
(d)......................................................................8.10
314(a)(1)...................................................................5.12
(a)(2).....................................................................**
(a)(3).....................................................................**
(a)(4)...................................................................5.17
(b)......................................................................N.A.
(c)(1)..................................................................11.03
(c)(2)..................................................................11.03
(c)(3)...................................................................N.A.
(d)......................................................................N.A.
(e).....................................................................11.04
(f)......................................................................N.A.
315(a)...................................................................8.01(2)
(b)................................................................8.05,11.02
(c)...................................................................8.01(1)
(d)...................................................................8.01(3)
(e)......................................................................7.11
316(a)(last sentence).......................................................2.08
(a)(1)(A)................................................................7.05
(a)(1)(B)................................................................7.04
(a)(2)...................................................................N.A.
(b)......................................................................7.07
(c).....................................................................10.04
317(a)(1)...................................................................7.08
(a)(2)...................................................................7.09
(b)......................................................................2.04
318(a).....................................................................11.01
</TABLE>
N.A. means not applicable.
* This Cross-Reference Table is not part of the Indenture.
** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939.
<PAGE>
INDENTURE dated as of December 23, 1996, between ICF Kaiser
International, Inc., a Delaware corporation as issuer (the "Company"), and The
Bank of New York, a New York banking corporation (the "Trustee").
The Company has duly authorized the creation of an issue of 12% Senior
Notes due 2003, Series A, and 12% Senior Notes due 2003, Series B (together with
the Series A Notes, the "Notes"), to be issued in exchange for the 12% Senior
Notes due 2003, Series A, pursuant to the Registration Rights Agreement and, to
provide therefor, the Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make the Notes, when duly issued and
executed by the Company and authenticated and delivered hereunder, and the
Guarantees of Cygna Consulting Engineers and Project Management, Inc., a
California corporation, ICF Kaiser Government Programs, Inc., a Delaware
corporation, PCI Operating Company, Inc., a Delaware corporation, and Systems
Applications International, Inc., a Delaware corporation, as guarantors of the
principal of, premium, if any, and interest on the Notes (each individually, a
"Guarantor" and collectively, the "Guarantors"), the valid and binding
obligations of the Company and the Guarantors, respectively, and to make this
Indenture a valid and binding agreement of the Company, and the Guarantees valid
and binding obligations of each of the Guarantors, have been done.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Notes:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions
"Acquired Indebtedness" means: (i) with respect to any Person that
becomes a direct or indirect Subsidiary of the Company after the date of this
Indenture, Indebtedness of such Person and its Subsidiaries existing at the time
such Person becomes a Subsidiary of the Company that was not incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary of
the Company; and (ii) with respect to the Company or any of its Subsidiaries,
any Indebtedness assumed by the Company or any of its Subsidiaries in connection
with the acquisition of an asset from another Person that was not incurred by
such other Person in connection with, or in contemplation of, such acquisition.
"Affiliate" of any Person means any Person (i) which directly or
indirectly controls or is controlled by, or is under direct or indirect common
control with, the referent Person, (ii) which beneficially owns or holds 10% or
more of any class of the Voting Stock of the referent Person or (iii) of which
10% or more of the Voting Stock (or, in the case of a Person which is not a
corporation, 10% or more of the equity interest) is beneficially owned or held
by the referent Person. For purposes of this definition, control of a Person
shall mean the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, the term "Affiliate"
shall not include, with respect to the Company or any Wholly Owned Subsidiary of
the Company, (a) any Wholly Owned Subsidiary of the Company or (b) any
Subsidiary of the Company that is not a Wholly Owned Subsidiary or any Joint
Venture, provided that such Subsidiary or Joint Venture is not under the control
of, and does not have any Capital Stock (other than directors' qualifying
shares) or Indebtedness owned or held by, any Affiliate of the Company.
"Agent" means any Registrar or Paying Agent.
"Asset Sale" for any Person means the sale, lease, transfer or other
disposition or series of sales, leases, transfers or other dispositions
(including without limitation by merger or consolidation, and whether by
operation of law or otherwise) of any of that Person's assets (including without
limitation the sale or other disposition of Capital Stock of any Subsidiary of
such Person, whether by such Person or by such Subsidiary), whether owned on the
date of this Indenture or subsequently acquired, excluding, however: (i) any
sale, lease, transfer or other disposition between the Company and any of its
Wholly Owned Restricted Subsidiaries; (ii) any transfer of assets of the Company
or any of its Restricted Subsidiaries that constitutes and is treated as a
Designated Investment; (iii) any transfer of assets of the Company or any of its
Restricted Subsidiaries that constitutes a Change of Control and that is
governed by and effected in accordance with the provisions of Section 5.03 and
Article 6; and (iv) any sale, lease, transfer or other disposition, or
<PAGE>
series of sales, leases, transfers or other dispositions, of assets having a
purchase price or transaction value, as the case may be, of $1,000,000 or less,
provided that no Default or Event of Default exists at the time of such sale.
"Asset Sale Offer" means an Asset Sale Offer as defined in
Section 5.09.
"Attributable Indebtedness," when used with respect to any Sale and
Leaseback Transaction, means, as at the time of determination, the greater of
(i) the fair market value of the property subject to such Sale and Leaseback
Transaction and (ii) the present value (discounted at a rate equivalent to the
Company's then-current weighted average cost of funds for borrowed money as at
the time of determination, compounded on a semi-annual basis) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in any such Sale and Leaseback Transaction.
"Bank Credit Agreement" means the Credit Agreement dated May 6, 1996
among the Company, certain banks and CoreStates Bank, N.A., as agent for the
banks, as such agreement has been and may be amended, restated, supplemented or
otherwise modified from time to time, and includes any successor bank credit
agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" for any Person means the Board of Directors of
such Person or any authorized committee of the Board of Directors of such
Person.
"Board Resolution" for any Person means a duly adopted resolution of
the Board of Directors of such Person.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to
purchase, warrants or options (whether or not currently exercisable),
participations or other equivalents of or interests in (however designated) the
equity (including without limitation common stock, preferred stock and
partnership and joint venture interests) of such Person.
"Capitalized Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Cash Equivalents" means: (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America; (ii) commercial paper rated the highest
grade by Moody's Investors Service, Inc. and Standard & Poor's Corporation and
maturing not more than one year from the date of creation thereof; and
(iii) readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having one of the two
highest rating categories obtainable from either Moody's Investors Service, Inc.
or Standard & Poor's Corporation.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) in one or a series
of transactions, provided that a transaction where the holders of all classes of
Common Equity of the Company immediately prior to such transaction own, directly
or indirectly, more than 50% of the aggregate voting power of all classes of
Common Equity of such Person or group immediately after such transactions shall
not be a Change of Control; (ii) the acquisition by the Company and any of its
Subsidiaries of 50% or more of all classes of Common Equity of the Company in
one transaction or a series of related transactions; (iii) the approval by the
Company of a Plan of Liquidation of the Company; (iv) any transaction or series
of transactions (as a result of a tender offer, merger, consolidation or
otherwise) that results in, or that is in connection with, (a) any Person,
including a "group" (within the meaning of Section 13(d)(3) of the Exchange Act)
that includes such Person, acquiring "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 50% or more of the
aggregate voting power of all classes of Common Equity of the Company or any
<PAGE>
Person that possesses "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% or more of the aggregate voting
power of all classes of Common Equity of the Company, or (b) less than 50%
(measured by the aggregate voting power of all classes) of the Company's Common
Equity being registered under Section 12(b) or 12(g) of the Exchange Act; or
(v) a majority of the Board of Directors of the Company not being comprised of
Continuing Directors.
"Common Equity" of any Person means all Capital Stock of such Person
that is generally entitled to (i) vote in the election of directors of such
Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Company" means (i) ICF Kaiser International, Inc., a Delaware
corporation, and (ii) subject to the provisions of Article 6, in replacement of
or in addition to ICF Kaiser International, Inc., as the case may be, any
successor of ICF Kaiser International, Inc.
"Company Order" means a written order or request signed in the name of
the Company by its Chairman, President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated Amortization Expense" of any Person for any period means
the amortization expense of such Person and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income of
such Person), determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" of any Person for any period means
the depreciation expense of such Person and its Restricted Subsidiaries for such
period (to the extent included in the computation of Consolidated Net Income of
such Person), determined on a consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, with
respect to any determination date, the ratio of (i) EBITDA for such Person's
prior four full fiscal quarters for which financial results have been reported
immediately preceding the determination date to (ii) the aggregate Fixed Charges
of such Person for such four fiscal quarters; provided, however, that if any
calculation of the Company's Consolidated Fixed Charge Coverage Ratio requires
the use of any quarter beginning prior to the date of this Indenture, such
calculation shall be made on a pro forma basis, giving effect to the issuance of
the Notes and the use of the net proceeds therefrom as if the same had occurred
at the beginning of the four-quarter period used to make such calculation; and
provided, further, that if any such calculation requires the use of any quarter
prior to the date that any Asset Sale was consummated, or that any Indebtedness
was incurred, or that any acquisition was effected, by the Company or any of its
Restricted Subsidiaries, such calculation shall be made on a pro forma basis,
giving effect to each such Asset Sale, incurrence of Indebtedness or
acquisition, as the case may be, and the use of any proceeds therefrom, as if
the same had occurred at the beginning of the four-quarter period used to make
such calculation.
"Consolidated Income Tax Expense" means, for any Person for any
period, the provision for taxes based on income and profits of such Person and
its Restricted Subsidiaries to the extent such income or profits were included
in computing Consolidated Net Income of such Person for such period.
"Consolidated Net Income" of any Person for any period means the net
income (or loss) of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise included
therein), without duplication: (i) the net income (or loss) of any Person
(other than a Restricted Subsidiary of the referent Person) in which any Person
other than the referent Person has an ownership interest, except to the extent
that any such income has actually been received by the referent Person or any of
its Wholly Owned Restricted Subsidiaries in the form of cash dividends or
similar cash distributions during such period; (ii) except to the extent
includible in the consolidated net income of the referent Person pursuant to the
foregoing clause (i), the net income (or loss) of any Person that accrued prior
to the date that (a) such Person becomes a Restricted Subsidiary of the referent
Person or is merged into or consolidated with the referent Person or any of
<PAGE>
its Restricted Subsidiaries or (b) the assets of such Person are acquired by the
referent Person or any of its Restricted Subsidiaries; (iii) the net income (or
loss) of any Restricted Subsidiary of the referent Person to the extent that the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary of that income is not permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary during such
period (provided that the amount of loss excluded pursuant to this clause
(iii) shall not exceed that amount of net income excluded pursuant to this
clause (iii)); (iv) any gain (but not loss, except pursuant to clause (vii)
below), together with any related provisions for taxes on any such gain,
realized during such period by the referent Person or any of its Restricted
Subsidiaries upon (a) the acquisition of any securities, or the extinguishment
of any Indebtedness, of the referent Person or any of its Restricted
Subsidiaries or (b) any Asset Sale by the referent Person or any of its
Restricted Subsidiaries; (v) any extraordinary gain (but not extraordinary loss,
except pursuant to clause (vii) below), together with any related provision for
taxes on any such extraordinary gain, realized by the referent Person or any of
its Restricted Subsidiaries during such period; (vi) in the case of a successor
to such Person by consolidation, merger or transfer of its assets, any earnings
of the successor prior to such merger, consolidation or transfer of assets; and
(vii) in the case of the Company, any extraordinary loss directly related to the
repurchase or repayment, substantially concurrently with the sale of the Notes,
of (a) the Company's 13.5% Senior Subordinated Notes due 1999 and warrants
issued in connection with the issuance of such notes, (b) the Bank Credit
Agreement and (c) the Company's Series 2C Senior Preferred Stock and related
Series 2C Warrants.
"Consolidated Net Tangible Assets" of any Person as of any date means
the Consolidated Tangible Assets of such Person and its Restricted Subsidiaries
less the total current liabilities of such Person and its Restricted
Subsidiaries, on a consolidated basis as of such date.
"Consolidated Tangible Assets" of any Person as of any date means the
total assets of such Person and its Restricted Subsidiaries (excluding any
assets that would be classified as "intangible assets" under GAAP) on a
consolidated basis at such date, determined in accordance with GAAP, less all
write-ups subsequent to September 30, 1996 in the book value of any asset owned
by such Person or any of its Restricted Subsidiaries.
"Consolidated Tangible Net Worth" of any Person as of any date means
the stockholders' equity (including any preferred stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and its
Restricted Subsidiaries (excluding any equity adjustment for foreign currency
translation for any period subsequent to September 30, 1996 and any assets that
would be classified as "intangible assets" under GAAP) on a consolidated basis
at such date, as determined in accordance with GAAP, less all write-ups
subsequent to September 30, 1996 in the book value of any asset owned by such
Person or any of its Restricted Subsidiaries.
"Continuing Director" of the Company as of any date means a member of
the Board of Directors of the Company who (i) was a member of the Board of
Directors of the Company on the date of this Indenture or (ii) was nominated for
election or elected to the Board of Directors of the Company with the
affirmative vote of at least a majority of the directors who were Continuing
Directors at the time of such nomination or election.
"Corporate Trust Office of the Trustee" means the address of the
Trustee specified in Section 11.02 or such other address as the Trustee may give
notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is, or after notice
or the passage of time or both would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the form of
one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
<PAGE>
"Designated Investments" means Investments made after the date of this
Indenture in (i) any Subsidiary of the Company that is not a Wholly Owned
Restricted Subsidiary or (ii) any Joint Venture, provided that such Subsidiary
or Joint Venture is engaged in one or more Permitted Businesses.
"Disqualified Stock" means any Capital Stock that, by its terms, by
the terms of any agreement related thereto or by the terms of any security into
which it is convertible, puttable or exchangeable, is, or upon the happening of
any event or the passage of time would be, required to be redeemed or
repurchased by the issuer thereof or any of its Subsidiaries, whether or not at
the option of the holder thereof, or matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, in whole or in part, on or
prior to the final maturity date of the Notes.
"EBITDA" means, with respect to any Person for any period, without
duplication, the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Income Tax Expense, (iii) Consolidated Amortization
Expense (but only to the extent not included in Fixed Charges), (iv)
Consolidated Depreciation Expense, (v) Fixed Charges and (vi) all other non-
cash items reducing the Consolidated Net Income of such Person and its
Restricted Subsidiaries, in each case determined on a consolidated basis in
accordance with GAAP (provided, however, that the amounts set forth in clauses
(ii) through (vi) shall be included only to the extent such amounts reduce
Consolidated Net Income), less the aggregate amount of all non-cash items,
determined on a consolidated basis, to the extent such items increase
Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means all of the Indebtedness of the Company
and its Restricted Subsidiaries that is outstanding on the date of this
Indenture.
"Existing Indenture" means the Indenture for the Existing Notes dated
January 11, 1994 between the Company and The Bank of New York as Trustee, as
such Indenture has been and may be amended, restated, supplemented or otherwise
modified from time to time.
"Existing Notes" means the $125,000,000 principal amount of 12% Senior
Subordinated Notes due 2003 issued pursuant to the Existing Indenture.
"Fixed Charges" means, with respect to any Person for any period, the
aggregate amount of (i) interest, whether expensed or capitalized, paid, accrued
or scheduled to be paid or accrued during such period (except to the extent
accrued in a prior period) in respect of all Indebtedness of such Person and its
Restricted Subsidiaries (including (a) original issue discount on any
Indebtedness and (b) the interest portion of all deferred payment obligations,
calculated in accordance with the effective interest method, in each case to the
extent attributable to such period) and (ii) dividend requirements on preferred
stock of such Person and its Subsidiaries (whether in cash or otherwise), but
not including dividends payable solely in shares of Qualified Capital Stock,
paid, accrued or scheduled to be paid or accrued during such period (except to
the extent accrued in a prior period), and excluding items eliminated in
consolidation. For purposes of this definition, (1) interest on a Capitalized
Lease Obligation shall be deemed to accrue at the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP, (2) interest on
Indebtedness that is determined on a fluctuating basis shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest of such
Indebtedness in effect on the last day of the period with respect to which Fixed
Charges are being calculated, (3) interest on Indebtedness that may optionally
be determined at an interest rate based upon a factor of a prime or similar
rate, a eurocurrency interbank offered rate or other rates, shall be deemed to
have been based upon the rate actually chosen, or, if none, then based upon such
optional rate chosen as such Person may designate and (4) Fixed Charges shall be
increased or reduced by the net cost (including without limitation amortization
of discount) or benefit associated with Hedging Obligations attributable to such
period. For purposes of clause (ii) above, dividend requirements (other than
dividends payable solely in shares of Qualified Capital Stock) shall be
increased to an amount representing the pretax earnings that would be required
to cover such dividend requirements; accordingly, the increased amount shall be
equal to a fraction, the numerator of which is such dividend requirements and
the denominator of which is 1 minus the applicable actual combined Federal,
state, local and foreign income tax rate of such Person and its Subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Fixed Charges.
<PAGE>
"Foreign Asset Sale" means any Asset Sale in respect of the Capital
Stock or assets of a Foreign Subsidiary.
"Foreign Subsidiary" means any Subsidiary of the Company that is
organized under the laws of any jurisdiction other than the United States of
America, any state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on January 11, 1994.
"Global Note" means a security evidencing all or a portion of the
Notes issued to the Depository or its nominee in accordance with Section 2.01
and bearing the legend set forth in Exhibit C.
"Guarantee" shall mean any guarantee substantially in the form of
Exhibit G to this Indenture executed and delivered by any Restricted Subsidiary
pursuant to the provisions of Section 5.11 of the Indenture.
"Guarantor" shall mean (i) Cygna Consulting Engineers and Project
Management, Inc., ICF Kaiser Government Programs, Inc., PCI Operating Company,
Inc., Systems Applications International, Inc., and (ii) each of the Company's
Subsidiaries that in the future executes a Guarantee.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign exchange
rates.
"Holder" means a Person holding a Note.
"Indebtedness" of any Person at any date means, without duplication:
(i) all liabilities, contingent or otherwise, of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto), other than
standby letters of credit issued for the benefit of, or surety or performance
bonds issued by, such Person in the ordinary course of business to the extent
such letters of credit are not drawn upon; (iv) all obligations of such Person
with respect to Hedging Obligations; (v) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred by such Person in the ordinary course of
business in connection with obtaining goods, materials or services, which
payable is not overdue according to industry practice or the original terms of
sale unless such payable is being-contested in good faith; (vi) the maximum
fixed repurchase price of all Disqualified Stock of such Person; (vii) all
Capitalized Lease Obligations of such Person; (viii) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person, other than a pledge by a Single Purpose Subsidiary of
the Capital Stock of an Unrestricted Subsidiary or Joint Venture of such Single
Purpose Subsidiary to secure Indebtedness of such Unrestricted Subsidiary or
Joint Venture incurred to finance a project constituting one or more Permitted
Businesses; (ix) all Indebtedness of others guaranteed by, or otherwise the
Liability of, such Person to the extent of such guarantee or Liability; and
(x) all Attributable Indebtedness. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above, the maximum liability of such Person for any
such contingent obligations at such date and, in the case of clause (viii), the
fair market value of any asset subject to a Lien securing the Indebtedness of
others on the date that the Lien attaches. For purposes of the first sentence
hereof, the "maximum fixed repurchase price" of any Disqualified Stock that does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Stock as if such Disqualified Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the fair market
value of such Disqualified Stock (or any equity security for which it may be
exchanged or converted), such fair market value shall be determined in good
faith by the Board of Directors of such Person, which determination shall be
evidenced by a Board Resolution.
<PAGE>
"Indenture" means this Indenture as amended, supplemented or modified
from time to time.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Company's Board of Directors, qualified to perform
the task for which it has been engaged and disinterested and independent with
respect to the Company and its Affiliates.
"Initial Purchaser" means BT Securities Corporatio n.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" has the meaning assigned to such term in the
Notes.
"Investments" of any Person means (i) all investments by such Person
in any other Person in the form of loans, advances or capital contributions or
similar credit extensions constituting Indebtedness of such Person, and any
guarantee of Indebtedness of any other Person, (ii) all purchases (or other
acquisitions for consideration) by such Person of Indebtedness, Capital Stock or
other securities of any other Person and (iii) all other items that would be
classified as investments (including without limitation purchases of assets
outside the ordinary course of business) on a balance sheet of such Person
prepared in accordance with GAAP; provided, however, that advances to non-
executive employees and extensions of trade credit and advances to customers and
suppliers and other contractual and trade relationships, requiring repayment
within reasonable commercial periods, to the extent made in the ordinary course
of business consistent with past practice and in accordance with normal industry
practice, shall not be deemed to constitute Investments.
"Joint Venture" means (i) a corporation of which less than a majority
of the aggregate voting power of all classes of the Common Equity is owned by
the Company or its Restricted Subsidiaries and (ii) any entity other than a
corporation in which the Company and its Restricted Subsidiaries own less than a
majority of the Common Equity of such entity.
"Junior Subordinated Indebtedness" of the Company at any date means
Indebtedness of the Company which by its terms, or by the terms of any agreement
or instrument pursuant to which such Indebtedness is issued, (i) is expressly
subordinated in right of payment to the Notes and (ii) provides that no payment
of principal of such Indebtedness by way of sinking fund, mandatory redemption,
defeasance or otherwise is required to be made by the Company (including without
limitation at the option of the holder thereof) at any time prior to the
maturity of the Notes.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including without limitation any conditional sale or other title
retention agreement, and any lease in the nature thereof, any option or other
agreement to sell, and any filing of, or agreement to give, any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Net Proceeds" with respect to any Asset Sale by any Person means the
aggregate net proceeds received by such Person from such Asset Sale (including
without limitation the amount of cash applied to repay Indebtedness secured by
any asset involved in such Asset Sale or otherwise received as consideration for
the assumption or incurrence of liabilities incurred in connection with or in
anticipation of such Asset Sale) after (i) provision for all income or other
taxes measured by or resulting from such Asset Sale or the transfer of the
proceeds of such Asset Sale to such Person and (ii) payment of all brokerage
commissions and the underwriting and other fees and expenses related to such
Asset Sale, whether such proceeds are in cash or property (valued at the fair
market value thereof at the time of receipt as determined in good faith by the
Board of Directors of such Person, which determination shall be evidenced by a
Board Resolution).
<PAGE>
"Net Reductions in Investments" means the amount of cash and Cash
Equivalents, less all fees and expenses incurred or accrued in connection with
the realization or collection of such cash and Cash Equivalents, and after
giving effect to all taxes payable with respect thereto, received with respect
to any Designated Investment, whether from the payment of interest on
Indebtedness, dividends, repayments of loans or advances or other transfers of
assets from the Person in which such Designated Investment was made, but only to
the extent that such cash or Cash Equivalents have been paid to the Company or
one or more Wholly Owned Restricted Subsidiaries of the Company in compliance
with all applicable laws, rules and regulations and all relevant documents,
agreements and instruments.
"Non-Recourse Indebtedness" of a Single Purpose Subsidiary means
Indebtedness for which (i) the sole legal recourse for collection of principal,
premium, if any, and interest on such Indebtedness is against (a) the specific
property identified in the instruments evidencing or securing such Indebtedness
and such property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days of the acquisition of such property or
(b) the Capital Stock of such Single Purpose Subsidiary, provided that such
Single Purpose Subsidiary has no assets other than the specific property
acquired with the proceeds of such Indebtedness plus a reasonable amount of
working capital, (ii) no assets of such Single Purpose Subsidiary, other than
those assets identified in clause (i)(a) of this definition, may be realized
upon in collection of principal, premium, if any, or interest on such
Indebtedness and (iii) neither the Company nor any Restricted Subsidiary of the
Company, other than the referent Single Purpose Subsidiary, is directly or
indirectly liable to make any payment thereon, has made any guarantee of payment
or performance of such Indebtedness or has pledged or granted any lien or
encumbrances on any assets as collateral or security with respect thereto, other
than the Capital Stock of the referent Single Purpose Subsidiary.
"Notes" means the Notes issued under this Indenture.
"Officer" means the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller,
Secretary or any Vice President of the Company or a Guarantor, or any other
authorized representative designated by the Board of Directors of the Company or
a Guarantor.
"Officers' Certificate" means a certificate signed by two Officers,
one of whom must be the Company's Chief Executive Officer, Chief Financial
Officer or Controller.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Paying Agent" means the paying agent as defined in Section 2.03.
"Payment Restriction", with respect to a Subsidiary of any Person,
means any encumbrance, restriction or limitation, whether by operation of the
terms of its charter or by reason of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation, on the ability of
(i) such Subsidiary to (a) pay dividends or make other distributions on its
Capital Stock or make payments on any obligation, liability or Indebtedness owed
to such Person or any other Subsidiary of such Person, (b) make loans or
advances to such Person or any other Subsidiary of such Person or (c) transfer
any of its properties or assets to such Person or any other Subsidiary of such
Person or (ii) such Person or any other Subsidiary of such Person to receive or
retain any such (a) dividends, distributions or payments, (b) loans or advances
or (c) transfer of properties or assets.
"Permitted Businesses" means the businesses of providing consulting,
engineering or construction services to public and private sector clients in the
environment, energy, infrastructure and industry markets.
"Permitted Investments" means: (i) direct obligations of the United
States of America or any agency thereof, or obligations guaranteed by the United
States of America or any agency thereof, in each case maturing within 180 days
of the date of acquisition thereof; (ii) certificates of deposit or Eurodollar
deposits, due within 180 days of the date of acquisition thereof, with a
commercial bank which is organized under the laws of the United States of
America or any state thereof having capital funds of at least $500,000,000 or
more; and (iii) commercial paper given the highest rating by two established
national credit rating agencies and maturing not more than 180 days from the
date of acquisition thereof.
<PAGE>
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Physical Notes" shall have the meaning given such term in
Section 2.01.
"Plan of Liquidation," with respect to any Person, means a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise): (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety; and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such Person to Holders of
Capital Stock of such Person.
"Private Placement Legend" means the legend initially set forth on the
Series A Notes in the form set forth on Exhibit A.
"Qualified Capital Stock" means Capital Stock that is not Disqualified
Stock.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as such term is defined in Rule 144A under the Securities
Act.
"Refinancing Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary of the Company issued in exchange for, or the proceeds
from the issuance and sale or disbursement of which are used substantially
concurrently to repay, redeem, refund, refinance, discharge or otherwise retire
for value, in whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to or a deferral or renewal of
(collectively, an "amendment"), any Indebtedness of the Company or any of its
Restricted Subsidiaries existing immediately after the original issuance of the
Notes or incurred pursuant to the provisions of Section 5.04 in a principal
amount not in excess of the principal amount of the Indebtedness so refinanced;
provided that: (i) the Refinancing Indebtedness is the obligation of the same
Person, and is subordinated to the Notes, if at all, to the same extent, as the
Indebtedness being repaid; (ii) the Refinancing Indebtedness is scheduled to
mature either (a) no earlier than the Indebtedness being repaid or (b) after the
maturity date of the Notes; and (iii) the portion, if any, of the Refinancing
Indebtedness that is scheduled to mature on or prior to the maturity date of the
Notes has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the Weighted Average
Life to Maturity of the portion of the Indebtedness being repaid that is
scheduled to mature on or prior to the maturity date of the Notes.
"Registrar" means the Registrar as defined in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated December 23, 1996 between the Company and the Initial Purchaser.
"Regulation S " means Regulation S under the Securities Act.
"Related Business Investment" means any Investment directly by the
Company or one or more of its Wholly Owned Restricted Subsidiaries in any
business that is closely related to or complements the business of the Company
and its Subsidiaries as such business exists on the date thereof.
"Representative" means the indenture trustee or other trustee, agent
or representative for an issue of Senior Indebtedness.
"Restricted Debt Payment" means any purchase, redemption, defeasance
(including without limitation in substance or legal defeasance) or other
acquisition or retirement for value, directly or indirectly, by the Company or a
Subsidiary of the Company, prior to the scheduled maturity or prior to any
scheduled repayment of principal or sinking
<PAGE>
fund payment, as the case may be, in respect of Indebtedness of the Company that
is subordinate in right of payment to the Notes other than a Restricted Debt
Payment made with the proceeds of a substantially concurrent sale (other than to
a Subsidiary of the Company or an employee stock ownership plan) of the
Company's Qualified Capital Stock, provided that all Indebtedness so purchased,
redeemed, defeased or otherwise acquired or retired for value promptly is
surrendered for cancellation to the trustee for such Indebtedness.
"Restricted Investment," with respect to any Person, means any
Investment by such Person in any of its Affiliates or in any Person other than a
Wholly Owned Restricted Subsidiary other than (i) a Permitted Investment or
(ii) an Investment made with the proceeds of a substantially concurrent sale
(other than to a Subsidiary of the Company or an employee stock ownership plan)
of the Company's Qualified Capital Stock.
"Restricted Note" has the meaning set forth for "Restricted Security"
in Rule 144(a)(3) under the Securities Act; provided that the Trustee shall be
entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Note.
"Restricted Payment" means with respect to any Person: (i) the
declaration of any dividend (other than a dividend declared by a Wholly Owned
Restricted Subsidiary to holders of its Common Equity) or the making of any
other payment or distribution of cash, securities or other property or assets in
respect of such Person's Capital Stock, except that a dividend payable solely in
Qualified Capital Stock of such Person shall not constitute a Restricted Payment
(for purposes of this clause (i), the declaration of any such dividend, or the
making of any other such distribution, by any Restricted Subsidiary shall only
constitute a Restricted Payment to the extent of the amounts paid or payable to
Persons other than the Company or a Wholly Owned Restricted Subsidiary);
(ii) any payment on account of the purchase, redemption, retirement or other
acquisition for value of such Person's Capital Stock or any other payment or
distribution made in respect thereof, either directly or indirectly (other than
a payment solely in Qualified Capital Stock); (iii) any Restricted Investment;
or (iv) any Restricted Debt Payment.
"Restricted Subsidiary" means each of the Subsidiaries of the Company
which, as of the determination date, is not an Unrestricted Subsidiary of the
Company.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means with respect to any Person an
arrangement with any bank, insurance company or other lender or investor or to
which such lender or investor is a party, providing for the leasing by such
Person or any of its Subsidiaries of any property or asset of such Person or any
of its Subsidiaries which has been or is being sold or transferred by such
Person or such Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the security
of such property or asset. Notwithstanding the foregoing, no transaction
exclusively between the Company and any Wholly Owned Restricted Subsidiary shall
be deemed to constitute a Sale and Leaseback Transaction.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means all Indebtedness of the Company other than
Indebtedness that is specifically designated, by the terms of the instrument
creating or evidencing the same, as not being senior in right of payment to the
Notes.
"Series A Notes" means the 12% Senior Notes due 2003, Series A, of the
Company issued pursuant to this Indenture.
"Series B Notes" means the 12% Senior Notes due 2003, Series B, of the
Company to be issued in exchange for the Series A Notes pursuant to the
Registration Rights Agreement.
<PAGE>
"Single Purpose Subsidiary" of any Person means a Subsidiary of such
Person which has no Subsidiaries other than Unrestricted Subsidiaries and the
activities of which are limited to (i) ownership of all or a portion of the
interests in a single project constituting one or more Permitted Businesses,
either directly or through the ownership of the Capital Stock of another Person
and (ii) the development, engineering, design, project management, construction
or operation of such project.
"Subsidiary" of any Person means (i) any corporation of which at least
a majority of the aggregate voting power of all classes of the Common Equity is
owned by such Person directly or through one or more other Subsidiaries of such
Person and (ii) any entity other than a corporation in which such Person,
directly or indirectly, owns at least a majority of the Common Equity of such
entity.
"Supplemental Indenture" shall mean any supplemental indenture, in
form satisfactory to the Trustee, executed and delivered pursuant to (a) Article
10 of this Indenture or (b) Sections 5.11 or 6.01(a)(A) of this Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect
on the date hereof, except as provided in Section 10.03.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Unrestricted Subsidiary" means American Venture Holdings, Inc., a
Delaware corporation, American Venture Investments Incorporated, a Delaware
corporation, Excell Development Construction, Inc., a Delaware corporation, ICF
Kaiser Holdings Unlimited, Inc., a Delaware corporation, ICF Leasing
Corporation, Inc., a Delaware corporation, International Systems, Inc., a
Colorado corporation, Cygna Consulting Engineers and Project Management, Inc., a
California corporation, ICF Kaiser Engineers Eastern Europe, Inc., a Delaware
corporation, and ICF Kaiser Netherlands, B.V., a Netherlands corporation, and
each of the other Subsidiaries of the Company so designated by a resolution
adopted by the Board of Directors of the Company and whose creditors have no
direct or indirect recourse (including without limitation recourse with respect
to the payment of principal of or interest on Indebtedness of such Subsidiary)
to the Company or a Restricted Subsidiary other than a Lien on the Capital Stock
of such Unrestricted Subsidiary; provided, however, that (a) no Subsidiary may
be an Unrestricted Subsidiary if it owns any Capital Stock of a Restricted
Subsidiary and (b) the Board of Directors of the Company will be prohibited
after the date of this Indenture from designating as an Unrestricted Subsidiary
any Subsidiary existing on the date of this Indenture. The Board of Directors of
the Company may designate an Unrestricted Subsidiary to be a Restricted
Subsidiary, provided that (i) any such designation shall be deemed to be an
incurrence by the Company and its Restricted Subsidiaries of the Indebtedness
(if any) of such designated Subsidiary for purposes of the provisions of
Section 5.04 as of the date of such designation and (ii) immediately after
giving effect to such designation and the incurrence of any such additional
Indebtedness, the Company and its Restricted Subsidiaries could incur $1.00 of
additional Senior Indebtedness pursuant to the provisions of Section 5.04. Any
such designation or redesignation by the Board of Directors shall be evidenced
to the Trustee by the filing with the Trustee of a certified copy of the Board
Resolution of the Company giving effect to such designation or redesignation and
an Officers' Certificate certifying that such designation or redesignation
complied with the foregoing conditions and setting forth the underlying
calculations of such Officers' Certificate, and upon which certificate the
Trustee shall conclusively rely without any investigation whatsoever.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged.
"Voting Stock", with respect to any Person, means securities of any
class of Capital Stock of such Person entitling the holders thereof (whether at
all times or only so long as no senior class of stock has voting power by reason
of any contingency) to vote in the election of members of the board of directors
of such Person.
<PAGE>
"Weighted Average Life to Maturity", when applied to any Indebtedness
at any date, means the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of the Company means a Restricted
Subsidiary of the Company, of which 100% of the Common Equity (except for
directors' qualifying shares or certain minority interests owned by other
Persons solely due to local law requirements that there be more than one
stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by the Company or through one or more Wholly Owned
Restricted Subsidiaries of the Company.
"Wholly Owned Subsidiary" of the Company means a Subsidiary of the
Company, of which 100% of the Common Equity (except for directors' qualifying
shares or certain minority interests owned by other Persons solely due to local
law requirements that there be more than one stockholder, but which interest is
not in excess of what is required for such purpose) is owned directly by the
Company or one or more Wholly Owned Subsidiaries of the Company.
Section 1.02 Other Definitions
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction"...........................................5.08(a)
"Asset Sale Offer Date"...........................................5.09(b)
"Asset Sale Offer Period".........................................3.04(a)
"Asset Sale Payment Date".........................................3.04(a)
"Change of Control Offer".........................................5.03(a)
"Change of Control Payment
Date"............................................................5.03(a)
"Event of Default"...................................................7.01
"incur"...........................................................5.04(a)
"Legal Holiday".....................................................11.06
"Paying Agent".......................................................2.03
"Registrar"..........................................................2.03
"Successor"..........................................................6.01
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
All terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04 Rules of Construction
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
<PAGE>
ARTICLE 2
THE NOTES
Section 2.01 Form and Dating
The Series A Notes and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A annexed hereto, which is
hereby incorporated in and expressly made a part of this Indenture. The Series
B Notes and the Trustee's certificate of authentication thereof shall be
substantially in the form of Exhibit B annexed hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company and the Trustee shall approve any notation, legend or
endorsement on the Notes. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
Notes offered and sold in reliance on Rule 144A and to Institutional
Accredited Investors shall be issued initially in the form of one or more
permanent Global Notes in registered form, substantially in the form set forth
in Exhibit A, deposited with the Trustee, as custodian for the Depository, and
shall bear the legend set forth on Exhibit C. The aggregate principal amount of
any Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as custodian for the Depository, as
hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Notes in registered
form, substantially in the form set forth in Exhibit A (the "Offshore Physical
Notes"). Notes offered and sold in reliance on any other exemption from
registration under the Securities Act other than as described in the preceding
paragraph shall be issued, and Notes offered and sold in reliance on Rule 144A
may be issued, in the form of certificated Notes in registered form in
substantially the form set forth in Exhibit A (the "U.S. Physical Notes"). The
Offshore Physical Notes and the U.S. Physical Notes are sometimes collectively
herein referred to as the "Physical Notes."
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and to the extent applicable
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Section 2.02 Execution and Authentication
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time the Note is authenticated, the Note nevertheless shall be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall authenticate (a) Series A Notes for original issue
in the aggregate principal amount not to exceed $15,000,000 and (b) Series B
Notes from time to time for issue only in exchange for a like principal amount
of Series A Notes, in each case upon the receipt of a Company Order. The
aggregate principal amount of Notes outstanding at any time may not exceed
$15,000,000, except as provided in Section 2.06.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
Section 2.03 Registrar and Paying Agent
<PAGE>
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
Each Note shall be dated the date of its authentication.
Section 2.04 Paying Agent to Hold Money in Trust
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
Section 2.05 Registration of Transfer and Exchange
(a) Transfer and Exchange of Physical Notes. When Physical Notes
---------------------------------------
are presented to the Registrar with a request:
(i) to register the transfer of the Physical Notes; or
(ii) to exchange such Physical Notes for an equal number of Physical Notes
of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.05 for such
transactions are met; provided, however, that the Physical Notes presented or
surrendered for registration of transfer or exchange:
(A) shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(B) in the case of Physical Notes the offer and sale of which have not
been registered under the Securities Act, such Physical Notes shall be
accompanied, in the sole discretion of the Company, by the following additional
information and documents, as applicable:
(I) if such Physical Note is being delivered to the Registrar by a
Holder for registration in the name of such Holder, without transfer, a
certification from such Holder to that effect (substantially in the form of
Exhibit D hereto); or
(II) if such Physical Note is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or
(III) if such Physical Note is being transferred to an Institutional
Accredited Investor, delivery of a certification to that effect (substantially
in the form of Exhibit D hereto) and a Transferee Certificate for Institutional
Accredited Investors substantially in the form of Exhibit E hereto; or
<PAGE>
(IV) if such Physical Note is being transferred in reliance on
Regulation S, delivery of a certification to that effect (substantially in the
form of Exhibit D hereto), a Transferee Certificate for Regulation S Transfers
substantially in the form of Exhibit F hereto and an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(V) if such Physical Note is being transferred in reliance on Rule 144
under the Securities Act, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(VI) if such Physical Note is being transferred in reliance on another
exemption from the registration requirements of the Securities Act, a
certification to that effect (substantially in the form of Exhibit D hereto) and
an Opinion of Counsel reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act.
(b) Restrictions on Exchange of a Physical Note for a Beneficial
------------------------------------------------------------
Interest in a Global Note. A Physical Note may not be exchanged for a beneficial
- -------------------------
interest in a Global Note except upon satisfaction of the requirements set forth
below. Upon receipt by the Registrar of a Physical Note, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Registrar, together with:
(i) certification, substantially in the form of Exhibit D hereto,
that such Physical Note is being transferred (A) to a Qualified Institutional
Buyer, (B) to an Accredited Investor or (C) in an offshore transaction in
reliance on Regulation S; and
(ii) a Company Order directing the Registrar to make, or to direct
the Depository to make, an endorsement on the applicable Global Note to reflect
an increase in the aggregate amount of the Notes represented by the Global Note,
then the Registrar shall cancel such Physical Note and cause, or direct the
Depository to cause, in accordance with the standing instructions and procedures
existing between the Depository and the Registrar, the principal amount of Notes
represented by the applicable Global Note to be increased accordingly. If no
Global Note is then outstanding, the Company shall issue and the Trustee shall,
upon a Company Order in accordance with Section 2.02, authenticate such a Global
Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
-------------------------------------
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor.
(d) Transfer of a Beneficial Interest in a Global Note for a
--------------------------------------------------------
Physical Note.
- -------------
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Physical Note. Upon receipt
by the Registrar of a Company Order, or such other form of instructions as is
customary for the Depository, from the Depository or its nominee on behalf of
any Person having a beneficial interest in a Global Note and upon receipt by the
Trustee of a written order or such other form of instructions as is customary
for the Depository or the Person designated by the Depository as having such a
beneficial interest containing registration instructions and, in the case of any
such transfer or exchange of a beneficial interest in Notes the offer and sale
of which have not been registered under the Securities Act, the following
additional information and documents:
(A) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a certification from
such Person to that effect (substantially in the form of Exhibit D hereto); or
(B) if such beneficial interest is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or
<PAGE>
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and a Certificate for
Institutional Accredited Investors substantially in the form of Exhibit E
hereto; or
(D) if such beneficial interest is being transferred in reliance on
Regulation S, delivery of a certification to that effect (substantially in the
form of Exhibit D hereto) and a Transferee Certificate for Regulation S
Transfers substantially in the form of Exhibit F hereto and an Opinion of
Counsel reasonably satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(F) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the Securities Act, a
certification to that effect (substantially in the form of Exhibit D hereto) and
an Opinion of Counsel reasonably satisfactory to the Company to the effect that
such transfer is in compliance with the Securities Act,
then the Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar,
the aggregate principal amount of the applicable Global Note to be reduced and,
following such reduction, the Company will execute and, upon receipt of an
authentication order in the form of an Officers' Certificate in accordance with
Section 2.02, the Trustee will authenticate and deliver to the transferee a
Physical Note.
(ii) Notes issued in exchange for a beneficial interest in a Global
Note pursuant to this Section 2.05(d) shall be registered in such names and in
such authorized denominations as the Depository, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Registrar
in writing. The Registrar shall deliver such Physical Notes to the Persons in
whose names such Physical Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless, and the Trustee is hereby authorized to deliver Notes without the
Private Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act or
(ii) such Note has been sold pursuant to an effective registration statement
under the Securities Act.
(g) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.13 or this Section 2.05.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
No service charge shall be made to a Holder for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
<PAGE>
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Section 10.05 or the Registration Rights Agreement).
Without the prior consent of the Company, the Registrar is not required
(a) to register the transfer or exchange of any Note selected for redemption,
(b) to register the transfer or exchange of any Note for a period of 15 days
before a selection of Notes to be redeemed or (c) to register the transfer or
exchange of a Note between a record date and the next succeeding interest
payment date.
Section 2.06 Replacement Notes
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of a
Company Order, shall authenticate a replacement Note if the Trustee's
requirements are met. The Trustee or the Company may require that the Holder
supply an indemnity bond that is sufficient in the judgment of the Trustee and
the Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss which any of them may suffer if a Note is replaced. The
Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
Section 2.07 Outstanding Notes
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.07 as not outstanding.
If a Note is replaced pursuant to Section 2.06, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
5.01, it ceases to be outstanding and interest on it ceases to accrue.
Except as set forth in Section 2.08, a Note does not cease to be
outstanding because the Company or an Affiliate holds the Note.
Section 2.08 Treasury Notes
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or by any Affiliate of the Company shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which the Trustee actually knows are so owned shall be so disregarded.
Section 2.09 Temporary Notes
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes.
Section 2.10 Cancellation
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation. Unless the Company shall direct
by a written order signed by two Officers that canceled Notes be returned to it,
certification of their destruction shall be delivered to the Company. The
Company may not issue new Notes to replace
<PAGE>
Notes that it has paid or that have been delivered to the Trustee for
cancellation, provided, however, that the Trustee shall not be required to
destroy Notes.
Section 2.11 Defaulted Interest
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful, any
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 5.01. The Company, with the consent of the Trustee, shall fix
each such special record date and payment date. At least 15 days before the
record date, the Company (or the Trustee, in the name of and at the expense of
the Company) shall mail to Holders a notice that states the special record date,
the related payment date and the amount of such interest to be paid.
Section 2.12 CUSIP Numbers
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers.
Section 2.13 Book-Entry Provisions for Global Notes
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Participants") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global Note
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and
Participants, the operation of customary practices governing the exercise of the
rights in a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.05. In addition, Physical Notes shall
be transferred to all beneficial owners in exchange for their beneficial
interests in Global Notes if (i) the Depository notifies the Company that it is
unwilling or unable to continue as Depository for any Global Note and a
successor Depository is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue Physical Notes.
(c) In connection with the transfer of Global Notes as an entirety to
beneficial owners pursuant to paragraph (b) of this Section 2.13, the Global
Notes shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall upon receipt of Company Order
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Notes, an equal aggregate
principal amount of Physical Notes of authorized denominations.
(d) Any Physical Notes constituting a Restricted Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) of this
Section 2.13 shall, except as otherwise provided by Section 2.05, bear the
Private Placement Legend.
<PAGE>
(e) The Holder of any Global Note may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Notes.
ARTICLE 3
ASSET SALE OFFER
Section 3.01 Notices to Trustee
If the Company offers to purchase Notes pursuant to the provisions of
Section 3.04, it shall furnish to the Trustee, within five days after an Asset
Sale Offer Date, an Officers' Certificate setting forth the Asset Sale Payment
Date, the principal amount of Notes the Company is offering to purchase and the
purchase price of such Notes, and further setting forth a statement to the
effect that (a) the Company has consummated an Asset Sale and (b) the conditions
set forth in Section 5.09(a) have been satisfied.
Section 3.02 Notices to Holders
(a) As provided in Section 3.04, within 15 days after an Asset Sale
Offer Date, the Company shall mail a notice by first-class mail to each Holder.
(b) The notice shall state:
(1) that an Asset Sale Offer is being made pursuant to Section 3.04
and the length of time the Asset Sale Offer will remain open;
(2) the purchase price and the Asset Sale Payment Date;
(3) the principal amount of Notes the Company is offering to
purchase;
(4) that any Note not tendered or accepted for payment will continue
to accrue interest;
(5) that any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest on the Asset Sale Payment Date;
(6) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse side of the Note completed,
to the Company, a depository if appointed by the Company or a Paying Agent at
the address specified in the notice prior to termination of the Asset Sale
Offer;
(7) that Holders will be entitled to withdraw their election if the
Company, depository or Paying Agent, as the case may be, receives, not later
than the expiration of the Asset Sale Offer Period, or such longer period as may
be required by law, a telegram, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Note the Holder delivered
for purchase and a statement that such Holder is withdrawing his election to
have the Note purchased;
(8) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the aggregate principal amount of Notes offered to be purchased,
the Company shall select the Notes to be purchased on a pro rata basis or by lot
(with such adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000 or integral multiples thereof shall be
purchased);
(9) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; and
(10) the instructions that Holders must follow to tender their Notes.
(c) At the Company's written request, the Trustee shall give any
notice required in this Section 3.02 in the Company's name and at its expense;
provided, however, that the Company shall deliver to the Trustee on or prior to
the fifth day following an Asset Sale Offer Date an Officers' Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in this Section 3.02.
<PAGE>
Section 3.03 Deposit of Purchase Price
One Business Day prior to the Asset Sale Payment Date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the purchase price of, and accrued interest on, all Notes to be purchased on
that date. Upon completion of any Asset Sale Offer, the Trustee shall return to
the Company any money not required for that purpose.
If the Company complies with the preceding paragraph, interest on the
Notes or portions thereof purchased pursuant to any Asset Sale Offer will cease
to accrue on the Asset Sale Payment Date. If any Note to be purchased shall not
be so paid on the Asset Sale Payment Date, because of the failure of the Company
to comply with the preceding paragraph, then interest will be paid on the unpaid
principal from the Asset Sale Payment Date until such principal is paid and on
any interest not paid on such unpaid principal, in each case, at the rate
provided in the Notes and in Section 5.01.
Section 3.04 Asset Sale Offer
(a) Within 15 days after an Asset Sale Offer Date, the Company shall
mail (with notice to the Trustee) or shall cause the Trustee to mail (in the
Company's name and at its expense) notice of any Asset Sale Offer to each Holder
of Notes as set forth in Section 3.02. The Asset Sale Offer shall be deemed to
have commenced on the date of such mailing and shall terminate 20 Business Days
after its commencement unless a longer offering period is required by law (the
"Asset Sale Offer Period"). Promptly after the termination of the Asset Sale
Offer Period (the "Asset Sale Payment Date"), the Company shall purchase and
mail or deliver payment for, on a pro rata basis or as selected by lot, from
Holders tendering their Notes pursuant to an Asset Sale Offer, the amount of
Notes required to be purchased pursuant to Section 5.09. If an Asset Sale
Payment Date is on or after an interest payment record date and on or before the
related Interest Payment Date, accrued interest will be paid to the Person in
whose name a Note is registered at the close of business on such record date,
and no additional interest will be payable to Holders who tender Notes pursuant
to any such Asset Sale Offer.
(b) On or before any Asset Sale Payment Date, the Company, to the
extent lawful, shall (i) accept for payment (on a pro rata basis or as selected
by lot) Notes or portions thereof tendered pursuant to the Asset Sale Offer,
(ii) if the Company appoints a depositary or Paying Agent, deposit with such
depositary or Paying Agent money sufficient to pay the purchase price of all
Notes or portions thereof so accepted, (iii) deliver or cause the depositary or
Paying Agent to deliver to the Trustee Notes so accepted and (iv) deliver an
Officers' Certificate identifying the Notes or portions thereof accepted for
payment by the Company in accordance with the terms of this Section 3.04. The
depositary, the Paying Agent or the Company, as the case may be, promptly shall
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and accepted by the Company for purchase
and the Trustee promptly shall authenticate and mail or deliver to any such
Holder a new Note equal in principal amount to any unpurchased portion of the
Note surrendered by such Holder. Any Notes not so accepted promptly shall be
mailed or delivered by the Company to the Holder thereof. The Company will
publicly announce the results of any Asset Sale Offer on the Asset Sale Payment
Date.
(d) Any offer to purchase Notes pursuant to this Section 3.04 shall be
made pursuant to the provisions of Sections 3.01, 3.02 and 3.03.
(e) Any such offer shall be conducted in compliance with applicable
tender offer rules, including Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, and any other applicable securities laws or regulations.
ARTICLE 4
OPTIONAL REDEMPTION
Section 4.01 Redemption Date; Redemption Price
<PAGE>
The Notes may not be redeemed prior to December 31, 1998, but will be
redeemable at the option of the Company, in whole or in part, at any time on or
after December 31, 1998, at the following redemption prices (expressed as
percentages of principal amount), together with accrued and unpaid interest
thereon to the redemption date, if redeemed during the 12-month period beginning
December 31:
Year Optional Redemption Price
---- -------------------------
1998 108.0%
1999 106.4
2000 104.8
2001 103.2
2002 101.6
On and after the redemption date, interest will cease to accrue on the Notes or
portions thereof called for redemption.
Section 4.02 Notices to Trustee and Paying Agent
If the Company elects to redeem Notes pursuant to Section 4.01 and
Section 5 of the Notes, it shall notify the Trustee and the Paying Agent in
writing of the redemption date and the principal amount of Notes to be redeemed.
The Company shall give each notice provided for in this Section 4.02 at least 60
days before the redemption date, together with an Officers' Certificate stating
that such redemption shall comply with the conditions contained herein and in
the Notes.
Section 4.03 Selection of Notes to be Redeemed
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes being redeemed are listed or, if the Notes are not listed on a national
securities exchange, on a pro rata basis, by lot or by such other method as the
Trustee shall deem fair and appropriate.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. The Trustee promptly shall notify the
Company in writing of such Notes selected for redemption and, in the case of
Notes selected for partial redemption, the principal amount to be redeemed. The
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000. The Notes and portions thereof the Trustee selects shall be in amounts
of $1,000 or integral multiples of $1,000. Provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
Section 4.04 Notice to Holders
At least 30 days but not more than 60 days prior to a redemption date,
the Company shall mail or cause the mailing of a notice of redemption by first-
class mail to each Holder of Notes to be redeemed and the Trustee and Paying
Agent.
The notice shall identify the Notes, including "CUSIP" number, to be
redeemed and shall state:
(1) the redemption date;
(2) the redemption price and the amount of accrued interest, if any, to be
paid;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price and accrued interest, if any;
(5) that, unless the Company defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date and the only remaining right of the Holders is to receive
payment of the redemption price, together with accrued and unpaid interest
thereon to the redemption date, upon surrender to the Trustee or the Paying
Agent of the Notes so redeemed;
<PAGE>
(6) if any Note is being redeemed in part, the portion of the principal
amount (equal to $1,000 or any integral multiple thereof) of such Note to be
redeemed, and that, on and after the redemption date, upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
thereof shall be issued without charge to the Holder; and
(7) if less than all of the Notes are to be redeemed, the identification
of the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate principal
amount of Notes estimated to be outstanding after the redemption.
At the Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense.
Section 4.05 Effect of Notice of Redemption
Once notice of redemption is mailed, Notes called for redemption become
due and payable on the redemption date and at the redemption price and shall
cease to bear interest from and after the redemption date (unless the Company
shall default in the payment of the redemption price or accrued interest). Upon
surrender to the Paying Agent, such Notes shall be paid at the redemption price,
plus accrued interest to the redemption date but any interest installment with
respect to an Interest Payment Date that is on or prior to such redemption date
shall be payable on such Interest Payment Date to Holders of record at the close
of business on the record date referred to in the Notes.
Section 4.06 Deposit of Redemption Price
At least one Business Day prior to the redemption date, the Company
shall deposit with the Paying Agent money sufficient to pay the redemption price
of and accrued interest on all Notes or portions thereof to be redeemed on that
date.
If any Note surrendered for redemption in the manner provided in this
Indenture shall not be so paid on the redemption date due to the failure of the
Company to deposit sufficient funds with the Paying Agent, interest shall
continue to accrue from the redemption date until such payment is made on the
unpaid principal and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the date and in the manner provided in the
Notes.
Section 4.07 Notes Redeemed in Part
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
ARTICLE 5
COVENANTS
Section 5.01 Payment of Notes
The Company shall pay the principal of, premium, if any, and interest
on the Notes on the dates and in the manner provided in the Notes. Principal of,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent, other than the Company or a Subsidiary of the Company, holds on
that date money deposited by the Company designated for and sufficient to pay
all principal of, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
<PAGE>
Section 5.02 Maintenance of Office or Agency
The Company will maintain, in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or the
Registrar) where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company also from time to time may designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and from time to time may rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 5.03 Change of Control
(a) Upon the occurrence of a Change of Control, the Company will offer
(a "Change of Control Offer") to purchase all outstanding Notes at a purchase
price equal to 101% of the aggregate principal amount of the Notes, plus accrued
and unpaid interest, if any, to the date of purchase. The Change of Control
Offer shall be deemed to have commenced upon mailing of the notice described in
Section 5.03(b), which notice shall specify a payment date (which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed), and shall terminate on the specified payment date, unless a longer
offering period is required by law. Promptly after the termination of the
Change of Control Offer (the "Change of Control Payment Date"), the Company will
purchase and mail or deliver payment for all Notes tendered in response to the
Change of Control Offer. If the Change of Control Payment Date is on or after
an interest payment record date and on or before the related Interest Payment
Date, any accrued interest will be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Notes pursuant to the Change of
Control Offer.
(b) Within 30 days after any Change of Control, the Company, or the
Trustee at the Company's request and expense, will mail or cause to be mailed to
all Holders on the date of the Change of Control a notice of the occurrence of
such Change of Control. Such notice, which shall govern the terms of the Change
of Control Offer, shall state:
(1) that a Change of Control has occurred and that the Holders have
the right to require the Company to purchase any or all of the outstanding Notes
at a purchase price equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase;
(2) that the Change of Control Offer is being made pursuant to this
Section 5.03 and the length of time the Change of Control Offer will remain
open;
(3) the purchase price and the Change of Control Payment Date;
(4) that any Note not tendered will continue to accrue interest;
(5) that any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest on the Change of Control Payment
Date;
<PAGE>
(6) that Holders electing to have a Note purchased pursuant to any
Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse side of the Note
completed, to the Company, a depository if appointed by the Company or a Paying
Agent at the address specified in the notice prior to termination of the Change
of Control Offer;
(7) that Holders will be entitled to withdraw their election if the
Company, depository or Paying Agent, as the case may be, receives, not later
than the expiration of the Change of Control Offer, or such longer period as may
be required by law, a telegram, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Note the Holder delivered
for purchase and a statement that such Holder is withdrawing his election to
have the Note purchased;
(8) that Holders whose Notes are purchased only in part will be
issued Notes equal in principal amount to the unpurchased portion of the Notes
surrendered;
(9) the instructions, determined by the Company consistent with this
Indenture, that Holders must follow in order to have their Notes purchased;
(10) the circumstances and relevant facts regarding such Change of
Control (including without limitation information with respect to pro forma
historical income, cash flow and capitalization after giving effect to such
Change of Control); and
(11) information regarding the Persons acquiring control and an
information regarding such Person's business plans going forward.
(c) On, but in no event before, a Change of Control Payment Date, the
Company, to the extent lawful, will: (i) deposit with the depository or Paying
Agent, if the Company appoints any depository or Paying Agent, money in
immediately available funds sufficient to pay the purchase price of all Notes
tendered; (ii) deliver or cause such depository or Paying Agent to deliver to
the Trustee Notes so tendered; and (iii) deliver an Officers' Certificate
identifying the Notes accepted for payment by the Company in accordance with the
terms of this Section 5.03. The depository, the Paying Agent or the Company, as
the case may be, promptly shall mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Trustee promptly shall
authenticate and mail or deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note so surrendered. Any Notes not
accepted promptly shall be mailed or delivered by the Company to the Holder
thereof. The Company publicly will announce the results of the Change of
Control Offer on the Change of Control Payment Date.
(d) Neither the Board of Directors nor the stockholders of the
Company may adopt a Plan of Liquidation that provides for or contemplates, or
the effectuation of which is preceded by, (i) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company
otherwise than substantially as an entirety, and (ii) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and of the remaining assets of the Company to the holders of the
Company's Capital Stock unless, prior to making any liquidating distribution
pursuant to such Plan of Liquidation, the Company makes provision for the
satisfaction of its obligations hereunder and under the Notes. The Company shall
be deemed to have made provision for such payments only if the Company delivers
in trust to the Trustee or Paying Agent (other than the Company or a Subsidiary)
money or U.S. Government Obligations maturing as to principal and interest in
such amounts and at such times as are sufficient without consideration of any
reinvestment of such principal or interest to pay, when due, the principal of
and interest on the Notes and also delivers to the Trustee an Opinion of Counsel
or a tax ruling to the effect that Holders of the Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such action
and will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such action has not
been taken; provided, however, that the Company shall not make any liquidating
distribution until after the Company shall have certified to the Trustee with an
Officers' Certificate at least five days prior to the making of any liquidating
distribution that it has complied with the provisions of this Section 5.03(d)
and that no Default or Event of Default then exists or would occur as a result
of any such liquidating distribution.
<PAGE>
(e) Any Change of Control Offer will be conducted in compliance with
applicable tender offer rules, including Section 14(e) of the Exchange Act and
Rule 14e-1 promulgated thereunder, and any other applicable securities laws or
regulations.
Section 5.04 Limitations on Additional Indebtedness
(a) After the date hereof: (i) the Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, extend the maturity of or otherwise become liable with
respect to (collectively, "incur"), any Indebtedness (including without
limitation Acquired Indebtedness), other than (A) Junior Subordinated
Indebtedness incurred by the Company in compliance with the provisions of the
immediately following sentence or (B) Indebtedness between the Company and its
Wholly Owned Restricted Subsidiaries (provided that such Indebtedness of the
Company to any Wholly Owned Restricted Subsidiary is expressly subordinated in
right of payment to the Notes) or among such Wholly Owned Restricted
Subsidiaries (provided, however, that any subsequent issue or transfer of any
Capital Stock that results in any such Wholly Owned Restricted Subsidiary
ceasing to be a Wholly Owned Restricted Subsidiary or any transfer of such
Indebtedness (other than to a Wholly Owned Restricted Subsidiary) shall be
deemed, in each case, to constitute the incurrence of such Indebtedness by the
Company) and (ii) the Company will not permit any of its Restricted Subsidiaries
to issue (except to the Company or any of its Wholly Owned Restricted
Subsidiaries) any Capital Stock having a preference in liquidation or with
respect to the payment of dividends, unless, after giving effect thereto, the
Company's Consolidated Fixed Charge Coverage Ratio on the date thereof would be
at least:
(1) 2.25 to 1, if such date is on or prior to February 28, 1998; and
(2) 2.50 to 1, if such date is after February 28, 1998,
in each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness or the issuance of such Capital Stock, as the case may
be, and the application of the net proceeds therefrom, had occurred at the
beginning of the four-quarter period used to calculate the Company's
Consolidated Fixed Charge Coverage Ratio. In addition, after the date hereof
the Company will not directly or indirectly incur any Junior Subordinated
Indebtedness unless, after giving effect thereto, the Company's Consolidated
Fixed Charge Coverage Ratio on the date thereof would be at least 1.50 to 1, in
each case determined on a pro forma basis as if the incurrence of such
additional Indebtedness, and the application of the net proceeds therefrom, had
occurred at the beginning of the four-quarter period used to calculate the
Company's Consolidated Fixed Charge Coverage Ratio.
(b) Notwithstanding the provisions of Section 5.04(a), the Company and
its Restricted Subsidiaries may: (i) incur Indebtedness under the Bank Credit
Agreement in an amount not to exceed $60,000,000; (ii) incur Indebtedness not
otherwise permitted by any other provision hereof, so long as the aggregate
principal amount of Indebtedness incurred under this clause (ii) does not exceed
7.5% of the Consolidated Tangible Assets of the Company; and (iii) incur
Refinancing Indebtedness. In addition, notwithstanding the provisions of Section
5.04(a): (A) Subsidiaries of the Company that are not Wholly Owned Restricted
Subsidiaries may incur Indebtedness to the Company or any of its Wholly Owned
Restricted Subsidiaries in the amounts and subject to the restrictions in
Section 5.05(iii) and (B) Single Purpose Subsidiaries of the Company may incur
Non-Recourse Indebtedness to the extent permitted by Section 5.05(iv).
(c) Notwithstanding the provisions of Sections 5.04(a) and 5.04(b),
the Company may not incur any Indebtedness if such Indebtedness is subordinate
or junior in ranking in any respect to any Senior Indebtedness unless such
Indebtedness is Junior Subordinated Indebtedness. In addition, the Company may
not incur any secured Indebtedness which is not Senior Indebtedness unless
contemporaneously therewith effective provision is made to secure the Notes
equally and ratably with such secured Indebtedness for so long as such secured
Indebtedness is secured by a Lien.
Section 5.05 Limitations on Subsidiary Debt and Preferred Stock
<PAGE>
After the date hereof, the Company will not permit any of its
Restricted Subsidiaries, directly or indirectly, to create, incur, assume,
guarantee, extend the maturity of or otherwise become liable with respect to
(collectively, "incur"), any Indebtedness (which, with respect to any Restricted
Subsidiary, includes without limitation preferred stock of such Restricted
Subsidiary) except: (i) guarantees by any Restricted Subsidiary of the payment
of the principal of, premium, if any, and interest on the Indebtedness incurred
pursuant to the Bank Credit Agreement and in compliance with the provisions of
Section 5.04(b)(i) and with the provisions of Section 5.11; (ii) Indebtedness
issued to and held by the Company or a Wholly Owned Restricted Subsidiary of the
Company (provided, however, that any subsequent issue or transfer of any Capital
Stock that results in any such Wholly Owned Restricted Subsidiary ceasing to be
a Wholly Owned Restricted Subsidiary or any transfer of such Indebtedness (other
than to a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to
constitute the incurrence of such Indebtedness by such Restricted Subsidiary);
(iii) Indebtedness to the Company or any of its Wholly Owned Restricted
Subsidiaries incurred by Subsidiaries of the Company that are not Wholly Owned
Restricted Subsidiaries that are engaged in Permitted Businesses in an aggregate
amount (together with all Designated Investments made in Subsidiaries that are
not Wholly Owned Restricted Subsidiaries in compliance with the provisions of
Section 5.06(b)(E)) not to exceed 5% of Consolidated Tangible Assets; and (iv)
Non-Recourse Indebtedness incurred by a Single Purpose Subsidiary.
Section 5.06 Limitations on Restricted Payments
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment if at the
time of such Restricted Payment:
(i) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof;
(ii) the Company would be unable to incur an additional $1.00 of
Senior Indebtedness under the provisions of Section 5.04(a); or
(iii) the amount of such Restricted Payment, when added to the
aggregate amount of all Restricted Payments (other than those made pursuant to
the provisions of clause (A), (C), (D), (E) or (G) of Section 5.06(b)) made
after the date of this Indenture, exceeds the sum of: (a) 50% of the Company's
Consolidated Net Income accrued during the period from the date of this
Indenture to the end of the Company's most recently ended fiscal quarter for
which financial results have been reported at the time of such Restricted
Payment (or, if such aggregate Consolidated Net Income shall be a deficit, minus
100% of such aggregate deficit); plus (b) the aggregate amount of Net Reductions
in Investments attributable to Designated Investments made by the Company or any
Subsidiary subsequent to the date of this Indenture; provided, however, that (1)
the Net Reductions in Investments attributable to any Designated Investment for
purposes of this calculation shall not exceed the amount of such Designated
Investment, (2) to the extent that cash or Cash Equivalents included in any Net
Reductions in Investments pursuant to the definition thereof have been or will
be included in the computation of Consolidated Net Income for purposes of
determining the ability of the Company or any of its Restricted Subsidiaries to
make Restricted Payments under clause (iii)(a) of this Section 5.06(a), such
cash or Cash Equivalents shall not also be included in computing Net Reductions
in Investments for purposes of this clause (iii)(b) and (3) the Company will not
be permitted to make any Restricted Payment described in clause (i) or (ii) of
the definition of Restricted Payment from any Net Reductions in Investments.
(b) Notwithstanding the foregoing, the provisions of clauses (ii) and
(iii) of Section 5.06(a) will not prevent:
(A) the Company or any Wholly Owned Restricted Subsidiary from making
Investments in Subsidiaries, in an aggregate amount not to exceed $4,000,000,
pursuant to contractual obligations in existence on the date of this Indenture
or directly related to projects in existence on the date of this Indenture;
(B) the Company from paying any dividend within 60 days after the date
of its declaration if such dividend could have been paid on the date of its
declaration without violation of this covenant;
<PAGE>
(C) the Company from purchasing or redeeming and retiring any shares
of Capital Stock of the Company, and paying accrued and unpaid dividends on such
shares at the time of such repurchase or redemption, in exchange for, or out of
the net proceeds of a substantially concurrent sale (other than to a Subsidiary
of the Company or an employee stock ownership plan) of, shares of Qualified
Capital Stock of the Company;
(D) the Company or any Subsidiary from making (1) Investments pursuant
to the provisions of employee benefit plans of the Company or any of its
Subsidiaries in an aggregate amount not to exceed $500,000 in any fiscal year,
or (2) making loans to officers of the Company in connection with any relocation
of residence, approved by a majority of the independent members of the Board of
Directors of the Company, provided that the aggregate amount of Investments and
loans under this clause (D) shall not exceed $1,000,000 in any fiscal year;
(E) the Company or any Wholly Owned Restricted Subsidiary from making
Designated Investments (1) in Subsidiaries that are not Wholly Owned Restricted
Subsidiaries in an aggregate amount (together with Indebtedness incurred by or
on behalf of Subsidiaries that are not Wholly Owned Restricted Subsidiaries in
compliance with the provisions of Section 5.05(iii)) not to exceed 5% of
Consolidated Tangible Assets or (2) in Joint Ventures in an aggregate amount not
to exceed 5% of Consolidated Tangible Assets, provided that: (x) the Person in
whom the Investment is made is engaged only in Permitted Businesses; (y) the
Company, directly or through Wholly Owned Restricted Subsidiaries of the
Company, controls, under an operating and management agreement or otherwise, the
day to day management and operation of such Person or otherwise has the right to
exercise significant influence over the management and operation of such Person
in all material respects (including without limitation the right to control or
veto any material act or decision); and (z) after giving effect to such
Investment, the aggregate amount of Indebtedness and Investments made by the
Company and its Subsidiaries in such Person does not exceed $5,000,000;
(F) the Company or any Wholly Owned Restricted Subsidiary from making
Designated Investments in Subsidiaries that are not Wholly Owned Restricted
Subsidiaries or in Joint Ventures; provided that such Designated Investments are
made solely from (1) the net proceeds of a substantially concurrent sale (other
than to a Subsidiary of the Company or an employee stock ownership plan) of
shares of Qualified Capital Stock of the Company, (2) 50% of the Company's
Consolidated Net Income accrued during the period from the date of this
Indenture to the end of the Company's most recently ended fiscal quarter for
which financial results have been reported at the time of such Restricted
Payment or (3) the aggregate amount of Net Reductions in Investments (not to
exceed the aggregate amount of such Designated Investments) made by the Company
or any Subsidiary subsequent to the date of this Indenture;
(G) the Company from redeeming for cash all (but not less than all) of
the outstanding shares of the Company's Series 2D Senior Preferred Stock;
provided, however, that such redemption shall not be at a price in excess of the
redemption price set forth in Section 17.01 of the Company's Amended and
Restated Certificate of Incorporation in effect as of the date of this
Indenture; and provided, further, that prior to January 13, 1997, the Company
shall not redeem any of the outstanding shares of the Company's Series 2D Senior
Preferred Stock until the Company delivers to the Trustee an Officer's
Certificate certifying that the Company's earnings before interest and taxes for
the most recent twelve (12) month period calculated in accordance with generally
accepted accounting principles equalled or exceeded $27 million. Nothing
contained in this further proviso shall affect the Company's right to redeem the
Series 2D Senior Preferred Stock no later than January 13, 1997; or
(H) the Company from (1) making all regular quarterly dividends, each
such quarterly dividend payment not to exceed $487,500 in the aggregate of
$2,437.50 per share, on the outstanding shares of the Company's Series 2D Senior
Preferred Stock; and (2) making all payments of any dividends of up to 9.75% on
the aggregate unpaid amount of any regular quarterly dividend on the outstanding
shares of the Company's Series 2D Senior Preferred Stock from the date such
regular quarterly dividend should have been paid to the date of the payment of
such dividend; in consideration thereof, and except as provided below, the
------------------------------------------------------
Company shall increase the Interest payable on the Notes by one percent (1%)
(the "Additional Interest") from the date of this Indenture, such Additional
Interest payable as provided for in the Notes. The Company files its financial
results with the Securities and Exchange Commission on quarterly and annual
reports, and these reports include the Company's earnings after deducting
minority interests and before interest, taxes, depreciation, and amortization
calculated in accordance with generally accepted accounting principles
("Earnings"). The Company will measure its Earnings for trailing twelve month
periods, each period to end on the last day of a fiscal quarter and extend no
further than March 31, 1998 (each a "Quarterly Measurement Period").
<PAGE>
If the Company's Earnings equal or exceed $36 million for two consecutive
Quarterly Measurement Periods, then the Company is relieved of its obligation to
pay any future Additional Interest. However, if the Company's Earnings do not
equal or exceed $36 million for any subsequent Quarterly Measurement Period, up
to and including the Quarterly Measurement Period ending March 31, 1998, the
Company is obligated to commence paying Additional Interest until the Company's
Earnings again equal or exceed $36 million on a trailing twelve month basis
calculated quarterly.
Section 5.07 Limitations on Restrictions on Distributions from Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual Payment Restriction with respect to any of its
Restricted Subsidiaries, except for (i) Payment Restrictions covering not more
than $1,000,000 in the aggregate of retained earnings of ICF Kaiser Servicios
Ambientales, S.A. de C.V., (ii) any such Payment Restriction contained in
Existing Indebtedness or existing contracts to which the Company or any of its
Restricted Subsidiaries are parties, (iii) any such Payment Restriction under
any agreement evidencing any Acquired Indebtedness that was permitted to be
incurred pursuant to the provisions of this Indenture, provided that such
Payment Restriction only applies to assets that were subject to such
restrictions and encumbrances prior to the acquisition of such assets by the
Company or its Restricted Subsidiaries and (iv) any such Payment Restriction
arising in connection with Refinancing Indebtedness; provided that any such
Payment Restrictions that arise under such Refinancing Indebtedness are not,
taken as a whole, more restrictive than those under the agreement creating or
evidencing the Indebtedness being refunded or refinanced.
Section 5.08 Limitations on Transactions With Affiliates
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any loan, advance, guarantee or capital contribution to or
for the benefit of, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to or for the benefit of, or make any Investment in, or
purchase or lease any property or assets from, or enter into or amend any
contract, agreement or understanding with or for the benefit of, any Affiliate
of the Company or any of its Subsidiaries (each an "Affiliate Transaction"),
other than Affiliate Transactions in the ordinary course of business and
consistent with past practice that are fair to the Company or such Restricted
Subsidiary, as the case may be, and are on terms at least as favorable as would
have been obtainable at such time from an unaffiliated party, unless the Board
of Directors of the Company or such Restricted Subsidiary, as the case may be,
pursuant to a Board Resolution reasonably and in good faith determines that such
Affiliate Transaction is fair to the Company or such Restricted Subsidiary, as
the case may be, and is on terms at least as favorable as would have been
obtainable at such time from an unaffiliated party.
(b) In addition, the Company will not, and will not permit any of its
Restricted Subsidiaries to, enter into any Affiliate Transaction or series of
Affiliate Transactions involving or having a value of more than (i) $1,000,000
unless a majority of the members of the Board of Directors of the Company who
are not affiliated with any other party to such Affiliate Transaction reasonably
and in good faith shall have determined that such Affiliate Transaction or
series of Affiliate Transactions is fair to the Company or such Restricted
Subsidiary, as the case may be, and is on terms at least as favorable as would
have been obtainable at such time from an unaffiliated party and (ii) $5,000,000
unless the Company or such Restricted Subsidiary, as the case may be, has
received an opinion from an Independent Financial Advisor to the effect that the
financial terms of such Affiliate Transaction are fair to the Company or such
Restricted Subsidiary, as the case may be, from a financial point of view.
(c) The provisions of Sections 5.08(a) and 5.08(b) shall not apply to:
(i) transactions exclusively between or among the Company and any of its Wholly
Owned Restricted Subsidiaries or exclusively between or among any of the
Company's Wholly Owned Restricted Subsidiaries, provided that such transactions
are not otherwise prohibited by the Indenture; (ii) arms-length transactions
between the Company or any of its Wholly Owned Restricted Subsidiaries and the
other owners of any Subsidiary or Joint Venture described in the last sentence
of the definition of Affiliate; and (iii) reasonable compensation,
indemnification and other benefits paid or made available to officers, directors
and employees of the Company or any Subsidiary for services rendered in such
Person's capacity as an officer, director or employee.
Section 5.09 Limitations on Asset Sales
<PAGE>
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate any Asset Sale unless: (i) the Company or its
Restricted Subsidiaries receive consideration at the time of such Asset Sale at
least equal to the fair market value of the assets or Capital Stock included in
such Asset Sale; (ii) the aggregate fair market value of the consideration from
such Asset Sale (other than consideration in the form of assumption of
Indebtedness of the Company or one or more of its Restricted Subsidiaries from
which the Company or such Restricted Subsidiaries, as the case may be, are
released) that is not in the form of cash or Cash Equivalents shall not, when
aggregated with the fair market value of all other non-cash or non-Cash
Equivalent consideration received by the Company and its Restricted Subsidiaries
from all previous Asset Sales since the date of this Indenture that have not yet
been converted into cash or Cash Equivalents, exceed 5% of Consolidated Tangible
Assets of the Company at the time of such Asset Sale; and (iii) if the aggregate
fair market value of the assets or Capital Stock to be sold in such Asset Sale
exceeds $3,000,000, such Asset Sale has been approved by the Company's Board of
Directors.
(b) Within six months after consummation of any such Asset Sale (the
Business Day closest to the end of such six-month period is referred to as the
"Asset Sale Offer Date"), the Company shall, or shall cause the applicable
Restricted Subsidiary to: (i) reinvest the cash and Cash Equivalent portion of
the Net Proceeds of such Asset Sale in a manner that would constitute a Related
Business Investment; (ii) apply or cause to be applied the cash and Cash
Equivalent portion of the Net Proceeds of such Asset Sale to repay outstanding
Senior Indebtedness of the Company or any Restricted Subsidiary, provided,
however, that any such repayment of Indebtedness under any revolving credit
facility or similar agreement shall result in a permanent reduction in the
lending commitment relating thereto in an amount equal to the principal amount
so repaid; or (iii) apply or cause to be applied the cash and Cash Equivalent
portion of the Net Proceeds of such Asset Sale that is neither reinvested as
provided in clause (i) nor applied to the repayment of Senior Indebtedness as
provided in clause (ii), first to the purchase of Existing Notes tendered to the
-----
Company at a purchase price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, thereon to the date of purchase, pursuant
to an offer to purchase made by the Company as set forth in Article 3 and
Section 5.09 of the Indenture for the Existing Notes and this Indenture (an
"Asset Sale Offer") and second to the purchase of Notes tendered to the Company
------
at a purchase price equal to 100% of the principal thereof, plus accrued and
unpaid interest, if any, thereon to the date of purchase, pursuant to an Asset
Sale Offer; provided, however, that the Company may defer the Asset Sale Offer
until the amount subject thereto would be at least $5,000,000.
(c) Notwithstanding the provisions of Sections 5.09(a) and 5.09(b):
(i) to the extent that any or all of the Net Proceeds of any Foreign Asset Sale
are prohibited or delayed by applicable local law from being repatriated to the
United States, the portion of such Net Proceeds so affected will not be required
to be applied in the manner set forth in this Section 5.09 but may be retained
by the applicable Foreign Subsidiary so long, but only so long, as the
applicable local law will not permit repatriation to the United States (the
Company hereby agreeing to cause the applicable Foreign Subsidiary promptly to
take all actions required by the applicable local law to permit such
repatriation) and, once such repatriation of any of such affected Net Proceeds
is permitted under the applicable local law, such repatriation will be
immediately effected and such repatriated Net Proceeds will be applied in the
manner set forth in this Section 5.09; and (ii) to the extent that the Board of
Directors has determined in good faith that repatriation of any or all of the
Net Proceeds of any Foreign Asset Sale would have a material adverse tax
consequence, the Net Proceeds so affected may be retained by the applicable
Foreign Subsidiary for so long as such material adverse tax consequence would
continue.
Section 5.10 Restrictions on Sale of Stock of Subsidiaries
The Company may not sell or otherwise dispose of any of the Capital
Stock of any Restricted Subsidiary of the Company unless: (i) (a)(x) the Company
shall retain ownership of more than 50% of the Common Equity of such Restricted
Subsidiary or (y) all of the Capital Stock of such Restricted Subsidiary shall
be sold or otherwise disposed of, and (b) the Net Proceeds from any such sale or
disposition are applied in a manner consistent with the provisions of Section
5.09; or (ii) the Company elects to treat the amount of its remaining investment
in any such Restricted Subsidiary that has become a Joint Venture as a result of
such sale or other disposition as an Investment in such Joint Venture subject to
the provisions of Section 5.06.
<PAGE>
Section 5.11 Limitations on Guarantees
The Company will not permit any of its Restricted Subsidiaries to
guarantee any Indebtedness (other than (i) guarantees permitted under the
provisions of Section 5.05(i) and (ii) guarantees delivered pursuant to the Bank
Credit Agreement by Subsidiaries of the Company who have delivered similar
guarantees prior to the date of this Indenture) unless the Company causes each
such Subsidiary to execute and deliver to the Trustee, prior to or concurrently
with the issuance of such guarantee, a supplemental indenture, in form
satisfactory to the Trustee, pursuant to which such Subsidiary unconditionally
guarantees the payment of principal of, premium, if any, and interest on the
Notes. Any such guarantee shall be substantially in the form of Exhibit G to
this Indenture, which is hereby incorporated in and expressly made a part of
this Indenture.
Section 5.12 SEC Reports
(a) At any time that the Company has a class of securities registered
under the Exchange Act, the Company shall file with the Trustee and provide to
Holders, within 15 days after it files the same with the SEC, copies of its
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company or any Subsidiary of the Company is required to
file with the SEC pursuant to Section 12, 13 or 15(d) of the Exchange Act. The
Company shall cause any annual report furnished to its stockholders generally
and any quarterly or other financial reports furnished by it to its stockholders
generally to be filed with the Trustee and mailed to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar.
(b) At any time that the Company does not have a class of securities
registered under the Exchange Act, the Company shall furnish to the Trustee (who
is hereby authorized and directed to furnish a copy thereof to any Person
requesting the same in writing) and shall mail (or cause to be mailed by the
Trustee at the Company's expense) to each of the Holders at their addresses as
set forth in the register of Notes maintained by the Registrar within 60 days
after the close of each of the first three quarters of each fiscal year and
within 105 days after the close of each fiscal year consolidated balance sheets
of the Company as of the end of each such quarter or fiscal year, as the case
may be, and consolidated statements of income and cash flow of the Company for
the period commencing at the end of the Company's previous fiscal year and
ending with the end of such quarter or fiscal year, as the case may be, all such
financial statements setting forth in comparative form the corresponding figures
for the corresponding period of the preceding fiscal year, all in reasonable
detail and duly certified (subject to year-end adjustments) by an Officer of the
Company as having been prepared in accordance with GAAP consistently applied,
and, in the case of annual consolidated financial statements, certified by
independent public accountants of established national reputation, and a
discussion and analysis of the results of operations and financial condition of
the Company and its subsidiaries for the periods presented, which discussion and
analysis shall be prepared by the management of the Company in a manner
responsive to the requirements of Item 303 (or any successor item or section) of
Regulation S-K promulgated by the SEC. All financial statements shall be
prepared in accordance with GAAP consistently applied, except for changes with
which the Company's independent public accountants concur and except that
quarterly statements may be subject to year-end adjustments.
(c) Delivery of the above-referenced reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
Section 5.13 Corporate Existence
Subject to the provisions of Sections 5.09 and 6.01, the Company
shall, and shall cause each Restricted Subsidiary to, do or cause to be done all
things necessary to preserve and keep in full force and effect its rights
(charter and statutory), licenses and franchises, except in such cases where a
failure to do so would not have a material adverse effect on (a) the business,
prospects, assets or financial condition of the Company and its Restricted
Subsidiaries taken as a whole, or (b) the Holders.
<PAGE>
Section 5.14 Stay, Extension and Usury Laws
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the Company's
obligation to pay the Notes; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law insofar
as such law applies to the Notes, and covenants that it will not, by resort to
any such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every such power as
though no such law has been enacted.
Section 5.15 Insurance; Books and Records; Compliance with Law
(a) The Company will and will cause each Subsidiary to maintain
insurance with financially sound and responsible insurance companies on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business.
(b) The Company will and will cause each Subsidiary to keep proper
books of record and account in which full and correct entries shall be made of
all financial transactions and the assets and business of the Company and each
Subsidiary, in accordance with GAAP consistently applied to the Company and its
Subsidiaries taken as a whole.
(c) The Company will and will cause each Subsidiary to comply with all
statutes, laws, ordinances or government rules and regulations to which it is
subject, non-compliance with which would materially adversely affect the
business, prospects, earnings, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
Section 5.16 Inspection and Confidentiality
(a) The Company shall, and shall cause each of its Subsidiaries to,
permit authorized representatives of the Trustee to visit and inspect the
properties of the Company or its Subsidiaries, all upon reasonable prior notice
and at such reasonable times during normal business hours and as often as may be
reasonably requested.
(b) The Trustee and its authorized representatives referred to in
Section 5.16(a) agree not to use any information obtained pursuant to this
Section 5.16 for any unlawful purpose and to keep confidential and not to
disclose any such information to any Person except that (i) the recipient of the
information may disclose any information that becomes publicly available other
than as a result of disclosure by such recipient, (ii) the recipient of the
information may disclose any information that its counsel reasonably concludes
is necessary to be disclosed by law, pursuant to any court or administrative
order or ruling or in any pending legal or administrative proceeding or
investigation after prior written notice, reasonable under the circumstances, to
the Company and (iii) the recipient of the information may disclose any
information necessary to be disclosed pursuant to any provision of the TIA.
Section 5.17 Compliance Certificate
(a) The Company shall deliver to the Trustee, within 105 days after
the end of each fiscal year of the Company, an Officers' Certificate stating
that a review of the activities of the Company and its Restricted Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such Officers' Certificate,
that to the best of such Officer's knowledge the Company has kept, observed,
performed and fulfilled each covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which such Officer may have
knowledge and what action the Company is taking or proposes to take with respect
thereto) and that to the best of such Officer's knowledge no event has occurred
and remains in existence by reason of which payments on account of the
<PAGE>
principal of, premium, if any, or interest on the Notes are prohibited or, if
such event has occurred, a description of the event and what action the Company
is taking or proposes to take with respect thereto. Such compliance shall be
determined without regard to periods of grace or requirements of notice.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 5.12 shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 5 or 6 or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) The Company, so long as any of the Notes are outstanding, will
deliver to the Trustee, within five Business Days of any Officer becoming aware
of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
ARTICLE 6
SUCCESSORS
Section 6.01 Limitations on Mergers and Consolidations
(a) The Company, in a single transaction or a series of related
transactions, will not (i) consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets, or assign
any of its obligations under the Notes or this Indenture, to any Person or (ii)
adopt a Plan of Liquidation unless, in either case:
(A) the Person formed by or surviving such consolidation or merger (if
other than the Company) or to which such sale, lease, conveyance or other
disposition or assignment shall be made (or, in the case of a Plan of
Liquidation, one Person to which assets are transferred) (collectively, the
"Successor"), is a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia, and the
Successor assumes by supplemental indenture in a form satisfactory to the
Trustee all of the obligations of the Company under the Notes and this
Indenture;
(B) immediately prior to and immediately after and giving effect to
such transaction and the assumption of the obligations as set forth in clause
(A) above and the incurrence of any Indebtedness to be incurred in connection
therewith, no Default or Event of Default shall have occurred and be continuing;
and
(C) immediately after and giving effect to such transaction and the
assumption of the obligations as set forth in clause (A) above and the
incurrence of any Indebtedness to be incurred in connection therewith, and the
use of any net proceeds therefrom on a pro forma basis, (1) the Consolidated
Tangible Net Worth of the Company or the Successor, as the case may be, would be
at least equal to the Consolidated Tangible Net Worth of the Company immediately
prior to such transaction and (2) the Company or the Successor, as the case may
be, could incur at least $1.00 of additional Senior Indebtedness under the
provisions of Section 5.04.
(b) In addition, the Company will not permit any Single Purpose
Subsidiary that has outstanding Indebtedness to consolidate or merge with any
other Person other than a Person the activities of which are limited to
ownership of a portion of the same project in which the referent Single Purpose
Subsidiary owns an interest.
(c) The provisions of Sections 6.01(a) and 6.01(b) will not prohibit a
transaction the sole purpose of which (as determined in good faith by the Board
of Directors of the Company and evidenced by a Board Resolution) is to change
the state of incorporation of the Company or a Single Purpose Subsidiary, as the
case may be, and such transaction does not have as one of its purposes the
evasion of the limitations described above.
Section 6.02 Successor Corporation Substituted
<PAGE>
(a) Upon any consolidation or merger, or any sale, lease, conveyance
or other disposition of all or substantially all of the assets of the Company or
any assignment of its obligations under this Indenture or the Notes in
accordance with Section 6.01, the Successor formed by such consolidation or into
or with which the Company is merged or to which such sale, lease, conveyance or
other disposition or assignment is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such Successor had been named as the Company herein.
(b) Subject to the provisions of Section 5.03(a), in the event of any
such sale, lease, conveyance or other disposition (other than a transfer by way
of lease), the Company or any Successor which theretofore shall have been
substituted for the Company pursuant to the provisions of this Article 6 shall
be discharged from all obligations and covenants under this Indenture and the
Notes and may, but need not be, liquidated and dissolved.
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.01 Events of Default
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any of the Notes when it
becomes due and payable and such failure continues for 30 days;
(2) the Company fails to pay the principal or premium, if any, of the
Notes when it becomes due and payable, whether at stated maturity, upon
redemption, upon acceleration or otherwise (including failure to make payment
pursuant to a Change in Control Offer or an Asset Sale Offer);
(3) the Company fails to comply with any covenant in this Indenture
and such failure continues for 60 days after notice of such failure has been
given to the Company by the Trustee or by the Holders of at least 25% of the
aggregate principal amount of the Notes then outstanding;
(4) the Company or any of its Subsidiaries fail to make any payment
when due or during any applicable grace period in respect of any Indebtedness of
the Company or any of its Subsidiaries, other than Non-Recourse Indebtedness of
a Single Purpose Subsidiary, that has an aggregate outstanding principal amount
of $2,000,000 or more;
(5) the Company defaults under any Indebtedness, other than
Non-Recourse Indebtedness of a Single Purpose Subsidiary, whether such
Indebtedness existed on the date of this Indenture or thereafter shall be
created, if (A) such default results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity and (B) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness the maturity of which has been
so accelerated, aggregate $2,000,000 or more at any one time outstanding;
(6) one or more final judgments or orders that exceed $2,000,000 in
the aggregate for the payment of money have been entered by a court or courts of
competent jurisdiction against the Company or any of its Subsidiaries and such
judgment or judgments have not been satisfied, stayed, annulled or rescinded
within 60 days of being entered;
(7) the Company or any of its Subsidiaries pursuant to or within the
meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
<PAGE>
(d) makes a general assignment for the benefit of its creditors; or
(8) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(a) is for relief against the Company or any of its
Subsidiaries as debtor in an involuntary case,
(b) appoints a Custodian of the Company or any of its
Subsidiaries or a Custodian for all or substantially all of the property of the
Company or any of its Subsidiaries, or
(c) orders the liquidation of the Company or any of its Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days.
Section 7.02 Acceleration
If an Event of Default (other than an Event of Default with respect
to the Company specified in clause (7) or (8) of Section 7.01) occurs and is
continuing, the Trustee by written notice to the Company, or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding by notice
to the Company and the Trustee, may declare all amounts owing under the Notes to
be due and payable immediately for an amount equal to 100% of the principal
amount of the Notes plus accrued and unpaid interest, if any, to date of
payment. Upon such declaration of acceleration, the aggregate principal of and
interest on the Notes shall immediately become due and payable. If an Event of
Default with respect to the Company specified in clause (7) or (8) of Section
7.01 occurs, such an amount shall ipso facto become and be immediately due and
payable without any declaration, notice or other act on the part of the Trustee
or any Holder. The Holders of a majority in aggregate principal amount of the
Notes then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest on the Notes that has become due solely as a result of
such acceleration) have been cured or waived.
Section 7.03 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or interest on the Notes or to enforce
the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All remedies are cumulative to the extent permitted by law.
Section 7.04 Waiver of Past Defaults
Subject to the provisions of Section 7.07 and Section 10.02, the
Holders of a majority in principal amount of the then outstanding Notes by
notice to the Trustee may waive an existing Default or Event of Default and its
consequences, except a continuing Default or Event of Default specified in
clause (1), (2), (7) or (8) of Section 7.01 or in respect of the provisions of
Section 5.03 or any provision hereof that cannot be modified or amended without
the consent of the Holder so affected pursuant to Section 10.02. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
<PAGE>
Section 7.05 Control by Majority
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Holders, or that may involve the Trustee in personal
liability.
Section 7.06 Limitations on Suits
Except as provided in Section 7.07, a Holder may pursue a remedy with
respect to this Indenture or the Notes only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 7.07 Rights of Holders to Receive Payment
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal of, premium, if any, and
interest on the Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the consent of the Holder.
Section 7.08 Collection Suit by Trustee
If an Event of Default specified in Section 7.01(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the amount of principal,
premium, if any, and interest remaining unpaid on the Notes, determined in
accordance with Section 7.02, and interest on overdue principal and, to the
extent lawful, premium, if any, and interest, and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
<PAGE>
Section 7.09 Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 8.06. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 7.10 Priorities
If the Trustee collects any money pursuant to this Article 7, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 8.06;
Second: to Holders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for interest;
Third: to Holders for amounts due and unpaid on the Notes for
principal and premium, if any, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal and
premium, if any, respectively; and
Fourth: as a court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 7.10.
Section 7.11 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 7.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 7.07 or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
Section 7.12 Restoration of Rights and Remedies
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holder shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE 8
TRUSTEE
Section 8.01 Duties of Trustee
<PAGE>
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in such exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(2) Except during the continuance of an Event of Default:
(a) the Trustee need perform only those duties that are specifically
set forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; however, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) this paragraph does not limit the effect of paragraph (2) of this
Section 8.01;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 7.05.
(4) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(1), (2) and (3) of this Section 8.01.
(5) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may refuse to
perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 8.02 Rights of Trustee
Subject to the provisions of Section 8.01:
(1) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and an Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(3) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent (other than an agent who is an
employee of the Trustee) appointed with due care.
<PAGE>
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred by it in compliance with such
request or direction.
Section 8.03 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
Section 8.04 Trustee's Disclaimer
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes. It shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision hereof. It shall not be responsible for
the use or application of any money received by any Paying Agent other than the
Trustee. It shall not be responsible for any statement or recital herein or any
statement in the Notes other than its certificate of authentication.
Section 8.05 Notice of Defaults
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders, as their names and
addresses shall appear on the Notes register, a notice of the Default or Event
of Default within 60 days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of, premium, if any, or interest on any
Note or that resulted from a failure to comply with Section 5.03, the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Holders.
Section 8.06 Compensation and Indemnity
The Company shall pay to the Trustee such compensation as the Company
and the Trustee may from time to time agree upon in writing for its acceptance
of this Indenture and services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, advances and expenses incurred by it. Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee against any and all loss, damage, claim, liability or expense including
taxes (other than taxes based upon, measured by or determined by the income of
the Trustee), incurred by it arising out of or in connection with the acceptance
or administration of its duties under this Indenture, except as set forth in the
next paragraph. The Trustee promptly shall notify the Company of any claim for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
<PAGE>
To secure the Company's payment obligations in this Section 8.06, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of,
premium, if any, and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 7.01(7) or (8) occurs, the expenses (including
the reasonable charges and expenses of its counsel) and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 8.07 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 8.07.
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in principal
amount of the then outstanding Notes may remove the Trustee by so notifying the
Trustee and the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 310(b) of the TIA;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 310 of the TIA, any
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the Lien provided for
in Section 8.06. Notwithstanding replacement of the Trustee pursuant to this
Section 8.07, the Company's obligations under Section 8.06 shall continue for
the benefit of the retiring Trustee.
Section 8.08 Successor Trustee by Merger, etc.
Subject to Section 8.09, if the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor Trustee.
Section 8.09 Eligibility; Disqualification
<PAGE>
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, shall be authorized
under such laws to exercise corporate trust power, shall be subject to
supervision or examination by federal or state (or the District of Columbia)
authority and shall have a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition.
Section 8.10 Reports by Trustee to Holders
To the extent required by TIA ss. 313(a), within 60 days after May 15
of each year commencing with 1997 and for as long as there are Notes outstanding
hereunder, the Trustee shall mail to each Holder the Company's brief report
dated as of such date that complies with TIA ss. 313(a). The Trustee also shall
comply with TIA ss. 313(b), (c) and (d). A copy of such report at the time of
its mailing to Holders shall be filed with the SEC, if required, and each stock
exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any national securities exchange and the Trustee shall comply with
Section 313(d) of the TIA.
ARTICLE 9
DISCHARGE OF INDENTURE
Section 9.01 Termination of Company's Obligations
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 8.06 and the Trustee's and Paying Agent's
obligations under Section 9.03 shall survive) when all outstanding Notes
theretofore authenticated and issued have been delivered (other than destroyed,
lost or stolen Notes that have been replaced or paid) to the Trustee for
cancellation and the Company has paid all sums payable hereunder. In addition,
the Company may terminate all of its obligations under this Indenture if:
(1) the Company irrevocably deposits in trust with the Trustee or, at
the option of the Trustee, with a trustee satisfactory to the Trustee and the
Company under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, money or U.S. Government Obligations sufficient to
pay principal of, premium, if any, and interest on the Notes to maturity and to
pay all other sums payable by it hereunder; provided that (i) the trustee of the
irrevocable trust shall have been irrevocably instructed to pay such money or
the proceeds of such U.S. Government Obligations to the Trustee and (ii) the
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of said principal,
premium and interest with respect to the Notes;
(2) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to satisfaction and discharge of this
Indenture have been complied with, and an Opinion of Counsel to the same effect;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit; and
(4) the Company shall have delivered to the Trustee an Opinion of
Counsel from nationally recognized counsel acceptable to the Trustee or a tax
ruling to the effect that the Holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 9.01 and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised.
In such event, this Indenture shall cease to be of further effect (except as
provided in the next succeeding paragraph), and the Trustee, on demand of the
Company, shall execute proper instruments acknowledging confirmation of and
discharge under this Indenture.
However, the Company's obligations in Sections 2.03, 2.04, 2.05,
2.06, 5.01, 5.02, 8.06 and 8.07 and the Company's, the Trustee's and Paying
Agent's obligations in Section 9.03 shall survive until the Notes are no longer
<PAGE>
outstanding. Thereafter, only the Company's obligations in Section 8.06 and the
Trustee's and Paying Agent's obligations in Section 9.03 shall survive.
After such irrevocable deposit made pursuant to this Section 9.01 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal
of, premium, if any, or interest on the Notes, the U.S. Government Obligations
shall be payable as to principal or interest on or before such payment date in
such amounts as will provide the necessary money. U.S. Government Obligations
shall not be callable at the issuer's option.
Section 9.02 Application of Trust Money
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 9.01. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of, premium, if any, and interest on the
Notes.
Section 9.03 Repayment to Company
The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal, premium, if
any, or interest that remains unclaimed for two years after the date upon which
such payment shall have become due; provided, however, that the Company shall
have either caused notice of such payment to be mailed to each Holder entitled
thereto no less than 30 days prior to such repayment or within such period shall
have published such notice in a financial newspaper of general circulation
published in The City of New York. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
Section 9.04 Reinstatement
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 9.01 until such
time as the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 9.01; provided, however, that
if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 10
AMENDMENTS
Section 10.01 Without Consent of Holders
The Company and the Trustee may amend this Indenture or the Notes or
waive any provision hereof without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
<PAGE>
(2) to comply with Section 6.01;
(3) to provide for uncertificated Notes in addition to certificated
Notes;
(4) to make any change that does not adversely affect the legal
rights hereunder of any Holder;
(5) to surrender any right or power herein conferred upon the
Company;
(6) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of the
Indenture under the TIA, or under any similar federal statute hereafter enacted;
or
(7) to add or release any Guarantor pursuant to the terms of this
Indenture or the Guarantees.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors authorizing the execution of any such supplemental indenture,
and upon receipt by the Trustee of the documents described in Section 10.06, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any supplemental indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise. After an amendment or waiver under this Section 10.01 becomes
effective, the Company shall mail to the Holders of each Note affected thereby a
notice briefly describing the amendment or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
Section 10.02 With Consent of Holders
Except as provided in this Section 10.02, the Company and the Trustee
may amend this Indenture or the Notes with the written consent (including
consents obtained in connection with a tender offer or exchange offer for Notes)
of the Holders of at least a majority in principal amount of the then
outstanding Notes.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of the
consent of the Holders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 10.06, the Trustee shall join with the Company in
the execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
The Holders of a majority in principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes (including waivers obtained in
connection with a tender offer or exchange offer for Notes). However, without
the consent of each Holder affected, an amendment or waiver under this Section
10.02 may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of interest,
including default interest, on any Note ;
(3) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to optional redemption or mandatory
repurchase of the Notes under this Indenture, including without limitation
purchases of Notes under Section 3.04;
(4) make any Note payable in money other than that stated in the
Note;
(5) make any change in Section 5.03, 7.04 or 7.07 or in this
paragraph of this Section 10.02; or
(6) waive a continuing Default or Event of Default in the payment of
principal of or interest on the Notes or that resulted from a failure to comply
with Section 5.03.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of this Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Notes with respect to which such consent is required or sought as of a
date identified by the Trustee or the Company in a notice furnished to Holders
in accordance with the terms of this Indenture.
<PAGE>
Section 10.03 Compliance with Trust Indenture Act
Every amendment to this Indenture or the Notes shall comply in form
and substance with the TIA as then in effect.
Section 10.04 Revocation and Effect of Consents
Until an amendment (which includes any supplement) or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder or subsequent Holder may
revoke the consent as to his or her Note or portion of a Note if the Trustee
receives written notice of revocation before the date the amendment or waiver
becomes effective. An amendment or waiver becomes effective in accordance with
its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver. If the Company elects to fix a record date for such purpose, the record
date shall be fixed at (i) the later of 30 days prior to the first solicitation
of such consent or the date of the most recent list of Holders furnished to the
Trustee prior to such solicitation, or (ii) such other date as the Company shall
designate. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of Notes
required hereunder for such amendment or waiver to be effective shall have also
been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Holder, unless it is of the type described in any of clauses (1) through (7) of
Section 10.02. In such case, the amendment or waiver shall bind each Holder of a
Note who has consented to it and every subsequent Holder of a Note that
evidences the same debt as the consenting Holder's Note.
Section 10.05 Notation on or Exchange of Notes
The Trustee may place an appropriate notation about an amendment or
waiver on any Note thereafter authenticated. The Company in exchange for all
Notes may issue and the Trustee shall authenticate new Notes that reflect the
amendment or waiver.
Section 10.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 10 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and, subject to Section 8.01, shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that such
amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith and that it will be valid and
binding upon the Company in accordance with its terms.
ARTICLE 11
MISCELLANEOUS
Section 11.01 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss. 318(c), the imposed duties shall control.
<PAGE>
Section 11.02 Notices
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the other's address:
If to the Company: ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attention: Executive Vice President and Chief
Financial Officer
cc: Senior Vice President and General Counsel
If to the Trustee: The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail to the Holder's address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03 Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 11.04) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 11.04) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
Section 11.04 Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to Section 314(a)(4) of the TIA) shall include:
<PAGE>
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
Section 11.05 Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.06 Legal Holidays
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section 11.07 No Recourse Against Others
A director, officer, employee or stockholder of the Company, as such,
shall not have any liability for any obligations of the Company under the Notes
or this Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability.
Section 11.08 Governing Law
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Section 11.09 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 11.10 Successors
All agreements of the Company in this Indenture and the Notes shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 11.11 Severability
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12 Counterpart Originals
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13 Trustee as Paying Agent and Registrar
<PAGE>
The Company initially appoints the Trustee as Paying Agent and
Registrar.
Section 11.14 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SIGNATURES
ICF KAISER INTERNATIONAL, INC.
Issuer
By: /s/ James O. Edwards
Title: Chairman and Chief Executive Officer
THE BANK OF NEW YORK
Trustee
By: /s/ B. Merino
Title: Assistant Treasurer
<PAGE>
EXHIBIT A
[FORM OF SERIES A NOTE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) PROMULGATED UNDER THE
SECURITIES ACT (AN "ACCREDITED INVESTOR")) OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S PROMULGATED UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO
AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
<PAGE>
ICF KAISER INTERNATIONAL, INC.
12% SENIOR NOTE DUE 2003, SERIES A
CUSIP No. 449244_____
No. $____________________
ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for
value received promises to pay to [ ], or registered assigns, the principal sum
of _______________ Dollars on December 31, 2003.
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
Reference is made to the further provisions of this Security contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or
by facsimile by its duly authorized officers.
Dated:
ICF KAISER INTERNATIONAL, INC.
By:
------------------------------------
By:
------------------------------------
(SEAL)
Trustee's Certificate of Authentication
This is one of the Series A Notes referred to in the within-mentioned Indenture.
Dated: THE BANK OF NEW YORK
as Trustee
By:
-----------------------------------
Authorized Signatory
<PAGE>
[REVERSE OF SECURITY]
12% SENIOR NOTE DUE 2003, SERIES A
Certain capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture under which this Note is issued.
1. Interest. ICF Kaiser International, Inc., a Delaware corporation
(the "Company," which term shall include any Successor under the Indenture),
promises to pay interest on the principal amount of this Note at 12%, provided
that one percent (1%) additional interest (the "Additional Interest") is payable
on the Notes from the date of, and as provided in, the Indenture. The Company
files its financial results with the Securities and Exchange Commission on
quarterly and annual reports, and these reports include the Company's earnings
after deducting minority interests and before interest, taxes, depreciation, and
amortization calculated in accordance with generally accepted accounting
principles ("Earnings"). The Company measures its Earnings for trailing twelve
month periods, each period to end on the last day of a fiscal quarter and extend
no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the
Company's Earnings equal or exceed $36 million for two consecutive Quarterly
Measurement Periods, then the Company is relieved of its obligation to pay any
future Additional Interest. However, if the Company's Earnings do not equal or
exceed $36 million for any subsequent Quarterly Measurement Period, up to and
including the Quarterly Measurement Period ending March 31, 1998, the Company is
obligated to commence paying Additional Interest until the Company's Earnings
again equal or exceed $36 million on a trailing twelve month basis calculated
quarterly. The Company will pay interest semiannually on June 30 and December 31
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from the date of issuance; provided, that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
June 30, 1997. The Company shall pay interest on overdue principal from time to
time on demand at the rate of 1% per annum in excess of the interest rate then
in effect; it shall pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Company will pay the principal of, premium, if
any, and interest on the Notes in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). The Company, however, may pay such amounts by check
payable in such U.S. Legal Tender. It may mail an interest check to a Holder's
registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-registrar without notice to any Holder. The
Company may act in any such capacity.
4. Indenture and Guarantees. The Company issued the Notes under an
Indenture dated as of December 23, 1996 (the "Indenture") between the Company
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of
execution of the Indenture until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA. The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Notes are unsecured general
obligations of the Company limited to $15,000,000 in aggregate principal amount.
Payment on each Note is guaranteed, jointly and severally, by the Guarantors
pursuant to Section 5.11 of the Indenture.
5. Optional Redemption. The Notes may not be redeemed prior to
December 31, 1998, but will be redeemable at the option of the Company, in whole
or in part, at any time on or after December 31, 1998, at the following
redemption
<PAGE>
prices (expressed as percentages of principal amount), together with
accrued and unpaid interest, if any, thereon to the redemption date, if redeemed
during the 12-month period beginning December 31:
<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 fewer than all of the Notes are to be redeemed at any time, selection of
the Notes to be redeemed will be made by the Trustee from among the outstanding
Notes on a pro rata basis, by lot or by any other method permitted in the
Indenture. Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at the registered address of such Holder. On and after the redemption
date, interest shall cease to accrue on the Notes or portions thereof called for
redemption.
6. Offers to Repurchase.
(a) Change of Control Offer. In accordance with the terms of the Indenture,
upon the occurrence of a Change of Control, the Company will be required to
offer (a "Change of Control Offer") to purchase all outstanding Notes at a
purchase price equal to 101% of the aggregate principal amount of the Notes,
plus accrued and unpaid interest to the date of purchase.
A Holder of Notes may tender or refrain from tendering all or any portion
of his Notes at his discretion by completing the form entitled "OPTION OF HOLDER
TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes tendered
must be in integral multiples of $1,000.
(b) Asset Sale Offer. In accordance with the terms of the Indenture,
if the Company or any Restricted Subsidiary consummates an Asset Sale, the
Company will, under certain circumstances, be required to utilize a portion of
the net proceeds received from such Asset Sale to offer to purchase Notes at a
purchase price equal to 100% of the aggregate principal amount of the Notes plus
accrued interest to the date fixed for the purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
Subject to the provisions described above and compliance with Article
6 of the Indenture, the Company may sell or otherwise dispose of all or
substantially all of its assets to a Successor that assumes all of the Company's
obligations under the Notes and Indenture, and thereafter be discharged from
such obligations.
7. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
8. Persons Deemed Owners. The registered Holder of a Note may be treated as
its owner for all purposes.
52
<PAGE>
9. Unclaimed Funds. If funds for the payment of principal or interest remain
unclaimed for two years, the Trustee and the Paying Agent will repay the funds
to the Company at its request. After that, all liability of the Trustee and
Paying Agent with respect to such funds shall cease.
10. Discharge. The Company may be discharged from its obligations under the
Indenture and the Notes, except for certain provisions thereof, upon
satisfaction of certain conditions specified in the Indenture.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the
Notes may be amended or supplemented with the consent (which may include
consents obtained in connection with a tender offer or exchange offer for Notes)
of the Holders of at least a majority in principal amount of the Notes then
outstanding, and any existing Default under, or compliance with any provision
of, the Indenture may be waived (other than any continuing Default or Event of
Default in the payment of interest on or the principal of the Notes, or any
failure to comply with the provisions of the Indenture relating to a Change of
Control Offer (as defined in the Indenture)) with the consent (which may include
consents obtained in connection with a tender offer or exchange offer for Notes)
of the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency; to provide for the assumption of the Company's obligations to
Holders in the case of a merger or acquisition; to provide for uncertificated
Notes in addition to or in place of certificated Notes; to make any change that
does not adversely affect the legal rights of any Holder; to surrender any right
or power conferred upon the Company in the Indenture or the Notes; or to modify,
eliminate or add to the provisions of the Indenture or the Notes to such extent
as shall be necessary to effect the qualification of the Indenture under the TIA
or under any similar federal statute hereafter enacted.
The right of any Holder to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of any
Notes with respect to which such consent is required or sought as of a date
identified by the Trustee or the Company in a notice furnished to Holder in
accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not take
certain actions, including: (i) reduce the amount of Notes whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the rate of or change
the time for payment of interest, including default interest, on any Note; (iii)
reduce the principal of or change the fixed maturity of any Note or alter the
provisions with respect to optional redemption or mandatory repurchase of the
Notes under the Indenture; (iv) make any Note payable in money other than that
stated in this Note; (v) make any change in certain provisions of the Indenture
regarding a Change of Control, a waiver of past Defaults and the rights of
Holders to receive payment; or (vi) waive a continuing Default or Event of
Default in the payment of principal of or interest on the Notes or that resulted
from a failure to comply with the Change of Control provisions of the Indenture.
12. Restrictive Covenants. The Indenture contains certain covenants which,
among other things, limit: (i) the incurrence of additional Indebtedness by the
Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the
repurchase of capital stock or subordinated indebtedness; (iv) the making of
certain other distributions, loans and investments; (v) the sale of assets and
the sale of the stock of Restricted Subsidiaries; (vi) the creation of
restrictions on the ability of Restricted Subsidiaries to pay dividends or make
other payments to the Company; and (vii) the ability of the Company and
Restricted Subsidiaries to enter into certain transactions with Affiliates or to
merge, consolidate or transfer substantially all assets. These restrictions are
subject to important qualifications and exceptions. The Company must report to
the Trustee on compliance with such limitations.
13. Defaults and Remedies. Events of Default include: default in payment of
interest on the Notes for 30 days; default in payment of principal on the Notes;
failure by the Company for 60 days after notice to it to comply with any of its
other agreements in the Indenture or the Notes; certain defaults under other
Indebtedness; certain final judgments that remain undercharged; and certain
events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be immediately due and
payable for an amount equal to 100% of the principal amount of the Notes plus
accrued interest to the date of payment, except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes become due and payable immediately without further action or notice.
<PAGE>
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
14. Trustee Dealings with Company. The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee or stockholder,
as such, of the Company shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (-- tenants by
the entireties), JT TEN (-- joint tenants with right of survivorship and not as
tenants in common), CUST (--Custodian), and U/G/M/A (-- Uniform Gifts to Minors
Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Commission
on Uniform Security Identification Procedures, the Company has caused CUSIP
Numbers to be printed on the Notes as a convenience to the Holders of the Notes.
No representation is made to the accuracy of such numbers as provided on the
Notes, and reliance may be placed only on the other identification numbers
printed thereon.
19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
20. Registration Rights. Pursuant to the Registration Rights Agreement, the
Company will be obligated upon the occurrence of certain events to consummate an
exchange offer pursuant to which the Holders of the Series A Notes shall have
the right to exchange the Series A Notes for the Company's 12% Senior Notes due
2003, Series B, which have been registered under the Securities Act, in like
principal amount and having terms identical in all material respects as the
Series A Notes. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attention: Executive Vice President and
Chief Financial Officer
<PAGE>
GUARANTEE
The Guarantors (as defined in the Indenture referred to in the Note
upon which this notation is endorsed and each hereinafter referred to as a
"Guarantor," which term includes any successor to a Guarantor) have
unconditionally guaranteed (such guarantee by each Guarantor being referred to
herein as the "Guarantee") (a) the full and prompt payment of the principal of
and premium, if any, on any Note when and as the same shall come due and
payable, whether at the stated maturity thereof, by acceleration, redemption or
otherwise and (b) the full and prompt payment of any interest on any Note when
and as the same shall become due, according to the terms of such Note and the
Indenture.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Guarantor shall have any liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantees shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which the guarantees are
noted shall have been executed by the Trustee under the indenture by the manual
signature of its authorized officers.
CYGNA CONSULTING ENGINEERS AND
Attest: BY:
---------------------------
Name:
Title:
ICF KAISER GOVERNMENT PROGRAMS, INC.
Attest: BY:
---------------------------
Name:
Title:
PCI OPERATING COMPANY, INC.
Attest: BY:
---------------------------
Name:
Title:
SYSTEMS APPLICATIONS INTERNATIONAL, INC.
Attest: BY:
---------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- ---------------------------------------------
(Insert assignee's Soc. Sec. or tax I.D. No.)
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-------------------------------------
Your Signature:
---------------------------
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and
return this form to the Company.
If you want to elect to have only part of the Note purchased by the
Company pursuant to the Indenture, state the amount you elect to have purchased:
$
-----------------------
Date:
-------------------------------
Your Signature:
--------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
<PAGE>
EXHIBIT B
[FORM OF SERIES B NOTE]
ICF KAISER INTERNATIONAL, INC.
12% SENIOR NOTE DUE 2003, SERIES B
CUSIP No. 449244
-----
No. $
----------------------
ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for
value received promises to pay to [ ], or registered assigns, the principal sum
of Dollars on December 31, 2003.
---------------
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
Reference is made to the further provisions of this Security contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or
by facsimile by its duly authorized officers.
Dated:
ICF KAISER INTERNATIONAL, INC.
By:
--------------------------------------
By:
--------------------------------------
(SEAL)
<PAGE>
Trustee's Certificate of Authentication
This is one of the Series B Notes referred to in the within-mentioned
Indenture.
Dated: THE BANK OF NEW YORK
as Trustee
By:
-----------------------------------
Authorized Signatory
<PAGE>
[REVERSE OF SECURITY]
12% SENIOR NOTE DUE 2003, SERIES B
Certain capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture under which this Note is issued.
1. Interest. ICF Kaiser International, Inc., a Delaware corporation (the
"Company," which term shall include any Successor under the Indenture), promises
to pay interest on the principal amount of this Note at 12% provided that one
percent (1%) additional interest (the "Additional Interest") is payable on the
Notes from the date of, and as provided in, the Indenture. The Company files its
financial results with the Securities and Exchange Commission on quarterly and
annual reports, and these reports include the Company's earnings after deducting
minority interests and before interest, taxes, depreciation, and amortization
calculated in accordance with generally accepted accounting principles
("Earnings"). The Company measures its Earnings for trailing twelve month
periods, each period to end on the last day of a fiscal quarter and extend no
further than March 31, 1998 (each a "Quarterly Measurement Period"). If the
Company's Earnings equal or exceed $36 million for two consecutive Quarterly
Measurement Periods, then the Company is relieved of its obligation to pay any
future Additional Interest. However, if the Company's Earnings do not equal or
exceed $36 million for any subsequent Quarterly Measurement Period, up to and
including the Quarterly Measurement Period ending March 31, 1998, the Company is
obligated to commence paying Additional Interest until the Company's Earnings
again equal or exceed $36 million on a trailing twelve month basis calculated
quarterly. The Company will pay interest semiannually on June 30 and December 31
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from the date of issuance; provided, that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
June 30, 1997. The Company shall pay interest on overdue principal from time to
time on demand at the rate of 1% per annum in excess of the interest rate then
in effect; it shall pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the record date next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or before such
Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay the principal of, premium, if any, and
interest on the Notes in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). The Company, however, may pay such amounts by check payable in such
U.S. Legal Tender. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-registrar without notice to any Holder. The
Company may act in any such capacity.
4. Indenture and Guarantees. The Company issued the Notes under an
Indenture dated as of December 23, 1996 (the "Indenture") between the Company
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date of
execution of the Indenture until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA. The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Notes are unsecured general
obligations of the Company limited to $15,000,000 in aggregate principal amount.
Payment on each Note is guaranteed, jointly and severally, by the Guarantors
pursuant to Section 5.11 of the Indenture.
<PAGE>
5. Optional Redemption. The Notes may not be redeemed prior to December 31,
1998, but will be redeemable at the option of the Company, in whole or in part,
at any time on or after December 31, 1998, at the following redemption prices
(expressed as percentages of principal amount), together with accrued and unpaid
interest, if any, thereon to the redemption date, if redeemed during the
12-month period beginning December 31:
Optional
Year Redemption Price
---- ----------------
1998 108.0%
1999 106.4%
2000 104.8%
2001 103.2%
2002 101.6%
If fewer than all of the Notes are to be redeemed at any time, selection
of the Notes to be redeemed will be made by the Trustee from among the
outstanding Notes on a pro rata basis, by lot or by any other method permitted
in the Indenture. Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at the registered address of such Holder. On and after the
redemption date, interest shall cease to accrue on the Notes or portions thereof
called for redemption.
6. Offers to Repurchase.
(a) Change of Control Offer. In accordance with the terms of the
Indenture, upon the occurrence of a Change of Control, the Company will be
required to offer (a "Change of Control Offer") to purchase all outstanding
Notes at a purchase price equal to 101% of the aggregate principal amount of the
Notes, plus accrued and unpaid interest to the date of purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
(b) Asset Sale Offer. In accordance with the terms of the Indenture,
if the Company or any Restricted Subsidiary consummates an Asset Sale, the
Company will, under certain circumstances, be required to utilize a portion of
the net proceeds received from such Asset Sale to offer to purchase Notes at a
purchase price equal to 100% of the aggregate principal amount of the Notes plus
accrued interest to the date fixed for the purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
Subject to the provisions described above and compliance with Article
6 of the Indenture, the Company may sell or otherwise dispose of all or
substantially all of its assets to a Successor that assumes all of the Company's
obligations under the Notes and Indenture, and thereafter be discharged from
such obligations.
The Notes rank pari passu with the $125,000,000 12% Senior
Subordinated Notes due 2003 issued by the Company pursuant to an Indenture dated
as of January 11, 1994 between the Company and The Bank of New York as Trustee.
7. Denominations, Transfer, Exchange. The Notes are in registered form without
coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
<PAGE>
8. Persons Deemed Owners. The registered Holder of a Note may be treated as
its owner for all purposes.
9. Unclaimed Funds. If funds for the payment of principal or interest
remain unclaimed for two years, the Trustee and the Paying Agent will repay the
funds to the Company at its request. After that, all liability of the Trustee
and Paying Agent with respect to such funds shall cease.
10. Discharge. The Company may be discharged from its obligations under the
Indenture and the Notes, except for certain provisions thereof, upon
satisfaction of certain conditions specified in the Indenture.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture or
the Notes may be amended or supplemented with the consent (which may include
consents obtained in connection with a tender offer or exchange offer for Notes)
of the Holders of at least a majority in principal amount of the Notes then
outstanding, and any existing Default under, or compliance with any provision
of, the Indenture may be waived (other than any continuing Default or Event of
Default in the payment of interest on or the principal of the Notes, or any
failure to comply with the provisions of the Indenture relating to a Change of
Control Offer (as defined in the Indenture)) with the consent (which may include
consents obtained in connection with a tender offer or exchange offer for Notes)
of the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of any Holder, the Company and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity, defect or
inconsistency; to provide for the assumption of the Company's obligations to
Holders in the case of a merger or acquisition; to provide for uncertificated
Notes in addition to or in place of certificated Notes; to make any change that
does not adversely affect the legal rights of any Holder; to surrender any right
or power conferred upon the Company in the Indenture or the Notes; or to modify,
eliminate or add to the provisions of the Indenture or the Notes to such extent
as shall be necessary to effect the qualification of the Indenture under the TIA
or under any similar federal statute hereafter enacted.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Notes with respect to which such consent is required or sought as of a
date identified by the Trustee or the Company in a notice furnished to Holder in
accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not take
certain actions, including: (i) reduce the amount of Notes whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the rate of or change
the time for payment of interest, including default interest, on any Note; (iii)
reduce the principal of or change the fixed maturity of any Note or alter the
provisions with respect to optional redemption or mandatory repurchase of the
Notes under the Indenture; (iv) make any Note payable in money other than that
stated in this Note; (v) make any change in certain provisions of the Indenture
regarding a Change of Control, a waiver of past Defaults and the rights of
Holders to receive payment; or (vi) waive a continuing Default or Event of
Default in the payment of principal of or interest on the Notes or that resulted
from a failure to comply with the Change of Control provisions of the Indenture.
12. Restrictive Covenants. The Indenture contains certain covenants which,
among other things, limit: (i) the incurrence of additional Indebtedness by the
Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii) the
repurchase of capital stock or subordinated indebtedness; (iv) the making of
certain other distributions, loans and investments; (v) the sale of assets and
the sale of the stock of Restricted Subsidiaries; (vi) the creation of
restrictions on the ability of Restricted Subsidiaries to pay dividends or make
other payments to the Company; and (vii) the ability of the Company and
Restricted Subsidiaries to enter into certain transactions with Affiliates or to
merge, consolidate or transfer substantially all assets. These restrictions are
subject to important qualifications and exceptions. The Company must report to
the Trustee on compliance with such limitations.
13. Defaults and Remedies. Events of Default include: default in payment of
interest on the Notes for 30 days; default in payment of principal on the Notes;
failure by the Company for 60 days after notice to it to comply with any of its
other agreements in the Indenture or the Notes; certain defaults under other
Indebtedness; certain final judgments that remain undercharged; and certain
events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be immediately due and
payable for an amount equal to 100% of the principal amount of the Notes plus
<PAGE>
accrued interest to the date of payment, except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes become due and payable immediately without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
14. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (--
tenants by the entireties), JT TEN (-- joint tenants with right of survivorship
and not as tenants in common), CUST (--Custodian), and U/G/M/A (-- Uniform Gifts
to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Commission on Uniform Security Identification Procedures, the Company has caused
CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made to the accuracy of such numbers as provided on
the Notes, and reliance may be placed only on the other identification numbers
printed thereon.
19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attention: Executive Vice President and
Chief Financial Officer
<PAGE>
GUARANTEE
The Guarantors (as defined in the Indenture referred to in the Note upon
which this notation is endorsed and each hereinafter referred to as a
"Guarantor," which term includes any successor to a Guarantor) have
unconditionally guaranteed (such guarantee by each Guarantor being referred to
herein as the "Guarantee") (a) the full and prompt payment of the principal of
and premium, if any, on any Note when and as the same shall come due and
payable, whether at the stated maturity thereof, by acceleration, redemption or
otherwise and (b) the full and prompt payment of any interest on any Note when
and as the same shall become due, according to the terms of such Note and the
Indenture.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Guarantor shall have any liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
The Guarantees shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which the guarantees are
noted shall have been executed by the Trustee under the indenture by the manual
signature of its authorized officers.
GUARANTORS:
CYGNA CONSULTING ENGINEERS AND
Attest: BY:
---------------------------------
Name:
Title:
ICF KAISER GOVERNMENT PROGRAMS, INC.
Attest: BY:
---------------------------------
Name:
Title:
PCI OPERATING COMPANY, INC.
Attest: BY:
---------------------------------
Name:
Title:
SYSTEMS APPLICATIONS INTERNATIONAL,
INC.
Attest: BY:
---------------------------------
Name:
Title:
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- ------------------------------------------
(Insert assignee's Soc. Sec. or tax I.D. No.)
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-----------------------------------
Your Signature:
----------------------
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and
return this form to the Company.
If you want to elect to have only part of the Note purchased by the
Company pursuant to the Indenture, state the amount you elect to have purchased:
$
-----------------------------
Date:
-------------------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
<PAGE>
EXHIBIT C
FORM OF LEGEND FOR GLOBAL NOTES
Any Global Note authenticated and delivered hereunder shall bear a legend (which
would be in addition to any other legends required in the case of a Restricted
Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE
FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 12% Senior Notes due 2003, Series A, and
12% Senior Notes due 2003, Series B
(the "Notes"), of ICF Kaiser International, Inc.
------------------------------------------------
This Certificate relates to $_____ principal amount of Notes held in the form
of* ___ a beneficial interest in a Global Note or* ______ Physical Notes by
_____ (the "Transferor").
The Transferor:*
__
/__/ has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Note held by the Depositary a
Physical Note or Physical Notes in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Note (or the portion thereof indicated above); or
__
/__/ has requested that the Registrar by written order to exchange
or register the transfer of a Physical Note or Physical Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and the restrictions on
transfers thereof as provided in Section 2.05 of such Indenture, and that the
transfer of this Note does not require registration under the Securities Act of
1933, as amended (the "Act") because*:
__
/__/ Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.05(a)(B)(I) or Section
2.05(d)(i)(A) of the Indenture).
__
/__/ Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
__
/__/ Such Note is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act).
__
/__/ Such Note is being transferred in reliance on Regulation S
under the Act.
__
/__/ Such Note is being transferred in reliance on Rule 144 under
the Act.
__
/__/ Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
---------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------------------
[Authorized Signatory]
Date:
----------------------
*Check applicable box.
<PAGE>
EXHIBIT E
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
-----------------------------------------------
________________, ______
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: ICF Kaiser International, Inc. (the "Company") Indenture (the "Indenture")
relating to 12% Senior Notes due 2003, Series A, and 12% Senior Notes due
2003, Series B
--------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Notes due 2003,
Series A, or 12% Senior Notes due 2003, Series B (the "Notes"), of the Company,
we confirm that:
1. We have received such information as we deem necessary in order to make
our investment decision.
2. We understand that any subsequent transfer of the Notes is subject to
certain restrictions and conditions set forth in the Indenture and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Notes, we will do so only (A) to the Company
or any subsidiary thereof, (B) inside the United States in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as defined
therein), (C) inside the United States to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to the Trustee a signed letter substantially
in the form hereof, (D) outside the United States in accordance with Regulation
S under the Securities Act, (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available) or (F) pursuant to
an effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of Notes, we will be required
to furnish to the Trustee and the Company, such certification, legal opinions
and other information as the Trustee and the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions. We
further understand that the Notes purchased by us will bear a legend to the
foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
<PAGE>
6. We are acquiring the Notes purchased by us for our account or for one or
more accounts (each of which is an institutional "accredited investor") as to
each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
----------------------------
[Authorized Signatory]
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
with Regulation S Transfers
-------------------------------
________________, ______
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: ICF Kaiser International, Inc. (the "Company")
Indenture (the "Indenture") relating to 12% Senior
Notes due 2003, Series A, and 12% Senior Notes
due 2003, Series B (the "Notes")
--------------------------------------------------
Dear Sirs:
In connection with our proposed sale of $_________________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United States;
(2) either (a) at the time the buy offer was originated, the transferee was
outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither we nor any person acting
on our behalf knows that the transaction has been pre-arranged with a buyer
in the United States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions applicable to
the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------
[Authorized Signature]
<PAGE>
EXHIBIT G
FORM OF GUARANTEE
FOR VALUE RECEIVED, [name of subsidiary], a corporation duly organized and
existing under the laws of the State [state] (herein called the "Guarantor",
which term includes any successor corporation under the Indenture dated December
23, 1996, as supplemented (herein called the "Indenture") referred to in the
Notes to which this Guarantee relates), hereby unconditionally guarantees to the
Holders from time to time of the Notes:
(a) the full and prompt payment of the principal of, and premium, if any, on
any Note when and as the same shall come due and payable, whether at the stated
maturity thereof, by acceleration, redemption or otherwise, and
(b) the full and prompt payment of any interest on any Note when and as the
same shall become due, according to the terms of such Note and the Indenture.
In addition, the Guarantor hereby unconditionally agrees that upon default
by the Company in the payment when due of the principal of, premium, if any, on
and interest on the Notes (whether at stated maturity thereof, acceleration,
redemption or otherwise), the Guarantor will forthwith pay the same, without
further notice or demand.
The obligations of the Guarantor hereunder shall be absolute and
unconditional and, except as otherwise provided herein, shall remain in full
force and effect until the entire principal of, premium, if any, on, and
interest on the Notes shall have been paid or provided for in accordance with
the provisions of the Indenture, and such obligations shall not be affected,
modified or impaired upon the happening from time to time of any event,
including without limitation any of the following, whether or not with notice
to, or the consent of, the Guarantor:
(a) the waiver, surrender, compromise, settlement, release, or termination of
any or all of the obligations, covenants, or agreements of the Company under the
Indenture or the Notes, unless the waiver, surrender, compromise, settlement,
release or termination is made specifically applicable to the Guarantor;
b) the failure to give notice to the Guarantor of the occurrence of an Event of
Default;
(c) the waiver, compromise, or release of the payment, performance or
observance by the Company of any or all of its obligations, covenants or
agreements contained in the Indenture, unless such waiver, compromise or release
is specifically applicable to the Guarantor;
(d) the extension of time for payment of any principal of, premium, if any, on,
or interest on any Notes or for any other payments under the Indenture or of the
time for performance of any other obligations, covenants or agreements under or
arising out of the Indenture, unless such extension of time is specifically
applicable to the Guarantor;
(e) the modification or amendment (whether material or otherwise) of any
obligation, covenant, or agreement set forth in the Indenture or the Notes,
unless such modification or amendment is specifically applicable to the
Guarantor;
(f) the taking or the omission of any of the actions referred to in the
Indenture and any of the actions under the Notes;
(g) any failure, omission, delay, or lack on the part of the Trustee to
enforce, assert or exercise any right, power or remedy conferred on the Trustee
in the Indenture, or any other act or acts on the part of the Trustee or any of
the Holders from time to time of the Notes;
(h) the voluntary or involuntary liquidation, dissolution, sale, or other
disposition of all or substantially all of the assets, marshalling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with creditors, or
readjustment of, or other similar proceedings affecting the
<PAGE>
Guarantor, or the Company or any of the assets of any of them, or any allegation
or contest of the validity of this Guarantee in any such proceeding;
(i) to the extent permitted by law, the release or discharge by operation of
law of the Company from the performance or observance of any obligation,
covenant, or agreement contained in the Indenture, unless the Guarantor is also
released or discharged by operation of law;
(j) the default or failure of the Guarantor or the Trustee fully to perform any
of its obligations set forth in the Indenture or the Notes; or
(k) the invalidity of the Indenture or the Notes or any part thereof.
No set-off, counterclaim, reduction, or diminution of any obligation, or
any defense of any kind or nature which the Guarantor has or may have against
the Trustee shall be available hereunder to the Guarantor against the Trustee to
reduce the payments of the Guarantor under this Guarantee.
The Guarantor shall be released from all of its obligations under this
Guarantee if:
(a) the Guarantor has sold all or substantially all of its assets or the
Company and its Restricted Subsidiaries have sold all of the Capital Stock
of the Guarantor owned by them, in each case in a transaction in compliance
with Sections 5.09 and 6.01 of the Indenture; or
(b) The Guarantor merges with or into or consolidates with, or transfers all or
substantially all of its assets to, the Company or another Guarantor in a
transaction in compliance with Section 6.01 hereof;
and in each such case, the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to such transactions have been
complied with.
No stockholder, officer, director or incorporator, as such, past, present
or future, of the Guarantor shall have any liability under this Guarantee by
reason of his or its status as such stockholder, officer, director or
incorporator.
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of
laws.
All terms used in this Guarantee which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication on the Note to which this
Guarantee is endorsed has been executed by or on behalf of the Trustee, by the
manual signature of its, or its Authenticating Agent's, authorized signatories,
this Guarantee shall not be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Guarantor has caused
this Guarantee to be duly executed.
Dated: [Name of Subsidiary]
[CORPORATE SEAL] By:
-----------------------------
Title
Attest:
----------------
Secretary
<PAGE>
EXHIBIT H
GUARANTEE OF CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC.
FOR VALUE RECEIVED, Cygna Consulting Engineers and Projects
Management, Inc., a corporation duly organized and existing under the laws of
the State of California (herein called the "Guarantor", which term includes any
successor corporation under the Indenture dated December 23, 1996, as
supplemented (herein called the "Indenture") referred to in the Notes to which
this Guarantee relates), hereby unconditionally guarantees to the Holders from
time to time of the Notes:
(a) the full and prompt payment of the principal of, and premium, if
any, on any Note when and as the same shall come due and payable, whether at the
stated maturity thereof, by acceleration, redemption or otherwise, and
(b) the full and prompt payment of any interest on any Note when and
as the same shall become due, according to the terms of such Note and the
Indenture.
In addition, the Guarantor hereby unconditionally agrees that upon
default by the Company in the payment when due of the principal of, premium, if
any, on and interest on the Notes (whether at stated maturity thereof,
acceleration, redemption or otherwise), the Guarantor will forthwith pay the
same, without further notice or demand.
The obligations of the Guarantor hereunder shall be absolute and
unconditional and, except as otherwise provided herein, shall remain in full
force and effect until the entire principal of, premium, if any, on, and
interest on the Notes shall have been paid or provided for in accordance with
the provisions of the Indenture, and such obligations shall not be affected,
modified or impaired upon the happening from time to time of any event,
including without limitation any of the following, whether or not with notice
to, or the consent of, the Guarantor:
(a) the waiver, surrender, compromise, settlement, release, or
termination of any or all of the obligations, covenants, or agreements of the
Company under the Indenture or the Notes, unless the waiver, surrender,
compromise, settlement, release or termination is made specifically applicable
to the Guarantor;
(b) the failure to give notice to the Guarantor of the occurrence of
an Event of Default;
(c) the waiver, compromise, or release of the payment, performance or
observance by the Company of any or all of its obligations, covenants or
agreements contained in the Indenture, unless such waiver, compromise or release
is specifically applicable to the Guarantor;
(d) the extension of time for payment of any principal of, premium, if
any, on, or interest on any Notes or for any other payments under the Indenture
or of the time for performance of any other obligations, covenants or agreements
under or arising out of the Indenture, unless such extension of time is
specifically applicable to the Guarantor;
(e) the modification or amendment (whether material or otherwise) of
any obligation, covenant, or agreement set forth in the Indenture or the Notes,
unless such modification or amendment is specifically applicable to the
Guarantor;
(f) the taking or the omission of any of the actions referred to in
the Indenture and any of the actions under the Notes;
(g) any failure, omission, delay, or lack on the part of the Trustee
to enforce, assert or exercise any right, power or remedy conferred on the
Trustee in the Indenture, or any other act or acts on the part of the Trustee or
any of the Holders from time to time of the Notes;
<PAGE>
(h) the voluntary or involuntary liquidation, dissolution, sale, or
other disposition of all or substantially all of the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors,
or readjustment of, or other similar proceedings affecting the Guarantor, or the
Company or any of the assets of any of them, or any allegation or contest of the
validity of this Guarantee in any such proceeding;
(i) to the extent permitted by law, the release or discharge by
operation of law of the Company from the performance or observance of any
obligation, covenant, or agreement contained in the Indenture, unless the
Guarantor is also released or discharged by operation of law;
(j) the default or failure of the Guarantor or the Trustee fully to
perform any of its obligations set forth in the Indenture or the Notes; or
(k) the invalidity of the Indenture or the Notes or any part thereof.
No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which the Guarantor has or may have against
the Trustee shall be available hereunder to the Guarantor against the Trustee to
reduce the payments of the Guarantor under this Guarantee.
The Guarantor shall be released from all of its obligations under this
Guarantee if:
(a) the Guarantor has sold all or substantially all of its assets or
the Company and its Restricted Subsidiaries have sold all of the Capital Stock
of the Guarantor owned by them, in each case in a transaction in compliance with
Sections 5.09 and 6.01 of the Indenture; or
(b) The Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or another
Guarantor in a transaction in compliance with Section 6.01 hereof;
and in each such case, the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to such transactions have been
complied with.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
laws.
All terms used in this Guarantee which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication on the Note to which this
Guarantee is endorsed has been executed by or on behalf of the Trustee, by the
manual signature of its, or its Authenticating Agent's, authorized signatories,
this Guarantee shall not be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed.
CYGNA CONSULTING ENGINEERS AND PROJECT MANAGEMENT, INC.
[CORPORATE SEAL] By: /s/ Michael K. Goldman,
Title: President
Attest:
/s/ Paul Weeks, II, Secretary
<PAGE>
EXHIBIT I
GUARANTEE OF ICF KAISER GOVERNMENT PROGRAMS, INC.
FOR VALUE RECEIVED, ICF Kaiser Government Programs, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Guarantor", which term includes any successor corporation
under the Indenture dated December 23, 1996, as supplemented (herein called the
"Indenture") referred to in the Notes to which this Guarantee relates), hereby
unconditionally guarantees to the Holders from time to time of the Notes:
(a) the full and prompt payment of the principal of, and premium, if
any, on any Note when and as the same shall come due and payable, whether at the
stated maturity thereof, by acceleration, redemption or otherwise, and
(b) the full and prompt payment of any interest on any Note when and
as the same shall become due, according to the terms of such Note and the
Indenture.
In addition, the Guarantor hereby unconditionally agrees that upon
default by the Company in the payment when due of the principal of, premium, if
any, on and interest on the Notes (whether at stated maturity thereof,
acceleration, redemption or otherwise), the Guarantor will forthwith pay the
same, without further notice or demand.
The obligations of the Guarantor hereunder shall be absolute and
unconditional and, except as otherwise provided herein, shall remain in full
force and effect until the entire principal of, premium, if any, on, and
interest on the Notes shall have been paid or provided for in accordance with
the provisions of the Indenture, and such obligations shall not be affected,
modified or impaired upon the happening from time to time of any event,
including without limitation any of the following, whether or not with notice
to, or the consent of, the Guarantor:
(a) the waiver, surrender, compromise, settlement, release, or
termination of any or all of the obligations, covenants, or agreements of the
Company under the Indenture or the Notes, unless the waiver, surrender,
compromise, settlement, release or termination is made specifically applicable
to the Guarantor;
(b) the failure to give notice to the Guarantor of the occurrence of
an Event of Default;
(c) the waiver, compromise, or release of the payment, performance or
observance by the Company of any or all of its obligations, covenants or
agreements contained in the Indenture, unless such waiver, compromise or release
is specifically applicable to the Guarantor;
(d) the extension of time for payment of any principal of, premium, if
any, on, or interest on any Notes or for any other payments under the Indenture
or of the time for performance of any other obligations, covenants or agreements
under or arising out of the Indenture, unless such extension of time is
specifically applicable to the Guarantor;
(e) the modification or amendment (whether material or otherwise) of
any obligation, covenant, or agreement set forth in the Indenture or the Notes,
unless such modification or amendment is specifically applicable to the
Guarantor;
(f) the taking or the omission of any of the actions referred to in
the Indenture and any of the actions under the Notes;
(g) any failure, omission, delay, or lack on the part of the Trustee
to enforce, assert or exercise any right, power or remedy conferred on the
Trustee in the Indenture, or any other act or acts on the part of the Trustee or
any of the Holders from time to time of the Notes;
<PAGE>
(h) the voluntary or involuntary liquidation, dissolution, sale, or
other disposition of all or substantially all of the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors,
or readjustment of, or other similar proceedings affecting the Guarantor, or the
Company or any of the assets of any of them, or any allegation or contest of the
validity of this Guarantee in any such proceeding;
(i) to the extent permitted by law, the release or discharge by
operation of law of the Company from the performance or observance of any
obligation, covenant, or agreement contained in the Indenture, unless the
Guarantor is also released or discharged by operation of law;
(j) the default or failure of the Guarantor or the Trustee fully to
perform any of its obligations set forth in the Indenture or the Notes; or
(k) the invalidity of the Indenture or the Notes or any part thereof.
No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which the Guarantor has or may have against
the Trustee shall be available hereunder to the Guarantor against the Trustee to
reduce the payments of the Guarantor under this Guarantee.
The Guarantor shall be released from all of its obligations under this
Guarantee if:
(a) the Guarantor has sold all or substantially all of its assets or the
Company and its Restricted Subsidiaries have sold all of the Capital Stock of
the Guarantor owned by them, in each case in a transaction in compliance with
Sections 5.09 and 6.01 of the Indenture; or
(b) The Guarantor merges with or into or consolidates with, or transfers
all or substantially all of its assets to, the Company or another Guarantor in a
transaction in compliance with Section 6.01 hereof;
and in each such case, the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to such transactions have been
complied with.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
laws.
All terms used in this Guarantee which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication on the Note to which this
Guarantee is endorsed has been executed by or on behalf of the Trustee, by the
manual signature of its, or its Authenticating Agent's, authorized signatories,
this Guarantee shall not be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed.
ICF KAISER GOVERNMENT PROGRAMS, INC.
[CORPORATE SEAL] By: /s/ James O. Edwards
Title President
Attest:
/s/ Paul Weeks, II, Secretary
<PAGE>
EXHIBIT J
GUARANTEE OF PCI OPERATING COMPANY, INC.
FOR VALUE RECEIVED, PCI Operating Company, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Guarantor", which term includes any successor corporation under the
Indenture dated December 23, 1996, as supplemented (herein called the
"Indenture") referred to in the Notes to which this Guarantee relates), hereby
unconditionally guarantees to the Holders from time to time of the Notes:
(a) the full and prompt payment of the principal of, and premium, if
any, on any Note when and as the same shall come due and payable, whether at the
stated maturity thereof, by acceleration, redemption or otherwise, and
(b) the full and prompt payment of any interest on any Note when and
as the same shall become due, according to the terms of such Note and the
Indenture.
In addition, the Guarantor hereby unconditionally agrees that upon
default by the Company in the payment when due of the principal of, premium, if
any, on and interest on the Notes (whether at stated maturity thereof,
acceleration, redemption or otherwise), the Guarantor will forthwith pay the
same, without further notice or demand.
The obligations of the Guarantor hereunder shall be absolute and
unconditional and, except as otherwise provided herein, shall remain in full
force and effect until the entire principal of, premium, if any, on, and
interest on the Notes shall have been paid or provided for in accordance with
the provisions of the Indenture, and such obligations shall not be affected,
modified or impaired upon the happening from time to time of any event,
including without limitation any of the following, whether or not with notice
to, or the consent of, the Guarantor:
(a) the waiver, surrender, compromise, settlement, release, or
termination of any or all of the obligations, covenants, or agreements of the
Company under the Indenture or the Notes, unless the waiver, surrender,
compromise, settlement, release or termination is made specifically applicable
to the Guarantor;
(b) the failure to give notice to the Guarantor of the occurrence of
an Event of Default;
(c) the waiver, compromise, or release of the payment, performance or
observance by the Company of any or all of its obligations, covenants or
agreements contained in the Indenture, unless such waiver, compromise or release
is specifically applicable to the Guarantor;
(d) the extension of time for payment of any principal of, premium, if
any, on, or interest on any Notes or for any other payments under the Indenture
or of the time for performance of any other obligations, covenants or agreements
under or arising out of the Indenture, unless such extension of time is
specifically applicable to the Guarantor;
(e) the modification or amendment (whether material or otherwise) of
any obligation, covenant, or agreement set forth in the Indenture or the Notes,
unless such modification or amendment is specifically applicable to the
Guarantor;
(f) the taking or the omission of any of the actions referred to in
the Indenture and any of the actions under the Notes;
(g) any failure, omission, delay, or lack on the part of the Trustee
to enforce, assert or exercise any right, power or remedy conferred on the
Trustee in the Indenture, or any other act or acts on the part of the Trustee or
any of the Holders from time to time of the Notes;
<PAGE>
(h) the voluntary or involuntary liquidation, dissolution, sale, or
other disposition of all or substantially all of the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors,
or readjustment of, or other similar proceedings affecting the Guarantor, or the
Company or any of the assets of any of them, or any allegation or contest of the
validity of this Guarantee in any such proceeding;
(i) to the extent permitted by law, the release or discharge by
operation of law of the Company from the performance or observance of any
obligation, covenant, or agreement contained in the Indenture, unless the
Guarantor is also released or discharged by operation of law;
(j) the default or failure of the Guarantor or the Trustee fully to
perform any of its obligations set forth in the Indenture or the Notes; or
(k) the invalidity of the Indenture or the Notes or any part thereof.
No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which the Guarantor has or may have against
the Trustee shall be available hereunder to the Guarantor against the Trustee to
reduce the payments of the Guarantor under this Guarantee.
The Guarantor shall be released from all of its obligations under this
Guarantee if:
(a) the Guarantor has sold all or substantially all of its assets or
the Company and its Restricted Subsidiaries have sold all of the Capital Stock
of the Guarantor owned by them, in each case in a transaction in compliance with
Sections 5.09 and 6.01 of the Indenture; or
(b) The Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or another
Guarantor in a transaction in compliance with Section 6.01 hereof;
and in each such case, the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to such transactions have been
complied with.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
laws.
All terms used in this Guarantee which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication on the Note to which this
Guarantee is endorsed has been executed by or on behalf of the Trustee, by the
manual signature of its, or its Authenticating Agent's, authorized signatories,
this Guarantee shall not be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed.
Dated: December 23, 1996
PCI OPERATING COMPANY, INC.
[CORPORATE SEAL] By: /s/ Michael K. Goldman
Title Chief Executive Officer
Attest:
/s/ Paul Weeks, II
Secretary
<PAGE>
EXHIBIT K
GUARANTEE OF SYSTEMS APPLICATIONS INTERNATIONAL, INC.
FOR VALUE RECEIVED, Systems Applications International, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Guarantor", which term includes any successor corporation
under the Indenture dated December 23, 1996, as supplemented (herein called the
"Indenture") referred to in the Notes to which this Guarantee relates), hereby
unconditionally guarantees to the Holders from time to time of the Notes:
(a) the full and prompt payment of the principal of, and premium, if
any, on any Note when and as the same shall come due and payable, whether at the
stated maturity thereof, by acceleration, redemption or otherwise, and
(b) the full and prompt payment of any interest on any Note when and
as the same shall become due, according to the terms of such Note and the
Indenture.
In addition, the Guarantor hereby unconditionally agrees that upon
default by the Company in the payment when due of the principal of, premium, if
any, on and interest on the Notes (whether at stated maturity thereof,
acceleration, redemption or otherwise), the Guarantor will forthwith pay the
same, without further notice or demand.
The obligations of the Guarantor hereunder shall be absolute and
unconditional and, except as otherwise provided herein, shall remain in full
force and effect until the entire principal of, premium, if any, on, and
interest on the Notes shall have been paid or provided for in accordance with
the provisions of the Indenture, and such obligations shall not be affected,
modified or impaired upon the happening from time to time of any event,
including without limitation any of the following, whether or not with notice
to, or the consent of, the Guarantor:
(a) the waiver, surrender, compromise, settlement, release, or
termination of any or all of the obligations, covenants, or agreements of the
Company under the Indenture or the Notes, unless the waiver, surrender,
compromise, settlement, release or termination is made specifically applicable
to the Guarantor;
(b) the failure to give notice to the Guarantor of the occurrence of
an Event of Default;
(c) the waiver, compromise, or release of the payment, performance or
observance by the Company of any or all of its obligations, covenants or
agreements contained in the Indenture, unless such waiver, compromise or release
is specifically applicable to the Guarantor;
(d) the extension of time for payment of any principal of, premium, if
any, on, or interest on any Notes or for any other payments under the Indenture
or of the time for performance of any other obligations, covenants or agreements
under or arising out of the Indenture, unless such extension of time is
specifically applicable to the Guarantor;
(e) the modification or amendment (whether material or otherwise) of
any obligation, covenant, or agreement set forth in the Indenture or the Notes,
unless such modification or amendment is specifically applicable to the
Guarantor;
(f) the taking or the omission of any of the actions referred to in
the Indenture and any of the actions under the Notes;
(g) any failure, omission, delay, or lack on the part of the Trustee
to enforce, assert or exercise any right, power or remedy conferred on the
Trustee in the Indenture, or any other act or acts on the part of the Trustee or
any of the Holders from time to time of the Notes;
<PAGE>
(h) the voluntary or involuntary liquidation, dissolution, sale, or
other disposition of all or substantially all of the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors,
or readjustment of, or other similar proceedings affecting the Guarantor, or the
Company or any of the assets of any of them, or any allegation or contest of the
validity of this Guarantee in any such proceeding;
(i) to the extent permitted by law, the release or discharge by
operation of law of the Company from the performance or observance of any
obligation, covenant, or agreement contained in the Indenture, unless the
Guarantor is also released or discharged by operation of law;
(j) the default or failure of the Guarantor or the Trustee fully to
perform any of its obligations set forth in the Indenture or the Notes; or
(k) the invalidity of the Indenture or the Notes or any part thereof.
No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which the Guarantor has or may have against
the Trustee shall be available hereunder to the Guarantor against the Trustee to
reduce the payments of the Guarantor under this Guarantee.
The Guarantor shall be released from all of its obligations under this
Guarantee if:
(a) the Guarantor has sold all or substantially all of its assets or
the Company and its Restricted Subsidiaries have sold all of the Capital Stock
of the Guarantor owned by them, in each case in a transaction in compliance with
Sections 5.09 and 6.01 of the Indenture; or
(b) The Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or another
Guarantor in a transaction in compliance with Section 6.01 hereof;
and in each such case, the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to such transactions have been
complied with.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any liability under this
Guarantee by reason of his or its status as such stockholder, officer, director
or incorporator.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York, without regard to principles of conflicts of
laws.
All terms used in this Guarantee which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication on the Note to which this
Guarantee is endorsed has been executed by or on behalf of the Trustee, by the
manual signature of its, or its Authenticating Agent's, authorized signatories,
this Guarantee shall not be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be
duly executed.
Dated: December 23, 1996
SYSTEMS APPLICATIONS
INTERNATIONAL, INC.
[CORPORATE SEAL] By: /s/ Michael K. Goldman
Title Chief Executive Officer
Attest:
/s/ Paul Weeks, II
Secretary
<PAGE>
Exhibit No. 4(h)
ICF KAISER INTERNATIONAL, INC.
12% SENIOR NOTE DUE 2003, SERIES A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) PROMULGATED UNDER THE
SECURITIES ACT (AN "ACCREDITED INVESTOR")) OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S PROMULGATED UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER THEREOF OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO
AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 PROMULGATED UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
ICF KAISER INTERNATIONAL, INC.
12% SENIOR NOTE DUE 2003, SERIES A
CUSIP No. 449244 AC6
No. AQ-1 $15,000,000
ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for
value received promises to pay to CEDE & CO. or registered assigns, the
principal sum of Fifteen Million Dollars on December 31, 2003.
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
Reference is made to the further provisions of this Security contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or
by facsimile by its duly authorized officers.
Dated: December 23, 1996
ICF KAISER INTERNATIONAL, INC.
By:
------------------------------------
By:
------------------------------------
(SEAL)
Trustee's Certificate of Authentication
This is one of the Series A Notes referred to in the within-mentioned Indenture.
Dated: December 23, 1996 THE BANK OF NEW YORK
as Trustee
By:
---------------------------------
Authorized Signatory
Face - 2
<PAGE>
12% SENIOR NOTE DUE 2003, SERIES A
Certain capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture under which this Note is issued.
1. Interest. ICF Kaiser International, Inc., a Delaware
corporation (the "Company," which term shall include any Successor under the
Indenture), promises to pay interest on the principal amount of this Note at
12%, provided that one percent (1%) additional interest (the "Additional
Interest") is payable on the Notes from the date of, and as provided in, the
Indenture. The Company files its financial results with the Securities and
Exchange Commission on quarterly and annual reports, and these reports include
the Company's earnings after deducting minority interests and before interest,
taxes, depreciation, and amortization calculated in accordance with generally
accepted accounting principles ("Earnings"). The Company measures its Earnings
for trailing twelve month periods, each period to end on the last day of a
fiscal quarter and extend no further than March 31, 1998 (each a "Quarterly
Measurement Period"). If the Company's Earnings equal or exceed $36 million for
two consecutive Quarterly Measurement Periods, then the Company is relieved of
its obligation to pay any future Additional Interest. However, if the Company's
Earnings do not equal or exceed $36 million for any subsequent Quarterly
Measurement Period, up to and including the Quarterly Measurement Period ending
March 31, 1998, the Company is obligated to commence paying Additional Interest
until the Company's Earnings again equal or exceed $36 million on a trailing
twelve month basis calculated quarterly. The Company will pay interest
semiannually on June 30 and December 31 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided, that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be June 30, 1997. The Company shall pay
interest on overdue principal from time to time on demand at the rate of 1% per
annum in excess of the interest rate then in effect; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Company will pay the principal of, premium, if
any, and interest on the Notes in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). The Company, however, may pay such amounts by check
payable in such U.S. Legal Tender. It may mail an interest check to a Holder's
registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York
(the "Trustee") will act as Paying Agent and Registrar. The Company may change
any Paying Agent, Registrar or co-registrar without notice to any Holder. The
Company may act in any such capacity.
4. Indenture and Guarantees. The Company issued the Notes under an
Indenture dated as of December 23, 1996 (the "Indenture") between the Company
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S)77aaa-77bbbb), as in effect on the date of
execution of the Indenture until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA. The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Notes are unsecured general
obligations of the Company limited to $15,000,000 in aggregate principal amount.
Payment on each Note is guaranteed, jointly and severally, by the Guarantors
pursuant to Section 5.11 of the Indenture.
Reverse - 3
<PAGE>
5. Optional Redemption. The Notes may not be redeemed prior to
December 31, 1998, but will be redeemable at the option of the Company, in whole
or in part, at any time on or after December 31, 1998, at the following
redemption prices (expressed as percentages of principal amount), together with
accrued and unpaid interest, if any, thereon to the redemption date, if redeemed
during the 12-month period beginning December 31:
<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 fewer than all of the Notes are to be redeemed at any time,
selection of the Notes to be redeemed will be made by the Trustee from among the
outstanding Notes on a pro rata basis, by lot or by any other method permitted
in the Indenture. Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at the registered address of such Holder. On and after the
redemption date, interest shall cease to accrue on the Notes or portions thereof
called for redemption.
6. Offers to Repurchase.
(a) Change of Control Offer. In accordance with the terms of the
Indenture, upon the occurrence of a Change of Control, the Company will be
required to offer (a "Change of Control Offer") to purchase all outstanding
Notes at a purchase price equal to 101% of the aggregate principal amount of the
Notes, plus accrued and unpaid interest to the date of purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
(b) Asset Sale Offer. In accordance with the terms of the
Indenture, if the Company or any Restricted Subsidiary consummates an Asset
Sale, the Company will, under certain circumstances, be required to utilize a
portion of the net proceeds received from such Asset Sale to offer to purchase
Notes at a purchase price equal to 100% of the aggregate principal amount of the
Notes plus accrued interest to the date fixed for the purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
Subject to the provisions described above and compliance with Article
6 of the Indenture, the Company may sell or otherwise dispose of all or
substantially all of its assets to a Successor that assumes all of the Company's
obligations under the Notes and Indenture, and thereafter be discharged from
such obligations.
7. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
Reverse - 4
<PAGE>
9. Unclaimed Funds. If funds for the payment of principal or
interest remain unclaimed for two years, the Trustee and the Paying Agent will
repay the funds to the Company at its request. After that, all liability of the
Trustee and Paying Agent with respect to such funds shall cease.
10. Discharge. The Company may be discharged from its obligations
under the Indenture and the Notes, except for certain provisions thereof, upon
satisfaction of certain conditions specified in the Indenture.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent (which
may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of at least a majority in principal amount of
the Notes then outstanding, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of interest on or the principal of the Notes,
or any failure to comply with the provisions of the Indenture relating to a
Change of Control Offer (as defined in the Indenture)) with the consent (which
may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of a majority in principal amount of the Notes
then outstanding. Without the consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency; to provide for the assumption of the
Company's obligations to Holders in the case of a merger or acquisition; to
provide for uncertificated Notes in addition to or in place of certificated
Notes; to make any change that does not adversely affect the legal rights of any
Holder; to surrender any right or power conferred upon the Company in the
Indenture or the Notes; or to modify, eliminate or add to the provisions of the
Indenture or the Notes to such extent as shall be necessary to effect the
qualification of the Indenture under the TIA or under any similar federal
statute hereafter enacted.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Notes with respect to which such consent is required or sought as of a
date identified by the Trustee or the Company in a notice furnished to Holder in
accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not take
certain actions, including: (i) reduce the amount of Notes whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the rate of or change
the time for payment of interest, including default interest, on any Note; (iii)
reduce the principal of or change the fixed maturity of any Note or alter the
provisions with respect to optional redemption or mandatory repurchase of the
Notes under the Indenture; (iv) make any Note payable in money other than that
stated in this Note; (v) make any change in certain provisions of the Indenture
regarding a Change of Control, a waiver of past Defaults and the rights of
Holders to receive payment; or (vi) waive a continuing Default or Event of
Default in the payment of principal of or interest on the Notes or that resulted
from a failure to comply with the Change of Control provisions of the Indenture.
12. Restrictive Covenants. The Indenture contains certain covenants
which, among other things, limit: (i) the incurrence of additional Indebtedness
by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii)
the repurchase of capital stock or subordinated indebtedness; (iv) the making of
certain other distributions, loans and investments; (v) the sale of assets and
the sale of the stock of Restricted Subsidiaries; (vi) the creation of
restrictions on the ability of Restricted Subsidiaries to pay dividends or make
other payments to the Company; and (vii) the ability of the Company and
Restricted Subsidiaries to enter into certain transactions with Affiliates or to
merge, consolidate or transfer substantially all assets. These restrictions are
subject to important qualifications and exceptions. The Company must report to
the Trustee on compliance with such limitations.
13. Defaults and Remedies. Events of Default include: default in
payment of interest on the Notes for 30 days; default in payment of principal on
the Notes; failure by the Company for 60 days after notice to it to comply with
any of its other agreements in the Indenture or the Notes; certain defaults
under other Indebtedness; certain final judgments that remain undercharged; and
certain events of bankruptcy or insolvency. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be immediately due and
payable for an amount equal to 100% of the principal amount of the Notes plus
accrued interest to the date of payment, except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes become due and payable immediately without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may
Reverse - 5
<PAGE>
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in principal amount
of the then outstanding Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT
(-- tenants by the entireties), JT TEN (-- joint tenants with right of
survivorship and not as tenants in common), CUST (--Custodian), and U/G/M/A
(--Uniform Gifts to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Commission on Uniform Security Identification Procedures, the Company has caused
CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made to the accuracy of such numbers as provided on
the Notes, and reliance may be placed only on the other identification numbers
printed thereon.
19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
20. Registration Rights. Pursuant to the Registration Rights
Agreement, the Company will be obligated upon the occurrence of certain events
to consummate an exchange offer pursuant to which the Holders of the Series A
Notes shall have the right to exchange the Series A Notes for the Company's 12%
Senior Notes due 2003, Series B, which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Series A Notes. The Holders shall be entitled to receive
certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement.
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attention: Executive Vice President and
Chief Financial Officer
Reverse - 6
<PAGE>
GUARANTEE
The Guarantors (as defined in the Indenture referred to in the Note upon
which this notation is endorsed and each hereinafter referred to as a
"Guarantor," which term includes any successor to a Guarantor) have
unconditionally guaranteed (such guarantee by each Guarantor being referred to
herein as the "Guarantee") (a) the full and prompt payment of the principal of
and premium, if any, on any Note when and as the same shall come due and
payable, whether at the stated maturity thereof, by acceleration, redemption or
otherwise and (b) the full and prompt payment of any interest on any Note when
and as the same shall become due, according to the terms of such Note and the
Indenture.
No stockholder, officer, director or incorporator, as such, past, present
or future, of any Guarantor shall have any liability under this Guarantee by
reason of his or its status as such stockholder, officer, director or
incorporator.
The Guarantees shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the guarantees are noted
shall have been executed by the Trustee under the indenture by the manual
signature of its authorized officers.
CYGNA CONSULTING ENGINEERS AND PROJECT
MANAGEMENT, INC.
Attest: BY:
------------------------ ---------------------------------------
Name:
Title:
ICF KAISER GOVERNMENT PROGRAMS, INC.
Attest: BY:
------------------------ ----------------------------------------
Name:
Title:
PCI OPERATING COMPANY, INC.
Attest: BY:
------------------------ ---------------------------------------
Name:
Title:
SYSTEMS APPLICATIONS INTERNATIONAL, INC.
Attest: BY:
------------------------ ----------------------------------------
Name:
Title:
Reverse - 7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's Soc. Sec. or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-----------------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and
return this form to the Company.
If you want to elect to have only part of the Note purchased by the
Company pursuant to the Indenture, state the amount you elect to have purchased:
$____________________
Date:
--------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
Reverse - 8
<PAGE>
EXHIBIT 4(i)
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE
FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ICF KAISER INTERNATIONAL, INC.
12% SENIOR NOTE DUE 2003, SERIES B
CUSIP No. 449244
--------
No.BQ- $
---------- -----------------------
ICF Kaiser International, Inc., a Delaware corporation (the "Company"), for
value received promises to pay to CEDE & Co., or registered assigns, the
principal sum of ________ Dollars on December 31, 2003.
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
<PAGE>
Reference is made to the further provisions of this Security contained herein,
which will for all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused the Security to be signed manually or
by facsimile by its duly authorized officers.
Dated:
ICF KAISER INTERNATIONAL, INC.
By:
----------------------------
By:
----------------------------
(SEAL)
Face - 2
<PAGE>
Trustee's Certificate of Authentication
This is one of the Series B Notes referred to in the within-mentioned
Indenture.
Dated: THE BANK OF NEW YORK
as Trustee
By:
--------------------------
Authorized Signatory
Face - 3
<PAGE>
12% SENIOR NOTE DUE 2003, SERIES B
Certain capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture under which this Note is issued.
1. Interest. ICF Kaiser International, Inc., a Delaware corporation
(the "Company," which term shall include any Successor under the Indenture),
promises to pay interest on the principal amount of this Note at 12% provided
that one percent (1%) additional interest (the "Additional Interest") is payable
on the Notes from the date of, and as provided in, the Indenture. The Company
files its financial results with the Securities and Exchange Commission on
quarterly and annual reports, and these reports include the Company's earnings
after deducting minority interests and before interest, taxes, depreciation, and
amortization calculated in accordance with generally accepted accounting
principles ("Earnings"). The Company measures its Earnings for trailing twelve
month periods, each period to end on the last day of a fiscal quarter and extend
no further than March 31, 1998 (each a "Quarterly Measurement Period"). If the
Company's Earnings equal or exceed $36 million for two consecutive Quarterly
Measurement Periods, then the Company is relieved of its obligation to pay any
future Additional Interest. However, if the Company's Earnings do not equal or
exceed $36 million for any subsequent Quarterly Measurement Period, up to and
including the Quarterly Measurement Period ending March 31, 1998, the Company is
obligated to commence paying Additional Interest until the Company's Earnings
again equal or exceed $36 million on a trailing twelve month basis calculated
quarterly. The Company will pay interest semiannually on June 30 and December 31
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from December 31, 1996; provided, that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
June 30, 1997. The Company shall pay interest on overdue principal from time to
time on demand at the rate of 1% per annum in excess of the interest rate then
in effect; it shall pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the same
rate to the extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. The Company will pay the principal of, premium, if
any, and interest on the Notes in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). The
Reverse - 1
<PAGE>
Company, however, may pay such amounts by check payable in such U.S. Legal
Tender. It may mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of New York (the
"Trustee") will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-registrar without notice to any Holder. The
Company may act in any such capacity.
4. Indenture and Guarantees. The Company issued the Notes under an
Indenture dated as of December 23, 1996 (the "Indenture") between the Company
and the Trustee. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb), as in effect on the date of
execution of the Indenture until such time as the Indenture is qualified under
the TIA, and thereafter as in effect on the date on which the Indenture is
qualified under the TIA. The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms.
Capitalized and certain other terms used herein and not otherwise defined have
the meanings set forth in the Indenture. The Notes are unsecured general
obligations of the Company limited to $15,000,000 in aggregate principal amount.
Payment on each Note is guaranteed, jointly and severally, by the Guarantors
pursuant to Section 5.11 of the Indenture.
5. Optional Redemption. The Notes may not be redeemed prior to
December 31, 1998, but will be redeemable at the option of the Company, in whole
or in part, at any time on or after December 31, 1998, at the following
redemption prices (expressed as percentages of principal amount), together with
accrued and unpaid interest, if any, thereon to the redemption date, if redeemed
during the 12-month period beginning December 31:
Optional
Year Redemption Price
---- ----------------
1998 108.0%
1999 106.4%
2000 104.8%
2001 103.2%
2002 101.6%
If fewer than all of the Notes are to be redeemed at any time,
selection of the Notes to be redeemed will be made by the Trustee from among the
outstanding Notes on a pro rata basis, by lot or by any other method permitted
in the Indenture. Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder whose Notes are to
be redeemed at the registered address of such Holder. On and after the
redemption date, interest shall cease to accrue on the Notes or portions thereof
called for redemption.
Reverse - 2
<PAGE>
6. Offers to Repurchase.
(a) Change of Control Offer. In accordance with the terms of the
Indenture, upon the occurrence of a Change of Control, the Company will be
required to offer (a "Change of Control Offer") to purchase all outstanding
Notes at a purchase price equal to 101% of the aggregate principal amount of the
Notes, plus accrued and unpaid interest to the date of purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below on this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
(b) Asset Sale Offer. In accordance with the terms of the
Indenture, if the Company or any Restricted Subsidiary consummates an Asset
Sale, the Company will, under certain circumstances, be required to utilize a
portion of the net proceeds received from such Asset Sale to offer to purchase
Notes at a purchase price equal to 100% of the aggregate principal amount of the
Notes plus accrued interest to the date fixed for the purchase.
A Holder of Notes may tender or refrain from tendering all or any
portion of his Notes at his discretion by completing the form entitled "OPTION
OF HOLDER TO ELECT PURCHASE" appearing below this Note. Any portion of Notes
tendered must be in integral multiples of $1,000.
Subject to the provisions described above and compliance with Article
6 of the Indenture, the Company may sell or otherwise dispose of all or
substantially all of its assets to a Successor that assumes all of the Company's
obligations under the Notes and Indenture, and thereafter be discharged from
such obligations.
7. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
Reverse - 3
<PAGE>
9. Unclaimed Funds. If funds for the payment of principal or interest
remain unclaimed for two years, the Trustee and the Paying Agent will repay the
funds to the Company at its request. After that, all liability of the Trustee
and Paying Agent with respect to such funds shall cease.
10. Discharge. The Company may be discharged from its obligations
under the Indenture and the Notes, except for certain provisions thereof, upon
satisfaction of certain conditions specified in the Indenture.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent (which
may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of at least a majority in principal amount of
the Notes then outstanding, and any existing Default under, or compliance with
any provision of, the Indenture may be waived (other than any continuing Default
or Event of Default in the payment of interest on or the principal of the Notes,
or any failure to comply with the provisions of the Indenture relating to a
Change of Control Offer (as defined in the Indenture)) with the consent (which
may include consents obtained in connection with a tender offer or exchange
offer for Notes) of the Holders of a majority in principal amount of the Notes
then outstanding. Without the consent of any Holder, the Company and the Trustee
may amend or supplement the Indenture or the Notes to cure any ambiguity, defect
or inconsistency; to provide for the assumption of the Company's obligations to
Holders in the case of a merger or acquisition; to provide for uncertificated
Notes in addition to or in place of certificated Notes; to make any change that
does not adversely affect the legal rights of any Holder; to surrender any right
or power conferred upon the Company in the Indenture or the Notes; or to modify,
eliminate or add to the provisions of the Indenture or the Notes to such extent
as shall be necessary to effect the qualification of the Indenture under the TIA
or under any similar federal statute hereafter enacted.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of record
of any Notes with respect to which such consent is required or sought as of a
date identified by the Trustee or the Company in a notice furnished to Holder in
accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may not take
certain actions, including: (i) reduce the amount of Notes whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the rate of or change
the time for payment of interest, including default interest, on any Note; (iii)
reduce the principal of or change the fixed maturity of any Note or alter the
provisions with respect to optional redemption or mandatory repurchase of the
Notes under the Indenture; (iv) make any Note payable in money other than that
stated in this Note; (v) make any change in certain provisions of the Indenture
regarding a Change of Control, a waiver of past Defaults and the rights of
Holders to receive payment; or
Reverse - 4
<PAGE>
(vi) waive a continuing Default or Event of Default in the payment of principal
of or interest on the Notes or that resulted from a failure to comply with the
Change of Control provisions of the Indenture.
12. Restrictive Covenants. The Indenture contains certain covenants
which, among other things, limit: (i) the incurrence of additional Indebtedness
by the Company and Restricted Subsidiaries; (ii) the payment of dividends; (iii)
the repurchase of capital stock or subordinated indebtedness; (iv) the making of
certain other distributions, loans and investments; (v) the sale of assets and
the sale of the stock of Restricted Subsidiaries; (vi) the creation of
restrictions on the ability of Restricted Subsidiaries to pay dividends or make
other payments to the Company; and (vii) the ability of the Company and
Restricted Subsidiaries to enter into certain transactions with Affiliates or to
merge, consolidate or transfer substantially all assets. These restrictions are
subject to important qualifications and exceptions. The Company must report to
the Trustee on compliance with such limitations.
13. Defaults and Remedies. Events of Default include: default in
payment of interest on the Notes for 30 days; default in payment of principal on
the Notes; failure by the Company for 60 days after notice to it to comply with
any of its other agreements in the Indenture or the Notes; certain defaults
under other Indebtedness; certain final judgments that remain undercharged; and
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be immediately due and
payable for an amount equal to 100% of the principal amount of the Notes plus
accrued interest to the date of payment, except that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes become due and payable immediately without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
Reverse - 5
<PAGE>
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (-- tenants in common), TEN ENT (--
tenants by the entireties), JT TEN (-- joint tenants with right of survivorship
and not as tenants in common), CUST (--Custodian), and U/G/M/A (-- Uniform Gifts
to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Commission on Uniform Security Identification Procedures, the Company has caused
CUSIP Numbers to be printed on the Notes as a convenience to the Holders of the
Notes. No representation is made to the accuracy of such numbers as provided on
the Notes, and reliance may be placed only on the other identification numbers
printed thereon.
19. Governing Law. THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Request may be made to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attention: Executive Vice President and
Chief Financial Officer
Reverse - 6
<PAGE>
GUARANTEE
The Guarantors (as defined in the Indenture referred to in the Note upon
which this notation is endorsed and each hereinafter referred to as a
"Guarantor," which term includes any successor to a Guarantor) have
unconditionally guaranteed (such guarantee by each Guarantor being referred to
herein as the "Guarantee") (a) the full and prompt payment of the principal of
and premium, if any, on any Note when and as the same shall come due and
payable, whether at the stated maturity thereof, by acceleration, redemption or
otherwise and (b) the full and prompt payment of any interest on any Note when
and as the same shall become due, according to the terms of such Note and the
Indenture.
No stockholder, officer, director or incorporator, as such, past, present
or future, of any Guarantor shall have any liability under this Guarantee by
reason of his or its status as such stockholder, officer, director or
incorporator.
The Guarantees shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the guarantees are noted
shall have been executed by the Trustee under the indenture by the manual
signature of its authorized officers.
GUARANTORS:
CYGNA CONSULTING ENGINEERS AND
PROJECTS MANAGEMENT, INC.
Attest: BY:
--------------- --------------------------------------------------
Name:
Title:
ICF KAISER GOVERNMENT PROGRAMS, INC.
Attest: BY:
--------------- --------------------------------------------------
Name:
Title:
PCI OPERATING COMPANY, INC.
Attest: BY:
--------------- --------------------------------------------------
Name:
Title:
SYSTEMS APPLICATIONS INTERNATIONAL, INC.
Attest: BY:
--------------- --------------------------------------------------
Name:
Title:
Reverse - 7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- -------------------------------------------------------------------------------
(Insert assignee's Soc. Sec. or tax I.D. No.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
---------------
Your Signature:
-------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
Referse - 8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to an Asset Sale Offer or a Change in Control Offer, please execute and
return this form to the Company.
If you want to elect to have only part of the Note purchased by the
Company pursuant to the Indenture, state the amount you elect to have purchased:
$
-------------
Date:
--------------
Your Signature:
------------------------------
(Sign exactly as your name appears on the face
of this Note)
Signature Guarantee:
Reverse - 9
<PAGE>
Exhibit No. 4(j)
WARRANT AGREEMENT dated as of December 23, 1996, between ICF KAISER
INTERNATIONAL, INC., a Delaware corporation (the "Company"), and The Bank of New
York, a New York banking corporation, as warrant agent (with any successor
Warrant Agent, the "Warrant Agent").
WHEREAS, the Company proposes to issue and deliver its warrant certificates
(the "Warrant Certificates") evidencing warrants (the "Warrants") to acquire,
under certain circumstances, up to an aggregate of 105,000 shares, subject to
adjustment, of its Common Stock (as defined below), in connection with an
offering by the Company of 15,000 Units comprising the Warrants and $15,000,000
aggregate principal amount of its 12% Senior Notes due 2003, Series A (the
"Notes"). The Notes are to be issued under an indenture to be dated as of
December 23, 1996 between the Company and The Bank of New York, a New York
banking corporation, as trustee (the "Indenture"). Each Warrant shall represent
the right to purchase from the Company one share of Common Stock, at an initial
price of $2.30 per share, subject to adjustment under certain circumstances; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of the Warrant Certificates and other matters as provided herein;
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company, the Warrant Agent and the record holders
from time to time of the Warrants, the Company and the Warrant Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Certain Definitions
As used in this Agreement, the following terms shall have the
following respective meanings:
"Affiliate" of any person means any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person. For purposes of this definition, "control" when used with respect
to any person means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Common Equity Securities" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.
"Common Stock" means the common stock, $0.01 par value per share, of
the Company, and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution of, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
"Company" means ICF Kaiser International, Inc., a Delaware
corporation, and its successors and assigns.
"Depositary" means, with respect to the Warrants issued in the form of
one or more Global Warrants, The Depository Trust Company or another Person
designated as Depositary by the Company, which must be a clearing agency
registered under the Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
<PAGE>
"Expiration Date" means December 31, 1999, subject to the provisions
of Section 3.05.
"Global Warrant" means a security evidencing all or a portion of the
Warrants issued to the Depositary or its nominee in accordance with Section 2.01
and bearing the legend set forth in Exhibit B.
"Holders" means, from time to time, the holders of the Warrants; in
the case of Section 8.04, "Holders" also means, from time to time, the holders
of Restricted Shares.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"NASD" means the National Association of Securities Dealers, Inc.
"Nasdaq Stock Market" means The Nasdaq Stock Market, Inc.
"Non-Surviving Combination" means any merger, consolidation or other
business combination by the Company with one or more persons (other than a
wholly-owned subsidiary of the Company) in which the Company is not the
survivor, or a sale of all or substantially all of the assets of the Company to
one or more such other persons, if, in connection with any of the foregoing,
consideration (other than consideration which includes Common Equity Securities)
is distributed to holders of Common Stock in exchange for all or substantially
all of their equity interest in the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Private Placement Legend" means the legend set forth on the Warrants
in the form set forth on Exhibit A.
"Purchase Price" means the purchase price per share of Common Stock to
be paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $2.30 per share, subject to adjustment from time
to time pursuant to Article IV hereof.
"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as such term is defined in Rule 144A.
"Restricted Shares" means (i) any shares of Common Stock issued or
issuable as a result of the exercise of Warrants and (ii) any other shares of
Common Stock issuable with respect to any of such shares of Common Stock (x) by
way of stock dividend or stock split, (y) in connection with a Transaction or
(z) otherwise.
"Regulation S" means Regulation S under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Surviving Combination" means any merger, consolidation or other
business combination by the Company with one or more persons in which the
Company is the survivor, or a purchase of assets by the Company from one or more
other persons.
"Transaction" means any transaction (including, without limitation, a
merger, consolidation, sale of all or substantially all of the Company's assets,
liquidation or recapitalization of the Common Stock or any combination thereof),
in which the previously outstanding Common Stock shall be changed into or
exchanged for different
-2-
<PAGE>
securities of the Company or common stock or other securities of another
corporation or interests in a noncorporate entity or other property (including
cash) or any combination of any of the foregoing.
"Underlying Common Stock" means the shares of Common Stock issuable
upon the exercise of the Warrants.
"Warrant Agent" means The Bank of New York, a New York banking
corporation, or the successor or successors of such Warrant Agent appointed in
accordance with the terms hereof.
Section 1.02 Certain Other Defined Terms
<TABLE>
<CAPTION>
Term Defined in Section
<S> <C>
"Change of Shares"................... 4.01(a)
"Common Stock Distribution".......... 4.01(b)
"Convertible Securities"............. 4.01(c)
"Indemnified Holder"................. 8.04(b)
"Indenture".......................... Preamble
"Note"............................... Preamble
"Offshore Physical Warrants"......... 2.01
"Options"............................ 4.01(c)
"Physical Warrants".................. 2.01
"Rights"............................. 4.01(c)
"Survivor"........................... 3.05(b)
"Transfer Agent"..................... 8.01
"U.S. Physical Warrants"............. 2.01
"Warrant Certificates"............... Preamble
"Warrants"........................... Preamble
</TABLE>
ARTICLE II
ORIGINAL ISSUE OF WARRANTS
Section 2.01 Form of Warrant Certificates
The Warrant Certificates (a) shall be issued in registered form only
and substantially in the form attached hereto as Exhibit A, (b) shall be dated
the date of issuance thereof (whether upon initial issuance, registration of
transfer, exchange or replacement), (c) shall show the date of countersignature
and (d) shall have such legends and endorsements, each as provided by the
Company, typed, stamped, printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law or with any rule or
regulation pursuant thereto or with any rule or regulation of any securities
exchange on which the Warrant may be listed, or to conform to customary usage,
including, without limitation, the Private Placement Legend set forth on the
form of face of Warrant Certificate attached hereto as Exhibit A. The Warrant
Certificates shall be in a format and in a form reasonably satisfactory to the
Warrant Agent.
Warrants offered and sold in reliance on Rule 144A and to
Institutional Accredited Investors shall be issued initially in the form of one
or more permanent Global Warrants in registered form, substantially in the form
set forth in Exhibit A, deposited with the Warrant Agent, as custodian for the
Depositary, and shall bear the legend set forth on Exhibit B. The aggregate
number of Warrants represented by any Global Warrant may from time to time be
increased or decreased by adjustments made on the records of the Warrant Agent,
as custodian for the Depositary, as hereinafter provided.
Warrants offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Warrants in registered
form, substantially in the form set forth in Exhibit A (the "Offshore Physical
Warrants"). Notes offered and sold in reliance on any other exemption from
registration under the Securities Act
-3-
<PAGE>
other than as described in the preceding paragraph shall be issued, and Warrants
offered and sold in reliance on Rule 144A may be issued, in the form of
certificated Warrants in registered form in substantially the form set forth in
Exhibit A (the "U.S. Physical Warrants"). The Offshore Physical Warrants and the
U.S. Physical Warrants are sometimes collectively herein referred to as the
"Physical Warrants."
Pending the preparation of definitive Warrant Certificates, temporary
Warrant Certificates may be issued, which may be printed, lithographed,
typewritten, mimeographed or otherwise produced, and which will be substantially
of the tenor of the definitive Warrant Certificates in lieu of which they are
issued.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates to the Warrant Agent, without
charge to the Holder. Until so exchanged the temporary Warrant Certificates
shall in all respects be entitled to the same benefits under this Agreement as
definitive Warrant Certificates.
Section 2.02 Execution and Delivery of Warrant Certificates
Warrant Certificates evidencing Warrants to purchase initially an
aggregate of up to 105,000 shares of Common Stock shall be executed, on or after
the date of this Agreement, by the Company and delivered to the Warrant Agent
for countersignature, and the Warrant Agent shall thereupon countersign and
deliver such Warrant Certificates upon the order and at the direction of the
Company to the purchasers thereof on the date of issuance. The Warrant Agent is
hereby authorized to countersign and deliver Warrant Certificates as required by
this Section 2.02 or by Section 3.04, Article V or Section 9.04. The Warrant
Certificates shall be executed on behalf of the Company by its Chairman, Chief
Executive Officer or President or by any of its Vice Presidents, either manually
or by facsimile signature printed thereon. The Warrant Certificates shall be
authenticated by manual signature of an authorized signatory of the Warrant
Agent and shall not be valid for any purpose unless so countersigned, and shall
be dated the date of authentication by the Warrant Agent. In case any officer
of the Company whose signature shall have been placed upon any of the Warrant
Certificates shall cease to be the Chairman, Chief Executive Officer, President
or a Vice President of the Company before countersignature by the Warrant Agent
and issue and delivery thereof, such Warrant Certificates may, nevertheless, be
countersigned by the Warrant Agent and issued and delivered with the same force
and effect as though such person had not ceased to be such officer of the
Company.
ARTICLE III
EXERCISE PRICE; EXERCISE OF WARRANTS
GENERALLY; NON-SURVIVING COMBINATION
Section 3.01 Exercise Price
Each Warrant Certificate shall, when countersigned by the Warrant
Agent, entitle the Holder thereof, subject to the provisions thereof and of this
Agreement, to receive one share of Common Stock for each Warrant represented
thereby, subject to adjustment as herein provided upon payment of the Purchase
Price for each of such shares. The Purchase Price shall be payable by certified
or official bank check or wire transfer, payable in United States currency to
the order of the Company.
Section 3.02 Exercise of Warrants
Subject to the terms and conditions set forth herein, the Warrants
shall be exercisable at any time on or prior to the Expiration Date.
Section 3.03 Expiration of Warrants
-4-
<PAGE>
The Warrants shall terminate and become void as of the close of
business on the Expiration Date; provided, however, that the Warrants will
-------- -------
terminate and become void prior to the Expiration Date in the event of a Non-
Surviving Combination, pursuant to Section 3.05.
The Company shall give notice not less than 90, and not more than 120,
days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
the close of business on the Expiration Date; provided, however, that the
-------- -------
failure by the Company to give such notice as provided in this Section shall not
affect such termination and becoming void of the Warrants as of the close of
business on the Expiration Date.
Section 3.04 Method of Exercise
In order to exercise a Warrant, the Holder thereof must surrender the
Warrant Certificates evidencing such Warrant to the Warrant Agent, with one of
the forms on the reverse of or attached to the Warrant Certificate duly
executed, and tender the Purchase Price therefor in accordance with this Article
III.
In order for a Person having a beneficial interest in a Global Warrant
to exercise a Warrant, such Person must first exchange such beneficial interest
for a Physical Warrant in the manner provided in Section 5.02(d).
If fewer than all of the Warrants represented by a Warrant Certificate
are surrendered, such Warrant Certificate shall be surrendered and, subject to
the provisions of Article V, a new Warrant Certificate of the same tenor and for
the number of Warrants that were not surrendered shall be executed by the
Company. The Warrant Agent shall countersign the new Warrant Certificate,
register it in such name or names as may be directed in writing by the Holder
and deliver the new Warrant Certificate to the person or persons entitled to
receive the same.
Upon surrender of a Warrant Certificate and payment of the Purchase
Price in conformity with the foregoing provisions, the Warrant Agent shall
thereupon promptly notify the Company, and the Warrant Agent will deliver or
cause to be delivered to or upon written order of any Holder appropriate
evidence of ownership of any shares of Underlying Common Stock or other
securities or property (including any money) to which the Holder is entitled,
subject to the provisions of Section 9.02.
Section 3.05 Non-Surviving Combination
(a) If the Company proposes, prior to the Expiration Date, to enter
into a transaction that would constitute a Non-Surviving Combination if
consummated, the Company shall give written notice thereof to the Warrant Agent
and to the Holders of Warrants, promptly after an agreement is reached with
respect to the Non-Surviving Combination but in no event less than 30 days prior
to the consummation thereof. Such notice shall describe the transaction in
reasonable detail and specify the consideration to be received by the Holders.
The Company shall also furnish to each Holder of Warrants all notices and
materials furnished to its stockholders in connection with such transactions.
(b) The Company agrees that it will not enter into an agreement
providing for a Non-Surviving Combination, unless the party to such transaction
that is the surviving entity (the "Survivor") shall be obligated to distribute
or pay to each Holder of Warrants, upon payment of the Purchase Price prior to
the Expiration Date, the number of shares of stock or other securities or other
property (including any cash) of the Survivor that would have been distributable
or payable on account of the Underlying Common Stock if such Holder's Warrants
had been exercised immediately prior to such Non-Surviving Combination (or, if
applicable, the record date therefor). Following the consummation of a Non-
Surviving Combination, the Warrants shall represent only the right to receive
such shares of stock or other property from the Survivor upon payment of the
Purchase Price prior to the Expiration Date.
ARTICLE IV
ADJUSTMENTS
-5-
<PAGE>
Section 4.01 Adjustments of Exercise Price and Number of Shares of Common Stock
The number and kind of shares purchasable upon the exercise of
Warrants and the Purchase Price shall be subject to adjustment from time to time
as follows:
(a) Changes in Common Stock. In the event the Company shall, at any
-----------------------
time or from time to time after the date hereof, (i) issue any shares of Common
Stock as a stock dividend to the holders of Common Stock, (ii) subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares or (iii) issue any shares of its capital stock in a reclassification
or reorganization of the Common Stock (any such issuance, subdivision,
combination, reclassification or reorganization being herein called a "Change of
Shares"), then (A) in the case of (i) or (ii) above, the number of shares of
Common Stock that may be purchased upon the exercise of each Warrant shall be
adjusted to the number of shares of Common Stock that the Holder of such Warrant
would have owned or have been entitled to receive after the happening of such
event had such Warrant been exercised immediately prior to the record date (or,
if there is no record date, the effective date) for such event, and the Purchase
Price shall be adjusted to the price (calculated to the nearest 1,000th of one
cent) determined by multiplying the Purchase Price immediately prior to such
event by a fraction, the numerator of which shall be the number of shares of
Common Stock purchasable with one Warrant immediately prior to such event and
the denominator of which shall be the number of shares of Common Stock
purchasable with one Warrant after the adjustment referred to above and (B) in
the case of (iii) above, paragraph (l) below shall apply. An adjustment made
pursuant to clause (A) of this paragraph (a) shall become effective
retroactively immediately after the record date in the case of such dividend and
shall become effective immediately after the effective date in other cases, but
any shares of Common Stock issuable solely as a result of such adjustment shall
not be issued prior to the effective date of such event.
(b) Common Stock Distribution. In the event the Company shall, at any
-------------------------
time or from time to time after the date hereof, issue, sell or otherwise
distribute (including by way of deemed distributions pursuant to paragraphs (c)
and (d) below) any shares of Common Stock (other than pursuant to a Change of
Shares or the exercise of any Option, Convertible Security (each as defined in
paragraph (c) below) or Warrant) (any such event, including any deemed
distributions described in paragraphs (c) and (d), being herein called a "Common
Stock Distribution"), for a consideration per share less than the current market
price per share of Common Stock (as defined in paragraph (f) below), on the date
of such Common Stock Distribution, then, effective upon such Common Stock
Distribution, the Purchase Price shall be reduced to the price (calculated to
the nearest 1,000th of one cent) determined by multiplying the Purchase Price in
effect immediately prior to such Common Stock Distribution by a fraction, the
numerator of which shall be the sum of (i) the number of shares of Common Stock
outstanding (exclusive of any treasury shares) immediately prior to such Common
Stock Distribution multiplied by the current market price per share of Common
Stock on the date of such Common Stock Distribution, plus (ii) the
consideration, if any, received by the Company upon such Common Stock
Distribution, and the denominator of which shall be the product of (A) the total
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such Common Stock Distribution multiplied by (B) the current
market price per share of Common Stock on the date of such Common Stock
Distribution.
If any Common Stock Distribution shall require an adjustment to the
Purchase Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall be increased to a number determined by
multiplying the number of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Purchase Price in effect immediately after
such adjustment. In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest 1,000th of
a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Purchase Price or
reduce the number of shares of Common Stock purchasable upon the exercise of any
Warrant, except by operation of paragraph (j) or (k) below.
-6-
<PAGE>
(c) Issuance of Options. In the event the Company shall, at any time
-------------------
or from time to time after the date hereof, issue, sell, distribute or otherwise
grant in any manner (including by assumption) any rights to subscribe for or to
purchase, or any warrants or options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock (any such
rights, warrants or options being herein called "Options" (the term "Options"
shall also include without limitation any rights ("Rights") to purchase Common
Stock and each other security for which such rights are at any time exercisable
issued pursuant to the Rights Agreement between the Company and the Rights Agent
designated therein approved by the Board of Directors of the Company on January
13, 1992, as amended from time to time) and any such convertible or exchangeable
stock or securities being herein called "Convertible Securities"), whether or
not such Options or the rights to convert or exchange such Convertible
Securities are immediately exercisable, and the price per share at which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as consideration
for the issuance, sale, distribution or granting of such Options, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Options, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all Convertible Securities issuable upon the exercise of all such
Options) shall be less than the current market price per share of Common Stock
on the date of the issuance, sale, distribution or granting of such Options
then, for purposes of paragraph (b) above, the total maximum number of shares of
Common Stock issuable upon the exercise of all such Options or upon the
conversion or exchange of the total maximum amount of the Convertible Securities
issuable upon the exercise of all such Options shall be deemed to have been
issued as of the date of the issuance, sale, distribution or granting of such
Options and thereafter shall be deemed to be outstanding and the Company shall
be deemed to have received as consideration such price per share, determined as
provided above, therefor. Except as otherwise provided in paragraphs (j) and
(k) below, no additional adjustment of the Purchase Price shall be made upon the
actual exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options. If the
minimum and maximum numbers or amounts referred to in this paragraph (c) or in
paragraph (d) below cannot be calculated with certainty as of the date of the
required adjustment, such numbers and amounts shall be determined in good faith
by the Board of Directors of the Company.
(d) Issuance of Convertible Securities. In the event the Company
----------------------------------
shall, at any time or from time to time after the date hereof, issue, sell or
otherwise distribute (including by assumption) any Convertible Securities (other
than upon the exercise of any Option), whether or not the rights to convert or
exchange such Convertible Securities are immediately exercisable, and the price
per share at which Common Stock is issuable upon the conversion or exchange of
such Convertible Securities (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale or distribution of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange of all such Convertible Securities, by (ii) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the current
market price per share of Common Stock on the date of such issuance, sale or
distribution, then, for the purposes of paragraph (b) above, the total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of the
issuance, sale or distribution of such Convertible Securities and thereafter
shall be deemed to be outstanding and the Company shall be deemed to have
received as consideration such price per share, determined as provided above,
therefor. Except as otherwise provided in paragraphs (j) and (k) below, no
additional adjustment of the Purchase Price shall be made upon the actual
conversion or exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company shall, at
---------------------------
any time or from time to time after the date hereof, distribute to the holders
of Common Stock any dividend or other distribution of cash, evidences of its
indebtedness, other securities or other properties or assets (in each case other
than (i) dividends payable in Common Stock, Options or Convertible Securities
and (ii) any cash dividend that, when added to all other cash dividends paid in
the one year prior to the declaration date of such dividend (excluding any such
other dividend included in a previous adjustment of the Purchase Price pursuant
to this paragraph (e)), does not exceed 10% of the current market price per
share of Common Stock on such declaration date), or any options, warrants or
-7-
<PAGE>
other rights to subscribe for or purchase any of the foregoing, then (A) the
Purchase Price shall be decreased to a price determined by multiplying the
Purchase Price then in effect by a fraction, the numerator of which shall be the
current market price per share of Common Stock on the record date for such
distribution less the sum of (X) the cash portion, if any, of such distribution
per share of Common Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution plus (Y) the then fair market value (as
determined in good faith by the Board of Directors of the Company) per share of
Common Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution of that portion, if any, of such distribution consisting
of evidences of indebtedness, other securities, properties, assets, options,
warrants or subscription or purchase rights, and the denominator of which shall
be such current market price per share of Common Stock and (B) the number of
shares of Common Stock purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of Common
Stock so purchasable immediately prior to the record date for such distribution
by a fraction, the numerator of which shall be the Purchase Price in effect
immediately prior to the adjustment required by clause (A) of this sentence and
the denominator of which shall be the Purchase Price in effect immediately after
such adjustment. The adjustments required by this paragraph (e) shall be made
whenever any such distribution is made and shall be retroactive to the record
date for the determination of stockholders entitled to receive such
distribution.
(f) Current Market Price. For the purpose of any computation under
--------------------
paragraphs (b), (c), (d) and (e) of this Section, the current market price per
share of Common Stock at any date shall be the average of the daily closing
prices for the shorter of (i) the 20 consecutive trading days ending on the last
full trading day on the exchange or market specified in the second succeeding
sentence prior to the Time of Determination and (ii) the period commencing on
the date next succeeding the first public announcement of the issuance, sale,
distribution or granting in question through such last full trading day prior to
the Time of Determination. The term "Time of Determination" as used herein
shall be the time and date of the earlier to occur of (A) the date as of which
the current market price is to be computed and (B) the last full trading day on
such exchange or market before the commencement of "ex-dividend" trading in the
Common Stock relating to the event giving rise to the adjustment required by
paragraph (b), (c), (d) or (e). The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices regular way for such
day, in each case (1) on the principal national securities exchange on which the
shares of Common Stock are listed or to which such shares are admitted to
trading or (2) if the Common Stock is not listed or admitted to trading on a
national securities exchange, in the over-the counter market as reported by the
Nasdaq Stock Market or any comparable system or (3) if the Common Stock is not
listed on the Nasdaq Stock Market or a comparable system, as furnished by two
members of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share cannot
be determined pursuant to the foregoing provisions of this paragraph (f), the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company.
(g) Certain Distributions. If the Company shall pay a dividend or
---------------------
make any other distribution payable in Options or Convertible Securities, then,
for purposes of paragraph (b) above (by operation of paragraph (c) or (d) above,
as the case may be), such Options or Convertible Securities shall be deemed to
have been issued or sold without consideration except for such amounts of
consideration as shall have been deemed to have been received by the Company
pursuant to paragraphs (c) or (d) above, as appropriate.
(h) Consideration Received. If any shares of Common Stock shall be
----------------------
issued and sold in an underwritten public offering, the consideration received
by the Company for such shares of Common Stock shall be deemed to include the
underwriting discounts and commissions realized by the underwriters of such
public offering. If any shares of Common Stock, Options or Convertible
Securities shall be issued, sold or distributed for a consideration other than
cash, the amount of the consideration other than cash received by the Company in
respect thereof shall be deemed to be the then fair market value of such
consideration (as determined in good faith by the Board of Directors of the
Company). If any Options shall be issued in connection with the issuance and
sale of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued, sold or
-8-
<PAGE>
distributed for such amount of consideration as shall be allocated to such
Options in good faith by the Board of Directors of the Company.
(i) Deferral of Certain Adjustments. No adjustment to the Purchase
-------------------------------
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder (i)
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
of the Purchase Price, provided, however, that any adjustment which by reason of
this clause (i) of this paragraph (i) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment and (ii)
solely with respect to Options that are Rights, until the time such Options
become exercisable.
(j) Changes in Options and Convertible Securities. If the exercise
---------------------------------------------
price provided for in any Options referred to in paragraph (c) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (d) above, or the rate at
which any Convertible Securities referred to in paragraph (c) or (d) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Article IV), the Purchase Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Purchase Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(k) Expiration of Options and Convertible Securities. If, at any time
------------------------------------------------
after any adjustment to the number of shares of Common Stock purchasable upon
the exercise of each Warrant shall have been made pursuant to paragraph (c), (d)
or (j) above or this paragraph (k), any Options or Convertible Securities shall
have expired unexercised or, solely with respect to Options that are Rights, are
redeemed, the number of such shares so purchasable shall, upon such expiration
or such redemption, be readjusted and shall thereafter be such as they would
have been had they been originally adjusted (or had the original adjustment not
been required, as the case may be) as if (i) the only shares of Common Stock
deemed to have been issued in connection with such Options or Convertible
Securities were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible Securities, whether or not
exercised; provided, however, that (x) no such readjustment shall have the
effect of decreasing the number of such shares so purchasable by an amount
(calculated by adjusting such decrease to account for all other adjustments made
pursuant to this Article IV following the date of the original adjustment
referred to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale, distribution or granting of such Options or
Convertible Securities and (y) in the case of the redemption of any Rights,
there shall be deemed (for the purposes of paragraph (c) above) to have been
issued as of the date of such redemption for no consideration a number of shares
of Common Stock equal to the aggregate consideration paid to effect such
redemption divided by the current market price of the Common Stock on the date
of such redemption.
(l) Other Adjustments. In the event that at any time, as a result of
-----------------
an adjustment made pursuant to this Article IV, the Holders shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Purchase Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares of
Common Stock contained in this Article IV.
(m) Excluded Transactions. Notwithstanding any provision in this
---------------------
Article IV to the contrary, no adjustment shall be made pursuant to this Article
IV in respect of (i) any change in the par value of the Common Stock, (ii) the
granting of any Options or the issuance of any shares of Common Stock, in either
case, which would
-9-
<PAGE>
otherwise trigger an adjustment under paragraph (b) above, that may be
registered on Form S-8 or any successor form under the Securities Act, to any
officers, directors or employees of, or any consultants or advisors to, the
Company, or (iii) the issuance of Common Stock pursuant to any dividend
reinvestment plan which provides that the price of the Common Stock purchased
for plan participants from the Company will be no less than 95% of the average
of the high and low sales prices of the Common Stock on the investment date or,
if no trading in the Common Stock occurs on such date, the next preceding date
on which trading occurred (1) on the principal national securities exchange on
which the shares of Common Stock are listed or to which such shares are admitted
to trading or (2) if the Common Stock is not listed or admitted to trading on a
national securities exchange, in the over-the-counter market as reported by the
Nasdaq Stock Market or any comparable system or (3) if the Common Stock is not
listed on the Nasdaq Stock Market or a comparable system, as furnished by two
members of the NASD selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the current market price per share cannot
be determined pursuant to the foregoing provisions of this paragraph, the
current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company; provided,
however, that clause (ii) of this paragraph (m) shall not apply to any such
grant or issuance if, after giving effect thereto, the aggregate amount of
Common Stock issued in all transactions covered by clause (ii) of this paragraph
(m) (assuming the exercise of all then outstanding Options granted in such
transactions) would exceed 5% of the number of shares of Common Stock then
outstanding (after giving effect to the exercise of the Options so granted and
all then outstanding Options or Convertible Securities).
Section 4.02 Notice of Adjustment
Whenever the number of shares of Common Stock or other stock or
property issuable upon the exercise of each Warrant is adjusted, as herein
provided, the Company shall promptly give a written certificate of the Company
to the Warrant Agent of such adjustment or adjustments and shall cause the
Warrant Agent promptly to mail by first class mail, postage prepaid, to each
Holder and the Warrant Agent notice of such adjustment or adjustments. In
addition, the Company at its sole expense shall within 120 calendar days
following the end of each fiscal year of the Company during which any Warrants
remain outstanding, and promptly upon the request of any Holder of a Warrant in
connection with the exercise of any of such Holder's Warrants, cause to be
delivered to the Warrant Agent a certificate of a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company) setting forth the number of shares
of Common Stock or other stock or property issuable upon the exercise of each
Warrant after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made. The Warrant Agent shall be entitled to rely on such
certificates and shall be under no duty or responsibility with respect to any
such certificate except to exhibit the same from time to time to any Holder
desiring an inspection thereof during reasonable business hours. The Warrant
Agent shall not at any time be under any duty or responsibility to any Holder to
determine whether any facts exist that may require any adjustment of the number
of shares of Common Stock or other stock or property issuable on exercise of the
Warrants, or with respect to the nature or extent or any such adjustment when
made, or with respect to the method employed in making such adjustment or the
validity or value (or the kind or amount) of any shares of Common Stock or other
stock or property which may be issuable on exercise of the Warrants. The
Warrant Agent shall not be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other common stock or property upon the exercise of any
Warrant.
Section 4.03 Statement of Warrants
Irrespective of any adjustment in the number or kind of shares
issuable upon the exercise of the Warrants, Warrants theretofore or thereafter
issued may continue to express the same number and kind of shares as are stated
in the Warrants initially issuable pursuant to this Agreement.
Section 4.04 Fractional Interest
The Company shall not be required to issue fractional shares of Common
Stock on the exercise of Warrants. If more than one Warrant shall be presented
for exercise in full at the same time by the same Holder, the
-10-
<PAGE>
number of full shares of Common Stock which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of shares of Common Stock
acquirable on exercise of the Warrants so presented. If any fraction of a share
of Common Stock would, except for the provisions of this Section, be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to be equal to the then current market
price per share multiplied by such fraction computed to the nearest whole cent.
The Holders, by their acceptance of the Warrant Certificates, expressly waive
any and all rights to receive any fraction of a share of Common Stock or a stock
certificate representing a fraction of a share of Common Stock.
ARTICLE V
WARRANT TRANSFERS
Section 5.01 Warrant Transfer Books
The Warrant Certificates shall be issued in registered form only. The
Company shall cause to be kept at the office of the Warrant Agent a register in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Warrant Certificates and of transfers or
exchanges of Warrant Certificates by the Warrant Agent as herein provided.
At the option of the Holder thereof, Warrant Certificates may be
exchanged at such office, upon payment of the charges hereinafter provided.
Whenever any Warrant Certificates are so surrendered for exchange, the Company
shall execute, and the Warrant Agent shall countersign and deliver, the Warrant
Certificates that the Holder making the exchange is entitled to receive.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificates surrendered for such registration of
transfer or exchange.
Section 5.02 Registration of Transfer and Exchange
(a) Transfer and Exchange of Physical Warrants. When Physical
------------------------------------------
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Physical Warrants; or
(ii) to exchange such Physical Warrants for an equal number of
Physical Warrants of other denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if the requirements under this Warrant Agreement as set forth in this Section
5.02 for such transactions are met; provided, however, that the Physical
-------- -------
Warrants presented or surrendered for registration of transfer or exchange:
(A) shall be duly endorsed or accompanied by a written instrument of transfer
in form satisfactory to the Warrant Agent, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(B) in the case of Physical Warrants the offer and sale of which have not been
registered under the Securities Act, such Physical Warrants shall be
accompanied, in the sole discretion of the Company, by the following additional
information and documents, as applicable:
(I) if such Physical Warrant is being delivered to the Warrant Agent by a
Holder for registration in the name of such Holder, without transfer, a
certification from such Holder to that effect (substantially in the form of
Exhibit C hereto); or
(II) if such Physical Warrant is being transferred to a Qualified Institutional
Buyer in accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit C hereto); or
-11-
<PAGE>
(III) if such Physical Warrant is being transferred to an Institutional
Accredited Investor, delivery of a certification to that effect (substantially
in the form of Exhibit C hereto) and a Transferee Certificate for Institutional
Accredited Investors substantially in the form of Exhibit D hereto; or
(IV) if such Physical Warrant is being transferred in reliance on Regulation S,
delivery of a certification to that effect (substantially in the form of Exhibit
C hereto), a Transferee Certificate for Regulation S Transfers substantially in
the form of Exhibit E hereto and an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in compliance with the
Securities Act; or
(V) if such Physical Warrant is being transferred in reliance on Rule 144 under
the Securities Act, delivery of a certification to that effect (substantially in
the form of Exhibit C hereto) and an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in compliance with the
Securities Act; or
(VI) if such Physical Warrant is being transferred in reliance on another
exemption from the registration requirements of the Securities Act, a
certification to that effect (substantially in the form of Exhibit C hereto) and
an Opinion of Counsel reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act.
(b) Restrictions on Exchange of a Physical Warrant for a Beneficial
---------------------------------------------------------------
Interest in a Global Warrant. A Physical Warrant may not be exchanged for a
- ----------------------------
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a Physical
Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Warrant Agent, together with:
(i) certification, substantially in the form of Exhibit C hereto, that such
Physical Warrant is being transferred (A) to a Qualified Institutional Buyer,
(B) to an Accredited Investor or (C) in an offshore transaction in reliance on
Regulation S; and
(ii) written instructions from the Company directing the Warrant Agent to make,
or to direct the Depositary to make, an endorsement on the Global Warrant to
reflect an increase in the aggregate number of Warrants represented by the
Global Warrant,
then the Warrant Agent shall cancel such Physical Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the aggregate
number of Warrants represented by the Global Warrant to be increased
accordingly. If no Global Warrant is then outstanding, the Company shall issue
and the Warrant Agent shall authenticate such a Global Warrant for the
appropriate number of Warrants.
(c) Transfer and Exchange of Global Warrants. The transfer and exchange of
----------------------------------------
Global Warrants or beneficial interests therein shall be effected through the
Depositary in accordance with this Warrant Agreement (including the restrictions
on transfer set forth herein) and the procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for a Physical
--------------------------------------------------------------------
Warrant.
- -------
(i) Any Person having a beneficial interest in a Global Warrant may upon
request exchange such beneficial interest for a Physical Warrant. Upon receipt
by the Warrant Agent of instructions from the Depositary or its nominee on
behalf of any Person having a beneficial interest in a Global Warrant and upon
receipt by the Warrant Agent of a written order or such other form of
instructions as is customary for the Depositary or the Person designated by the
Depositary as having such a beneficial interest containing registration
instructions and, in the case of any such transfer or exchange of a beneficial
interest in Warrants the offer and sale of which have not been registered under
the Securities Act, the following additional information and documents:
(A) if such beneficial interest is being transferred to the Person designated
by the Depositary as being the beneficial owner, a certification from such
Person to that effect (substantially in the form of Exhibit C hereto); or
-12-
<PAGE>
(B) if such beneficial interest is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit C hereto); or
(C) if such beneficial interest is being transferred to an Institutional
Accredited Investor, delivery of a certification to that effect (substantially
in the form of Exhibit C hereto) and a Certificate for Institutional Accredited
Investors substantially in the form of Exhibit D hereto; or
(D) if such beneficial interest is being transferred in reliance on Regulation
S, delivery of a certification to that effect (substantially in the form of
Exhibit C hereto) and a Transferee Certificate for Regulation S Transfers
substantially in the form of Exhibit E hereto and an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in reliance on Rule 144
under the Securities Act, delivery of a certification to that effect
(substantially in the form of Exhibit C hereto) and an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act; or
(F) if such beneficial interest is being transferred in reliance on another
exemption from the registration requirements of the Securities Act, a
certification to that effect (substantially in the form of Exhibit C hereto) and
an Opinion of Counsel reasonably satisfactory to the Company to the effect that
such transfer is in compliance with the Securities Act,
then the Warrant Agent will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
aggregate number of Warrants represented by the Global Warrant to be reduced
and, following such reduction, the Company will execute and the Warrant Agent
will authenticate and deliver to the transferee a Physical Warrant.
(ii) Warrants issued in exchange for a beneficial interest in a Global
Warrant pursuant to this Section 5.02(d) shall be registered in such names and
in such denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Warrant Agent
in writing. The Warrant Agent shall deliver such Physical Warrants to the
Persons in whose names such Physical Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
--------------------------------------------------------
Notwithstanding any other provisions of this Warrant Agreement, a Global Warrant
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Private Placement Legend. Upon the transfer, exchange or replacement
------------------------
of Warrants, the Warrant Agent shall deliver only Warrants that bear the Private
Placement Legend unless, and the Warrant Agent is hereby authorized to deliver
Warrants without the Private Placement Legend if, (i) there is delivered to the
Warrant Agent an Opinion of Counsel reasonably satisfactory to the Company and
the Warrant Agent to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act or (ii) such Warrant has been sold pursuant to
an effective registration statement under the Securities Act.
(g) General. By its acceptance of any Warrant bearing the Private
-------
Placement Legend, each Holder of such a Warrant acknowledges the restrictions on
transfer of such Warrant set forth in this Warrant Agreement and in the Private
Placement Legend and agrees that it will transfer such Warrant only as provided
in this Warrant Agreement.
The Warrant Agent shall retain copies of all letters, notices and other
written communications received pursuant to this Section 5.02. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Warrant Agent.
-13-
<PAGE>
No service charge shall be payable by Holders for any registration of
transfer or exchange of Warrant Certificates. The Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Warrant
Certificates.
ARTICLE VI
WARRANT HOLDERS
Section 6.01 No Voting Rights
Prior to the exercise of the Warrants, no Holder of a Warrant
Certificate, as such, shall be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to receive dividends or
subscription rights, the right to vote, to consent, to exercise any preemptive
right, to receive any notice of meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the Company, except as may be specifically provided for herein.
Section 6.02 Right of Action
All rights of action in respect of this Agreement are vested in the
Holders of the Warrants, and any Holder of any Warrant, without the consent of
the Warrant Agent or any Holder of any other Warrant, may, on such Holder's own
behalf and for such Holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such Holder's rights hereunder, including the right
to exercise, exchange or surrender for purchase such Holder's Warrants in the
manner provided in this Agreement.
ARTICLE VII
WARRANT AGENT
Section 7.01 Nature of Duties and Responsibilities Assumed
The Company hereby appoints the Warrant Agent to act as agent of the
Company as set forth in this Agreement. The Warrant Agent hereby accepts the
appointment as agent of the Company and agrees to perform that agency upon the
terms and conditions herein set forth, by all of which the Company and the
Holders of Warrants, by their acceptance thereof, shall be bound. The Warrant
Agent shall not by countersigning Warrant Certificates or by any other act
hereunder be deemed to make any representation as to validity or authorization
of the Warrants or the Warrant Certificates (except as to its countersignature
thereon) or of any securities or other property delivered upon exercise of any
Warrant, or as to the number or kind or amount of stock or other securities or
other property deliverable upon exercise of any Warrant or the correctness of
the representations of the Company made in such certificates that the Warrant
Agent receives. The Warrant Agent shall not have any duty to calculate or
determine any adjustments with respect to the kind and amount of shares or other
securities or any property receivable by Holders upon the exercise of Warrants
required from time to time, and the Warrant Agent shall have no duty or
responsibility in determining the accuracy or correctness of any such
calculation, other than to apply any adjustment, notice of which is given by the
Company to the Warrant Agent to be mailed to the Holders in accordance with
Section 4.02. The Warrant Agent shall not (a) be liable for any recital or
statement of fact contained herein or in the Warrant Certificates or for any
action taken, suffered or omitted by it in good faith in the belief that any
Warrant Certificate or any other document or any signature is genuine or
properly authorized, (b) be responsible for any failure on the part of the
Company to comply with any of its covenants and obligations contained in this
Agreement or in the Warrant Certificates or (c) be liable for any act or
omission in connection with this Agreement except for its own gross negligence
or willful misconduct. The Warrant Agent is hereby authorized to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary or the Assistant Secretary of the Company
and to apply to any such officer for instructions (which instructions will be
promptly given in writing when requested), and the Warrant Agent shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with the instructions of any such officer, except for its own gross
negligence or willful
-14-
<PAGE>
misconduct, but in its discretion the Warrant Agent may in lieu thereof accept
other evidence of such or may require such further or additional evidence as it
may deem reasonable. Any application by the Warrant Agent for written
instructions from the Company may, at the option of the Warrant Agent, set forth
in writing any action proposed to be taken or omitted by the Warrant Agent under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective. The Warrant Agent shall not be liable for any
action taken by, or omission of, the Warrant Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three business days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Warrant Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
The Warrant Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, provided reasonable care has been
exercised in the selection of any such attorney, agent or employee. The Warrant
Agent shall not be under any obligation or duty to institute, appear in or
defend any action, suit or legal proceeding in respect hereof, unless first
indemnified to its satisfaction, but this provision shall not affect the power
of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without such indemnity. The Warrant Agent shall
promptly notify the Company in writing of any claim made or action, suit or
proceeding instituted against or arising out of or in connection with this
Agreement. No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
The Company will perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Warrant Agent in
order to enable it to carry out or perform its duties under this Agreement.
The Warrant Agent shall act solely as agent of the Company hereunder.
The Warrant Agent shall not be liable except for the failure to perform such
duties as are specifically set forth herein, and no implied covenants or
obligations shall be read into this Agreement against the Warrant Agent, whose
duties and obligations shall be determined solely by the express provisions
hereof.
Section 7.02 Right to Consult Counsel
The Warrant Agent may at any time consult with legal counsel of its
selection satisfactory to it (who may be legal counsel for the Company), and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
Section 7.03 Compensation and Reimbursement
The Company agrees to pay to the Warrant Agent from time to time
compensation for all services rendered by it hereunder as the Company and the
Warrant Agent may agree from time to time in writing, and to reimburse the
Warrant Agent for reasonable expenses and disbursements incurred in connection
with the execution and administration of this Agreement (including the
reasonable compensation and the expenses of its counsel), and further agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any and all
loss, liability, damage, claim or expense incurred without gross negligence, bad
faith or willful misconduct on its part, arising out of or in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. The
provisions of this Section 7.03 shall survive the termination of this Agreement.
Section 7.04 Warrant Agent May Hold Company Securities
-15-
<PAGE>
Except as may be limited by applicable law, the Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or its Affiliates
or become pecuniarily interested in transactions in which the Company or its
Affiliates may be interested, or contract with or lend money to the Company or
its Affiliates or otherwise act as fully and freely as though it were not the
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other person.
Section 7.05 Resignation and Removal; Appointment of Successor
(a) No resignation or removal of the Warrant Agent and no
appointment of a successor warrant agent shall become effective until the
acceptance of appointment by the successor warrant agent as provided herein. The
Warrant Agent may resign its duties and be discharged from all further duties
and liability hereunder (except liability arising as a result of the Warrant
Agent's own gross negligence, bad faith or willful misconduct) after giving
written notice to the Company. The Company may remove the Warrant Agent upon
written notice, and the Warrant Agent shall thereupon in like manner be
discharged from all further duties and liabilities hereunder, except as
aforesaid. The Warrant Agent shall, at the Company's expense, cause to be mailed
(by first class mail, postage prepaid) to each Holder of a Warrant at his last
address as shown on the register of the Company maintained by the Warrant Agent
a copy of said notice of resignation or notice of removal, as the case may be.
Upon such resignation or removal, the Company shall appoint in writing a new
warrant agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such resignation by
the resigning Warrant Agent or after such removal, then the Company shall become
Warrant Agent until a successor Warrant Agent has been appointed, and the Holder
of any Warrant may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court, shall be a corporation doing business under the
laws of the United States, any state thereof or the District of Columbia, in
good standing and having a combined capital and surplus of not less than
$50,000,000. The combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as set forth in the most
recent annual report of its condition published by such warrant agent prior to
its appointment, provided that such reports are published at least annually
pursuant to law or to the requirements of a federal or state supervising or
examining authority. After acceptance in writing of such appointment by the new
warrant agent, it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning or
removed Warrant Agent. Not later than the effective date of any such
appointment, the Company shall give notice thereof to the resigning or removed
Warrant Agent. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of a new warrant
agent, as the case may be.
(b) Any corporation into which the Warrant Agent or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Warrant Agent or any new warrant agent shall be a party or any person to
whom the Warrant Agent transfers substantially all of its corporate trust
business shall be a successor Warrant Agent under this Agreement without any
further act, provided that such corporation (i) would be eligible for
appointment as successor to the Warrant Agent under the provisions of Section
7.05(a) or (ii) is a wholly-owned subsidiary of the Warrant Agent. Any such
successor Warrant Agent shall promptly cause notice of its succession as Warrant
Agent to be mailed (by first class mail, postage prepaid) to each Holder at such
Holder's last address as shown on the register maintained by the Warrant Agent
pursuant to Section 5.01.
ARTICLE VIII
COVENANTS OF THE COMPANY
Section 8.01 Reservation of Common Stock for Issuance on Exercise of
Warrants; Listing
The Company will at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, solely for
the purpose of issuance upon exercise of Warrants as herein provided, such
-16-
<PAGE>
number of shares of Common Stock as shall then be issuable upon the exercise of
all outstanding Warrants. The Company covenants that all shares of Common Stock
which shall be so issuable shall, upon such issuance, be duly and validly issued
and fully paid and nonassessable, and that upon issuance such shares shall be
listed on each national securities exchange or quotation system (including the
Nasdaq Stock Market), if any, on which any other shares of outstanding Common
Stock of the Company are then listed.
The Company or the transfer agent for the Common Stock (the "Transfer
Agent") and every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the Warrants as herein
provided will be irrevocably authorized and directed at all times to reserve
such number of authorized shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition
from time to time from such Transfer Agent the stock certificates required to
honor outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash that may be payable as provided in Section 4.04. The Company will furnish
such Transfer Agent a copy of all notices of adjustment and certificates related
thereto transmitted to each holder pursuant to Section 4.02 hereof.
Section 8.02 Reports to Holders
To the extent such documents are required to be sent by the Company to
the holders of its outstanding Common Stock, the Company shall file with the
Warrant Agent and provide Holders of Warrants, within 15 days after it files
them with the SEC, copies of its annual report and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company is required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall
continue to file with the SEC and, to the extent it is required to send such
documents to the holders of its outstanding Common Stock, provide the Warrant
Agent and the Holders of the Warrants with reports containing substantially the
same information as would have been required to be filed with the SEC and sent
to holders of its outstanding Common Stock had the Company continued to have
been subject to such reporting requirements; provided, however, that the Company
shall not be so obligated to file with the SEC if the SEC does not permit such
filings. In such event, such reports shall be provided to the Warrant Agent and
Holders of Warrants at the times the Company would have been required to provide
such reports had it been subject to such reporting retirements. Delivery of
such reports, information and documents to the Warrant Agent is for
informational purposes only and the Warrant Agent's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Company's compliance with any of its covenants hereunder.
Section 8.03 Agreements Respecting Warrants
The Company agrees that it will not enter into any agreement or
instrument which would preclude the exercise of the Warrants for shares of
Underlying Common Stock.
Section 8.04 Registration under the Securities Laws
(a) Mandatory Registration. Not later than December 31, 1997, the
----------------------
Company shall file with the SEC, at the Company's expense, a registration
statement registering under the Securities Act for resale by the Holders all of
the Restricted Shares. The Company shall use all reasonable efforts to cause
such registration statement to become effective as soon as possible thereafter
and to maintain such effectiveness continually until the first to occur of
(i) December 31, 2001, (ii) the date all Restricted Shares covered by such
registration statement have been disposed of in accordance with such
registration statement, (iii) the date the Company has received a written
opinion of independent counsel, a copy of which will be provided to each Holder,
that all of the Restricted Shares are freely tradable without registration
pursuant to Rule 144 (or any successor thereto) under the Securities Act and
applicable state securities laws, or (iv) if no Warrants have been exercised on
or prior to the Expiration Date or such other date on which the Warrants
terminate and become void prior to the Expiration Date, the close of business on
the
-17-
<PAGE>
Expiration Date or such other date on which the Warrants terminate and
become void prior to the Expiration Date. Such registration statement will
include a plan of distribution permitting any reasonable method of resale by the
Holders of the Restricted Shares including resale in the public market, in
broker's transactions, or in privately negotiated transactions. The Company
also will prepare and file promptly with the SEC, at the Company's expense, such
amendments and supplements to such registration statement and the prospectus
included in such registration statement as may be necessary to comply with the
provisions of the Securities Act. The Holders shall provide the Company in
writing with such information about the Holders and the proposed plan of
distribution as the Company shall reasonably request for inclusion in the
registration statement. The Company will provide to each Holder such number of
copies of such registration statement and of each amendment and supplement
thereto, such number of copies of the prospectus included in such registration
statement and each amendment and supplement thereto, and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the
Restricted Shares owned by such Holder. The Company shall, as expeditiously as
possible following the filing of such registration statement, use all reasonable
efforts to register or qualify the Restricted Shares covered by the registration
statement under the securities or Blue Sky laws of such states as the Holders
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the Holders to consummate the public or other
disposition in each such jurisdiction of the Restricted Shares; provided,
--------
however, that the Company shall not be required in connection with this Section
- -------
8.04 to qualify as a foreign corporation, subject itself to taxation or execute
a general consent to service of process in any jurisdiction.
(b) Indemnification.
---------------
(i) Indemnification by the Company. The Company will, and hereby
------------------------------
does, indemnify and hold harmless each Holder, its directors and officers, each
other person who participates as an underwriter, broker or dealer in the
offering or sale of Restricted Shares by such Holder and each other person, if
any, who controls such Holder or any such participating person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each such person being sometimes referred to as an "Indemnified Holder"),
against any losses, claims, damages or liabilities, joint or several, to which
such Holder or any such director or officer or participating or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (x) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Shares were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, (y) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in the light of the circumstances under
which they were made not misleading or (z) any violation or alleged violation by
the Company of the Securities Act; and the Company will reimburse such Holder
and each such director, officer, participating person and controlling person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information relating to such
Indemnified Holder furnished to the Company through an instrument duly executed
by such Indemnified Holder expressly for use therein. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Holder or any such director, officer, participating person or
controlling person and shall survive the transfer of such securities by such
Holder.
(ii) Indemnification by the Holders of Restricted Shares. Each
---------------------------------------------------
Holder participating in the registration provided for in paragraph (a) above
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in clause (i)) the Company, each director of the Company, each officer
of the Company who shall sign such registration statement and each other person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, with respect to any statement
in or omission from such registration statement, any preliminary prospectus,
final prospectus, or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or omission was made in reliance upon and
in conformity with written information relating to such Holders furnished to the
Company through an instrument duly
-18-
<PAGE>
executed by such Holder expressly for use in the preparation of such
registration statement, preliminary prospectus, final prospectus or summary
prospectus contained therein, amendment or supplement. In no event, however,
shall the liability of any such Holder for indemnification under this paragraph
exceed the net proceeds received by the such Holder from the sale of such
Restricted Shares. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the transfer or such
securities by such Holder.
(iii) Notice of Claims, etc. Promptly after receipt by an
---------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in clause (i) or (ii) of this paragraph (b), such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
-------- -------
give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding clauses of this paragraph (b),
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any action is brought against an indemnified
party, the indemnifying party will be entitled to participate in and to assume
the defense of such action, jointly with any other indemnifying party to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
the indemnified party or parties. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(iv) Contribution. If for any reason the indemnification provided
------------
for in this paragraph (b) is unavailable to an indemnified party as contemplated
by this paragraph (b), then the indemnifying party in lieu of indemnification
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations, provided that no Holder shall be required to
--------
contribute in an amount greater than the excess of the net proceeds received by
the Holder from the sale of such Restricted Shares over all amounts already
contributed by such Holder with respect to such claims, including amounts paid
for any legal or other fees or expenses incurred by such Holder.
The relative fault of the Company on the one hand and of the
Indemnified Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Indemnified Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in this paragraph (b),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending an action or claim.
The Company and each Holder shall agree that it would not be just and
equitable if contribution pursuant to this paragraph (b) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this paragraph (b), an Indemnified
Holder shall not be required to contribute any amount in excess of the amount by
which the total price at which the Restricted Shares sold by such Indemnified
Holder or its affiliated Indemnified Holders and distributed to the public were
offered to the public exceeds the amount of any damages that such Indemnified
Holder, or its affiliated Indemnified Holder, has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
-19-
<PAGE>
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(v) Other Indemnification. Indemnification and contribution
---------------------
similar to that specified in the preceding clauses of this paragraph (b) (with
appropriate modifications) shall be given by the Company and each seller of
Restricted Shares with respect to any required registration or other
qualification of such Restricted Shares under any Federal or state law or
regulations of governmental authority other than the Securities Act. The
indemnification and contribution rights under this paragraph (b) shall be in
addition to any rights that any indemnified person may have at common law or
otherwise.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Money and Other Property Deposited with the Warrant Agent
Any money, securities or other property which at any time shall be
deposited by the Company or on its behalf with the Warrant Agent pursuant to
this Agreement shall be and are hereby assigned, transferred and set over to the
Warrant Agent in trust for the purpose for which such moneys, securities or
other property shall have been deposited; but such moneys, securities or other
property need not be segregated from other funds, securities or other property
of the Warrant Agent except to the extent required by law. The Warrant Agent
shall distribute any money deposited with it for payment and distribution to any
Holder by mailing by first-class mail a check in such amount as is appropriate,
to such Holder at the address shown on the Warrant register maintained pursuant
to Section 5.01, or as it may be otherwise directed in writing by such Holder,
upon surrender of such Holder's Warrants. Any money or other property deposited
with the Warrant Agent for payment and distribution to any Holder that remains
unclaimed for two years, less one day, after the date the money was deposited
with the Warrant Agent shall be paid to the Company upon its request therefor.
Section 9.02 Payment of Taxes
The Company will pay all taxes and other governmental charges that
may be imposed on the Company or on the holders of the Warrants or on the
holders of any securities deliverable upon exercise of Warrants with respect
thereto. The Company will not be required, however, to pay any tax or other
charge imposed in connection with any transfer involved in the issue of any
certificate for shares of Common Stock or other securities underlying the
Warrants or payment of cash or other property to any person other than the
Holder of a Warrant Certificate surrendered upon the exercise thereof, and in
case of such transfer or payment, the Warrant Agent and the Company shall not be
required to issue any stock certificate or security or pay any cash or
distribute any property until such tax or charge has been paid or it has been
established to the Warrant Agent's and the Company's satisfaction that no such
tax or other charge is due.
Section 9.03 Surrender of Certificates
Any Warrant Certificate surrendered for exercise or purchased or
otherwise acquired by the Company shall, if surrendered to the Company, be
delivered to the Warrant Agent, and all Warrant Certificates surrendered or so
delivered to the Warrant Agent shall promptly be canceled by such Warrant Agent
and shall not be reissued by the Company. The Warrant Agent shall return such
canceled Warrant Certificates to the Company.
Section 9.04 Mutilated, Destroyed, Lost and Stolen Warrant Certificates
If (a) any mutilated Warrant Certificate is surrendered to the Warrant
Agent or (b) the Company and the Warrant Agent receive evidence to their
satisfaction of the destruction, loss or theft of any Warrant Certificate, and
there is delivered to the Company and the Warrant Agent such security or
indemnity as may be reasonably required by them to save each of them harmless,
then, in the absence of notice to the Company or any officer in the corporate
trust department of the Warrant Agent that such Warrant Certificate has been
acquired by a bona fide purchaser, the Company shall execute and upon its
written request the Warrant Agent shall countersign and deliver, in exchange
-20-
<PAGE>
for any such mutilated Warrant Certificate or in lieu of any such destroyed,
lost or stolen Warrant Certificate, a new Warrant Certificate of like tenor and
for a like aggregate number of warrants.
Upon the issuance of any new Warrant Certificate under this Section
9.04, the Company may require the payment by the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and other expenses (including the reasonable fees and expenses of the
Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this
Section 9.04 in lieu of any destroyed, lost or stolen Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
destroyed, lost or stolen Warrant Certificate shall be at any time enforceable
by anyone, and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder.
The provisions of this Section 9.04 are exclusive and shall preclude
(to the extent lawful) all other rights or remedies with respect to the
replacement of mutilated, destroyed, lost or stolen Warrant Certificates.
Section 9.05 Miscellaneous Rights
The rights of Holders upon the occurrence of the events set forth in
this Agreement are cumulative. If more than one such event shall occur and the
periods following the occurrence of such events and prior to the closing of the
transactions that are the subject of such events overlap, each Holder may
exercise such rights arising therefrom as such Holder may elect without any
condition imposed upon such exercise not contained in this Agreement.
Neither the Company nor any of its Affiliates involved in any proposed
transaction that is the subject of such an event shall have any obligation to
the Holders to consummate any such proposed transaction once an agreement or
agreement in principle or decision to proceed with respect thereto is reached,
whether on the terms first proposed or as revised, or to include any Holder in,
or apprise any Holder of, any negotiations or discussions concerning any such
proposed transaction among the prospective parties thereto.
Section 9.06 Notices
Any notice or communication by the Company or the Warrant Agent to the
other is duly given if in writing and delivered in person, mailed by first-class
mail (registered or certified, return receipt requested), or sent by telecopier
or overnight air courier guaranteeing next day delivery, to the other's address:
If to the Company:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attention: Executive Vice President and Chief Financial
Officer
cc: Senior Vice President and General Counsel
If to the Warrant Agent:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
-21-
<PAGE>
The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and the next business day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail to the Holder's address shown on the register of the Company
maintained by the Warrant Agent. Failure to mail a notice or communication to a
Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Warrant Agent at the same time.
Section 9.07 Persons Benefiting
This Agreement shall be binding upon and inure to the benefit of the
Company and the Warrant Agent, and their respective successors and assigns, and
the Holders from time to time of the Warrants. Nothing in this Agreement is
intended or shall be construed to confer upon any person, other than the
Company, the Warrant Agent and the Holders of the Warrants, any right, remedy or
claim under or by reason of this Agreement or any part hereof.
Section 9.08 Counterpart Originals
The parties may sign any number of copies of this Agreement. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 9.09 Amendments
The Company may, without the consent of the Holders of the Warrants,
by supplemental agreement or otherwise, make any changes or corrections in this
Agreement (a) to cure any ambiguity or to correct or supplement any provision
herein which may be defective or inconsistent with any other provision herein,
(b) to add to the covenants and agreements of the Company for the benefit of the
Holders, or surrender any rights or power reserved to or conferred upon the
Company in this Agreement, or (c) that do not adversely affect the interests of
the Holders in any material respect. The Warrant Agent shall join with the
Company in the execution and delivery of any such supplemental agreements unless
it affects the Warrant Agent's own rights, duties or immunities hereunder, in
which case such party may, but shall not be required to, join in such execution
and delivery. Prior to executing any such supplemental agreement, the Warrant
Agent shall be entitled to receive and shall be protected in relying upon a
certificate of the Company which states that the proposed supplemental agreement
is in compliance with the terms of this Section 9.09.
Section 9.10 Termination
This Agreement (other than the Company's obligations with respect to
Warrants previously exercised under Article III, and with respect to
compensation, reimbursement and indemnification under Section 7.03) shall
terminate and be of no further force and effect, provided the Company has
complied with Section 3.05 hereof in the case of a Non-Surviving Combination, on
the earlier of (a) the Expiration Date and (b) the consummation of a Non-
Surviving Combination.
-22-
<PAGE>
Section 9.11 Governing Law
THIS AGREEMENT AND EACH WARRANT ISSUED HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 9.12 Headings
The headings of the Articles and Sections of this Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ICF KAISER INTERNATIONAL, INC.
By: /s/ James O. Edwards
Name: James O. Edwards
Title: Chairman and Chief Executive Officer
THE BANK OF NEW YORK,
as Warrant Agent
By: /s/ B. Merino
Name: B. Merino
Title: Assistant Treasurer
-23-
<PAGE>
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QUALIFIED INSTITUTIONAL
BUYER") OR (B) IT IS AN "INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), (D) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE WARRANT AGENT AND THE COMPANY SUCH LETTERS, CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
No. 1996W- Certificate for _______ Warrants
CUSIP No. 449244____
WARRANTS TO ACQUIRE COMMON STOCK OF
ICF KAISER INTERNATIONAL, INC.
This certifies that _________________________________, or registered
assigns, is the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), subject
to the provisions contained herein and in the Warrant Agreement referred to
below, to acquire from ICF Kaiser International, Inc., a Delaware corporation
(the "Company"), one share of Common Stock, $0.01 par value per share, of the
Company (the "Common Stock") for consideration equal to the Purchase Price (as
defined in the Warrant Agreement) per share of Common Stock. The Warrants
evidenced by this Warrant Certificate shall not be exercisable after and shall
terminate and become void as of the close of business on December 31, 1999 (the
"Expiration Date") or as of the closing of any Non-Surviving Combination, if
earlier.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of December 23, 1996 (the "Warrant Agreement"),
between the Company and The Bank of New York, as warrant agent (the "Warrant
Agent", which term includes any successor Warrant Agent under the Warrant
Agreement), and
<PAGE>
is subject to the terms and provisions contained in the Warrant Agreement, to
all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is hereby incorporated
herein by reference and made a part hereof. Reference is hereby made to the
Warrant Agreement for a full statement of the respective rights, limitations of
rights, duties and obligations of the Company, the Warrant Agent and the Holders
of the Warrants. Capitalized terms not defined herein have the meanings ascribed
thereto in the Warrant Agreement. A copy of the Warrant Agreement may be
obtained for inspection by the Holder hereof upon written request to the Company
at 9300 Lee Highway, Fairfax, Virginia 22031-1207, Attention of Senior Vice
President, General Counsel and Secretary.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants are immediately exercisable.
If the Company proposes, prior to the Expiration Date, to enter into a
merger, consolidation, sale of assets or other business combination with one or
more persons (other than a wholly-owned subsidiary of the Company) in which
consideration (other than Common Equity Securities) is distributed to the
holders of Common Stock in exchange for all or substantially all of their equity
interest in the Company (a "Non-Surviving Combination"), the Company shall give
written notice thereof to the Holders promptly after an agreement is reached but
in no event less than 30 days prior to the closing thereof. In the event the
Company enters into a Non-Surviving Combination, upon payment of the Purchase
Price prior to the Expiration Date, the Holder hereof will be entitled to
receive the shares of stock or other securities or other property (including any
money) of the surviving entity in such Non-Surviving Combination as the Holder
would have received had the Holder exercised its Warrants immediately prior to
such Non-Surviving Combination (or, if applicable, the record date therefor).
In order to exercise a Warrant, the registered Holder hereof must
surrender this Warrant Certificate at the office of the Warrant Agent, with the
Exercise Subscription Form on the reverse hereof duly executed by the Holder
hereof, with signature guaranteed as therein specified and tender the Purchase
Price therefor.
ICF KAISER INTERNATIONAL, INC.
By:
------------------------------
Name:
Title:
[SEAL]
Attest:
------------------------
Secretary
DATED:
Countersigned:
The Bank of New York,
as Warrant Agent
By:
---------------------------
Authorized Signatory
Date of Countersignature:
<PAGE>
[FORM OF REVERSE OF WARRANT CERTIFICATE]
ICF KAISER INTERNATIONAL, INC.
------------------------------
This Warrant Certificate and all rights hereunder are transferable by
the registered Holder hereof, in whole or in part, on the register maintained by
the Warrant Agent, upon surrender of this Warrant Certificate for registration
of transfer at the office of the Warrant Agent maintained for such purpose, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Warrant Agent duly executed by, the
registered Holder hereof or his attorney duly authorized in writing, with
signature guaranteed as specified in the attached Form of Assignment. Upon any
partial transfer, the Company will issue and deliver to such Holder a new
Warrant Certificate or Certificates with respect to any portion not so
transferred. No service charge shall be made for any registration of transfer
or exchange of Warrant Certificates, but the Company may require payment by the
Holder of a sum sufficient to cover any tax or other governmental charge payable
in connection therewith.
All shares of Common Stock issuable by the Company upon the exercise
of the Warrants shall, upon such issue, be duly and validly issued and fully
paid and nonassessable, and upon issuance such shares shall be listed on each
national securities exchange or quotation system (including the Nasdaq Stock
Market), if any, on which any other shares of outstanding Common Stock are then
listed.
Each taker and holder of this Warrant Certificate, by taking or
holding the same, consents and agrees that the holder of this Warrant
Certificate when duly endorsed in blank may be treated by the Company, the
Warrant Agent and all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented hereby, or to the transfer hereof on the register of the
Company maintained by the Warrant Agent, any notice to the contrary
notwithstanding, but until such transfer on such register, the Company and the
Warrant Agent may treat the registered Holder hereof as the owner for all
purposes.
The number of shares of Common Stock issuable upon exercise of the
Warrants is subject to adjustment in certain events, including (i) stock
dividends, stock splits and reclassification affecting the Common Stock,
(ii) the issuance of certain rights, warrants or options, or convertible or
exchangeable securities, to the holders of Common Stock entitling them to
acquire Common Stock at a price per share lower than its then market value and
(iii) sales by the Company of Common Stock at a price per share lower than its
then market value.
The Warrants do not entitle any Holder to any of the rights of a
stockholder of the Company.
This Warrant Certificate and the Warrant Agreement are subject to
amendment as provided in the Warrant Agreement.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory of the
Warrant Agent.
This Warrant Certificate and all rights hereunder shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws.
<PAGE>
EXERCISE SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise
____________________ of the Warrants represented by this Warrant Certificate,
for the acquisition of one share each of Common Stock, $0.01 par value per
share, of ICF Kaiser International, Inc., on the terms and conditions specified
in this Warrant Certificate and the Warrant Agreement herein referred to,
surrenders this Warrant Certificate and all right, title and interest therein to
ICF Kaiser International, Inc. and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered thereto.
Date: _____________, ____
/1/
--------------------------
(Signature of Owner)
--------------------------
(Street Address)
--------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
--------------------------
FORM OF TRANSFER
FOR VALUE RECEIVED the undersigned registered Holder of this Warrant
Certificate hereby sells, assigns and transfers unto the Assignee(s) named below
(including the undersigned with respect to any Warrants constituting a part of
the Warrants evidenced by this Warrant Certificate not being assigned hereby)
all of the right of the undersigned under this Warrant Certificate, with respect
to the number of Warrants set forth below:
<TABLE>
<CAPTION>
================================================================================
Social Security or
Name of Assignee(s) Address other identifying Number of Warrants
number of assignee(s)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
================================================================================
</TABLE>
and does hereby irrevocably constitute and appoint the Warrant Agent as the
undersigned's attorney to make such transfer on the register maintained by the
Warrant Agent for that purpose, with full power of substitution in the premises.
Date: _________, ____
/2/
-------------------------
(Signature of Owner)
-------------------------
(Street Address)
-------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------
- ------------------------
/1/ The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever, and must be guaranteed.
/2/ The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever, and must be guaranteed.
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR GLOBAL WARRANTS
Any Global Warrant authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS WARRANT IS A GLOBAL WARRANT WITHIN THE MEANING OF THE
WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. THIS WARRANT IS NOT EXCHANGEABLE FOR
WARRANTS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE WARRANT AGREEMENT, AND NO TRANSFER OF THIS
WARRANT (OTHER THAN A TRANSFER OF THIS WARRANT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE WARRANT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER OR EXCHANGE, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Acquire Common Stock (the "Warrants") of ICF Kaiser
-------------
International, Inc.
------------------------------
This Certificate relates to _____ Warrants held in the form of* ___ a
beneficial interest in a Global Warrant or* ______ Physical Warrants by _____
(the "Transferor").
The Transferor:*
[ ] has requested by written order that the Warrant Agent deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Physical Warrant or Physical Warrants in definitive, registered
form representing the number of Warrants equal to its beneficial interest in
such Global Warrant (or the portion thereof indicated above); or
[ ] has requested the Warrant Agent by written order to exchange or
register the transfer of a Physical Warrant or Physical Warrants.
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and the restrictions on
transfers thereof as provided in Section 5.02 of such Warrant Agreement, and
that the transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because*
[ ] Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 5.02(a)(B)(I) or Section
5.02(d)(i)(A) of the Warrant Agreement.
[ ] Such Warrant is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
[ ] Such Warrant is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act).
[ ] Such Warrant is being transferred in reliance on Regulation S under
the Act.
[ ] Such Warrant is being transferred in reliance on Rule 144 under the
Act.
[ ] Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
---------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------
[Authorized Signatory]
Date:
------------------------
*Check applicable box
<PAGE>
EXHIBIT D
Form of Certificate to Be Delivered in Connection with Transfers to
Institutional Accredited Investors
________________, ____
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: ICF Kaiser International, Inc. (the "Company") Warrant Agreement, dated
as of December __, 1996, (the "Warrant Agreement"), relating to Warrants
to Acquire Common Stock of the Company, (the Warrants")
Ladies and Gentlemen:
In connection with our proposed purchase of Warrants, we confirm that:
1. We have received such information as we deem necessary in order to make
our investment decision.
2. We understand that any subsequent transfer of the Warrants is subject to
certain restrictions and conditions set forth in the Warrant Agreement and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Warrants except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Warrants have not been
registered under the Securities Act, and that the Warrants may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Warrants, we will do so only (A) to the
Company or any subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Warrant Agent a signed
letter substantially in the form hereof, (D) outside the United States in
accordance with Regulation S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available) or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
Warrants from us a notice advising such purchaser that resales of the Warrants
are restricted as stated herein.
4. We understand that, on any proposed resale of Warrants, we will be
required to furnish to the Warrant Agent and the Company, such certification,
legal opinions and other information as the Warrant Agent and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Warrants purchased by us will bear
a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Warrants, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.
6. We are acquiring the Warrants purchased by us for our account or for one
or more accounts (each of which is an institutional "accredited investor") as to
each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
---------------------------------
[Authorized Signatory]
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered in Connection with Regulation S Transfers
________________, ____
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Re: ICF Kaiser International, Inc. (the "Company")
Warrant Agreement, dated as of December __, 1996
(the "Warrant Agreement"), relating to Warrants to
Acquire Common Stock of the Company (the "Warrants")
----------------------------------------------------
Dear Sirs:
In connection with our proposed sale of _________________ Warrants,
we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, we represent that:
(1) the offer of the Warrants was not made to a person in the United States;
(2) either (a) at the time the buy offer was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States, or (b) the
transaction was executed in, on or through the facilities of a designated
offshore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions applicable to
the Warrants.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
---------------------------------
[Authorized Signature]
<PAGE>
Exhibit No. 4(k)
WARRANTS TO ACQUIRE COMMON STOCK OF
ICF KAISER INTERNATIONAL, INC.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QUALIFIED INSTITUTIONAL BUYER") OR (B) IT IS AN
"INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT
AGENT), (D) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE WARRANT
AGENT AND THE COMPANY SUCH LETTERS, CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATIONS UNDER THE SECURITIES
ACT.
THIS WARRANT IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS WARRANT IS NOT
EXCHANGEABLE FOR WARRANTS REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT, AND NO TRANSFER OF THIS WARRANT (OTHER THAN A TRANSFER OF
THIS WARRANT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT.
1
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER OR EXCHANGE, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. 1996WQ-1 Certificate for 105,000 Warrants
CUSIP No. 449244 128
WARRANTS TO ACQUIRE COMMON STOCK OF
ICF KAISER INTERNATIONAL, INC.
This certifies that CEDE & CO., or registered assigns, is the registered
holder of the number of Warrants set forth above (the "Warrants"). Each Warrant
entitles the holder thereof (the "Holder"), subject to the provisions contained
herein and in the Warrant Agreement referred to below, to acquire from ICF
Kaiser International, Inc., a Delaware corporation (the "Company"), one share of
Common Stock, $0.01 par value per share, of the Company (the "Common Stock") for
consideration equal to the Purchase Price (as defined in the Warrant Agreement)
per share of Common Stock. The Warrants evidenced by this Warrant Certificate
shall not be exercisable after and shall terminate and become void as of the
close of business on December 31, 1999 (the "Expiration Date") or as of the
closing of any Non-Surviving Combination, if earlier.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of December 23, 1996 (the "Warrant Agreement"), between the
Company and The Bank of New York, as warrant agent (the "Warrant Agent", which
term includes any successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company, the Warrant Agent and the Holders of the
Warrants. Capitalized terms not defined herein have the meanings ascribed
thereto in the Warrant Agreement. A copy of the Warrant Agreement may be
obtained for inspection by the Holder hereof upon written request to the Company
at 9300 Lee Highway, Fairfax, Virginia 22031-1207, Attention of Senior Vice
President, General Counsel and Secretary.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants are immediately exercisable.
If the Company proposes, prior to the Expiration Date, to enter into a
merger, consolidation, sale of assets or other business combination with one or
more persons (other than a wholly-owned subsidiary of the Company) in which
consideration (other than Common Equity Securities) is distributed to the
holders of Common Stock in exchange for all or substantially all of their equity
interest in the Company (a "Non-Surviving Combination"), the Company shall give
written notice thereof to the Holders promptly after an agreement is reached but
in no event less than 30 days prior to the closing thereof. In the event the
Company enters into a Non-Surviving Combination, upon payment of the Purchase
Price prior to the Expiration Date, the Holder hereof will be entitled to
receive the shares of stock or other securities or other property (including any
money) of the surviving entity in such Non-Surviving Combination as the Holder
would have received had the Holder exercised its Warrants immediately prior to
such Non-Surviving Combination (or, if applicable, the record date therefor).
2
<PAGE>
In order to exercise a Warrant, the registered Holder hereof must surrender
this Warrant Certificate at the office of the Warrant Agent, with the Exercise
Subscription Form on the reverse hereof duly executed by the Holder hereof, with
signature guaranteed as therein specified and tender the Purchase Price
therefor.
ICF KAISER INTERNATIONAL, INC.
By: ______________________________
Name:
Title:
[SEAL]
Attest: _______________________________________
Secretary
DATED: December 23, 1996
Countersigned:
The Bank of New York,
as Warrant Agent
By: ________________________
Authorized Signatory
Date of Countersignature: December 23, 1996
ICF KAISER INTERNATIONAL, INC.
This Warrant Certificate and all rights hereunder are transferable by the
registered Holder hereof, in whole or in part, on the register maintained by the
Warrant Agent, upon surrender of this Warrant Certificate for registration of
transfer at the office of the Warrant Agent maintained for such purpose, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Warrant Agent duly executed by, the
registered Holder hereof or his attorney duly authorized in writing, with
signature guaranteed as specified in the attached Form of Assignment. Upon any
partial transfer, the Company will issue and deliver to such Holder a new
Warrant Certificate or Certificates with respect to any portion not so
transferred. No service charge shall be made for any registration of transfer
or exchange of Warrant Certificates, but the Company may require payment by the
Holder of a sum sufficient to cover any tax or other governmental charge payable
in connection therewith.
All shares of Common Stock issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
nonassessable, and upon issuance such shares shall be listed on each national
securities exchange or quotation system (including the Nasdaq Stock Market), if
any, on which any other shares of outstanding Common Stock are then listed.
Each taker and holder of this Warrant Certificate, by taking or holding the
same, consents and agrees that the holder of this Warrant Certificate when duly
endorsed in blank may be treated by the Company, the Warrant Agent and all other
persons dealing with this Warrant Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the register of the Company maintained by
the Warrant Agent, any notice to the contrary notwithstanding, but until such
transfer on such register, the Company and the Warrant Agent may treat the
registered Holder hereof as the owner for all purposes.
3
<PAGE>
The number of shares of Common Stock issuable upon exercise of the Warrants
is subject to adjustment in certain events, including (i) stock dividends, stock
splits and reclassification affecting the Common Stock, (ii) the issuance of
certain rights, warrants or options, or convertible or exchangeable securities,
to the holders of Common Stock entitling them to acquire Common Stock at a price
per share lower than its then market value and (iii) sales by the Company of
Common Stock at a price per share lower than its then market value.
The Warrants do not entitle any Holder to any of the rights of a
stockholder of the Company.
This Warrant Certificate and the Warrant Agreement are subject to amendment
as provided in the Warrant Agreement.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Warrant
Agent.
This Warrant Certificate and all rights hereunder shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws.
EXERCISE SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise ____________________
of the Warrants represented by this Warrant Certificate, for the acquisition of
one share each of Common Stock, $0.01 par value per share, of ICF Kaiser
International, Inc., on the terms and conditions specified in this Warrant
Certificate and the Warrant Agreement herein referred to, surrenders this
Warrant Certificate and all right, title and interest therein to ICF Kaiser
International, Inc. and directs that the shares of Common Stock deliverable upon
the exercise of such Warrants be registered or placed in the name and at the
address specified below and delivered thereto.
Date: _____________, ____
------------------------------/1/
(Signature of Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
------------------------------
- --------------------------
/1/ The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever, and must be
guaranteed.
4
<PAGE>
FORM OF TRANSFER
FOR VALUE RECEIVED the undersigned registered Holder of this Warrant
Certificate hereby sells, assigns and transfers unto the Assignee(s) named below
(including the undersigned with respect to any Warrants constituting a part of
the Warrants evidenced by this Warrant Certificate not being assigned hereby)
all of the right of the undersigned under this Warrant Certificate, with respect
to the number of Warrants set forth below:
================================================================================
Social Security or
other identifying
number of assignee(s)
Name of Assignee(s) Number of Warrants
Address
- --------------------------------------------------------------------------------
================================================================================
and does hereby irrevocably constitute and appoint the Warrant Agent as the
undersigned's attorney to make such transfer on the register maintained by the
Warrant Agent for that purpose, with full power of substitution in the premises.
Date: _________, ____
/2/
---------------------
(Signature of Owner)
---------------------
(Street Address)
---------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
---------------------
- ---------------------------------
/2/ The signature must correspond with the name as written upon the face of
the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever, and must be
guaranteed.
5
<PAGE>
Exhibit No. 4(l)
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as of
December 23, 1996 between ICF Kaiser International, Inc., a Delaware corporation
(the "Company"), and BT Securities Corporation (the "Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of December 19, 1996, between the Company and the Initial
Purchaser (the "Purchase Agreement") that provides for the sale by the Company
to the Initial Purchaser of 15,000 units consisting of $15,000,000 aggregate
principal amount of the Company's 12% Senior Notes due 2003 (the "Notes") and
warrants to purchase 105,000 shares of the Company's common stock, par value
$0.01 per share. In order to induce the Initial Purchaser to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement for the benefit of the Initial Purchaser and its
direct and indirect transferees and assigns. The execution and delivery of this
Agreement is a condition to the Initial Purchaser's obligation to purchase the
Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a) hereof.
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the first introductory paragraph hereto.
Applicable Period: See Section 2(b) hereof.
Closing Date: The Closing Date as defined in the Purchase Agreement.
Company: See the first introductory paragraph hereto.
Effectiveness Date: The date that is 135 days after the Issue Date.
Effectiveness Period: See Section 3(a) hereof.
Event Date: See Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
Exchange Offer: See Section 2(a) hereof.
Exchange Registration Statement: See Section 2(a) hereof.
Filing Date: Within 45 days after the Issue Date.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of December 23, 1996 between the
Company and The Bank of New York, as trustee, pursuant to which the Notes are
being issued, as amended or supplemented from time to time in accordance with
the terms thereof.
Initial Purchaser: See the first introductory paragraph hereto.
Inspectors: See Section 5(o) hereof.
Issue Date: The date on which the original Notes were sold to the
Initial Purchaser pursuant to the Purchase Agreement.
NASD: See Section 5(s) hereof.
Notes: See the second introductory paragraph hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2(b) hereof.
<PAGE>
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Private Exchange: See Section 2(b) hereof.
Private Exchange Notes: See Section 2(b) hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including post-
effective amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
Records: See Section 5(o) hereof.
Registrable Notes: Each Note upon original issuance of the Notes and at
all times subsequent thereto, each Exchange Note as to which Section 2(c)(v)
hereof is applicable upon original issuance and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until in the case of any such Note, Exchange Note or Private
Exchange Note, as the case may be, the earliest to occur of (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section
2(c)(v) hereof is applicable, the Exchange Registration Statement) covering such
Note, Exchange Note or Private Exchange Note, as the case may be, has been
declared effective by the SEC and such Note, Exchange Note or Private Exchange
Note, as the case may be, has been disposed of in accordance with such effective
Registration Statement, (ii) such Note, Exchange Note or Private Exchange Note,
as the case may be, is sold in compliance with Rule 144, (iii) such Note has
been exchanged for an Exchange Note or Exchange Notes pursuant to an Exchange
Offer and is entitled to be resold without complying with the prospectus
delivery requirements of the Securities Act or (iv) such Note, Exchange Note or
Private Exchange Note, as the case may be, ceases to be outstanding for purposes
of the Indenture.
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement and any
registration statement filed in connection with a Shelf Registration, filed with
the SEC pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including post-
effective amendments, all exhibits and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
Shelf Registration: See Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
2
<PAGE>
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. Exchange Offer
(a) The Company shall file with the SEC no later than the Filing Date
an offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
(other than the Private Exchange Notes, if any) for a like aggregate principal
amount of debt securities of the Company that are identical in all material
respects to the Notes (the "Exchange Notes") (and that are entitled to the
benefits of the Indenture or a trust indenture that is identical in all material
respects to the Indenture (other than such changes to the Indenture or any such
identical trust indenture as are necessary to comply with any requirements of
the SEC to effect or maintain the qualification thereof under the TIA) and that,
in either case, has been qualified under the TIA), except that the Exchange
Notes (other than Private Exchange Notes, if any) shall have been registered
pursuant to an effective Registration Statement under the Securities Act and
shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. The Company agrees to use its best
efforts to (x) cause the Exchange Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 20 business days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 180th day
following the Issue Date. If after such Exchange Registration Statement is
declared effective by the SEC, the Exchange Offer or the issuance of the
Exchange Notes thereunder is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
such Exchange Registration Statement shall be deemed not to have become
effective for purposes of this Agreement. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Notes received by
it will be acquired in the ordinary course of its business, that at the time of
the consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act and that such Holder
is not an affiliate of the Company within the meaning of the Securities Act and
is not acting on behalf of any persons or entities who could not truthfully make
the foregoing representations. Upon consummation of the Exchange Offer in
accordance with this Section 2, the provisions of this Agreement shall continue
to apply, mutatis mutandis, solely with respect to Registrable Notes that are
Private Exchange Notes and Exchange Notes held by Participating Broker-Dealers,
and the Company shall have no further obligation to register Registrable Notes
(other than Private Exchange Notes and other than in respect of any Exchange
Notes as to which clause 2(c)(v) hereof applies) pursuant to Section 3 hereof.
No securities other than the Exchange Notes shall be included in the Exchange
Registration Statement.
(b) The Company shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, that shall contain a summary
statement of the positions taken or policies made by the Staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
judgment of the Initial Purchaser, represent the prevailing views of the Staff
of the SEC. Such "Plan of Distribution" section shall also expressly permit the
use of the Prospectus by all Persons subject to the prospectus delivery
requirements of the Securities Act, including all Participating Broker-Dealers,
and include a statement describing the means by which Participating Broker-
Dealers may resell the Exchange Notes.
The Company shall use its best efforts to keep the Exchange Registration
Statement effective and to amend and supplement the Prospectus contained therein
in order to permit such Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirements of the Securities Act for such
period of time as is necessary to comply with applicable law in connection with
any resale of the Exchange Notes; provided, however, that such period shall not
exceed 180 days after the consummation of the Exchange Offer (or such longer
period if extended pursuant to the last paragraph of Section 5 hereof) (the
"Applicable Period").
3
<PAGE>
If, prior to consummation of the Exchange Offer, the Initial Purchaser
holds any Notes acquired by it and having, or that are reasonably likely to be
determined to have, the status of an unsold allotment in the initial
distribution, the Company, upon the request of the Initial Purchaser
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
shall issue and deliver to the Initial Purchaser in exchange (the "Private
Exchange") for such Notes held by the Initial Purchaser a like principal amount
of debt securities of the Company that are identical in all material respects to
the Exchange Notes (the "Private Exchange Notes") (and that are issued pursuant
to the same indenture as the Exchange Notes), except for the placement of a
restrictive legend on such Private Exchange Notes. The Private Exchange Notes
shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York;
(3) permit Holders to withdraw tendered Notes at any time prior to the
close of business, New York time, on the last business day on which the Exchange
Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable laws,
rules and regulations.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Notes properly tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Notes so accepted for
exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may be,
equal in principal amount to the Notes of such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event shall provide that (1) the Exchange Notes shall
not be subject to the transfer restrictions set forth in the Indenture and (2)
the Private Exchange Notes shall be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent
together on all matters as one class and that neither the Exchange Notes, the
Private Exchange Notes or the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the Staff of the SEC, the Company is not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days of
the Issue Date, (iii) the holder of Private Exchange Notes so requests at any
time after the consummation of the Private Exchange, (iv) the Holders of not
less than a majority in aggregate principal amount of the Registrable Notes
determine that the interests of the Holders would be materially adversely
affected by consummation of the Exchange Offer or (v) in the case of any Holder
that participates in the Exchange Offer, such Holder does not receive Exchange
Notes on the date of the exchange that may be sold without restriction under
state
4
<PAGE>
and federal securities laws (other than due solely to the status of such
Holder as an affiliate of the Company within the meaning of the Securities Act),
then the Company shall promptly deliver to the Holders and the Trustee written
notice thereof (the "Shelf Notice") to the Trustee and in the case of clauses
(i), (ii) and (iv), all Holders, in the case of clause (iii), the Holders of the
Private Exchange Notes and in the case of clause (v), the affected Holder, and
shall file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
(a) Shelf Registration. The Company shall as promptly as reasonably
practicable file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Shelf Registration"). If the Company shall not have yet filed an
Exchange Registration Statement, the Company shall use its best efforts to file
with the SEC the Shelf Registration on or prior to the Filing Date. The Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Company shall not permit any securities other than
the Registrable Notes to be included in the Shelf Registration.
The Company shall use its best efforts to cause the Shelf Registration
to be declared effective under the Securities Act on or prior to the
Effectiveness Date and to keep the Shelf Registration continuously effective
under the Securities Act until the date that is three years from the Issue Date
(the "Effectiveness Period"), or such shorter period ending when all Registrable
Notes covered by the Shelf Registration have been sold in the manner set forth
and as contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the Company
shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly supplement
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter of such Registrable
Notes.
4. Additional Interest
(a) The Company and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Company fails to fulfill its
obligation under Section 2 or Section 3 hereof and that it would not be feasible
to ascertain the extent of such damages with precision. Accordingly, the
Company agrees to pay, as liquidated damages, additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below (without duplication):
(i) if neither the Exchange Registration Statement nor the Shelf
Registration has been filed on or prior to the Filing Date, Additional Interest
shall accrue on the Notes over and above the stated interest at a rate of 0.50%
per annum for the first 90 days immediately following the Filing Date, such
Additional Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 90-day period;
(ii) if neither the Exchange Registration Statement nor the Initial
Shelf Registration is declared effective by the SEC on or prior to the
Effectiveness Date, then, commencing on the 136th day after the Issue Date,
Additional Interest shall be accrued on the Notes included or that should have
been included in such Registration Statement over and above the stated interest
at a rate of 0.50% per annum for the first 90 days
5
<PAGE>
immediately following the Effectiveness Date, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each subsequent
90-day period; and
(iii) if either (A) the Company has not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange Offer on
or prior to the 180th day after the Issue Date or (B) the Exchange Registration
Statement ceases to be effective at any time prior to the time that the Exchange
Offer is consummated or (C) if applicable, the Shelf Registration has been
declared effective and such Shelf Registration ceases to be effective at any
time during the Effectiveness Period, then Additional Interest shall be accrued
on the Notes (over and above any interest otherwise payable on the Notes) at a
rate of 0.50% per annum on (x) the 181st day after the Issue Date, in the case
of (A) above, or (y) the day the Exchange Registration Statement ceases to be
effective without being declared effective within five business days in the case
of (B) above, or (z) the day such Shelf Registration ceases to be effective, in
the case of (C) above, such Additional Interest rate increasing by an additional
0.50% per annum at the beginning of each such subsequent 90-day period (it being
understood and agreed that, notwithstanding any provision to the contrary, so
long as any Note that is the subject of a Shelf Notice is then covered by an
effective Shelf Registration Statement, no Additional Interest shall accrue on
such Note);
provided, however, that the Additional Interest rate on any affected Note may
not exceed at any one time in the aggregate 2.0% per annum; and provided,
further, that (1) upon the filing of the Exchange Registration Statement or a
Shelf Registration (in the case of clause (i) of this Section 4(a)), (2) upon
the effectiveness of the Exchange Registration Statement or the Shelf
Registration (in the case of clause (ii) of this Section 4(a)), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause
(iii)(A) of this Section 4(a)), or upon the effectiveness of the Exchange
Registration Statement that had ceased to remain effective (in the case of
(iii)(B) of this Section 4(a)) or upon the effectiveness of the Shelf
Registration that had ceased to remain effective (in the case of (iii)(C) of
this Section 4(a)), Additional Interest on the affected Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Company shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Any amounts of Additional
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable in cash semi-annually on each December 31 and June 30 (to the holders of
record on the December 15 and June 15 immediately preceding such dates),
commencing with the first such date occurring after any such Additional Interest
commences to accrue. The amount of Additional Interest will be determined by
multiplying the applicable Additional Interest rate by the principal amount of
the Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year consisting of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed) and the
denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Company, hereunder the Company
shall:
(a) Prepare and file with the SEC prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by Sections 2 or
3 hereof, and use its best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided, however,
that, if (1) such filing is pursuant to Section 3 hereof or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to Section 2
hereof is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to and afford the Holders of the
Registrable Notes covered by such Registration Statement or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including
6
<PAGE>
copies of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five business days prior to
such filing). The Company shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto if the Holders of a majority
in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the case may
be, or their counsel, or the managing underwriters, if any, shall reasonably
object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
prospectus supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus; the Company shall be deemed not to have used its best efforts to
keep a Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable Notes or such
Exchange Notes during that period, unless such action is required by applicable
law or unless the Company complies with this Agreement, including without
limitation, the provisions of paragraph 5(k) hereof and the last paragraph of
this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, notify the selling Holders of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two business
days) and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, at the sole expense
of the Company, one conformed copy of such Registration Statement or post-
effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Company contained in any agreement (including any underwriting
agreement), contemplated by Section 5(n) hereof cease to be true and correct,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or written threat of any proceeding for such
purpose, (v) of the happening of any event, the existence of any condition or
any information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respects
or that requires the making of any changes in or amendments or supplements to
such Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading and (vi) of the Company's determination that a post-
effective amendment to a Registration Statement would be appropriate.
(d) Use its reasonable best efforts to prevent the issuance of any
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
7
<PAGE>
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes for sale in any jurisdiction and, if any such order is
issued, to use their best efforts to obtain the withdrawal of any such order at
the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters, if any, or the Holders of
a majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or underwriters, if any, such Holders or counsel for any of
them determine is reasonably necessary to be included therein, (ii) make all
required filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment and (iii) supplement or make amendments to such Registration
Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to their respective
counsel and each managing underwriter, if any, at the sole expense of the
Company, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules and, if requested, all documents incorporated or deemed
to be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel and the underwriters, if any, at the sole expense of the Company, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers, if any, in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of
the Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or Exchange
Notes or any delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, to use their best efforts to register or qualify
and to cooperate with the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer or the managing underwriter or underwriters
reasonably request in writing; provided, however, that where Exchange Notes held
by Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Company agrees to cause the Company's
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
Statement; provided, however, that the Company shall not be required to (A)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in any such jurisdiction where it is not then so subject.
8
<PAGE>
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use its best efforts to cause the Registrable Notes covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the Holders
thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Registrable Notes, except as may be required solely as a
consequence of the nature of such selling Holder's business, in which case the
Company will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi), hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the Company's sole
expense, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(l) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement or the Exchange Notes, as the case may be, to be rated
with the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates
for the Registrable Notes or Exchange Notes, as the case may be, in a form
eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes or Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to, and covenants with, the underwriters
with respect to the business of the Company and its subsidiaries (including any
acquired business, properties or entity, if applicable) and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers to underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same in writing if and when requested; (ii) obtain
the written opinion of counsel to the Company and written updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters customarily
covered in opinions requested in underwritten offerings of debt similar to the
Notes and such other matters as may be reasonably requested by the managing
underwriter or underwriters; (iii) obtain "cold comfort" letters and updates
thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
9
<PAGE>
Company for which financial statements and financial data are, or are required
to be, included or incorporated by reference in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of debt securities similar to the Notes
and such other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable than
those set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3 hereof
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the case
may be, or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities, and cause
the respective officers, directors and employees of the Company and its
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Records that the
Company determines, in good faith, to be confidential and any Records that it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) disclosure of such information is, in the
opinion of counsel for any Inspector, necessary or advisable in connection with
any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, relating to
or involving this Agreement or any transactions contemplated hereby or arising
hereunder or (iv) the information in such Records has been made generally
available to the public. Each selling Holder of such Registrable Securities and
each such Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Company unless and until such information is generally
available to the public. Each selling Holder of such Registrable Notes and each
such Participating Broker-Dealer will be required to further agree that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company to undertake
appropriate action to prevent disclosure of the Records deemed confidential at
the Company's sole expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) hereof, as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange Offer
or the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the SEC to enable such
indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Notes are sold to underwriters in a firm commitment
or best efforts
10
<PAGE>
underwritten offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company after the
effective date of a Registration Statement, which statements shall cover said
12-month periods.
(r) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company, who may, at the Company's election,
be internal counsel to the Company, in a form customary for underwritten
transactions, addressed to the Trustee for the benefit of all Holders of
Registrable Notes participating in the Exchange Offer or the Private Exchange,
as the case may be, that the Exchange Notes or Private Exchange Notes, as the
case may be, and the related indenture constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its respective terms, subject to customary exceptions and qualifications.
(s) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Company (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Company shall mark, or cause
to be marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(u) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such Registrable Notes as the
Company may, from time to time, reasonably request. The Company may exclude
from such registration the Registrable Notes of any seller who unreasonably
fails to furnish such information within a reasonable time after receiving such
request and in such event shall have no further obligation under this Agreement
(including, without limitation, obligations under Section 4 hereof) with respect
to such seller or any subsequent holder of such Registrable Notes. Each seller
as to which any Shelf Registration is being effected agrees to furnish promptly
to the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon actual receipt
of any notice from the Company of the happening of any event of the kind
described in Sections 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Registrable Notes covered
by such Registration Statement or Prospectus or Exchange Notes to be sold by
such Holder or Participating Broker-Dealer, as the case may be, until such
Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event that the Company shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses
11
<PAGE>
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or sold by any Participating
Broker-Dealer, as the case may be, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company and fees and
disbursements of special counsel for the sellers of Registrable Notes (subject
to the provisions of Section 6(b) hereof), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, if any, and any fees associated with making the Registrable Notes
or Exchange Notes eligible for trading through the Depository Trust Company,
(vii) Securities Act liability insurance, if the Company desires such insurance,
(viii) fees and expenses of all other Persons retained by the Company, (ix)
internal expenses of the Company (including, without limitation, all salaries
and expenses of officers and employees of the Company performing legal or
accounting duties), (x) the expense of any annual audit, (xi) the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, if applicable, and (xii) the expenses
relating to printing, word processing and distributing of all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary to comply with this Agreement.
(b) The Company shall (i) reimburse the Holders of the Registrable
Notes being registered in a Shelf Registration for the reasonable fees and
disbursements of not more than one counsel chosen by the Holders of a majority
in aggregate principal amount of the Registrable Notes to be included in such
Registration Statement and (ii) reimburse out-of-pocket expenses (other than
legal expenses) of Holders of Registrable Notes incurred in connection with the
registration and sale of the Registrable Notes pursuant to a Shelf Registration
or in connection with the exchange of Registrable Notes pursuant to the Exchange
Offer. In addition, the Company shall reimburse the Initial Purchaser for the
reasonable fees and expenses of one counsel in connection with the Exchange
Offer, which shall be Cahill Gordon & Reindel, and shall not be required to pay
any other legal expenses in connection therewith.
7. Indemnification
(a) The Company agrees to indemnify and hold harmless each Holder of
Registrable Notes offered pursuant to a Shelf Registration Statement and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period,
the officers and directors of each such Person or its affiliates, and each other
Person, if any, who controls any such Person or its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, the reasonable legal
fees and other expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement pursuant to which the offering of such Registrable Notes
or Exchange Notes, as the case may be, is registered (or any amendment thereto)
or related Prospectus (or any amendments or supplements thereto) or any related
preliminary prospectus, or caused by, arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not
12
<PAGE>
misleading; provided, however, that the Company will not be required to
indemnify a Participant if (i) such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company in writing by or on behalf of such
Participant expressly for use therein or (ii) if such Participant sold to the
person asserting the claim the Registrable Notes or Exchange Notes that are the
subject of such claim and such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the Prospectus or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and it is established by the Company in the related
proceeding that such Participant failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Notes or Exchange Notes sold to
such Person if required by applicable law, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors and officers and each Person who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to each Participant, but only (i) with reference to information
relating to such Participant furnished to the Company in writing by or on behalf
of such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto or any preliminary prospectus or
(ii) with respect to any untrue statement or representation made by such
Participant in writing to the Company. The liability of any Participant under
this paragraph shall in no event exceed the proceeds received by such
Participant from sales of Registrable Notes or Exchange Notes giving rise to
such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability that it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Person shall have failed within a
reasonable period of time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that, unless there exists a conflict among Indemnified Persons,
the Indemnifying Person shall not, in connection with any one such proceeding or
separate but substantially similar related proceeding in the same jurisdiction
arising out of the same general allegations, be liable for the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed
promptly as they are incurred. Any such separate firm for the Participants and
such control Persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Notes and Exchange
Notes sold by all such Participants and any such separate firm for the Company,
its directors, its officers and such control Persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its prior written
consent, but if settled with such consent or if there be a final non-appealable
judgment for the plaintiff for which the Indemnified Person is entitled to
indemnification pursuant to this Agreement, the Indemnifying Person agrees to
indemnify and hold harmless each Indemnified Person from and against any loss or
13
<PAGE>
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement; provided, however, that the Indemnifying Person shall
not be liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Person is contesting, in good faith, the request
for reimbursement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of any
Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Participant or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability that the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rule 144 and 144A
14
<PAGE>
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, if at any time
the Company is not required to file such reports, it will, upon the request of
any Holder of Registrable Notes, make publicly available annual reports and such
information, documents and other reports of the type specified in Sections 13
and 15(d) of the Exchange Act. The Company further covenants for so long as any
Registrable Notes remain outstanding, to make available to any Holder or
beneficial owner of Registrable Notes in connection with any sale thereof and
any prospective purchaser of such Registrable Notes from such Holder or
beneficial owner the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Company.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, and shall not, after the date of this Agreement, enter into any
agreement with respect to any of the Company's securities that is inconsistent
with the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not entered and
will not enter into any agreement with respect to any of its securities that
will grant to any Person piggy-back registration rights with respect to a
Registration Statement.
(b) Adjustments Affecting Registrable Notes. The Company shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Holders of not less than a majority in aggregate principal amount
of the then outstanding Registrable Notes. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold by such Holders
pursuant to such Registration Statement; provided, however, that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including without
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the registrar
under the Indenture, with a copy in like manner to the Initial Purchaser as
follows:
15
<PAGE>
BT SECURITIES CORPORATION
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-7200
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: William M. Hartnett, Esq.
2. if to the Initial Purchaser, at the addresses
specified in Section 10(d)(1);
3. if to the Company, at the address as follows:
ICF KAISER INTERNATIONAL, INC.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Facsimile No.: (703) 934-3029
Attention: General Counsel
with a copy to:
Crowell & Moring LLP
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Facsimile No.: (202) 628-5116
Attention: James J. Maiwurm, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto;
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
16
<PAGE>
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchaser on the
one hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ICF KAISER INTERNATIONAL, INC.
By: /s/ Richard K. Nason
Name: Richard K. Nason
Title: Executive Vice President and Chief
Financial Officer
BT SECURITIES CORPORATION
By: /s/ Timothy Hynes
Name: Timothy Hynes
Title: Vice President
17
<PAGE>
EXHIBIT 5
ICF KAISER INTERNATIONAL, INC.
9300 Lee Highway
Fairfax, Virginia 22031
(703) 934-3600
January 10, 1997
ICF Kaiser International, Inc.
Cygna Consulting Engineers and Project Management, Inc.
ICF Kaiser Government Programs, Inc.
PCI Operating Company, Inc.
Systems Applications International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031
Re: ICF Kaiser International, Inc.
12% Senior Notes due 2003, Series B
Registration Statement on Form S-1
-------------------------------------
Ladies and Gentlemen:
I have acted as counsel to ICF Kaiser International, Inc., a Delaware
corporation (the "Company"), and each of Cygna Consulting Engineers and Project
Management, Inc., a California corporation, ICF Kaiser Government Programs,
Inc., a Delaware corporation, PCI Operating Company, Inc., a Delaware
corporation, and Systems Applications International, Inc., a Delaware
corporation (each a "Subsidiary Guarantor" and collectively the "Subsidiary
Guarantors"), in connection with the registration under the Securities Act of
1933, as amended (the "Securities Act"), of, and the offer to exchange (the
"Exchange Offer"), the Company's 12% Senior Notes due 2003, Series B (the
"Exchange Notes"), for its outstanding 12% Senior Notes due 2003, Series A (the
"Old Notes"), and the guarantee of the Exchange Notes by each of the Subsidiary
Guarantors (collectively the "Guarantees"). This opinion is delivered to you in
connection with the Registration Statement on Form S-1 for the aforementioned
Exchange Notes, Exchange Offer and the Guarantees (the "Registration
Statement"). Capitalized terms used herein without definition shall have the
meanings given to them in the Registration Statement.
In arriving at the opinions expressed below, I have examined and relied on
the originals, or copies certified or otherwise identified to my satisfaction,
or each of (a) the Exchange Notes, (b) the Indenture and (c) the Guarantees,
each of which has been filed as an exhibit to the Registration Statement.
<PAGE>
ICF Kaiser International, Inc. and Subsidiary Guarantors
January 10, 1997
Page 2
I have assumed for purposes of my opinions hereinafter set forth that (a)
the Indenture has been duly authorized, executed and delivered by the Trustee
and (b) the Trustee has full power, authority and legal right to perform its
obligations under the Indenture.
In connection with rendering the opinions expressed below, I have examined
and relied upon the originals, or copies authenticated to my satisfaction, of
such public and corporate records, certificates of public officials,
certificates of officers and representatives of the Company and the Subsidiary
Guarantors and other documents and instruments as I have deemed relevant and
necessary as the basis of the opinions hereinafter set forth. Insofar as this
opinion involves factual matters, I have relied, to the extent I have deemed
proper, upon certificates of officers of the Company and the Subsidiary
Guarantors and certificates of public officials.
In my examination of all of the foregoing, I have assumed the genuineness
of all signatures, the legal capacity of natural persons, the authenticity of
all documents submitted to me as originals, the conformity to original documents
of all documents submitted to me as certified or photostatic copies and the
authenticity of the originals of such copies.
Based upon the foregoing and subject to the qualifications, exceptions and
limitations set forth herein, I am of the opinion that when the Registration
Statement shall become effective under the Securities Act, when the Indenture
shall become qualified under the Trust Indenture Act of 1939, as amended, and
when the Exchange Notes shall have been duly executed and authenticated as
specified in the Indenture:
1. The Indenture has been duly and validly authorized by the Company and
constitutes the valid and legally binding agreement of the Company, enforceable
against the Company in accordance with its terms.
2. The Guarantees have been duly and validly authorized by each of the
Subsidiary Guarantors and (assuming due authentication and delivery of the
Exchange Notes by the Trustee in accordance with the Indenture) each of the
Guarantees constitutes the valid and legally binding agreement of the Subsidiary
Guarantor that issued it, enforceable against such Subsidiary Guarantor in
accordance with its terms.
3. The Exchange Notes have been duly and validly authorized by the
Company and, when duly executed and delivered by the Company upon delivery to
the Company of Old Notes in accordance with the terms of the Exchange Offer
(assuming due authentication and delivery of the Exchange Notes by the Trustee
in accordance with the Indenture), will constitute the valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms.
The enforceability of the Indenture, the Guarantees and the Exchange Notes
is subject in each case to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity) and
the discretion of the court before which any proceeding therefor may be brought.
<PAGE>
ICF Kaiser International, Inc. and Subsidiary Guarantors
January 10, 1997
Page 3
This opinion deals only with the specific legal issues it addresses
explicitly. In rendering this opinion, I express no opinion as to the laws of
any jurisdiction other than the federal laws of the United States, the laws of
the State of New York and the General Corporation Law of the State of Delaware.
I am admitted to practice only in the Commonwealth of Virginia and the District
of Columbia and for purposes of rendering this opinion I have assumed that the
laws of the State of New York are the same in all material respects as the laws
of the Commonwealth of Virginia.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus that is a part of the Registration Statement.
Respectfully submitted,
/s/ Paul Weeks, II
Paul Weeks, II
Senior Vice President,
General Counsel and Secretary
<PAGE>
EXHIBIT 8
CROWELL & MORING LLP
1001 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004-2595
(202) 624-2500
FACSIMILE (202) 628-5116
January 10, 1997
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031
Ladies and Gentlemen:
We have acted as special tax counsel to ICF Kaiser International, Inc. (the
"Company") and participated in the preparation of the Registration Statement on
Form S-1 (Commission File No. 333-_____) (such Registration Statement, as
amended at the effective date thereof, being referred to herein as the
"Registration Statement") filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the registration of the Company's 12% Senior Notes due 2003, Series
B, and the related Guarantees of certain Subsidiary Guarantors of the Company,
together with the Prospectus relating thereto and included as part of the
Registration Statement.
Based on our examination of such documents and questions of law as we have
deemed necessary or appropriate, we confirm to you our opinion, as stated in the
first paragraph under the caption "Risk Factors--Original Issue Discount" and
under the caption "Certain Federal Income Tax Considerations" in the Prospectus
included as part of the Registration Statement. The other statements under the
caption "Certain Federal Income Tax Considerations" in the Prospectus are also,
in our opinion, accurate in all material respects insofar as they are, or refer
to, statements of United States law or legal conclusions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading
"Certain Federal Income Tax Considerations" in the Prospectus included as part
of the Registration Statement. By giving
<PAGE>
ICF Kaiser International, Inc.
January 10, 1997
Page 2
such consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ CROWELL & MORING LLP
CROWELL & MORING LLP
<PAGE>
Exhibit No. 10(a)(1)
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement, dated as of December 17,
1996 (this "Agreement"), is entered into by and among ICF Kaiser International,
Inc. ("Borrower"), a Delaware corporation, each of its subsidiaries signatories
hereto (each a "Subsidiary Guarantor" and collectively the "Subsidiary
Guarantors"), the banking institutions signatories hereto (each, a "Bank" and
collectively, the "Banks") and Corestates Bank, N.A., as agent for the Banks
under this Agreement (in such capacity, the "Agent").
WITNESSETH
WHEREAS, Borrower, each Subsidiary Guarantor, the Banks and the Agent
are parties to a Credit Agreement, dated as of May 6, 1996, whereby the Banks
have agreed to provide a revolving credit facility for loans and for letters of
credit;
WHEREAS, the Borrower and the Subsidiary Guarantors have requested,
and the Banks and the Agent have agreed, to amend the Credit Agreement in
certain respects, as provided herein.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Amendment to Credit Agreement
a. The following definitions are hereby amended in their entirety so that
such definitions, as so amended, shall read as follows:
"Excluded Transaction" shall mean the redemption on or before January
13, 1997 of the Series 2D Senior Preferred Stock of Borrower from the proceeds
of any one or more of (i) the sale of some or all of Borrower's investment in
the entities owning and operating a pulverized coal injection facility in Gary,
Indiana, (ii) the 1996 Senior Notes and (iii) up to $6,500,000 of Loans
hereunder.
"Security Agreement" shall mean the Security Agreement, dated as of
May 6, 1996, as amended as of the date hereof.
b. The following definitions are hereby added to Section 1.1:
"Amendment Closing Date" shall mean December 17, 1996.
"1996 Senior Notes" shall mean the Borrower's 12% Senior Notes due
2003, Series A, to be issued December 23, 1996, and all 12% Senior Notes due
2003, Series B, issued in exchange therefor.
"Overadvance Availability" shall mean, prior to and on March 31, 1997,
$5,000,000, and after March 31, 1997, $0, subject to reductions provided in
Section 2.7 (c).
"Overadvance Amount" shall mean, at any time, the amount by which the
unpaid principal amount of all Revolving Credit Loans then outstanding plus the
Letter of Credit Outstandings at such time exceeds the then current Borrowing
Base.
c. Clauses (3), (4) and (5) of Section 2.1 (a) are hereby amended in
their entirety so that such clauses, as so amended, shall read as follows:
(3) Notwithstanding the foregoing, Borrower shall not be entitled to
a Revolving Credit Loan if, after giving effect to such Revolving Credit Loans
to Borrower then outstanding plus the Letter of Credit Outstandings at
<PAGE>
such time would exceed the lesser of (i) the Aggregate Revolving Loan Commitment
or (ii) the then current Borrowing Base plus the Overadvance Availability or (B)
the unpaid principal amount of the Revolving Credit Loans to Borrower then
outstanding would exceed $25,000,000.
(4) Except for Revolving Credit Loans which exhaust the full
remaining amount permitted by clause (3) above, and conversions which result in
the conversion of all Revolving Credit Loans subject to a particular interest
rate option, each of which hereof may be in lesser amounts, each Loan when made
and each conversion of Loans of one type into Loans of another type hereunder
shall be in an amount at least equal to $1,000,000, or if greater, then in such
minimum amount plus $1,000,000 multiples.
(5) Within the limits of clause (3) above, the Aggregate Revolving
Loan Commitment and the Borrowing Base, Borrower may borrow, prepay (in
accordance with Section 2.8) and reborrow Revolving Credit Loans. All Revolving
Credit Loans shall, in any event, be repaid by Borrower on the Revolving
Termination Date.
d. Section 2.4(e) is hereby amended in its entirety so that such Section,
as so amended, shall read as follows:
(e) Applicable Margins. The margin applicable to Base Rate Loans and
the Loans (in each such case, the "Applicable Margin"), other than the
Overadvance Amount, will be determined from time to time based on the ratio of
EBIT to Consolidated Interest Expense. Upon receipt by the Agent of the
quarterly financial statements required to be delivered pursuant to Section 6.1
(b), the Agent shall determine the ratio of EBIT to Consolidated Interest
Expense for the quarterly period covered by such statements. The Agent shall
thereupon determine the Applicable Margin corresponding to such ratio, in each
case pursuant to the schedule attached as Schedule 2.4(e) hereto. Any adjustment
to the Applicable Margins shall become effective five Business Days following
receipt by the Agent of the financial statements required pursuant to Section
6.1(b) hereof or, if Borrower fails to provide financial statements within the
time period required by Section 6.1 (b) hereof, and such financial statements
cause the Applicable Margins to increase, such adjustment of the Applicable
Margins shall become effective retroactive to the date five Business Days
following the date the financial statements were required under Section 6.1(b)
to be furnished. Any adjustment in such Applicable Margins shall affect the
Applicable Margin of Base Rate Loans then in effect or thereafter made, and
shall apply to the Applicable Margin of LIBO Rate Loans thereafter made.
Overadvance Amounts shall be subject to a Base Rate Margin of 1% and a LIBO Rate
Margin of 2 1/2 %. For purposes of determining the interest rate applicable to
outstanding Loans, the Overadvance Amount shall be included in Base Rate Loans
then outstanding and, to the extent the Overadvance Amount exceeds the Base Rate
Loans then outstanding, LIBO Rate Loans then outstanding.
e. Section 2.7(c) is hereby amended by inserting, at the end of such
Section, the following sentences:
In addition, the Aggregate Revolving Loan Commitment shall be reduced by
$5,000,000 on March 31, 1997. Any reduction in the Aggregate Revolving Loan
Commitment pursuant to this Section 2.7(c) shall also result in a corresponding
reduction in the Overadvance Availability.
f. Section 2.8(a) is hereby amended in its entirety, so for such Section,
as amended, shall read as follows:
(a) Mandatory Prepayments. If at any time the aggregate outstanding
Revolving Credit Loans plus Letter of Credit Outstandings exceed the lesser of
(y)) the then Aggregate Revolving Loan Commitment or (z) the then current
Borrowing Base plus the Overadvance Availability, Borrower shall make a
prepayment of principal in respect of the Base Rate Loans in such amount as is
necessary to assure that the aggregate principal amount of Loans outstanding
immediately after such reduction plus Letter of Credit Outstandings will not
exceed the lesser of the then Aggregate Revolving Loan Commitment and the then
current Borrowing Base plus the Overadvance Availability. If prepayment in full
as of the Base Rate Loans does not reduce the amount of all Loans outstanding
plus Letter of Credit Outstandings to an amount that will not exceed the lesser
of the then Aggregate Revolving Loan Commitment and the then current Borrowing
Base plus the Overadvance Availability, Borrower shall deposit with the Agent
cash and Discounted Treasuries in an amount sufficient to repay that portion of
the principal amount of LIBO Rate Loans outstanding, with interest thereon
through the end of each applicable Interest Period, as is necessary to assure
that the aggregate principal amount of Loans outstanding immediately after such
reduction of
-2-
<PAGE>
the Base Rate Loans less the principal amount of LIBO Loans repaid by such
collateral plus Letter of Credit Outstandings will not exceed the lesser of the
then Aggregate Revolving Loan Commitment and the then current Borrowing Base
plus the Overadvance Availability, such collateral to be held by the Agent on
behalf of the Banks until each such maturity date and then applied to the
repayment of such Loans. If, upon prepayment in full of the Base Rate Loans and
deposit of cash and Discounted Treasuries in an amount sufficient to repay the
principal amount of the LIBO Rate Loans, the Letter of Credit Outstandings
exceed the lesser of the then Aggregate Revolving Loan Commitment and the then
current Borrowing Base plus the Overadvance Availability, Borrower shall deposit
with the Agent cash and Discounted Treasuries in an amount equal to one hundred
five percent (105%) of the amount by which Letters of Credit Outstandings exceed
the lesser of the then Aggregate Revolving Loan Commitment and the then current
Borrowing Base plus the Overadvance Availability, such collateral to be held by
the Agent on Behalf of the Banks to reimburse the Issuing Bank for the amount of
any Unpaid Drawings. Upon reduction of Letter of Credit Outstandings to an
amount equal to the lesser of the then Aggregate Revolving Loan Commitment and
the then current Borrowing Base plus the Overadvance Availability and if no
Event of Default or Potential Default then exists, any such collateral held for
reimbursement of Unpaid Drawings of Letters of Credit shall be released to
Borrower. If Borrower sells or otherwise disposes of assets requiring a
reduction in the Aggregate Revolving Loan Commitment pursuant to Section 2.7(c)
hereof, Borrower shall use the proceeds of each such sale or disposition to
prepay the Revolving Credit Loans, unless the Required Banks consent in writing
to the waiver of this provision, such waiver being required for each sale or
disposition.
g. The first sentence of Section 3.5 is hereby amended to read as
follows:
The consolidated financial statements of Borrower and its Subsidiaries as of and
for the nine (9) months ended September 30, 1996, consisting in each case of a
balance sheet, a statement of operations, a statement of shareholders' equity, a
statement of cash flows and accompanying footnotes, present fairly, in all
material respects, the financial position, results of operations and cash flows
of Borrower and its Subsidiaries as of the dates and for the periods referred
to, in conformity with Generally Accepted Accounting Principles.
h. Section 6.1 is hereby amended by the addition of the following
subsection (k) at the end of such Section.
(k) Additional Information during Overadvance Availability. Until
the later of reduction of the Overadvance Availability to $0 and repayment of
the Overadvance Amount (i) as soon as available but no later than twenty-five
(25) Business Days after the end of each month, a consolidated balance sheet of
Borrower and its Subsidiaries and related consolidated statements of operations,
retained earnings and cash flows for such month and for the period from the
beginning of such fiscal year to the end of such month, together with
consolidating information, and a corresponding financial statement for the same
periods in the preceding year certified by the Executive Vice President and
Chief Financial Officer or the Vice President and Treasurer of Borrower as
having been financial statements and weekly statement of cash flow will be in a
form reasonably acceptable to the Agent.
i. Section 6.11 is hereby amended by the addition, at the end of such
Section of the following phrase:
"and for the redemption of the Series 2D Senior Preferred Stock as and to the
extent provided in the definition of "Excluded Transaction".
j. Section 7.2 is hereby amended by deleting subsection (e) and replacing
it with new (e) as follows:
(e) the 1996 Senior Notes.
k. Section 7.6 is hereby amended by the addition, at the end of such
Section, of the following:
; provided, however, that no Investment otherwise permitted under any of the
clauses (d), (e) or (f) above (other than an Investment not in excess of
$300,000 in connection with a New York light rail transit proposal) shall be
made after the Amendment Closing Date until the later of reduction of the
Overadvance Availability to $0 and repayment of the Overadvance Amount.
-3-
<PAGE>
l. Section 7.10 is hereby amended in its entirety so that such Section,
as so amended, shall read as follows:
7.10 Modification of Indenture. Consent to or permit any amendment,
modification or waiver of any material provision or term contained in (a) the
Indenture dated as of January 11, 1994, as supplemented between Borrower and The
Bank of New York, as Trustee, relating to the 12% Senior Subordinated Notes due
2003 issued by Borrower or (b) the Indenture dated as of December 20, 1996
between the Borrower, the guarantors named therein and The Bank of New York, as
Trustee, relating to the 1996 Senior Notes unless, fifteen (15) days before
consenting to or permitting such amendment, modification or waiver, Borrower
shall furnish to the Agent and each of the Banks a certificate signed by the
Executive Vice President and Chief Financial Officer or Vice President and
Treasurer of Borrower certifying that, to the best of such officer's knowledge,
after due inquiry, immediately after such amendment, modification or waiver, (i)
Borrower has complied with all covenants, agreements and conditions in each Loan
Document and each representation and warranty contained in each Loan Document is
true and correct with the same effect as though each such representation and
warranty had been made on the date of such certificate (except to the extent
such representation or warranty related to a specific prior date), and (ii) no
event has occurred and is continuing that constitutes an Event of Default or
Potential Default.
m. Article VIII is hereby amended in its entirety so that such Article,
as so amended, shall read as follows:
VIII. FINANCIAL COVENANTS
Borrower covenants and agrees that, without the prior written consent
of the Required Banks, from and after the date hereof and so long as the
Revolving Loan Commitments are in effect or any Obligations remain unpaid or
outstanding, Borrower will not:
8.1 Fixed Charge Coverage. Permit, as of the end of any fiscal
quarter ending in the periods set forth below for the immediately preceding four
fiscal quarters, the ratio of (i) EBITDA less Capital Expenditures plus
Consolidated Lease Expenses of Borrower and its Subsidiaries, to (ii)
Consolidated Fixed Charges for such period to be less than the ratio set forth
opposite such period below:
Fiscal Quarters Ending
Amendment Closing Date through September 30, 1997 1.05:1.0
October 1, 1997 through June 30, 1998 1.20:1.0
8.2 Interest Coverage. Permit, as of the end of any fiscal quarter
ending in the periods set forth below for the immediately preceding four fiscal
quarters, the ratio of (i) EBITDA for such period to (ii) Consolidated Interest
Expense for such period to be less than the ratio set forth opposite such period
below:
Test Period
Amendment Closing Date through September 30, 1997 1.5:1.0
October 1, 1997 through June 30, 1998 1.75:1.0
8.3 Senior Funded Indebtedness to EBITDA. Permit the ratio of Senior
Funded Indebtedness on the last day of any fiscal quarter to EBITDA as of such
day for the immediately preceding four fiscal quarters to be greater than
2.5:1.0.
8.4 Indebtedness for Borrowed Money to Total Capitalization. Permit
the ratio of Indebtedness for Borrowed Money to Total Capitalization on the last
day of any fiscal quarter to be greater than .86:1.0:
8.5 Indebtedness for Borrowed Money to EBITDA. Permit the ratio of
Indebtedness for Borrowed Money on the last day of any fiscal quarter ending in
the periods set forth below to EBITDA as of such day for the immediately
preceding four (4) fiscal quarters to be greater than the ratio set forth
opposite such period below:
-4-
<PAGE>
Test Period
Amendment Closing Date through March 30, 1997 6.25:1.0
March 31, 1997 through June 30, 1997 6.00:1.0
July 1, 1997 through September 30, 1997 5.50:1.0
October 1, 1997 through December 31, 1997 5.00:1.0
January 1, 1998 through June 30, 1998 4.75:1.0
n. Exhibit A is hereby amended to read in the form attached hereto as
Exhibit A.
2. Conditions Precedent. The Amendment to the Credit Agreement contained
in Section 1 hereof shall be effective upon satisfaction of the following
conditions precedent.
(a) Evidence of Authorization. The Banks shall have received copies
certified by the Secretary or Assistant Secretary of Borrower and each
Subsidiary Guarantor of all corporate or other action taken by such party to
authorize its execution and delivery and performance of this Amendment, the
Security Agreement and the Loan Documents as amended hereby together with such
other related papers as the Banks shall reasonably require;
(b) Legal Opinions. The Banks shall have received a favorable
written opinion of Crowell & Moring, Counsel for Borrower and the Subsidiary
Guarantors, which shall be addressed to the Banks and be dated the date of the
first Loan, in substantially the form attached as Exhibit E, and such other
legal opinion or opinions as the Banks may reasonably request;
(c) Notes. Each Bank shall have received an executed Note payable to
the order of such Bank and otherwise in the form of Exhibit C hereto, in
substitution for the Notes previously issued;
(d) Documents. The Agent shall have received all certificates,
instruments and other documents then required to be delivered pursuant to any
Loan Documents, in each instance in form and substance reasonably satisfactory
to the Agent and the Banks;
(e) Other Agreements. Borrower and each Subsidiary Guarantor shall
have executed and delivered each other Loan Document required hereunder;
3. Additional Conditions Precedent. Notwithstanding the satisfaction of
the conditions set forth in Section 2 above, the amendment to the Credit
Agreement contained in Subsections 1(c), (d), (e), (f) and (o) hereof shall not
be effective until satisfaction of the following additional conditions
precedent:
(a) Issuance of 1996 Senior Notes. The Agent shall have received
evidence in form and substance satisfactory to it that not less than $15,000,000
of the 1996 Senior Notes shall have been issued by the Company, which 1996
Senior Notes shall have terms satisfactory to each of the Banks in its sole
discretion.
4. Representations and Warranties.
The Borrower confirms the accuracy of the representations and
warranties made in Article 3 of the Credit Agreement as of the date originally
given and restates to the Banks such representations and warranties, as
previously amended, on and as of the date hereof as if originally given on such
date.
5. Covenants.
(a) The Borrower warrants to the Banks that the Borrower is in
compliance and have complied with all covenants, agreements and conditions in
each Loan Document on and as of the date hereof, that no Potential Default or
Event of Default has occurred and is continuing on the date hereof and that,
upon the consummation of
-5-
<PAGE>
the transactions contemplated hereby, no Potential Default or Event of Default
shall have occurred and be continuing.
(b) The Borrowers shall provide to the Agent and its representatives
all requested access and assistance as shall be reasonably necessary for such
due diligence review as the Agent shall determine is necessary or advisable,
including without limitation a collateral audit.
6. Effect of Agreement.
This Agreement amends the Loan Documents only to the extent and in the
manner herein set forth, and in all other respects the Loan Documents are
ratified and confirmed.
7. Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures hereto
were upon the same instrument.
8. Governing Law.
This Agreement and all rights and obligations of the parties hereunder
shall be governed by and be construed and enforced in accordance with the laws
of Pennsylvania without regard to principles of conflict of law.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures hereto
were upon the same instrument.
8. Governing Law.
This Agreement and all rights and obligations of the parties hereunder
shall be governed by and be construed and enforced in accordance with the laws
of Pennsylvania without regard to principles of conflict of law.
IN WITNESS WHEREOF, Borrower and the Banks have caused this Agreement
to be executed by their proper corporate officers thereunto duly authorized as
of the day and year first above written.
<TABLE>
<CAPTION>
ICF KAISER INTERNATIONAL, INC.
By: /s/ Richard K. Nason
Title: Executive Vice President and
Chief Financial Officer
<S> <C> <C>
CLEMENT INTERNATIONAL CYGNA GROUP, INC. HENRY J. KAISER COMPANY
CORPORATION By: /s/ Richard K. Nason By: /s/ Richard K. Nason
By: /s/ Richard K. Nason Title: Treasurer Title: Treasurer
Title: Assistant Treasurer
EXCELL DEVELOPMENT ICF INFORMATION ICF INCORPORATED
CONSTRUCTION, INC. TECHNOLOGY, INC. By: /s/ Richard K. Nason
By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Assistant Treasurer
Title: Assistant Treasurer Title: Assistant Treasurer
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C> <C>
ICF KAISER ENGINEERS ICF KAISER ENGINEERS ICF KAISER ENGINEERS
CORPORATION (CALIFORNIA) CORPORATION MASSACHUSETTS, INC.
By: /s/ Richard K. Nason By: /s/ Richard K. Nason By: /s/ Richard K. Nason
Title: Treasurer Title: Assistant Treasurer Title: Treasurer
ICF KAISER ENGINEERS ICF KAISER GOVERNMENT ICF KAISER ENGINEERS, INC.
GROUP, INC. PROGRAMS, INC. By: /s/ Richard K. Nason
By: /s/ Richard K. Nason By: /s/ Richard K. Nason Title: Treasurer
Title: Treasurer Title: Treasurer
ICF KAISER HOLDINGS ICF KAISER HANFORD COMPANY ICF RESOURCES
UNLIMITED, INC. By: /s/ Paul Weeks, II INCORPORATED
By: /s/ Richard K. Nason Title: Assistant Secretary By: /s/ Richard K. Nason
Title: Assistant Treasurer Title: Assistant Treasurer
ICF LEASING CORPORATION, KE SERVICES CORPORATION KE LIVERMORE, INC.
INC. By: /s/ Richard K. Nason By: /s/ Richard K. Nason
By: /s/ Richard K. Nason Title: Treasurer Title: Treasurer
Title: Assistant Treasurer
KAISER ENGINEERS AND KAISER ENGINEERS CYGNA CONSULTING
CONSTRUCTORS, INC. INTERNATIONAL, INC. ENGINEERS & PROJECT
By: /s/ Richard K. Nason By: /s/ Richard K. Nason MANAGEMENT, INC.
Title: Treasurer Title: Treasurer By: /s/ Richard K. Nason
Title: Treasurer
TUDOR ENGINEERING COMPANY PCI OPERATING COMPANY, INC. SYSTEMS APPLICATIONS
By: /s/ Richard K. Nason By: /s/ Richard K. Nason INTERNATIONAL, INC.
Title: Treasurer Title: Treasurer By: /s/ Richard K. Nason
Title: Treasurer
CORESTATES BANK, N.A. BHF-BANK AKTIENGESELLSCHAFT SIGNET BANK
By: /s/ John D. Brady By: Linda Pace By: Brian Haggerty
Title: Assistant Vice President Title: Assistant Vice President Title: Vice President
By: Elmer Cantos
Title: Vice President
</TABLE>
-7-
<PAGE>
Exhibit No. 10(b)(3)
Amendments to the ICF Kaiser International, Inc. Employee Stock
Ownership Plan
. The procedure for voting ICF Kaiser stock held under the Plan is clarified
to provide that each participant may instruct the Trustee how to vote shares
allocated to the participant's account and, if no instructions are received, the
Committee will direct the Trustee how to vote the uninstructed shares.
. The Plan Year is changed to the calendar year.
. The Trustee is changed to Vanguard Fiduciary Trust Company.
NOW, THEREFORE, BE IT RESOLVED that the Plans be and hereby are amended, as
follows, effective as of March 1, 1995, except as otherwise provided herein:
1. Sections 1.2 and 1.35 are amended by substituting "December" for
"February", and by adding at the end of Section 1.35:
There shall be a short Plan Year beginning March 1, 1995 and ending December 31,
1995.
2. A new Section 1.36 is added, effective December 12, 1994, and Sections 1.36
through 1.48 are renumbered accordingly, to provide:
1.36 "Qualified Military Service" shall mean qualified military service as
defined in (S)414(u) of the Code.
3. Section 1.47 is amended, effective August 31, 1995, by substituting
"Vanguard Fiduciary Trust Company" for the named individual trustees.
4. Section 1.48 is deleted in its entirety, and the following language is
substituted therefor, effective August 31, 1995:
1.48 "Valuation Date" shall mean the most current date with respect to which
the Trustee determines the fair value of the assets comprising the Trust or any
portion thereof, in accordance with the Trustee's procedures, as they may be
amended from time to time, provided, however, that a Valuation Date shall occur
at least once per Plan Year. Under current procedures, a Valuation Date
generally occurs on each business day of the Trustee.
5. A new Section 2.7 is added, effective December 12, 1994, to provide as
follows:
2.7 Qualified Military Service. Notwithstanding any provision of this Plan to
--------------------------
the contrary, contributions, benefits and service credit with respect to
Qualified Military Service will be provided in accordance with (S)414(u) of the
Code.
6. Section 4.1 is amended by adding at the end thereof:
When a contribution is made in a form other than cash, until such contribution
is reduced to cash, a Participant's Account shall contain an allocable share of
such contribution, provided that an allocation of Company Stock shall be in
whole shares, with the value of any fractional shares to be allocated in cash.
7. Section 7.1 is amended by deleting the phrase "including fractional shares"
in the first sentence thereof.
8. Section 7.3 is amended by adding the following language at the end thereof:
Notwithstanding any other provision of the Plan, the Trustee may credit the
contribution for a Plan Year as of the date such contribution is actually
received by the Trustee, subject to any required approval by the Internal
Revenue Service.
<PAGE>
9. Section 8.4(a) is amended, effective August 31, 1995, by deleting the second
sentence thereof and substituting the following language therefor:
The Vested portion of a Participant's Account shall be computed as soon as
practicable after receipt of authorized distribution instructions, as of the
applicable Valuation Date under the Trustee's procedures, as they may be amended
from time to time, provided that the Participant's Vested benefit may not be
paid without the written consent of the Participant and his spouse, if any, if
the present value of his accrued benefit exceeds, or at the time of any prior
distribution exceeded, $3,500.
10. Section 9.7 is amended by deleting the last sentence of subsection (a)
thereof and substituting the following therefor:
In the absence of receipt of such written direction from the Participant with
respect to any such shares within 3 business days before the exercise of any
shareholder rights, the Committee, in its sole discretion, shall direct the
Trustee how to vote such shares, and the Trustee shall vote such shares in
accordance with the directions of the Committee.
11. Section 9.7(d) is deleted in its entirety and the following language is
substituted therefor:
To the extent required by the Department of Labor Regulations under (S) 404(c),
each Participant shall be entitled to direct the exercise of rights other than
voting rights (such as, for example, acceptance or rejection of a tender offer
or a conversion privilege) with respect to Company Stock in his Account in the
same manner as prescribed in this Section. In the absence of receipt of such
written direction from the Participant with respect to any such shares within 3
business days before the exercise of any shareholder rights, the Committee, in
its sole discretion, shall direct the Trustee how to exercise such shareholder
rights and the Trustee shall exercise such shareholder rights shares in
accordance with the directions of the Committee.
<PAGE>
Exhibit No. 10(d)(3)
Amendments to the ICF Kaiser International, Inc. Retirement Plan
. The procedure for voting ICF Kaiser stock held under the Plan is clarified to
provide that (a) the Committee will instruct the Trustee how to vote ICF Kaiser
stock that is not subject to the participant's investment election, and (b) the
participant may instruct the Trustee how to vote shares allocated to the
participant's account that are subject to his investment election and, if no
instructions are received, the Committee will direct the Trustee how to vote the
uninstructed shares.
. The Plan Year is changed to the calendar year.
. The Trustee is changed to Vanguard Fiduciary Trust Company.
NOW, THEREFORE, BE IT RESOLVED that the Plans be and hereby are amended, as
follows, effective as of March 1, 1995, except as otherwise provided herein:
1. Sections 1.2 and 1.36 are amended by substituting "December" for
"February", and by adding at the end of Section 1.36:
There shall be a short Plan Year beginning March 1, 1995 and ending December 31,
1995.
2. A new Section 1.38 is added, effective December 12, 1994, and Sections
1.38 through 1.49 are renumbered accordingly, to provide:
1.38 "Qualified Military Service" shall mean qualified military service as
defined in (S) 414(u) of the Code.
3. Section 1.48 is amended, effective August 31, 1995, by substituting
"Vanguard Fiduciary Trust Company" for "U.S. Trust Company of California, N.A."
4. Section 1.49 is deleted in its entirety, and the following language is
substituted therefor, effective August 31, 1995:
1.49 "Valuation Date" shall mean the most current date with respect to which
the Trustee determines the fair value of the assets comprising the Trust or any
portion thereof, in accordance with the Trustee's procedures, as they may be
amended from time to time, provided, however, that a Valuation Date shall occur
at least once per Plan Year. Under current procedures, a Valuation Date
generally occurs on each business day of the Trustee.
5. Section 2.1 is amended by adding the following sentence at the end
thereof:
For purposes of the Plan Year beginning March 1, 1995 and ending on December 31,
1995, the 1,000 Hours of Service requirement shall be satisfied by completion of
648 Hours of Service.
6. A new Section 2.7 is added, effective December 12, 1994, to provide as
follows:
2.7 Qualified Military Service. Notwithstanding any provision of this Plan to
--------------------------
the contrary, contributions, benefits and service credit with respect to
Qualified Military Service will be provided in accordance with (S) 414(u) of the
Code.
7. Section 3.6 is amended by adding the following language at the end
thereof:
For purposes of the Plan Year beginning March 1, 1995 and ending on December 31,
1995, a Participant shall be credited with a Year of Service if his Period of
Service includes December 31, 1995.
8. Section 4.1 is amended by deleting the last sentence thereof and
substituting the following language therefor:
<PAGE>
When a contribution is made in a form other than cash, until such contribution
is reduced to cash, a Participant's Account shall contain an allocable share of
such contribution, provided that an allocation of Company Stock shall be in
whole shares, with the value of any fractional shares to be allocated in cash.
For purposes of the Plan Year beginning March 1, 1995 and ending December 31,
1995, a Participant shall satisfy the 1,000 Hours of Service requirement if he
has completed 648 Hours of Service.
9. Section 4.4 is amended by adding the following language at the end thereof:
For purposes of the Plan Year beginning March 1, 1995 and ending December 31,
1995, the limits under (S) 415 shall be pro-rated as required under the
applicable regulations.
10. Section 6.1 is deleted in its entirety and the following language is
substituted therefor:
Participants may direct the investment of assets in their Account in specific
investments that have been approved by the Committee, in accordance with
procedures provided by the Trustee and authorized by the Committee, except for
assets that have been contributed in a form other than cash, and have not been
reduced to cash. Participants' Accounts shall be invested as directed by each
Participant in Directed Investment Sub-Accounts, which shall be charged or
credited as appropriate with the net earnings, gains, losses and expenses as
well as appreciation or depreciation in market value during each Plan Year
attributable to such Sub-Accounts. Such amounts shall not be considered in
determining Trust gains or losses, apart from such Sub-Accounts.
11. Section 6.2 is amended by deleting the first sentence thereof and
substituting the following language therefor:
A Participant may notify the Committee in writing on such form and in such
manner as determined by the Committee that he elects to have that portion of his
Account available for investment direction invested in whole shares of the stock
of the Company, to be held under the Plan in the ICF Stock Fund, and the
Committee shall direct the Trustee to invest such portion accordingly at such
time and on such terms as the Committee may determine.
12. Section 7.1 is amended by deleting the phrase "including fractional shares"
and by adding the following language at the end thereof:
For purposes of the Plan Year beginning March 1, 1995 and ending December 31,
1995, a Participant who has completed 648 Hours of Service shall satisfy the
1,000 Hours of Service requirement.
13. Section 7.2 is amended by adding the following language at the end thereof:
Notwithstanding any other provision of the Plan, the Trustee may credit the
contribution for a Plan Year as of the date such contribution is actually
received by the Trustee, subject to any required approval by the Internal
Revenue Service.
14. Section 7.6(b) is amended, effective August 31, 1995, by deleting the
phrase "allocated to his Account for" and substituting therefor "contributed to
his Account during".
15. Section 8.4(a) is amended by deleting the second sentence thereof and
substituting the following language therefor, to be effective August 31, 1995:
The Vested portion of a Participant's Account shall be computed as soon as
practicable after receipt of authorized distribution instructions, as of the
applicable Valuation Date under the Trustee's procedures, as they may be amended
from time to time.
16. Section 8.10(c) is amended by adding the following language at the end
thereof:
<PAGE>
The Committee may delegate to the Trustee the function of approval of loans, in
accordance with the terms of the Plan.
17. Section 8.10(d) is amended by adding the following language to the end
thereof:
To the extent allowable by law, loans shall not be granted to any Participant or
his Beneficiary that provide for a repayment period extending beyond such
Participant's Normal Retirement Date. Loan repayments will be suspended under
the Plan as permitted under (S) 414(u)(4).
18. Section 9.7 is deleted in its entirety and the following language is
substituted therefor:
(a) Company Stock Not Allocated to a Participant's Directed Investment Sub-
----------------------------------------------------------------------
Account. With respect to Company Stock that is not allocated to a
-------
Participant's Directed Investment Sub-Account, the Committee, in its sole
discretion, shall direct the Trustee how to exercise all shareholder
rights, including, but not limited to, voting and the acceptance or
rejection of a tender offer, and the Trustee shall vote such shares in
accordance with the directions of the Committee.
(b) Company Stock Allocated to a Participant's Directed Investment Sub-
--------------------------------------------------------------------
Account. A Participant (or Beneficiary) shall have the right to direct the
-------
Trustee to take or refrain from taking any shareholder action, including
but not limited to, voting and the acceptance or rejection of a tender
offer, with respect to the shares of Company Stock allocated to the
Participant's Directed Investment Sub-Account. In the absence of receipt of
written direction from the Participant within 3 business days prior to the
exercise of such shareholder rights, the Committee, in its sole discretion,
shall direct the Trustee how to exercise such shareholder rights and the
Trustee shall exercise such shareholder rights in accordance with the
directions of the Committee. The Committee shall notify the Participants in
writing of each occasion for the exercise of voting rights as soon as
practicable, and generally not less than 30 days, before such rights are to
be exercised. Such notification shall include all the information that the
Corporation distributes to shareholders regarding the exercise of such
rights.
<PAGE>
Exhibit No. 10(n)
United States of America
Department of Energy
Richland Operations Office
P.O. Box 550
Richland, Washington 99352
96-PRO-596
Mr. R. E. Tiller, General Manager
ICF Kaiser Hanford Company
Richland, Washington
Dear Mr. Tiller:
CONTRACT DE-AC06-93RL12359, TERMINATION FOR CONVENIENCE OF THE GOVERNMENT
Pursuant to Clause 1.b. of the Assignment Agreement for Contract No. DE-
AC06-93RL12359, RL has retained sole termination rights for your contract. You
are hereby notified that effective midnight on September 30, 1996, the subject
contract with ICF Kaiser Hanford Company is terminated in whole for the
convenience of the Government. The administration of any termination claim or
settlement will be performed by WHC as part of the closeout effort. If you have
any questions on this decision, please call me or your staff may contact Bill
Kellogg at 376-7489
Sincerely,
/s/ John D. Wagoner
John D. Wagoner
Manager
PRO:AWK
cc: H.J. Hatch, FDH
S.J. Morgan, WHC
<PAGE>
Exhibit No. 10(q)(3)
Amendments to the ICF Kaiser International, Inc. Section 401(k) Plan
. The procedure for voting ICF Kaiser stock held under the Plan is clarified
to provide that each participant may instruct the Trustee how to vote shares
allocated to the participant's account and, if no instructions are received, the
Committee will direct the Trustee how to vote the uninstructed shares.
NOW, THEREFORE, BE IT RESOLVED that the Plans be and hereby are amended, as
follows, effective as of March 1, 1995, except as otherwise provided herein:
1. A new Section 1.33 is added, effective December 12, 1994, and Sections 1.33
through 1.43 are renumbered accordingly, to provide:
1.33 "Qualified Military Service" shall mean qualified military service as
defined in (S)414(u) of the Code.
2. A new Section 2.6 is added, effective December 12, 1994, to provide as
follows:
2.6 Qualified Military Service. Notwithstanding any provision of this Plan to
--------------------------
the contrary, contributions, benefits and service credit with respect to
Qualified Military Service will be provided in accordance with (S)414(u) of the
Code.
3. Section 4.10 is amended, effective January 1, 1995, by adding the following
Section 4.10(c):
(c) Excess Deferrals. To the extent necessary to comply with the limits set
----------------
forth in Sections 4.7 and 4.8 of the Plan, Matching Contributions shall be
forfeited. Such forfeited amounts shall be used to reduce the Company's future
contributions to the Plan.
4. Section 8.5(c)(3) is amended, effective December 12, 1994, by adding the
following to the end thereof: Loan repayments will be suspended under the Plan
as permitted under (S)414(u)(4).
5. Section 9.7 is deleted in its entirety and the following language is
substituted therefor:
9.7 Shareholder Rights.
------------------
(a) Voting Rights. The Committee shall exercise all voting powers granted to
-------------
the Trust through ownership of Company Stock, except with respect to Company
Stock allocated to Participant's Accounts. All shares of Company Stock allocated
to a Participant's Account shall be voted by the Trustee in accordance with the
written direction of the Participant. In the absence of receipt of such written
direction from the Participant with respect to any such shares within 3 business
days before the exercise of any shareholder rights, the Committee shall direct
the Trustee how to vote such allocated but uninstructed shares and the Trustee
shall vote such shares in accordance with the directions of the Committee.
(b) Notification. The Committee shall notify the Participants in writing of
------------
each occasion for the exercise of voting rights as soon as practicable, and
generally not less than 30 days, before such rights are to be exercised. Such
notification shall include all the information that the Corporation distributes
to shareholders regarding the exercise of such rights.
(c) Other Shareholder Rights. To the extent required by the Department of
------------------------
Labor regulations under (S)404(c) of ERISA, each Participant shall be entitled
to direct the exercise of rights other than voting rights (such as, for example,
a tender offer or conversion privilege) with respect to Company Stock in his
Account in the same manner as prescribed in this Section. In the absence of
receipt of such written direction from the Participant within 3 business days
prior to the exercise of such shareholder rights, the Committee, in its sole
discretion, shall direct the Trustee how to exercise such shareholder rights and
the Trustee shall exercise such shareholder rights in accordance with the
directions of the Committee.
<PAGE>
Exhibit No. 12
ICF KAISER INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS TO FIXED CHARGES
(Unaudited)
The computations of the ratio of earnings to fixed charges for the nine months
ended September 30, 1996 and 1995, for the ten months ended December 31, 1995,
and for the years ended February 28 or 29, 1995, 1994, 1993 and 1992 are set
forth below (in thousands except ratio). In the years ended February 29, 1992
and February 28, 1994, income from continuing operations before fixed charges
and income taxes (Earnings) were inadequate to cover fixed charges. The
deficiencies were $54.3 million and $12.9 million for the years ended February
29, 1992 and February 28, 1994, respectively.
<TABLE>
<CAPTION>
Nine Months Ended Ten Months
September 30, Ended Year Ended February 28 or 29,
------------------------------ December 31, -----------------------------------------------
1996 1995 1995 1995 1994 1993
------------- -------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Income before income
taxes, minority interests,
and extraordinary item $ 9,285 $ 2,542 $ 6,303 $ 1,239 $ (12,877) $ 14,894
Less:
Minority interest of fifty-
percent-owned subsidiary (4,725) (1,315) (1,960) - - -
------------- -------------- -------------- -------------- --------------- ---------------
Income before income
taxes and extraordinary item
and after minority interest
of fifty-percent-owned
subsidiary 4,560 1,227 4,343 1,239 (12,877) 14,894
------------- -------------- -------------- -------------- --------------- ---------------
Fixed charges:
Interest expense 12,829 12,117 13,255 14,799 8,212 8,629
Interest factor in
rental expense 7,865 7,537 8,317 10,392 10,278 10,522
------------- -------------- -------------- -------------- --------------- ---------------
Total fixed charges 20,694 19,654 21,572 25,191 18,490 19,151
------------- -------------- -------------- -------------- --------------- ---------------
Earnings $ 25,254 $ 20,881 $ 25,915 $ 26,430 $ 5,613 $ 34,045
============= ============== ============== ============== =============== ===============
Earnings to fixed charges 1.2 1.1 1.2 1.0 N/A 1.8
============= ============== ============== ============== =============== ===============
<CAPTION>
Year Ended February 28 or 29,
----------------------------
1992
----------------------------
<S> <C>
Income before income
taxes, minority interests,
and extraordinary item $ (54,310)
Less:
Minority interest of fifty-
percent-owned subsidiary -
--------------
Income before income
taxes and extraordinary item
and after minority interest
of fifty-percent-owned
subsidiary (54,310)
--------------
Fixed charges:
Interest expense 10,778
Interest factor in
rental expense 10,861
--------------
Total fixed charges 21,639
--------------
Earnings $ (32,671)
==============
Earnings to fixed charges N/A
==============
</TABLE>
<PAGE>
Exhibit No. 21
CONSOLIDATED SUBSIDIARIES OF
ICF KAISER INTERNATIONAL, INC.
<TABLE>
<CAPTION>
JURISDICTION
ENTITY NAME OF FORMATION
- -------------------------------------------------------------------------------------------------------
<S> <C>
I. Clement International Corporation Delaware
I. Cygna Group, Inc. Delaware
II. Liability Risk Management, Inc. California
I. ICF Cannon Associates, Inc. Delaware
I. ICF Consulting Associates, Inc. Delaware
I. ICF Incorporated Delaware
I. ICF Information Technology, Inc. Delaware
II. Phase Linear Systems Incorporated Delaware
I. ICF Kaiser Development Corporation, Inc. Delaware
II. Global Trade & Investment, Inc. Delaware
I. ICF Kaiser Engineers Group, Inc. Delaware
II. Henry J. Kaiser Company Nevada
II. ICF Florida First, Inc. Delaware
II. ICF Kaiser Engineers, Inc. Ohio
III. ICF Kaiser Engineers (California) Corporation Delaware
III. ICF Kaiser Engineers Corporation New York
III. ICF Kaiser Engineers of Michigan, Inc. Michigan
III. ICF Kaiser International Planning & Design, Inc. Pennsylvania
III. ICF Kaiser Mound, LLC (99.9%) Ohio
III. ICF Kaiser Remediation Company Delaware
III. Kaiser Engineers Australia Pty. Limited (50%) Australia
IV. ICF Kaiser Aluterv Hungary
IV. ICF Kaiser Cayman Islands, Ltd. (99.9%) Cayman Islands
IV. Kaiser Engineers (NZ) Ltd (99%) New Zealand
III. Kaiser Engineers and Constructors, Inc. Nevada
IV. ICF Pty. Ltd. (50%) Australia
IV. Kaiser Engineers Limited (0.02%) U.K.
IV. Kaiser Engineers Australia Pty. Limited (50%) Australia
IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal
V. ICF Kaiser Cayman Islands, Ltd. (0.1%) Cayman Islands
IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand
IV. Kaiser Engineers Pty. Ltd. (50%) Australia
IV. Kaiser Ingenieria de Chile Limitada (51%) Chile
III. Kaiser Engineers International, Inc. Nevada
IV. ICF Pty. Ltd. (50%) Australia
IV. Kaiser Engenharia de Portugal Limitada (50%) Portugal
IV. Kaiser Engineers Pty. Ltd. (50%) Australia
IV. Kaiser Ingenieria de Chile Limitada (49%) Chile
III. Kaiser Engineers Limited (99.98%) U.K.
IV. Kaiser Engineers Technical Services Limited (80%) Cyprus
IV. Kaiser Engineers (UK) Limited (50%) U.K.
</TABLE>
-Page 1 of 2- Current as of January 1, 1997
<PAGE>
<TABLE>
<S> <C> <C>
III. Kaiser Engineers (UK) Limited (50%) U.K.
IV. Kaiser Engineers Technical Services Limited (20%) Cyprus
III. Kaiser Engenharia e Constructoes Limitada Brazil
III. KE, Inc. Philippines
III. ICF Kaiser Engineers & Builders, Inc. Delaware
III. KE Services Corporation Delaware
III. La Compagnie Henry J. Kaiser Company (Canada) Ltee. Canada
III. ICF Kaiser Overseas Engineering, Inc. Delaware
III. PCI Operating Company, Inc. Delaware
II. ICF Technology Incorporated Delaware
II. International Waste Energy Systems, Inc. Delaware
II. KE Livermore, Inc. Delaware
I. ICF Kaiser Engineers Massachusetts, Inc. Delaware
I. ICF Kaiser/Georgia Wilson, Inc. Delaware
I. ICF Kaiser Government Programs, Inc. Delaware
II. Kaiser-Hill Company, LLC (50%) Colorado
I. ICF Kaiser Hanford Company Delaware
I. ICF Kaiser Holdings Unlimited, Inc. Delaware
II. American Venture Investments Incorporated Delaware
III. American Venture Holdings, Inc. Delaware
II. Cygna Consulting Engineers and Project Management, Inc. California
II. Excell Development Construction, Inc. Delaware
III. International Systems, Inc. Colorado
II. ICF Kaiser Engineers Eastern Europe, Inc. Delaware
III. ICF Kaiser Netherlands B.V. (10%) Netherlands
II. ICF Kaiser Netherlands B.V. (90%) Netherlands
II. ICF Leasing Corporation, Inc. Delaware
I. ICF Kaiser Mound (Ohio), Inc. Ohio
I. ICF Kaiser Mound, LLC (0.1%) Ohio
I. ICF Kaiser Panama S.A. Panama
I. ICF Kaiser Servicios Ambientales, S.A. de C.V. Mexico
I. ICF Kaiser Systems, Inc. Delaware
I. ICF Resources Incorporated Delaware
II. HBG Hawaii, Inc. Delaware
II. HBG International, Inc. Delaware
I. Kaiser Engineers Pacific, Inc. Nevada
I. Monument Select Insurance Company Vermont
I. Systems Applications, Inc. Nevada
I. Systems Applications International, Inc. Delaware
I. Tudor Engineering Company Delaware
</TABLE>
-Page 2 of 2- Current as of December 31, 1996
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-1
of our report dated March 8, 1996, except for Note 1, as to which the date is
January 7, 1997, on our audits of the financial statements and the financial
statement schedule of ICF Kaiser International, Inc. We also consent to the
reference to our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Washington, D.C.
January 7, 1997
<PAGE>
Exhibit 25
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
ICF KAISER INTERNATIONAL, INC.
(Exact name of obligor as specified in its charter)
Delaware 54-1437073
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
and Subsidiary Guarantors
Cygna Consulting Engineers and Project Management, Inc.
ICF Kaiser Government Programs, Inc.
PCI Operating Company, Inc.
Systems Applications International, Inc.
(Exact names of registrants as specified in their respective charters)
California 94-2278222
Delaware 54-1761768
Delaware 54-1589711
Delaware 54-1770848
(State of incorporation) (I.R.S. employer
identification number)
9300 Lee Highway
Fairfax, Virginia 22031
(Address of principal executive offices) (Zip code)
----------------------
12% Senior Notes due 2003, Series B
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 3rd day of January, 1997.
THE BANK OF NEW YORK
By: /S/ BYRON MERINO
------------------------
Name: BYRON MERINO
Title: ASSISTANT TREASURER
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 4,404,522
Interest-bearing balances............... 732,833
Securities:
Held-to-maturity securities............. 789,964
Available-for-sale securities........... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold...................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .....................28,728,602
LESS: Allowance for loan and
lease losses ..................584,525
LESS: Allocated transfer risk
reserve............................429
Loans and leases, net of unearned
income, allowance, and reserve........ 28,143,648
Assets held in trading accounts........... 1,004,242
Premises and fixed assets (including
capitalized leases)..................... 605,668
Other real estate owned................... 41,238
Investments in unconsolidated
subsidiaries and associated
companies............................... 205,031
Customers' liability to this bank on
acceptances outstanding................. 949,154
Intangible assets......................... 490,524
Other assets.............................. 1,305,839
-----------
Total assets.............................. $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices..................... $20,441,318
Noninterest-bearing ...........8,158,472
Interest-bearing .............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs........ 11,710,903
Noninterest-bearing ..............46,182
Interest-bearing .............11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased................. 1,565,288
Demand notes issued to the U.S.
Treasury................................ 293,186
Trading liabilities....................... 826,856
Other borrowed money:
With original maturity of one year
or less............................... 2,103,443
With original maturity of more than
one year.............................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding................... 951,116
Subordinated notes and debentures......... 1,020,400
Other liabilities......................... 1,522,884
-----------
Total liabilities......................... 40,456,160
-----------
EQUITY CAPITAL
Common stock.............................. 942,284
Surplus................................... 525,666
Undivided profits and capital
reserves................................ 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities.............................. ( 2,073)
Cumulative foreign currency transla-
tion adjustments........................ ( 8,403)
-----------
Total equity capital...................... 3,586,850
-----------
Total liabilities and equity
capital ................................ $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 99(a)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________,
1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
ICF KAISER INTERNATIONAL, INC.
9300 Lee Highway
Fairfax, Virginia 22031
LETTER OF TRANSMITTAL
To Exchange 12% Senior Notes due 2003, Series A,
For 12% Senior Notes due 2003, Series B,
That Have Been Registered Under the Securities Act of 1933, As Amended
Exchange Agent:
BANKERS TRUST COMPANY
---------------------
To: Bankers Trust Company
--------------------------
Facsimile Transmission: (212) 250-6961 or (212) 250-6392
Confirm by telephone to: (800) 735-7777
By Mail:
Bankers Trust Company
Corporate Trust and Agency Group
Reorganization Department
P.O. Box 1458
Church Street Station
New York, New York 10008-1458
By Hand/Overnight Delivery:
Bankers Trust Company
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated _______, 1997 (the
"Prospectus") of ICF Kaiser International, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal for 12% Senior Notes due 2003, Series
A, which may be amended from time to time (this "Letter"), which together
constitute the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 12% Senior Notes due 2003, Series B (the "Exchange
Notes"), for each $1,000 in principal amount of its outstanding 12% Senior Notes
due 2003, Series A (the "Old Notes"), that were issued and sold in a transaction
exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act").
The undersigned has completed, executed and delivered this Letter to indicate
the action he or she desires to take with respect to the Exchange Offer.
All holders of Old Notes who wish to tender their Old Notes must, prior to the
Expiration Date: (1) complete, sign, date and deliver this Letter, or a
facsimile thereof, to the Exchange Agent, in person or to the address set forth
above; and (2) tender his or her Old Notes or, if a tender of Old Notes is to be
made by book-entry transfer to the account maintained by the Exchange Agent at
The Depository Trust Company (the "Book-Entry Transfer Facility"), confirm such
book-entry transfer (a "Book-Entry Confirmation"), in each case in accordance
with the procedures for tendering described in the instructions to this Letter.
Holders of Old Notes whose certificates are not immediately available, or who
are unable to deliver their certificates or Book-Entry Confirmation and all
other documents required by this Letter to be delivered to the Exchange Agent on
or prior to the Expiration Date, must tender their Old Notes according to the
guaranteed delivery procedures set forth under the caption "The Exchange Offer -
- - How to Tender" in the Prospectus. (See Instruction 1).
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Old Notes validly tendered and not withdrawn and the
issuance of the Exchange Notes will be made on the Exchange Date. For the
purposes of the Exchange Offer, the Company shall be deemed to have accepted for
exchange validly tendered Old Notes when, as and if the Company has given
written notice thereof to the Exchange Agent.
The Instructions included with this Letter must be followed in their entirety.
Questions and requests for assistance or for additional copies of the Prospectus
or this Letter may be directed to the Exchange Agent, at the address listed
above, or to Paul Weeks, II, Senior Vice President, General Counsel and
Secretary of the Company, 9300 Lee Highway, Fairfax, Virginia 22031, at (703)
934-3600.
-2-
<PAGE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING
THE INSTRUCTIONS TO THIS LETTER, CAREFULLY
BEFORE CHECKING ANY BOX BELOW
Capitalized terms used in this Letter and not defined herein shall have the
respective meanings ascribed to them in the Prospectus.
List in Box 1 below the Old Notes of which you are the holder. If the space
provided in Box 1 is inadequate, list the certificate numbers and principal
amount of Old Notes on a separate signed schedule and affix that schedule to
this Letter.
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
----------------------------------------
Principal
Name(s) and Address(es) of Amount of
Registered Holder(s) Certificate Principal Amount Old Notes
(Please fill in if blank) Number(s) (1) of Old Notes Tendered (2)
- -------------------------- ------------- ---------------- ------------
Totals:
(1) Need not be completed if Old Notes are being tendered by book-entry
transfer.
(2) Unless otherwise indicated, the entire principal amount of Old Notes
represented by a certificate or Book-Entry Confirmation delivered to the
Exchange Agent will be deemed to have been tendered.
-3-
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned tenders to the Company the principal amount of Old Notes indicated
above. Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered with this Letter, the undersigned exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to the Old Notes tendered.
The undersigned constitutes and appoints the Exchange Agent as his or her agent
and attorney-in-fact (with full knowledge that the Exchange Agent also acts as
the agent of the Company) with respect to the tendered Old Notes, with full
power of substitution, to: (a) deliver certificates for such Old Notes; (b)
deliver Old Notes and all accompanying evidence of transfer and authenticity to
or upon the order of the Company upon receipt by the Exchange Agent, as the
undersigned's agent, of the Exchange Notes to which the undersigned is entitled
upon the acceptance by the Company of the Old Notes tendered under the Exchange
Offer; and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of the Old Notes, all in accordance with the terms of the
Exchange Offer. The power of attorney granted in this paragraph shall be deemed
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full power and
authority to tender, exchange, assign and transfer the Old Notes tendered hereby
and that the Company will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company to be necessary or desirable to
complete the assignment and transfer of the Old Notes tendered.
The undersigned agrees that acceptance of any tendered Old Notes by the Company
and the issuance of Exchange Notes (together with the guarantees of the
Subsidiary Guarantors (as defined in the Prospectus) with respect thereto) in
exchange therefor shall constitute performance in full by the Company of its
obligations under the Registration Rights Agreement (as defined in the
Prospectus) and that, upon the issuance of the Exchange Notes, the Company will
have no further obligations or liabilities thereunder (except in certain limited
circumstances). By tendering Old Notes, the undersigned certifies (a) that it
is not an "affiliate" of the Company within the meaning of the Securities Act
(an "Affiliate"), that it is not a broker-dealer that owns Old Notes acquired
directly from the Company or an Affiliate, that it is acquiring the Exchange
Notes offered hereby in the ordinary course of the undersigned's business and
that the undersigned has no arrangement with any person to participate in the
distribution of such Exchange Notes; (b) that it is an Affiliate of the Company
or of the Initial Purchaser of the Old Notes and that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it; or (c) that it is a Participating Broker-Dealer (as
defined in the Registration Rights Agreement) and that it will deliver a
prospectus in connection with any resale of the Exchange Notes. By tendering
Old Notes and executing this Letter of Transmittal, the undersigned further
certifies that it is not engaged in and does not intend to engage in a
distribution of the Exchange Notes.
The undersigned acknowledges that, if it is a broker-dealer that will receive
Exchange Notes for its own account, it will deliver a prospectus in connection
with any resale of such Exchange Notes. By so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned understands that the Company may accept the undersigned's tender
by delivering written notice of acceptance to the Exchange Agent, at which time
the undersigned's right to withdraw such tender will terminate.
The undersigned understands that the Exchange Notes will bear interest from
December 31, 1996, and waives the right to receive any payment in respect of
interest on the Old Notes accrued from December 31, 1996 to the date of issuance
of the Exchange Notes.
-4-
<PAGE>
All authority conferred or agreed to be conferred by this Letter shall survive
the death or incapacity of the undersigned, and every obligation of the
undersigned under this Letter shall be binding upon the undersigned's heirs,
legal representatives, successors, assigns, executors and administrators.
Tenders may be withdrawn only in accordance with the procedures set forth in the
Instructions contained in this Letter.
Unless otherwise indicated under "Special Delivery Instructions" below, the
Exchange Agent will deliver Exchange Notes (and, if applicable, a certificate
for any Old Notes not tendered but represented by a certificate also
encompassing Old Notes that are tendered) to the undersigned at the address set
forth in Box 1.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict between
the terms of the Prospectus and this Letter, the Prospectus shall prevail.
____
/___ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------
Account Number:
--------------------------------------------------------
Transaction Code Number:
-----------------------------------------------
____
/___ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------
Window Ticket Number (if available):
-----------------------------------
Name of Institution that Guaranteed Delivery:
--------------------------
-5-
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
BOX 2
PLEASE SIGN HERE
WHETHER OR NOT OLD NOTES ARE BEING
PHYSICALLY TENDERED HEREBY
This box must be signed by registered holder(s) of Old Notes as their name(s)
appear(s) on certificate(s) for Old Notes, or by person(s) authorized to become
registered holder(s) by endorsement and documents transmitted with this Letter.
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below. (See Instruction 3).
X
-------------------------------------------------
X
-------------------------------------------------
Signature(s) of Owner(s) or Authorized Signatory
Date:____________________, 1997
Name(s):______________________________________
(Please Print)
Capacity:
Address: (Include Zip Code)
Area Code and Telephone No.:
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (See Instruction 4)
Certain Signatures Must be Guaranteed by an Eligible Institution
(Name of Eligible Institution Guaranteeing Signatures)
(Address (including zip code) and Telephone Number (including area code) of
Firm)
(Authorized Signature)
(Title)
(Printed Name)
Date: , 1997
-6-
<PAGE>
BOX 3
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYOR'S NAME:
-----------------------------------
Part 1 Social Security Number or Employer
Identification Number
PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY ________________
BY SIGNING AND DATING BELOW /________________/
SUBSTITUTE Form W-9 Part 2 [_]
Department of the
Treasury, Internal Check the box if you are NOT subject to back-up
Revenue Service withholding under the provisions of Section
2406(a)(1)(C) of the Internal Revenue Code
because (1) you have not been notified that you
are subject to back-up withholding as a result
of failure to report all interest or dividends
or (2) the Internal Revenue Service has
notified you that you are no longer subject to
back-up withholding.
Payor's Request for Part 3 [_]
Taxpayer Identification
Number (TIN) Check if Awaiting TIN
CERTIFICATION UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS
FORM IS TRUE, CORRECT AND COMPLETE.
Signature: ____________________ Date: ________
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- ------------------------------- --------------------------------------
Signature Date
-7-
<PAGE>
BOX 4 BOX 5
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4) (See Instructions 3 and 4)
To be completed ONLY if To be completed ONLY if certificates for
certificates for Old Notes in a Old Notes in a principal amount not
principal amount not exchanged, exchanged, or Exchange Notes, are to be
or Exchange Notes, are to be sent to someone other than the person
issued in the name of someone whose signature appears in Box 2 or to an
other than the person whose address other than that shown in Box 1.
signature appears in Box 2, or
if Old Notes delivered by
book-entry transfer that are
not accepted for exchange are
to be returned by credit to an
account maintained at the
Book-Entry Transfer Facility
other than the account
indicated above.
Issue and deliver: Deliver:
(check appropriate boxes) (check appropriate boxes)
[_] Old Notes not tendered [_] Old Notes not tendered
[_] Exchange Notes, to: [_] Exchange Notes, to:
(Please Print) (Please Print)
Name: Name:
-------------------------- -----------------------------------
Address: Address:
----------------------- --------------------------------
- ------------------------------- ----------------------------------------
- ------------------------------- ----------------------------------------
Please complete the Substitute Please complete the Substitute Form W-9
Form W-9 at Box 3. at Box 3.
Tax I.D. or Social Security Number: Tax I.D. or Social Security Number:
-8-
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter and Certificates. Certificates for Old Notes or a
----------------------------------------
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed copy of this Letter and any other documents required by this
Letter, must be received by the Exchange Agent at one of its addresses set forth
herein on or before the Expiration Date. The method of delivery of this Letter,
certificates for Old Notes or a Book-Entry Confirmation, as the case may be,
and any other required documents is at the election and risk of the tendering
holder, but except as otherwise provided below, the delivery will be deemed made
when actually received by the Exchange Agent. If delivery is by mail, the use
of registered mail with return receipt requested, properly insured, is
suggested.
If tendered Old Notes are registered in the name of the signer of this Letter
and the Exchange Notes to be issued in exchange therefor are to be issued (and
any untendered Old Notes are to be reissued) in the name of the registered
holder, the signature of such signer need not be guaranteed. In any other case,
the tendered Old Notes must be endorsed or accompanied by written instruments of
transfer in form satisfactory to the Company and duly executed by the registered
holder and the signature on the endorsement or instrument of transfer must be
guaranteed by a bank, broker, dealer, credit union, savings association,
clearing agency or other institution (each an "Eligible Institution") that is a
member of a recognized signature guarantee medallion program within the meaning
of Rule 17Ad-15 under the Exchange Act. If the Exchange Notes and/or Old Notes
not exchanged are to be delivered to an address other than that of the
registered holder appearing on the note register for the Old Notes, the
signature on this Letter must be guaranteed by an Eligible Institution.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
Old Notes should contact such holder promptly and instruct such holder to tender
Old Notes on such beneficial owner's behalf. If such beneficial owner wishes to
tender such Old Notes itself, such beneficial owner must, prior to completing
and executing the Letter of Transmittal and delivering such Old Notes, either
make appropriate arrangements to register ownership of the Old Notes in such
beneficial owner's name or follow the procedures described in the immediately
preceding paragraph. The transfer of record ownership may take considerable
time.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes or a Book-Entry Confirmation, as the case may be, and all other
required documents to the Exchange Agent on or before the Expiration Date may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in the Prospectus. Pursuant to such procedures: (i) tender must be made by or
through an Eligible Institution; (ii) prior to the Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by telegram, telex,
facsimile transmission, mail or hand delivery) (x) setting forth the name and
address of the holder, the description of the Old Notes and the principal amount
of Old Notes tendered, (y) stating that the tender is being made thereby and (z)
guaranteeing that, within five New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery, this Letter together
with the certificates representing the Old Notes or a Book-Entry Confirmation,
as the case may be, and any other documents required by this Letter will be
deposited by the Eligible Institution with the Exchange Agent; and (iii) the
certificates for all tendered Old Notes or a Book-Entry Confirmation, as the
case may be, as well as all other documents required by this Letter, must be
received by the Exchange Agent within five New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery, all as
provided in the Prospectus under the caption "The Exchange Offer--How to
Tender."
The method of delivery of Old Notes and all other documents is at the election
and risk of the holder. If sent by mail, it is recommended that registered
mail, return receipt requested, be used, proper insurance be obtained, and the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent on or before the Expiration Date.
-9-
<PAGE>
Unless an exemption applies under the applicable law and regulations concerning
"backup withholding" of federal income tax, the Exchange Agent will be required
to withhold, and will withhold, 31% of the gross proceeds otherwise payable to a
holder pursuant to the Exchange Offer if the holder does not provide his or her
taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each tendering
holder should complete and sign the main signature form and the Substitute Form
W-9 included as part of this Letter, so as to provide information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is proved in a manner satisfactory to the Company and the
Exchange Agent.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Old Notes to reach the Exchange Agent before the
Expiration Date, a tender may be effected if the Exchange Agent has received at
its office listed on the front of this letter on or prior to the Expiration Date
a letter, telegram or facsimile transmission from an Eligible Institution
setting forth the name and address of the tendering holder, the principal amount
of the Old Notes being tendered, the names in which the Old Notes are registered
and, if possible, the certificate number of the Old Notes to be tendered, and
stating that the tender is being made thereby and guaranteeing that within five
New York Stock Exchange trading days after the date of execution of such letter,
telegram or facsimile transmission by the Eligible Institution, the Old Notes,
in proper form for transfer, will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal (and
any other required documents). Unless Old Notes being tendered by the above-
described method (or a timely Book-Entry Confirmation) are deposited with the
Exchange Agent within the time period set forth above (accompanied or preceded
by a properly completed Letter of Transmittal and any other required documents),
the Company may, at its option, reject the tender. Copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the purposes
described in this paragraph are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when the tendering
holder's properly completed and duly signed Letter of Transmittal accompanied by
the Old Notes (or a timely Book-Entry Confirmation) is received by the Exchange
Agent. Issuances of Exchange Notes in exchange for Old Notes tendered pursuant
to a Notice of Guaranteed Delivery or letter, telegram or facsimile transmission
to similar effect (as provided above) by an Eligible Institution will be made
only against deposit of the Letter of Transmittal (and any other required
documents) and the tendered Old Notes (or a timely Book-Entry Confirmation).
All questions as to the validity, form, eligibility (including time of receipt),
acceptance and withdrawal of tendered Old Notes will be determined by the
Company, whose determination will be final and binding. The Company reserves
the absolute right to reject any or all tenders that are not in proper form or
the acceptance of which, in the opinion of the Company's counsel, would be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. All tendering holders, by
execution of this Letter, waive any right to receive notice of acceptance of
their Old Notes. The Company's interpretation of the terms and conditions of
the Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding.
Neither the Company, the Exchange Agent nor any other person shall be obligated
to give notice of defects or irregularities in any tender, nor shall any of them
incur any liability for failure to give any such notice.
2. Partial Tenders; Withdrawals. If less than the entire principal amount of
----------------------------
any Old Note evidenced by a submitted certificate or by a Book-Entry
Confirmation is tendered, the tendering holder must fill in the principal amount
tendered in the fourth column of Box 1 above. All of the Old Notes represented
by a certificate or by a Book-Entry Confirmation delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. A certificate
for Old Notes not tendered will be sent to the holder, unless otherwise provided
in Box 5, as soon as practicable after the Expiration Date, in the event that
less than the entire principal amount of Old Notes represented by a submitted
certificate is tendered (or, in the case of Old Notes tendered by book-entry
transfer, such non-exchanged Old Notes will be credited to an account maintained
by the holder with the Book-Entry Transfer Facility).
-10-
<PAGE>
If not yet accepted, a tender pursuant to the Exchange Offer may be withdrawn
prior to the Expiration Date. For a withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at its address set forth on the back cover of the Prospectus
prior to the Expiration Date. Any such notice of withdrawal must specify the
person named in the Letter of Transmittal as having tendered Old Notes to be
withdrawn, the certificate numbers of Old Notes to be withdrawn, the principal
amount of Old Notes to be withdrawn, a statement that such holder is withdrawing
its election to have such Old Notes exchanged, and the name of the registered
holder of such Old Notes, and must be signed by the holder in the same manner as
the original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Company
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Old Notes being withdrawn. The Exchange Agent will return the properly
withdrawn Old Notes promptly following receipt of notice of withdrawal. All
questions as to the validity of notices of withdrawals, including time of
receipt, will be determined by the Company, and such determination will be final
and binding on all parties.
3. Signatures on this Letter; Assignments; Guarantee of Signatures. If this
---------------------------------------------------------------
Letter is signed by the holder(s) of Old Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificate(s)
for such Old Notes, without alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned by two or more joint owners,
all owners must sign this Letter. If any tendered Old Notes are held in
different names on several certificates, it will be necessary to complete, sign
and submit as many separate copies of this Letter as there are names in which
certificates are held.
If this Letter is signed by the holder of record and (i) the entire principal
amount of the holder's Old Notes are tendered; and/or (ii) untendered Old Notes,
if any, are to be issued to the holder of record, then the holder of record need
not endorse any certificates for tendered Old Notes, nor provide a separate bond
power. In any other case, the holder of record must transmit a separate bond
power with this Letter.
If this Letter or any certificate or assignment is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence satisfactory to the
Company of their authority to so act must be submitted, unless waived by the
Company.
Signatures on this Letter must be guaranteed by an Eligible Institution, unless
Old Notes are tendered: (i) by a holder who has not completed the Box entitled
"Special Issuance Instructions" (Box 4) or "Special Delivery Instructions" (Box
5) on this Letter; or (ii) for the account of an Eligible Institution. In the
event that the signatures on this Letter or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantees must be by an eligible
guarantor institution that is a member of The Securities Transfer Agents
Medallion Program (STAMP), The New York Stock Exchange Medallion Signature
Program (MSP) or The Stock Exchanges Medallion Program (SEMP). If Old Notes are
registered in the name of a person other than the signer of this Letter, the Old
Notes surrendered for exchange must be endorsed by, or be accompanied by a
written instrument or instruments of transfer or exchange, in satisfactory form
as determined by the Company, in its discretion, duly executed by the registered
holder with the signature thereon guaranteed by an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering holders should
------------------------------------------
indicate, in Box 4 or 5, as applicable, the name and address to which the
Exchange Notes or certificates for Old Notes not exchanged are to be issued or
sent, if different from the name and address of the person signing this Letter.
In the case of issuance in a different name, the tax identification number of
the person named also must be indicated. Holders tendering Old Notes by book-
entry transfer may request that Old Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such holder may
designate.
5. Tax Identification Number. Federal income tax law requires that a holder
-------------------------
whose tendered Old Notes are accepted for exchange must provide the Exchange
Agent (as payor) with his or her correct taxpayer identification number ("TIN"),
which, in the case of a holder who is an individual, is his or her social
security number. If the
-11-
<PAGE>
Exchange Agent is not provided with the correct TIN, the holder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, delivery
to the holder of the Exchange Notes pursuant to the Exchange Offer may be
subject to back-up withholding. (If withholding results in overpayment of
taxes, a refund may be obtained.) Exempt holders (including, among others, all
corporations and certain foreign individuals) are not subject to these back-up
withholding and reporting requirements. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 (the
"Guidelines") for additional instructions.
Under federal income tax laws, payments that may be made by the Company on
account of Exchange Notes issued pursuant to the Exchange Offer may be subject
to back-up withholding at a rate of 31%. In order to prevent back-up
withholding, each tendering holder must provide his or her correct TIN by
completing the "Substitute Form W-9" referred to above, certifying that the TIN
provided is correct (or that the holder is awaiting a TIN) and that: (i) the
holder has not been notified by the Internal Revenue Service that he or she is
subject to back-up withholding as a result of failure to report all interest or
dividends; (ii) the Internal Revenue Service has notified the holder that he or
she is no longer subject to back-up withholding; or (iii) in accordance with the
Guidelines, such holder is exempt from back-up withholding. If the Old Notes
are in more than one name or are not in the name of the actual owner, consult
the enclosed Guidelines for information on which TIN to report.
6. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable
--------------
to the transfer of Old Notes to it or its order pursuant to the Exchange Offer.
If however, the Exchange Notes or certificates for Old Notes not exchanged are
to be delivered to, or are to be issued in the name of, any person other than
the record holder, or if tendered certificates are recorded in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed by any reason other than the transfer of Old Notes to the Company or its
order pursuant to the Exchange Offer, then the amount of such transfer taxes
(whether imposed on the record holder or any other person) will be payable by
the tendering holder. If satisfactory evidence of payment of taxes or exemption
from taxes is not submitted with this Letter, the amount of transfer taxes will
be billed directly to the tendering holder.
Except as provided in this Instruction 6, it will not be necessary for transfer
tax stamps to be affixed to the certificates listed in this Letter.
7. Waiver of Conditions. The Company reserves the absolute the right to amend
--------------------
or waive any of the specified conditions in the Exchange Offer in the case of
any Old Notes tendered.
8. Mutilated, Lost, Stolen or Destroyed Certificates. Any holder whose
-------------------------------------------------
certificates for Old Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above, for further
instructions.
9. Requests for Assistance or Additional Copies. Questions relating to the
--------------------------------------------
procedure for tendering, as well as requests for additional copies of the
Prospectus or this Letter, may be directed to the Exchange Agent.
IMPORTANT: This Letter (together with certificates representing tendered Old
Notes or a Book-Entry Confirmation and all other required documents) must be
received by the Exchange Agent on or before the Expiration Date (as defined in
the Prospectus).
-12-
<PAGE>
EXHIBIT 99(b)
ICF KAISER INTERNATIONAL, INC.
NOTICE OF GUARANTEED DELIVERY
of 12% Senior Notes due 2003, Series A
As set forth in the Prospectus dated ______, 1997 (the "Prospectus") of ICF
Kaiser International, Inc. (the "Company") under "The Exchange Offer--How to
Tender" and in the Letter of Transmittal for 12% Senior Notes due 2003, Series A
(the "Letter of Transmittal"), this form or one substantially equivalent hereto
must be used to accept the Exchange Offer (as defined below) of the Company if:
(i) certificates for the above-referenced Notes (the "Old Notes") are not
immediately available; (ii) time will not permit all required documents to reach
the Exchange Agent (as defined below) on or prior to the Expiration Date (as
defined in the Prospectus); or (iii) the procedures for book-entry transfer
cannot be completed on or prior to the Expiration Date (as defined below). Such
form may be delivered by hand or transmitted by telegram, facsimile transmission
or letter to the Exchange Agent.
To: Bankers Trust Company
(the "Exchange Agent")
By Facsimile: (212) 250-6961 or (212) 250-6392
By Mail:
Bankers Trust Company
Corporate Trust and Agency Group
Reorganization Department
P.O. Box 1458
Church Street Station
New York, New York 10008-1458
Hand/Overnight Delivery:
Bankers Trust Company
Corporate Trust and Agency Group
Receipt & Delivery Window
123 Washington Street, 1st Floor
New York, New York 10006
Delivery of this instrument to an address other than
as set forth above or transmittal of this instrument to
a facsimile number other than as set forth
above does not constitute a valid delivery.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and conditions set
forth in the Prospectus and the Letter of Transmittal (which together constitute
the "Exchange Offer"), receipt of which are hereby acknowledged, the principal
amount of Old Notes set forth below pursuant to the guaranteed delivery
procedures described in the Prospectus and the Letter of Transmittal.
The undersigned understands and acknowledges that the Exchange Offer will expire
at 5:00 p.m., New York City time, on _______, 1997, unless extended by the
Company. With respect to the Exchange Offer, "Expiration Date" means such time
and date, or if the Exchange Offer is extended, the latest time and date to
which the Exchange Offer is so extended by the Company.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<TABLE>
<S> <C>
SIGNATURES Principal amount of Old Notes Exchanged:
_____________________________________ $____________________________________________
Signature of Owner
_____________________________________ Certificates Nos. of Old Notes (if available)
Signature of Owner (if more than one)
Dated: _______________, 1997 _____________________________________________
_____________________________________________
Name(s): ____________________________ IF OLD NOTES WILL BE DELIVERED BY BOOK-
_____________________________________ ENTRY TRANSFER, PROVIDE THE DEPOSITORY
TRUST COMPANY ("DTC") ACCOUNT NO:
Address:_____________________________
(Include Zip Code) Account No.: __________________________________
Area Code and Telephone No.:_________
Capacity (full tile), if signing in a
representative capacity: ____________
Taxpayer Identification or Social
Security No: ________________________
</TABLE>
<PAGE>
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned, a member of a recognized signature guarantee medallion program
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees that certificates representing the principal amount
of Old Notes tendered hereby in proper form for transfer, or timely confirmation
of the book-entry transfer of such Old Notes into the Exchange Agent's account
at The Depository Trust Company, in either case with delivery of a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other required documents, is being made within five New York Stock Exchange
trading days after the date of execution hereof.
____________________________________ ______________________________________
Name of Firm Authorized Signature
____________________________________
Number and Street or P.O. Box Title:________________________________
-----
____________________________________
City State Zip Code Date:_________________________________
----
Tel. No.: __________________________
Fax No.: ___________________________
NOTE: DO NOT SEND CERTIFICATES REPRESENTING OLD NOTES WITH THIS NOTICE. OLD
NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED
AND DULY EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99(c)
ICF KAISER INTERNATIONAL, INC.
Offer to Exchange
$1,000 in principal amount of
12% Senior Notes due 2003, Series B,
for
each $1,000 in principal amount of
outstanding 12% Senior Notes due 2003, Series A,
that were issued and sold in a transaction
exempt from registration under the Securities
Act of 1933, as amended
To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated ______, 1997 (as the same
may be amended or supplemented from time to time the "Prospectus") and a form
Letter of Transmittal (the "Letter of Transmittal") relating to the offer (the
"Exchange Offer") by ICF Kaiser International, Inc. (the "Company") to exchange
up to $15,000,000 in aggregate principal amount of its 12% Senior Notes due
2003, Series B (the "Exchange Notes"), for up to $15,000,000 aggregate principal
amount of its outstanding 12% Senior Notes due 2003, Series A, that were issued
and sold in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Old Notes").
We are asking you to contact your clients for whom you hold Old Notes registered
in your name or in the name of your nominee. In addition, we ask you to contact
your clients who, to your knowledge, hold Old Notes registered in their own
name. The Company will not pay any fees or commissions to any broker, dealer or
other person in connection with the solicitation of tenders pursuant to the
Exchange Offer. You will, however, be reimbursed by the Company for customary
mailing and handling expenses incurred by you in forwarding any of the enclosed
materials to your clients. The Company will pay all transfer taxes, if any,
applicable to the tender of Old Notes to it or its order, except as otherwise
provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the exchange of
Old Notes and for the information of your clients (facsimile copies of the
Letter of Transmittal may be used to exchange Old Notes);
3. A form of letter that may be sent to your clients for whose accounts
you hold Old Notes registered in your name or the name of your nominee, with
space provided for obtaining the clients' instructions with regard to the
Exchange Offer;
4. A Notice of Guaranteed Delivery;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to Bankers Trust Company, the
Exchange Agent.
<PAGE>
Your prompt action is requested. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on _______, _________, 1997, unless extended (the
"Expiration Date"). Old Notes tendered pursuant to the Exchange Offer may be
withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
To tender Old Notes, certificates for Old Notes or a Book-Entry Confirmation, a
duly executed and properly completed Letter of Transmittal or a facsimile
thereof, and any other required documents, must be received by the Exchange
Agent as provided in the Prospectus and the Letter of Transmittal.
If holders of Old Notes wish to tender, but it is impracticable for them to
forward their certificate for Old Notes prior to the expiration of the Exchange
Offer or to comply with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery procedures described
in the Prospectus under "The Exchange Offer -- How to Tender."
Questions and requests for assistance with respect to the Exchange Offer or for
additional copies of the enclosed material may be directed to the Exchange Agent
at its address set forth in the Prospectus or at (800) 735-7777.
Very truly yours,
ICF KAISER INTERNATIONAL, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR ANY AFFILIATE
THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR
THE ENCLOSED DOCUMENTS AND THE STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99(d)
ICF KAISER INTERNATIONAL, INC.
Offer to Exchange
$1,000 in principal amount of
12% Senior Notes due 2003, Series B,
for
each $1,000 in principal amount of
outstanding 12% Senior Notes due 2003, Series A,
that were issued and sold in a transaction
exempt from registration under the Securities
Act of 1933, as amended
To Our Clients:
Enclosed for your consideration is a Prospectus dated _________, 1997 (as the
same may be amended or supplemented from time to time the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by ICF Kaiser International, Inc. (the "Company")
to exchange up $15,000,000 in aggregate principal amount of its 12% Senior Notes
due 2003, Series B (the "Exchange Notes"), for up to $15,000,000 in aggregate
principal amount of its outstanding 12% Senior Notes due 2003, Series A, that
were issued and sold in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Old Notes").
The material is being forwarded to you as the beneficial owner of the Old Notes
carried by us for your account or benefit but not registered in your name. A
tender of any Old Notes may be made only by us as the registered holder and
pursuant to your instructions.
Accordingly, we request instructions as to whether you wish us to tender any or
all Old Notes, pursuant to the terms and conditions set forth in the Prospectus
and Letter of Transmittal. We urge you to read carefully the Prospectus and
Letter of Transmittal before instructing us to tender your Old Notes.
Your instructions to us should be forwarded as promptly as possible in order to
permit us to tender Old Notes on your behalf in accordance with the provisions
of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m., New York
City time, on _____, __________, 1997, unless extended (the "Expiration Date").
Old Notes tendered pursuant to the Exchange Offer may be withdrawn, subject to
the procedures described in the Prospectus, at any time prior to the Expiration
Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount of
the Exchange Notes for each $1,000 principal amount of the Old Notes, of
which $15,000,000 aggregate principal amount of the Old Notes was
outstanding as of ________, 1997. The terms of the Exchange Notes are
substantially identical (including principal amount, interest rate,
maturity, security and ranking) to the terms of the Old Notes, except that
the Exchange Notes (i) are freely transferrable by holders thereof (except
as provided in the Prospectus) and (ii) are not entitled to certain
registration rights and certain additional interest provisions that are
applicable to the Old Notes under a Registration Rights Agreement dated as
of December 23, 1996
<PAGE>
(the "Registration Rights Agreement") between the Company and BT Securities
Corporation, as initial purchaser.
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS, SEE "THE EXCHANGE
OFFER--CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New
York City time, on __________, 1997, unless extended.
4. The Company has agreed to pay the expenses of the Exchange Offer except
as provided in the Prospectus and the Letter of Transmittal.
5. Any transfer taxes incident to the transfer of Old Notes from the
tendering holder to the Company will be paid by the Company, except as
provided in the Prospectus of the Letter of Transmittal.
The Exchange Offer is not being made to nor will exchange be accepted from or on
behalf of holders of Old Notes in any jurisdiction in which the making of the
Exchange Offer or the acceptance thereof would not be in compliance with the
laws of such jurisdiction.
If you wish to have us tender any or all of your Old Notes held by us for your
account or benefit, please so instruct us by completing, executing and returning
to us the instruction form that appears below. The accompanying Letter of
Transmittal is furnished to you for informational purposes only and may not be
used by you to tender Old Notes held by us and registered in our name for your
account or benefit.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed material
referred to therein relating to the Exchange Offer of ICF Kaiser International,
Inc., including the Prospectus and the Letter of Transmittal.
This form will instruct you to exchange the aggregate principal amount of Old
Notes indicated below (or, if no aggregate principal amount is indicated below,
all Old Notes) held by you for the account or benefit of the undersigned,
pursuant to the terms and conditions set forth in the Prospectus and Letter of
Transmittal.
Aggregate Principal Amount of Old Notes to be exchanged: $ *
--------------------
*I (we) understand that if I
(we) sign these instruction ---------------------------------------------
forms without indicating an
aggregate principal amount of ---------------------------------------------
Old Notes in the space above, Signature(s)
all Old Notes held by you for
my (our) accounts will be
exchanged. ----------------------------------------
(Please print name(s) and address above)
Dated: , 1997
----------------------------
(Area Code & Telephone Number)
---------------------------------------------------
(Taxpayer Identification or Social Security Number)
<PAGE>
EXHIBIT 99(e)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer--
Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-
000. Employer identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
Give the
Give the EMPLOYER
SOCIAL SECURITY For this type IDENTIFICATION
For this type of account: number of-- of account: number of--
---------------- --------------
<S> <C> <C> <C>
1. An individual's The individual 9. A valid The legal
account trust, entity (Do not
estate, or furnish the
pension trust identifying
number of the
representative
or trustee
unless the
legal entity
itself is not
designated in
the account
title) (5)
2. Two or more The actual owner
individuals (joint of the account
account) or, if combined
funds, any one
of the
individuals (1)
3. Husband and wife The actual owner 10. Corporate The corporation
(joint account) of the account account
or, if joint
funds, either
person (1)
4. Custodian account of a The minor (2) 11. Religious, The organization
minor (Uniform Gift to charitable,
Minors Act) or
educational
organization
account
5. Adult and minor The adult or, if 12. Partner- The partnership
(joint account) the minor is the ship account
only held in the
contributor, the name of the
minor (1) business
6. Account in the name of The ward, minor, 13. Associa- The
guardian or committee for or incompetent tion organiza-
a designated ward, minor, person(3) tion club, or
or incompetent person other
tax-exempt
organization
7a. The usual revocable The 14. A broker The broker or
savings trust account grantor-trustee or registered nominee
(grantor is also trustee) (1) nominee
</TABLE>
<PAGE>
b. So-called trust The actual owner 15. Account The public
account that is not a (1) with the entity
legal or valid trust Department of
under State law Agriculture
in the name
of a public
entity (such
as a State or
local
government,
school
district, or
prison) that
receives
agricultural
program
payments
8. Sole proprietorship The owner (4)
account
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments
include the following:
. A corporation.
. An organization exempt from tax under section 501(a), or an
individual retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United
States, or any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality
thereof.
. A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a nonexempt trust as
described in section 4947(a)(1).
. An entity registered at all times under the Investment Company Act
of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to nonresident aliens subject to withholding under section
1441.
. Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not
paid in money.
. Payments made by certain foreign organizations.
<PAGE>
Payments of interest not generally subject to backup withholding include
the following:
. Payments of interest on obligations issued by individuals. Note:
You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to
the payer.
. Payments of tax-exempt interest (including exempt-interest
dividends under section 852). Payments described in section
6049(b)(5) to non-resident aliens. Payments on tax-free covenant
bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice--Section 6109 requires most recipients of dividends, interest
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Beginning January 1, 1993, payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
Penalties
(1) Penalties for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payee, you are subject
to a penalty of $50 for each such failure unless your failure is due to a
reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an under-
payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
