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As filed with the Securities and Exchange Commission on July 12, 1999
Registration No. 333-___
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
__________
ICF KAISER INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 8711 54-1437073
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code No.)
9300 Lee Highway, Fairfax, Virginia 22031-1207
(703) 934-3600
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
James J. Maiwurm, President and Chief Executive Officer
9300 Lee Highway
Fairfax, Virginia 22031-1207
(703) 934-3600
(Name, address, including zip code,
& telephone number, including
area code, of agent for service)
Copy to:
Jeffrey J. Margulies, Esq.
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
_________________________________________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Maximum Maximum Amount of
Securities To Amount To Be Offering Aggregate Registration
Be Registered Registered (1) Price Per Unit (1) Offering Price (1)(2) Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share
- ------------------------------------------------------------------------------------------------------------------------------
13% Senior Subordinated Notes Due 2003
- ------------------------------------------------------------------------------------------------------------------------------
Total $34,000,000 $34,000,000 $9,452
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Not specified as to each class of securities being registered, since the
amount of each class of securities to be offered in the exchange offer has not
been determined. The maximum aggregate offering price of securities issued
under this registration will not exceed $_______ unless additional securities
are subsequently registered by an amendment to the registration statement.
(2) Estimated solely for purposes of computing the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>
PROSPECTUS AND CONSENT SOLICITATION STATEMENT
ICF KAISER INTERNATIONAL, INC.
Offer to Exchange
$___________
13% Senior Subordinated Notes due 2003 and
_____Shares of Common Stock
for all outstanding
12% Senior Subordinated Notes due 2003
following a $_______
Asset Sale Offer
Recapitalization
Our recapitalization consists of an exchange offer, asset sale offer and
consent solicitation, all of which are dependent upon each other.
<TABLE>
<CAPTION>
Exchange Offer Conditions to Exchange Offer
<S> <C>
. We are offering to exchange $____ of new 13% . At least 95% of the outstanding old notes are
Senior Subordinated Notes due 2003 and ____ tendered in the exchange offer.
shares of common stock, or __% of our common
stock on a fully diluted basis, for all . A majority of the holders of the old notes
outstanding 12% Senior Subordinated Notes consent to amend the indenture for the old
due 2003 following the purchase of the old notes.
notes in the asset sale offer.
. We obtain a new revolving credit facility.
Asset Sale Offer
. In connection with the exchange offer, we . Shareholders approve the issuance of the
will offer to purchase for cash at par on a common stock to be issued in the exchange
pro rata basis a total of $____ million in offer.
old notes. The purchase of the old notes
will be funded through the proceeds of the Market for Securities
recent sale of our Consulting Group.
. Our common stock is listed on the New York
Consent Solicitation Stock Exchange under the trading symbol "ICF"
and we will apply for the listing of the
. we are also soliciting the holders of the old additional common stock to be issued. The new
notes for consents to remove most covenants notes will not be listed on any exchange.
in the indenture and to deliver an
instruction to the Trustee not to interfere Expiration Date
with our recapitalization.
. The exchange offer, asset sale offer and
The New Notes consent solicitation will expire at 5:00 p.m.,
New York City time, _______, 1999, unless
. The new notes will mature on December 31, extended or earlier terminated.
2003.
. We will pay interest on the new notes at an
annual rate of 13%, payable twice a year
beginning on December 31, 1999.
. The new notes will be unsecured and will be
subordinated to our existing and future
senior debt.
. We may, at our option, redeem the new notes
at par plus accrued interest at any time.
</TABLE>
______________________________________________
See "Risk Factors" on page ___ of this prospectus for a discussion of risks
to be considered in connection with your investment decision.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or common stock or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is ____________, 1999.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Kaiser files annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information we file at the Securities and
Exchange Commission's public reference room at the following location:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information on the operation of the public reference room. Our
Securities and Exchange Commission filings are also available to the public from
commercial document retrieval services and at the web site maintained by the
Securities and Exchange Commission at http://www.sec.gov. In addition, our
------------------
filings can be inspected at the office of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
We have filed a registration statement on Form S-4 with the Securities and
Exchange Commission to register the common stock and notes proposed to be issued
in the exchange offer described in this prospectus. This prospectus is a part
of that registration statement. As permitted by the rules of the Securities and
Exchange Commission, this prospectus does not contain all of the information
included in the registration statement and the accompanying exhibits and
schedules. The registration statement, together with the related exhibits and
schedules, is available at the public reference room or through the web site of
the Securities and Exchange Commission.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from or in addition to what is contained in this
prospectus. Therefore, if anyone does give you information of this sort, you
should not rely on it. If you are in a jurisdiction where it is unlawful to
offer to exchange or sell or to ask for offers to exchange or buy the securities
offered by this prospectus, or if you are a person to whom it is unlawful to
direct those activities, then the offer presented in this prospectus does not
extend to you. The information contained in this prospectus speaks only as of
its date unless the information specifically indicates that another date
applies.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus, which means that we can disclose
important information to you by referring you to other information we have filed
with the Securities and Exchange Commission. The information incorporated by
reference is deemed to be part of this prospectus, except for any information
superseded by information in this prospectus.
This prospectus incorporates by reference the documents set forth below
that we have previously filed with the Securities and Exchange Commission. All
of the documents listed below as incorporated by reference into this prospectus
also are being delivered to you with this prospectus. You should read this
prospectus together with the information incorporated by reference.
. Annual Report on Form 10-K for the year ended December 31, 1998
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
. Current Reports on Form 8-K dated March 10, 1999, April 9, 1999, May
12, 1999 and June 10, 1999
. Proxy Statement dated __________, 1999 relating to the 1999 Annual
Meeting of Shareholders
Our Annual Report on Form 10-K for the year ended December 31, 1998 also
served as our annual report to shareholders for 1998. The following information
contained in that Annual Report on Form 10-K is included among the information
incorporated by reference into this prospectus:
. description of segments, classes of similar products and services,
foreign and domestic operations and export sales (note 12 of notes to
consolidated financial statements);
i
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. selected financial data (Item 6);
. supplementary financial information (Item 8 and note 15 of notes to
consolidated financial statements);
. management's discussion and analysis of financial condition and
results of operations (Item 7);
. changes in and disagreements with accountants on accounting and
financial disclosures (Item 9); and
. quantitative and qualitative information about market risk (Item 7a).
We also are incorporating by reference additional documents that we file
with the Securities and Exchange Commission between the date of this prospectus
and the consummation of the exchange offer described in this prospectus.
You can request an additional free copy of any or all of these documents,
including exhibits that are specifically incorporated by reference into these
documents, by writing or calling the person indicated at the following address
or telephone number:
Shaun M. Martin, Vice President, Treasurer and Secretary
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
(703) 934-3600
If you would like to request documents from us, please do so by
______________, 1999 to receive the documents before the consummation of the
exchange offer.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains what we believe are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. They
are statements about future performance or results such as statements including
the words, "believe," "expect" and "anticipate" when Kaiser discusses its
financial condition, results of operations and business. Forward-looking
statements involve risks, assumptions and uncertainties. They are not guarantees
of future performance. Factors may cause actual results to differ materially
from those expressed in these forward-looking statements. These factors include
those identified under the caption "Risk Factors" in this prospectus, as well as
the factors identified under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" contained in Kaiser's Annual
Report on Form 10-K for the year ended December 31, 1998 and in Kaiser's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1999 that
are incorporated by reference into and delivered with this prospectus.
We believe that the expectations reflected in our forward-looking
statements are reasonable. However, we cannot assure you that these
expectations will prove to be correct. You should consider the factors we have
noted under the captions stated above as you read this prospectus.
ii
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION........................................... ROM - 1
INCORPORATION BY REFERENCE.................................................... ROM - 1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS.......................... ROM - 2
SUMMARY....................................................................... 1
The Company................................................................ 1
Strategy................................................................... 2
The Recapitalization....................................................... 3
Rationale for the Recapitalization......................................... 3
The New 13% Senior Subordinated Notes and New Common Stock................. 4
The Exchange Offer......................................................... 5
The Asset Sale Offer....................................................... 5
The Consent Solicitation................................................... 6
Procedures for Participating in the Exchange Offer, Asset Sale Offer and
Consent Solicitation....................................................... 6
Risk Factors............................................................... 7
Summary Financial Data..................................................... 8
RISK FACTORS.................................................................. 11
CAPITALIZATION................................................................ 15
RATIO OF EARNINGS TO FIXED CHARGES............................................ 15
UNAUDITED PRO FORMA FINANCIAL STATEMENTS...................................... 16
OVERVIEW AND BACKGROUND OF THE RECAPITALIZATION............................... 17
THE EXCHANGE OFFER............................................................ 17
THE ASSET SALE OFFER.......................................................... 19
THE CONSENT SOLICITATION...................................................... 20
PROCEDURES FOR PARTICIPATING IN THE EXCHANGE OFFER, ASSET SALE OFFER
AND CONSENT SOLICITATION..................................................... 22
RECENT DEVELOPMENTS........................................................... 27
BUSINESS...................................................................... 27
MANAGEMENT.................................................................... 32
DESCRIPTION OF NEW REVOLVING LINE OF CREDIT................................... 33
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS...................... 33
DESCRIPTION OF COMMON STOCK................................................... 34
DESCRIPTION OF NEW NOTES...................................................... 41
EXPERTS....................................................................... 63
LEGAL MATTERS................................................................. 63
</TABLE>
iii
<PAGE>
SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. This
prospectus includes specific terms of the new notes and common stock we are
offering to exchange, as well as information regarding our business and detailed
financial data. We encourage you to read this prospectus in its entirety.
The Company
We are a global provider of engineering, construction management, and
project and program management services. We also own a 50% interest in Kaiser-
Hill Company, LLC, which serves as the integrated management contractor at the
U.S. Department of Energy's Rocky Flats Environmental Technology Site.
We completed the sale of our EFM Group on April 9, 1999 for net cash
proceeds, after a working capital adjustment, of $74 million and on June 30,
1999 we sold 90% of our Consulting Group for $64 million in cash, plus $6.6
million of interest bearing notes. These actions were taken in response to
substantial losses incurred primarily in 1998 in connection with fixed price
contracts to construct four nitric acid plants.
We are now focused on serving clients in five major lines of business:
. Transit and Transportation- Our transit and transportation services
support the planning, design, engineering, and construction of heavy-
and light-rail transit systems, high-speed rail, peoplemovers, bus
systems, highways and bridges, and airport improvements.
. Alumina/Aluminum- We provide design and construction services for
expansion and modernization of some of the world's largest alumina and
aluminum facilities in locations from Kentucky to the Middle East and
Australia.
. Facilities Engineering / Management- We provide engineering services to
public-and private-sector clients who need to modernize or maintain
facilities, to design and build new capacity for the future, or to
improve existing operations and environmental conditions.
. Iron and Steel- We support the iron and steel industry by providing
traditional services such as engineering, design, and project and
construction management for plant expansions, modernizations, and
greenfield development.
. Microelectronics and Clean Technology- We also provide design/build
services for the microelectronics, semiconductor, biotechnology, and
telecommunication industries.
Our business is global in nature with more than 30 offices worldwide.
We own Kaiser-Hill Company, LLC equally with CH2M Hill Companies Ltd. We
designate a majority of the members of Kaiser-Hill's Board of Managers. Kaiser-
Hill currently serves as the integrated management contractor at the U.S.
Department of Energy's ("DOE") Rocky Flats Environmental Technology Site near
Denver, Colorado. The scope of Kaiser-Hill's contract with the DOE includes all
elements of daily and long-term operation of the site, including stabilizing and
safely storing more than 14 tons of plutonium, cleaning up areas contaminated
with hazardous and radioactive waste, and restoring much of the 6,000-acre site
for future use by the public. Kaiser-Hill's contract with the DOE expires in
June 2000. We expect that the DOE will either award Kaiser-Hill an extension of
the existing contract or open the extension for competition in the very near
future. Although we believe that an extension of the existing contract is more
likely than a recompetition, Kaiser-Hill is prepared to aggressively bid in a
recompetition.
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Strategy
Our strategy is to grow the revenue base of our remaining operations and
improve profitability. We will focus on new business development, cost
reductions and stringent project and operating controls to achieve this goal.
New Business Development. With the nitric acid projects behind us, the
realignment of our capital structure will enable us to focus on expanding our
revenue base. We believe our expertise in our core lines of business and
worldwide presence and recognition for quality service delivery can be leveraged
into significant opportunities in the future. We will seek additional contracts
with our existing customers and utilize our expertise from our current projects
to win business from new clients.
Cost Reductions. Concurrently with the planning for the sales of the EFM
and Consulting Groups, we identified approximately $20 million of cost reduction
opportunities in our remaining operations. Upon elimination of these costs, we
will have aligned our cost structure with our remaining revenue base. By
changing the way we operate our business in North America from a regional focus
to a line of business focus, we will be able to eliminate a layer of regional
overhead including personnel and facilities costs. In addition to reductions in
overhead, reductions in technical personnel resulting in higher revenue per
employee will improve profitability. As of ___ we have effected approximately
___% of these cost reductions.
Stringent Controls. Following the identification of our nitric acid plant
related problems we, along with several outside consultants, thoroughly reviewed
our policies and procedures in all phases of a contract lifecycle. As a result,
we have implemented:
. stronger financial and operating controls and project evaluation
processes;
. frequent senior management reviews of progress and profitability of each
contract; and
. a new project management reporting system that will allow us to more
proactively manage profitable project execution.
____________________
Our principal executive office is located at 9300 Lee Highway, Fairfax,
Virginia 22031-1207 and our telephone number is (703) 934-3600.
2
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The Recapitalization
Overview. The recapitalization will be completed in a series of
simultaneous transactions, each of which is dependent upon consummation of the
others. These transactions will occur, assuming the conditions of the exchange
offer are met, as follows:
. we will purchase $__ million principal amount of tendered old notes at
par in an asset sale offer;
. we will exchange $__ million of new notes and _____ shares of our common
stock for the remaining tendered old notes;
. holders of a majority of the outstanding old notes will consent to the
amendment of the indenture governing the old notes; and
. we will enter into a new $___ million credit facility.
Asset Sale Offer. In general terms, our indentures require us to use
proceeds from asset sales to reduce senior indebtedness or reinvest in our
business or make an asset sale offer to purchase at par, first the old notes and
second the 12% Senior Notes. As a result of the sale of the Consulting Group we
have approximately $___ million of available cash to fund an asset sale offer to
holders of our old notes. If the conditions to complete the exchange are not met
or the board in its discretion terminates the exchange offer, we may choose to
reinvest the $___ million in our business, potentially through one or more
acquisitions.
Exchange Offer. We are offering new notes and common stock in exchange for
all remaining old notes not purchased in the asset sale offer, $___ million
after purchasing $___ million in the asset sale offer. Our acceptance of old
notes tendered in the exchange offer is conditioned on, among other things,
holders of at least 95% of the principal amount of old notes accepting the
exchange offer, the receipt of the requisite consent to amend the old notes
indenture and our obtaining a new credit facility. In order to participate in
the exchange offer, the holder of old notes must tender all of the old notes
beneficially owned by the holder. We can extend the exchange offer and accept
all old notes tendered for exchange or amend the terms of the exchange offer and
any amendment will apply to the old notes tendered pursuant to the exchange
offer. Additionally, we reserve the right at any time to terminate the exchange
offer and not accept for exchange any old notes tendered for exchange. Tenders
of old notes may be withdrawn at any time prior to the expiration date.
Consent Solicitation. Simultaneously with the exchange offer we are seeking
a consent from the holders of our old notes to remove substantially all
restrictive covenants and some events of default from the indenture governing
the old notes. We are also requesting holders to deliver an instruction to the
Trustee not to interfere with our recapitalization. A holder of old notes does
not need to consent to the proposed amendments in order to tender its old notes
in the exchange offer.
New Credit Facility. We have received a term sheet for a new $__ million
credit facility. The closing of the new credit facility is conditioned on the
successful completion of the recapitalization.
Rationale for the Recapitalization
The amount of cash flow currently available from our remaining operations
is insufficient to service the interest expense associated with our existing
debt obligations. A realignment of our capital structure through the
recapitalization will substantially reduce our level of debt and associated
interest expense. We believe the recapitalization will enhance our ability to
win new business and retain key employees. Currently, we are significantly more
leveraged than our competitors. Especially in the recent past, this has
sometimes impaired our ability to win new business. Additionally, our current
financial position has in the past and could in the future impair our ability to
retain key personnel. We believe we will be better able to service our debt
remaining after the recapitalization. The completion of the recapitalization is
a condition to our securing a new credit facility which is necessary to support
short-term liquidity needs and letters of credit.
3
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The New 13% Senior Subordinated Notes and New Common Stock
Issuer............................. ICF Kaiser International, Inc.
Securities Offered................. We are offering $____ principal
amount of new notes and an aggregate
of ____ shares of common stock.
These shares will represent __% of
our outstanding common stock and __%
of our fully diluted shares
outstanding after the
recapitalization.
For each $1,000 principal amount of
old notes, a holder of old notes
will receive $____ principal amount
of new notes and ___ shares of
common stock.
Maturity Date...................... The new notes will mature on
December 31, 2003.
Interest Rate...................... We will pay an annual rate of
interest equal to 13%.
Interest Payments.................. We will make interest payments semi-
annually, beginning on December 31,
1999.
Ranking............................ The new notes will be unsecured and
will be subordinated in right of
payment to all of our existing and
future senior debt. The new notes
will rank senior in right of payment
to any of our future subordinated
debt and to the unexchanged old
notes. As of ____, 1999, after
giving effect to the asset sale
offer and the exchange, the
aggregate principal amount of our
outstanding senior debt would have
been approximately $ ___ million.
Optional Redemption................ We may redeem the new notes at our
option, in whole or in part, at any
time and from time to time at a
redemption price equal to 100% of
the principal amount plus accrued
and unpaid interest.
Asset Sale Proceeds................ If we do not reinvest cash proceeds
from any future sale of assets in
our business, we may have to use
these proceeds to offer to buy back
some of the new notes at their face
amount, plus interest.
Restrictive Covenants.............. The indenture governing the new
notes will limit what we may do. The
provisions of the indenture will
limit our ability to:
. incur more debt;
. pay dividends, redeem stock, or
make other distributions;
. issue stock of subsidiaries;
. make some investments;
. create liens;
. enter into sale/leaseback
transactions;
. enter into transactions with
affiliates;
. merge or consolidate; and
. transfer or sell assets.
These covenants are subject to a
number of important exceptions. See
"Description of New Notes."
Common Stock....................... Our common stock is listed on the
New York Stock Exchange under the
symbol "ICF" and we will apply for
listing of the additional common
stock to be issued.
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The Exchange Offer
------------------
The Exchange Offer................. We are offering to exchange new
notes and common stock for all old
notes outstanding after the asset
sale offer.
Minimum Tender Condition........... In order for us to consummate the
exchange offer, holders of at least
95% of the outstanding old notes
must have validly tendered and not
withdrawn their old notes.
Conditions of the Exchange Offer... Our acceptance of the exchange offer
is subject to the following
conditions, among other things:
. the minimum tender condition of
95% must be met;
. we must obtain the requisite
consent;
. we must obtain a new credit
facility; and
. our shareholders must approve
the issuance of common stock
being offered.
At any time we can waive any
condition to the exchange offer and
accept all old notes tendered for
exchange pursuant to the exchange
offer. Additionally, we reserve the
right at any time to terminate the
exchange offer and not accept for
exchange any old notes tendered for
exchange. See "The Exchange Offer-
Conditions of the Exchange Offer."
Tax Consequences of the Exchange... The exchange should qualify as a
recapitalization under the Internal
Revenue Code. If the exchange
qualifies as a recapitalization, and
the new notes are not "securities"
for federal income tax purposes,
holders of the old notes who
participate in the exchange offer
will recognize taxable gain, but not
loss, equal to the lower of the fair
market value of the new notes or the
amount of gain realized in the
exchange. Alternatively, if the
Internal Revenue Service were to
determine that the exchange was not
a recapitalization, holders of the
old notes who participate in the
exchange offer would be required to
recognize taxable gain or loss. See
"Material United States Federal
Income Tax Considerations."
The Asset Sale Offer
The Asset Sale Offer............... We will be offering to purchase $___
million of the old notes, including
$____ accrued but unpaid interest.
All old notes tendered for purchase
will be purchased on a pro rata
basis. The offer to purchase will be
made at the same time as the offer
to exchange, and the purchase will
be consummated immediately prior to
consummation of the exchange offer.
Conditions to Asset Sale Offer..... We will only consummate the asset
sale offer if the exchange offer is
consummated, the requisite number of
consents are obtained, and the new
credit facility is obtained.
Tax Consequences of the Asset
Sale Offer........................ Holders of old notes repurchased in
the asset sale offer will recognize
capital gain or loss equal to the
difference between that holder's
basis in the purchased notes and the
amount of cash received. In
addition, holders may be required to
recognize as ordinary income cash
received as payment for accrued
interest not previously recognized.
See "Material United States Federal
Income Tax Consequences."
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The Consent Solicitation
------------------------
The Consent Solicitation.............. In connection with the exchange
offer, we are soliciting consents
from the holders of old notes to
approve the proposed amendments to
the indenture. We are also
requesting holders to deliver an
instruction to the Trustee not to
interfere with our recapitalization.
The proposed amendments will not
become operative unless the
conditions of the exchange offer are
met and will become effective
immediately preceding the
consummation of the exchange offer.
Requisite Consents.................... Consents of registered holders of a
majority of the outstanding
aggregate principal amount of the
old notes are required to approve
the proposed amendments to the
indenture.
Proposed Amendments................... The proposed amendments will
eliminate substantially all of the
restrictive covenants and events of
default in the old notes indenture.
Additionally, the old notes
indenture will be amended to provide
that the new notes will be senior to
the old notes and that we must make
an asset sale offer first to the 12%
Senior Notes, second to the new
notes, and third to the old notes.
If the proposed amendments become
effective with respect to the old
notes indenture, they will apply to
all old notes issued under the old
notes indenture, and each holder of
old notes not tendered or accepted
for exchange pursuant to the
exchange offer will be bound by the
proposed amendments regardless of
whether the holder consented to the
proposed amendments.
Procedures for Participating in the Exchange Offer,
Asset Sale Offer and Consent Solicitation
Expiration Date....................... The exchange offer, asset sale
offer, and consent solicitation will
expire at 5:00 p.m., New York City
time, on _______ unless we extend or
earlier terminate it.
Procedures for Tendering Old Notes and
Consents.............................. Unless a tender of old notes is
effected pursuant to the procedures
for book-entry transfer, each holder
who wishes to tender old notes for
exchange in the exchange offer or
for purchase in the asset sale offer
or who wishes to tender consents in
the solicitation must:
. complete and sign the letter of
transmittal and consent form;
. have the signature guaranteed if
required by the letter of
transmittal and consent form;
and
. deliver the letter of
transmittal and consent form,
and all other required
documents, together with the
old notes or a notice of
guaranteed delivery, to the
exchange/solicitation/paying
agent at the address set forth
on page ____ of this
prospectus prior to 5:00 p.m.,
New York City time, on the
expiration date.
Any beneficial owner of the old
notes whose old notes are registered
in the name of a nominee, such as a
broker, dealer, commercial bank or
trust company, who wishes to tender
old notes in the exchange offer or
asset sale offer, should instruct
the entity or person to promptly
tender old notes on the beneficial
owner's behalf. See "Procedures for
Participating in the Exchange Offer,
Asset Sale Offer and Consent
Solicitation."
6
<PAGE>
Guaranteed Delivery Procedure........ Holders of old notes who wish to
tender their old notes in the
exchange offer or in the asset sale
offer and
. whose old notes are not
immediately available; or
. who cannot deliver their old
notes or any other documents
required by the letter of
transmittal and consent form
to the
exchange/solicitation/paying
agent prior to the exchange or
asset sale offer expiration
date or complete the procedure
for book-entry transfer on a
timely basis,
may tender their old notes according
to the guaranteed delivery
procedures set forth in the letter
of transmittal and consent form. See
"Procedures for Participating in the
Exchange Offer, Asset Sale Offer and
Consent Solicitation."
Withdrawal Rights and Revocation of
Consents............................ Tenders of old notes or consents may
be withdrawn at any time prior to
the expiration date. A proper
withdrawal of the tendered old notes
at or prior to the expiration date
shall not be deemed a revocation of
any related consent. A proper
revocation of a consent at or prior
to the expiration date shall not be
deemed a withdrawal of any related
old notes. See "Procedures for
Participating in the Exchange Offer,
Asset Sale Offer and Consent
Solicitation."
Exchange/Solicitation/Paying Agent... ___________________.
Risk Factors
------------
Before making an investment, you should consider carefully the information
included in the "Risk Factors" section, as well as all other information set
forth in this prospectus.
7
<PAGE>
Summary Financial Data
The following statement of operations, basic and diluted (loss) per share
data, and balance sheet data, excluding the data for the three months ended and
as of March 31, 1999, has been derived from financial statements audited by
PricewaterhouseCoopers LLP, independent accountants. The information should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with our consolidated financial
statements and related notes, incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
Ten
Year Months Three
Ended Ended Months
February December Ended
28, 31, Year Ended December 31, March 31,
1995 1995 1996 1997 1998 1999(a)
---------- ---------- ---------- ---------- ----------- ----------
(in thousands, except per share data) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Gross Revenue......................... $ 861,518 $ 916,744 $1,248,443 $1,108,116 $1,210,421 $ 225,497
Service revenue (b)................... 459,786 425,896 532,116 426,086 345,462 64,159
Operating Costs (c)................... 436,866 400,534 500,588 398,422 397,696 63,200
Depreciation and amortization......... 9,232 8,357 10,348 9,595 9,048 1,481
Severance and restructuring charges... - - - - 9,407 -
Other unusual charges................. - (500) - - 7,672 895
Operating income (loss)............... 13,688 17,505 21,180 18,069 (78,361) (1,417)
Income (loss) before income taxes,
minority interest, and extraordinary
item and cumulative effect of
accounting change..................... 1,239 6,303 14,484 2,561 (97,101) (7,001)
Net income (loss) before extraordinary
item and cumulative effect of
accounting change..................... (1,661) 2,252 5,834 (4,987) (93,442) (8,063)
Basic and Diluted Earnings (Loss) Per
Share:
Continuing operations before
extraordinary item and cumulative
effect of accounting change........... $ (0.18) $ 0.02 $ 0.17 $ (0.22)$ (3.87) $ (0.34)
Discontinued operations............... - - - - - .10
Extraordinary item.................... - - - - (0.05) -
Cumulative effect of accounting
change, net of tax.................... - - - - (0.25) -
---------- ---------- ---------- ---------- ----------- ----------
Total............................ $ (0.18) $ 0.02 $ 0.17 $ (0.22)$ (4.17) $ (0.24)
========== ========== ========== ========== =========== ==========
Weighted average common shares
outstanding--basic.................. 20,957 21,132 22,035 22,382 24,092 24,068
Weighted average common shares
outstanding--diluted................ 20,957 21,606 22,057 22,382 24,092 24,068
Other Data:
Minority interest (d)................. $ - $ 1,960 $ 6,043 $ 10,867 $ 7,698 $ 2,082
EBITDA (e)............................. 22,920 23,402 25,485 16,797 (59,932) (1,123)
Balance Sheet Data (end of period):
Cash and cash equivalents............. $ 28,233 $ 17,019 $ 20,250 $ 20,020 $ 15,267 $ 14,282
Total assets.......................... 281,422 370,179 369,462 399,288 429,053 391,729
Long-term debt (f).................... 126,733 120,112 156,519 141,004 137,488 137,610
Redeemable preferred stock............ 19,617 19,787 - - - -
Shareholders' equity (deficit)........ 27,624 28,427 34,892 27,327 (63,118) (67,931)
</TABLE>
_______________
(a) Effective January 1, 1999 the results of operations from the EFM and
Consulting Groups were treated as discontinued operations and therefore
were excluded from operating income.
(b) Service revenue is calculated by deducting the costs of subcontracted
services and other direct costs from the gross revenue and adding our share
of the income or loss of joint ventures and affiliated companies.
(c) Includes direct labor and fringe benefits, group overhead and corporate
general and administrative expense.
(d) Minority interest represents CH2M Hill's fifty-percent ownership of
Kaiser-Hill.
(e) EBITDA as presented herein includes operating income (loss) plus
depreciation and amortization, severance and restructuring charges, and
unusual charges and minus minority interest. We believe that EBITDA
provides useful information regarding our ability to service our
indebtedness, but should not be considered in isolation or as a substitute
for operating income or cash flow from operations (in each case as
determined in accordance with generally accepted accounting principles), as
an indicator of our operating performance or as a measure of our liquidity.
(f) Includes unamortized discounts.
8
<PAGE>
The following financial information represents the three months ended March
31, 1999 annualized on an actual basis and an adjusted basis. The adjustments
give effect to (i) the decrease in our run-rate service revenue based on
internal management projections and (ii) the full year effect of our cost
reduction plan. The information is based on our unaudited historical financial
information for the three months ended March 31, 1999 and should be read in
conjunction with the related notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in our
quarterly report on Form 10Q for the period ended March 31, 1999 that has been
incorporated by reference into this prospectus. This financial data is provided
for information purposes only and is not intended to project our results of
operations or financial position for any future period or as of any future date.
<TABLE>
<CAPTION>
Annualized Adjusted
Run Annualized
Rate (a) Adjustments Run Rate
------------ ----------- ----------
<S> <C> <C> <C>
Statement of Operations Data:
Gross Revenue $ 901,988 $ - $901,988
Service revenue(b) 256,636 (1,116)(c) 255,520
Operating Costs 252,800 (19,888)(d) 232,912
Depreciation and amortization 5,924 - 5,924
Other unusual charges 3,580 3,580
------------ -------- --------
Operating income (loss) (5,668) 18,772 13,104
Other Data:
Minority interest(e) $ 8,328 $ 8,328
EBITDA(f) (4,492) 14,280
</TABLE>
(a) Represents the three months ended March 31, 1999 annualized.
(b) Service revenue is calculated by deducting the costs of subcontracted
services and other direct costs from the gross revenue and adding our share
of the income or loss of joint ventures and affiliated companies.
(c) To give effect to a decrease in service revenue as compared to run rate
based on internal management projections.
(d) To give effect to the full year effect of our cost reduction plan as a
result of the scheduled separation of approximately 200 employees.
(e) Minority interest represents CH2M Hill's fifty-percent ownership of
Kaiser-Hill.
(f) EBITDA as presented herein includes operating income (loss) plus
depreciation and amortization, severance and restructuring charges, and
unusual charges and minus minority interest. We believe that EBITDA
provides useful information regarding our ability to service our
indebtedness, but should not be considered in isolation or as a substitute
for operating income or cash flow from operations (in each case as
determined in accordance with generally accepted accounting principles), as
an indicator of our operating performance or as a measure of our liquidity.
The assumed decrease in service revenue and the assumed decrease in costs
from the cost reduction plan are not predictions of actual future results. You
should not assume that the decrease in service revenue and the decrease in costs
necessarily will occur. Accordingly, you should not use or rely on this
information as an indication of actual future results. The foregoing projections
constitute what we believe are forwarding-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks, assumptions and uncertainties. There can be no
assurance that future developments will be in accordance with Kaiser's
expectations. See "Cautionary Note Regarding Forward-Looking Statements."
<PAGE>
RISK FACTORS
An investment in the securities described in this prospectus involves a
high degree of risk. You should consider carefully the following factors, in
addition to the other information contained in this prospectus, before
participating in the exchange offer.
Specific factors related to our financial performance may adversely affect our
ability to pay interest and principal on our debt.
Sale of operating groups will reduce cash flow. During the first half of
1999, we sold our EFM and Consulting Groups. Prior to their sale, these groups
had generated cash that was used to support Kaiser's operations and debt
service. In the recent past, apart from Kaiser's interest in Kaiser-Hill
Company, LLC, Kaiser's other operating units have not generated positive cash
flow.
Reliance on plan to reduce expenses and increase cash flow. Our success
will be dependent, to a large extent, on our ability to execute promptly and
effectively our plan to reduce operating expenses, increase margins and enhance
cash flow from remaining operations.
We are dependent on key customers. Our future profitability is dependent,
to a significant extent, on Kaiser-Hill's obtaining an extension of its DOE
contract or winning a new contract if DOE opens up the contract for
recompetition. We have several other key clients, the loss of any of which
would have a significant material adverse effect on our ability to return to
profitability. The loss of a significant client could impair our ability to
compete for new clients and have a significant negative impact on Kaiser's
future growth.
We intend to continue bidding and entering into fixed price contracts. Our
recent history of financial losses is partially attributable to its failure to
accurately bid on, and its inability to perform, fixed price contracts,
specifically with respect to the nitric acid plant contracts. Despite this
performance history, the nature of our business is such that it is necessary for
us to continue to enter into fixed price contracts. Although we believe we have
put appropriate controls in place such that we can successfully bid and perform
fixed price contracts, we give no assurances that all future fixed price
contracts will be completed profitably.
Quarterly financial results may fluctuate. Our quarterly financial results
may be affected by, among other factors, the commencement, completion or
termination of major projects, such as the Kaiser-Hill contract and the contract
for the construction of the Nova Hut steel mini-mill in the Czech Republic.
Accordingly, results for any one quarter are not necessarily indicative of
results for any other quarter or for the full year.
The remaining operations may not be able to retain or attract the personnel
needed for growth and profitability. Our future performance will depend to a
significant extent upon the efforts and abilities of key executives and line of
business managers. The loss of the services of key managers could have a
material adverse effect on us. In addition, because our remaining operations
are service-oriented in nature, our ability to deliver these services in a cost-
effective and high quality manner depends upon our ability to attract, retain,
and properly manage a staff of qualified professionals with the necessary
skills. The market for these professionals is quite competitive.
The remaining operations may not grow and become profitable in their highly
competitive markets. We compete with many other firms ranging from small firms
to large multinational firms having substantially greater financial, management
and marketing resources. Other competitive factors include quality of services,
technical qualifications, reputation, geographic presence, price, and the
availability of key professional personnel. In order for us to become
profitable, we will have to successfully compete against these firms in order to
generate additional backlog of service contracts, including an extension of the
current contract or award of a new contract for Kaiser-Hill.
We are dependent upon our subsidiaries for our operating income and cash flow.
As a holding company, we derive substantially all of our operating income and
cash flow from our subsidiaries instead of directly operating in the markets we
serve. Consequently, our ability to service our debt, including the new notes,
depends on the earnings of our subsidiaries and on our ability to receive funds
from these subsidiaries through inter-company payments. The ability of our
subsidiaries to make these payments will be subject to, among other things,
applicable
9
<PAGE>
state laws and contractual restrictions that may be entered into by these
subsidiaries. See "Description of New Notes--Certain Covenants--Limitations on
Restrictions on Distributions from Subsidiaries." In addition, subsidiaries that
are organized or do business in countries other than the United States are
subject to the risk of governmental restrictions on repatriation of funds to the
United States, and there may be adverse tax consequences to using cash generated
by foreign operations to pay our debt in the United States. If our subsidiaries
do not generate operating income and cash flow, or if they are unable to
distribute their earnings to us, we will not be able to service our debt and we
will not be able to continue in business.
Our financial performance is significantly tied to Kaiser-Hill, which is subject
to uncertainties that may adversely affect its and our operating results.
Status of Kaiser-Hill Department of Energy Contract. The contract with DOE
under which Kaiser-Hill operates expires in June 2000. Although we believe DOE
may extend the term of this contract, it is possible that DOE will instead
conduct a competition for the contract. If the contract is opened up for
recompetition, Kaiser-Hill is prepared to aggressively bid for the new contract.
We do not know if we will receive an extension of the Kaiser-Hill contract or
whether we will win the new contract if it is made subject to competition by
DOE. If we do not win an extension or a new rebid contract, we will lose a
significant portion of our cash flow and value.
There are special Federal regulations that affect Kaiser-Hill. Because
Kaiser-Hill provides the Federal government with nuclear energy and defense-
related services, it and a number of its employees are required to have and
maintain security clearances from the Federal government. There can be no
assurance that the required security clearances will be obtained and maintained
in the future. In addition, Kaiser-Hill is subject to foreign ownership,
control and influence regulations imposed by the Federal government and designed
to prevent the release of classified information to contractors subject to
foreign ownership, influence and control. There can be no assurance that
foreign ownership, influence and control concerns will not affect the ability of
Kaiser-Hill to secure and maintain its DOE contract.
Kaiser-Hill has special environmental concerns. Kaiser-Hill performs DOE's
Performance Based Integrating Management Contract at DOE's Rocky Flats
Environmental Technology Site near Denver, Colorado. Rocky Flats is a former DOE
nuclear weapons production facility. Under the DOE contract, Kaiser-Hill is
responsible for, and DOE will not pay for costs associated with, liabilities
caused by the willful misconduct or lack of good faith of Kaiser-Hill's
managerial personnel or the failure to exercise prudent business judgment by
Kaiser-Hill's managerial personnel. If Kaiser-Hill were found liable for any of
these reasons, the associated costs could be substantial.
We face significant contingencies, which may adversely impact our ability to pay
interest and principal on our debt.
We have certain obligations relating to the operating groups that were
sold. We have indemnified the purchasers of the operating groups we sold
against breaches of representations and warranties and covenants included in the
sale agreements. We also have retained some potential liabilities arising from
the pre-closing operations of these operating groups. These retained
liabilities relate to potential liabilities arising out of ongoing federal
government audits of certain activities of the operating groups prior to their
sale.
Bath Iron Works Contingency. In March 1998, we entered into a $197 million
maximum price contract to construct a ship building facility for Bath Iron
Works. In May 1998, we learned that estimated costs to perform the contract as
reflected in actual proposed subcontracts were approximately $30 million higher
than the cost estimates originally used as the basis for contract negotiation
between us and our customer. After learning this, we advised the customer that
we were not required to perform the contract in accordance with its terms as a
result of a mutual mistake between us in negotiating that contract. In October
1998, our customer presented an initial draft of a claim against us requesting
payment for estimated damages and entitlements pursuant to the terminated
contract. We are currently discussing with the customer its draft claim. No
provision for loss from this matter has been included in our financial results
to date as management does not believe that it has sufficient information to
reasonably estimate the outcome as negotiation activity has not been significant
to date.
10
<PAGE>
Acquisition Contingency. In March 1998, we acquired ICT Spectrum
Constructors, Inc. by issuing common stock in exchange for the stock of ICT
Spectrum. We guaranteed that the fair market value of each of the 1.5 million
shares of common stock issued in the acquisition will reach $5.36 by March 1,
2001. In the event that the fair market value does not attain the guaranteed
level, we are obligated to make up the shortfall either through the payment of
cash or by issuing additional shares of common stock with a total value equal to
the shortfall, depending upon our preference. Under the terms of the agreement,
however, the total number of contingently issuable shares of common stock cannot
exceed an additional 1.5 million. Given recently quoted prices of our stock,
the assumed issuance of an additional 1.5 million shares would not completely
extinguish the purchase price contingency and we would be required to pay a cash
fill-up to satisfy the contingency. Any future distribution of cash or common
stock would be recorded as a charge to our paid-in-capital. Until the earlier
of the resolution of the contingent purchase price or March 1, 2001, any
additional shares assumed to be issued because of shortfalls in fair market
value will be included in our diluted earnings per share calculations, unless
they are antidilutive. The exchanged shares also contain restrictions
preventing their sale prior to March 1, 2001.
On March 29, 1999, one ex-ICT Spectrum shareholder, individually and on
behalf of all others similarly situated, filed a class action lawsuit alleging
false and misleading statements made in a private disclosure document, and
asserting other claims, in connection with our acquisition of ICT Spectrum.
This litigation is in its preliminary stages.
There may be Y2K compliance issues associated with the remaining
operations. During recent years, there has been significant global awareness
raised regarding the potential disruption to business operations worldwide
resulting from the inability of current computer software to process properly
the change from the year 1999 to 2000. We have reviewed our data processing,
operating and other computer-based systems, and we do not currently anticipate
any material disruption in our operations as a result of any failure by us to
achieve year 2000 compliance, but we cannot give any assurance to that effect.
Even if our computer operations are unaffected by the year 2000, our business
operations may be interrupted or adversely affected as a result of year 2000
complications experienced by our subcontractors, clients, vendors, or general
business interruptions experienced domestically or internationally. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Other Matters - Year 2000 Readiness" in the Annual Report on Form
10-K enclosed with this prospectus.
There are significant financial risks associated with the new notes and common
stock, which could adversely affect your ability to receive payments of interest
and principal on the new notes or adversely affect the value of the new notes or
our common stock.
The new notes will be subordinated to senior indebtedness. Payments on the
new notes are subordinated and subject to the right of prior payment in full of
all senior indebtedness, which will include indebtedness outstanding under our
senior notes and our new senior secured revolving credit facility, as the credit
facility may be amended or replaced. In the event we default under senior
indebtedness, we will be unable to make any payment under the new notes unless
the senior indebtedness default has been cured or waived.
The new notes may be subordinated to other debt. The new notes also will
be subordinated to other debt instruments unless those debt instruments
specifically state that such debt is subordinated in right of payment to either
the new notes or all of our subordinated indebtedness. The new notes will rank
senior in right of payment to unexchanged old notes.
The new notes will be subordinated to liabilities of our subsidiaries.
Since substantially all of our operations are conducted, and substantially all
of our assets are owned, by our subsidiaries, the new notes will effectively be
subordinated to all existing and future liabilities of our subsidiaries,
including the obligations of our subsidiaries in relation to the new revolving
credit facility. Any right we may have to participate in any distribution of
the assets of any of our subsidiaries upon the subsidiary's liquidation,
reorganization, or insolvency, and any right the holders of the new notes may
consequently have to participate in the distribution of those assets, will be
subject to the claims of the creditors, including trade creditors, of the
subsidiary. If we have a valid claim against a subsidiary as a creditor of the
subsidiary, we will also be subject to such claims. In addition, in the event
that our claims as a creditor of a subsidiary are recognized, these claims would
be subordinated to any security interest in the assets of the subsidiary and any
indebtedness of the subsidiary senior to that held by us.
11
<PAGE>
The repayment of new notes is not secured by our assets. Our obligation to
make payments of principal and interest on the new notes is unsecured. As a
result, holders of the new notes will not have any ability to use our assets as
collateral for the repayment of these obligations. In addition, if we become
subject to a bankruptcy or liquidation proceeding, the right of holders of the
new notes to be repaid will be limited to the assets available after all of our
secured creditors have been satisfied. These remaining assets will then be
distributed among the remaining unsecured creditors, including trade creditors,
as well as holders of the new notes. As a result, holders of the new notes may
not recover their investment in these new notes.
Our common stock could be delisted from the New York Stock Exchange. Our
common stock is listed on the New York Stock Exchange. In order to continue to
be listed on the NYSE, we must meet specific quantitative standards. If one or
more of these standards is not met, the NYSE could initiate procedures to delist
our common stock. Although we would have an opportunity to appeal any decision
by the NYSE to delist its common stock, there can be no assurance that this
appeal would be successful. If our common stock were delisted from the NYSE, we
would seek to have the common stock listed on another exchange, such as AMEX or
one of the regional exchanges, or quoted in the Nasdaq National or SmallCap
markets. However, many of these exchanges and markets also have minimum
quantitative standards that we may be unable to meet. If our common stock is
delisted from the NYSE and we are unable to have our shares included on another
exchange or in the over-the-counter market, shareholders may find it more
difficult to dispose of the shares or to obtain accurate quotations of the
market value of the shares. In addition, the market price of the shares could
decline, news coverage about us could decline, and we could find it more
difficult to obtain financing in the future.
Kaiser does not anticipate that it will pay any dividends on its common
stock in the foreseeable future. We have never paid dividends on its common
stock and anticipates retaining all earnings for use in the business rather than
paying cash dividends in the foreseeable future. Our ability to pay cash
dividends on its common stock issued in the exchange offer is substantially
restricted under the indentures governing its outstanding debt. The new
revolving credit facility also may contain provisions prohibiting us from paying
dividends without the consent of the lender. These contractual restrictions
will limit our ability to pay dividends in the future.
Issuance of shares to former holders of ICT Spectrum stock could cause
significant dilution. As noted above, if we are required to issue shares to
extinguish the ICT Spectrum purchase price contingency, there will be
significant dilution to shareholders.
If the recapitalization is completed, holders of old notes not tendered in the
exchange offer or asset sale offer will have reduced rights under the indenture
and may find it difficult to sell their old notes.
The old notes will be amended. Concurrent with the exchange offer, we
propose to amend the indenture that governs the old notes by eliminating
substantially all of the covenants that restrict our activities and those of our
subsidiaries. Although we will continue to remain subject to similar covenants
that are included in the indentures governing the new notes and the outstanding
$15 million senior notes, holders of the old notes will not have the right to
enforce these covenants upon us.
The market price of the old notes may decline. If the exchange offer is
successful, the amount of old notes outstanding will be substantially reduced.
As a result, it may become much more difficult for holders to resell their old
notes. In addition, the reduced liquidity of old notes outstanding after the
recapitalization could have the effect of reducing the market price at which the
old notes may be resold.
12
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999, pro
forma for the sale of the EFM and Consulting Groups and adjusted to give effect
to the consummation of the recapitalization as if it had occurred on March 31,
1999. The information set forth below should be read in conjunction with our
audited financial statements and unaudited pro forma financial statements,
together with the related notes, included and incorporated by reference in this
prospectus.
As of March 31, 1999
-----------------------
Pro Forma
Pro Forma Adjusted
----------- ----------
(Dollars in thousands)
Cash and cash equivalents (a) $ 78,721
======== ======
Long-term debt (including current portion):
Credit Facility $ - $ -
12% Senior Notes (b) 15,000 15,000
New 13% Senior Subordinated Notes -
Old 12% Senior Subordinated Notes (c) 125,000
-------- ------
Total Debt 140,000
Stockholders' Equity (Deficit) (24,320)
-------- ------
Total Capitalization $ 115,680
======== ======
(a) Includes $22.9 million of restricted cash being used to collateralize
letters of credit.
(b) Excludes $.4 million of unamortized discount.
(c) Excludes $2.1 million in unamortized discount
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for
the five years ended December 31, 1998 and the three months ended March 31,
1999. The ratio of earnings to fixed charges has been calculated by dividing
fixed charges into the sum of fixed charges and income from continuing
operations before income tax expense and before equity in earnings or losses of
less than fifty-percent owned companies. Fixed charges consist solely of
interest costs.
<TABLE>
<CAPTION>
Year ended
--------------------------------------------
Ten months
Year ended ended 3 months
February 28, December 31, December 31, December 31, December 31, ended March
1995 1995 1996 1997 1998 31, 1999
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed charges 14,799 13,255 17,334 18,276 20,779 5,852
Earnings from continuing operations 1,239 6,303 14,484 2,561 (97,101) (7,001)
-----------------------------------------------------------------------------------------
16,038 19,558 31,818 20,837 (76,322) (1,149)
Fixed charges 14,799 13,255 17,334 18,276 20,779 5,852
Ratio of earnings to fixed charges 1.08 1.48 1.84 1.14 (a) (a)
</TABLE>
(a) Earnings for these periods are inadequate to cover fixed charges.
The deficiency, calculated as the dollar amount of earning required
to attain a ratio of one-to-one, for the year ended December 31,
1998 and the three months ended March 31, 1999 is $97,101 and
$7,001, respectively.
13
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements are derived from
our historical financial statements incorporated by reference into this
prospectus and certain assumptions deemed appropriate by our management. The
unaudited pro forma statement of operations for the year ended December 31, 1998
reflects (i) the sale of our EFM and Consulting Groups and (ii) the completion
of the recapitalization described in this prospectus, as if such transactions
had occurred on January 1, 1998. The unaudited pro forma balance sheet at March
31, 1999 reflects such transactions as if the transactions in (i) and (ii) had
occurred at March 31, 1999. The unaudited pro forma financial statements should
be read in conjunction with the related notes, with the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and with our
historical financial statements, including the related notes, incorporated by
reference into this prospectus.
The pro forma adjustments to give effect to the various events
described above are based upon currently available information and upon certain
assumptions that management believes are reasonable. The pro forma financial
statements are provided for information purposes only and should not be
construed to be indicative of our results of operations or financial position
had the transactions described above been consummated on or as of the dates
assumed, and are not intended to project our results of operations or financial
position for any future period or as of any future date.
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 1999
(In Thousands)
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------------------
Actual
March 31, Sale of Sale of
1999 EFM CG
---------------- ----------------- ----------------
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 14,282 $ - $ 41,539 (4,6)
Contract receivables, net 214,312 - (1,948)
Prepaid expenses and other current assets 13,831 - (31)
Restricted cash - 10,000 (3) 12,900 (6)
Notes receivable - - 3,000
Deferred income taxes 34,205 (19,446)(1) (14,759) (4)
Net assets of discontinued operations 66,458 (47,242)(2) (19,216) (5)
---------------- ----------------- ----------------
Total Current Assets 343,088 (56,688) 21,485
---------------- ----------------- ----------------
Fixed Assets
Furniture, equipment, and leasehold improvements 17,498 - (131)
Less depreciation and amortization (13,184) - 121
---------------- ----------------- ----------------
4,314 - (10)
---------------- ----------------- ----------------
Other Assets
Goodwill, net 22,967 - (2,205)
Investments in and advances to affiliates 7,708 - 1,785 (7)
Capitalized software development costs 1,533 - -
Notes receivable - 6,550 (4)
Other 12,119 - -
---------------- ---------------- ----------------
44,327 - 6,130
---------------- ---------------- ----------------
Total Assets $ 391,729 $ (56,688) $ 27,605
================ ================ ================
Liabilities and Shareholders' (Deficit)
Current Liabilities
Debt currently payable $ 36,876 $ (36,876) (3)$ -
Accounts payable 168,036 (10,844) (3) (8,761) (6)
Accrued salaries and benefits 31,231 (2,500) (3) (76)
Other accrued expenses 59,162 (11,724) (3) -
Deferred revenue 13,037 - -
Income taxes payable 2,422 - -
Total Current Liabilities ---------------- ---------------- ----------------
310,764 (61,944) (10,750)
Long-term Liabilities
Long-term debt 137,610 - -
Other 8,704 - -
---------------- ---------------- ----------------
Total Liabilities 457,078 (61,944) (10,750)
---------------- ---------------- ----------------
Commitments and Contingencies
Minority Interest 2,582 - -
Shareholders' Equity
Preferred stock - - -
Common stock, par value $.01 per share:
Authorized-90,000,000 shares
Issued and outstanding- 23,790,995 and 24,257,828 shares 238 - -
Additional paid-in capital 75,218 - -
Notes receivable collateralized by common stock - - -
Accumulated deficit (140,476) 5,256 (1) 38,355 (4,7)
Cumulative translation adjustment (2,911) - -
---------------- ---------------- ----------------
Total Shareholders' Equity (Deficit) (67,931) 5,256 38,355
---------------- ---------------- ----------------
$ 391,729 $ (56,688) $ 27,605
Total Liabilities and Shareholders' Equity ================ ================ ================
<CAPTION>
Pro Forma Pro Forma
before March 31,
Recapitalization Recapitalization 1999
---------------- ---------------- -----------------
<S> <C> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 55,821 $ - $ -
Contract receivables, net 212,364 - -
Prepaid expenses and other current assets 13,800 - -
Restricted cash 22,900 - -
Notes receivable 3,000 - -
Deferred income taxes - - -
Net assets of discontinued operations - - -
---------------- ---------------- -----------------
Total Current Assets 307,885 - -
---------------- ---------------- -----------------
Fixed Assets
Furniture, equipment, and leasehold improvements 17,367 - -
Less depreciation and amortization (13,063) - -
----------------- ---------------- ----------------
4,304 - -
----------------- ---------------- ----------------
Other Assets
Goodwill, net 20,762 - -
Investments in and advances to affiliates 9,493 - -
Capitalized software development costs 1,533 - -
Notes receivable 6,550 - -
Other 12,119 - -
----------------- ---------------- ----------------
50,457 - -
----------------- ---------------- ----------------
Total Assets $ 362,646 $ - $ -
================= ================ ================
Liabilities and Shareholders' (Deficit)
Current Liabilities
Debt currently payable $ 3 $ - $ -
Accounts payable 147,797 - -
Accrued salaries and benefits 28,655 - -
Other accrued expenses 46,162 - -
Deferred revenue 13,037 - -
Income taxes payable 2,422 - -
----------------- ---------------- ----------------
Total Current Liabilities 238,070 - -
Long-term Liabilities
Long-term debt 137,610 - -
Other 8,704 - -
----------------- ---------------- ----------------
Total Liabilities 384,384 - -
----------------- ---------------- ----------------
Commitments and Contingencies
Minority Interest 2,582 - -
Shareholders' Equity
Preferred stock - - -
Common stock, par value $.01 per share:
Authorized-90,000,000 shares
Issued and outstanding- 23,790,995 and 24,257,828 share 238 - -
Additional paid-in capital 75,218 - -
Notes receivable collateralized by common stock - - -
Accumulated deficit (96,865) - -
Cumulative translation adjustment (2,911) - -
----------------- ---------------- ---------------
Total Shareholders' Equity (Deficit) (24,320) - -
----------------- ---------------- ---------------
Total Liabilities and Shareholders' Equity $ 362,646 $ - $ -
================= ================ ===============
</TABLE>
<TABLE>
<CAPTION>
Actual Results Pro Forma Adjustments
-----------------------------------
for the year ended Sale of Sale of
December 31, 1998 EFM CG
------------------- ------------------ ------------------
<S> <C> <C> <C>
Gross Revenue $ 1,210,421 $ (105,306)(2)$ (105,223)
Subcontract and direct material costs (794,794) 53,362 (2) 24,769
Provision for contract losses (76,210) - -
------------------- ------------------ ------------------
Service Revenue 339,417 (51,944) (80,454)
Operating Expenses
Direct labor and fringe benefits 282,562 (26,553)(2) (37,672)
Group overhead 92,151 (18,863)(2) (29,281)
Corporate general and administrative 22,983 (945)(2) (5,025)
Depreciation and amortization 9,048 (1,598)(2) (988)
Severance and restructuring 9,407 - -
Other unusual charges 7,672 - -
------------------- ------------------ ------------------
Operating Income (Loss) (84,406) (3,985) (7,488)
Other Income (Expense)
Gain on sale of business - - -
Interest income 1,539 - -
Interest expense (20,279) 1,282 (8) 711
Equity in net income of unconsolidated subsidiaries 6,045 (600)(2) -
------------------- ------------------ ------------------
Income (Loss) Before Income Taxes, Minority Interest, Discontinued
Operations, Extraordinary Item, and Cumulative Effect of
Accounting Change (97,101) (3,303) (6,777)
Income tax provision (benefit) (11,357) - -
------------------- ------------------ ------------------
Income (Loss) Before Minority Interest, Discontinued Operations,
Extraordinary Item, and Cumulative Effect of Accounting Change (85,744) (3,303) (6,777)
Minority interest in net income of subsidiaries 7,698 - -
------------------- ------------------ ------------------
Income (Loss) Before Discontinued Operations, Extraordinary Item
and Cumulative Effect of Accounting Change $ (93,442) $ (3,303) $ (6,777)
Discontinued Operations
Gain (Loss) on Sale of discontinued operations (net of tax) - 13,762 (1) 29,524
------------------- ------------------ ------------------
Income (Loss) Before Extraordinary Item and Cumulative Effect
of Accounting Change $ (93,442) $ 10,459 $ 22,747
Basic and Fully Diluted Earnings (Loss) Per Share
Income (Loss) Before Discontinued Operations, Extraordinary Item
and Cumulative Effect of Accounting Change $ (3.88) $ (0.14) $ (0.28)
Discontinued Operations - 0.57 1.23
------------------- ------------------ ------------------
Income (Loss) Before Extraordinary Item and Cumulative Effect
of Accounting Change $ (3.88) $ 0.43 $ 0.95
=================== ================== ==================
Weighted average shares for basic and fully diluted earnings (loss)
per share 24,092 24,092 24,092
=================== ================= ==================
<CAPTION>
Pro Forma Pro Forma Results
before for the year ended
Recapitalization Recapitalization December 31, 1998
------------------ ---------------- ------------------
<S> <C> <C> <C>
Gross Revenue $ 999,892 $ - $ -
Subcontract and direct material costs (716,663) - -
Provision for contract losses (76,210) - -
------------------ ------------------ ------------------
Service Revenue 207,019 - -
Operating Expenses
Direct labor and fringe benefits 218,337 - -
Group overhead 44,007 - -
Corporate general and administrative 17,013 - -
Depreciation and amortization 6,462 - -
Severance and restructuring 9,407 - -
Other unusual charges 7,672 - -
------------------ ------------------ ------------------
Operating Income (Loss) (95,879) - -
Other Income (Expense)
Gain on sale of business - - -
Interest income 1,539 - -
Interest expense (18,286) - -
Equity in net income of unconsolidated subsidiaries 5,445 - -
------------------ ------------------ ------------------
Income (Loss) Before Income Taxes, Minority Interest, Discontinued
Operations, Extraordinary Item, and Cumulative Effect of
Accounting Change (107,181) - -
Income tax provision (benefit) (11,357) - -
------------------ ------------------ ------------------
Income (Loss) Before Minority Interest, Discontinued Operations,
Extraordinary Item, and Cumulative Effect of Accounting Change (95,824) - -
Minority interest in net income of subsidiaries 7,698 - -
------------------ ------------------ ------------------
Income (Loss) Before Discontinued Operations, Extraordinary Item
and Cumulative Effect of Accounting Change $ (103,522) $ - $ -
Discontinued Operations
Gain (Loss) on Sale of discontinued operations (net of tax) 43,286 - -
------------------ ------------------ ------------------
Income (Loss) Before Extraordinary Item and Cumulative Effect
of Accounting Change $ (60,236) $ - $ -
Basic and Fully Diluted Earnings (Loss) Per Share
Income (Loss) Before Discontinued Operations, Extraordinary Item
and Cumulative Effect of Accounting Change $ (4.30) $ - $ -
Discontinued Operations 1.80 - -
------------------ ------------------ ------------------
Income (Loss) Before Extraordinary Item and Cumulative Effect
of Accounting Change $ (2.50) $ - $ -
================== ================== ==================
Weighted average shares for basic and fully diluted earnings (loss)
per share 24,092 24,092 24,092
================== ================== ==================
</TABLE>
<TABLE>
<CAPTION>
Actual Results
for the three Pro Forma Adjustments
----------------------------------
months ended Sale of Sale of
March 31, 1999 EFM CG
-------------- -------------- --------------
<S> <C> <C> <C>
Gross Revenue $ 225,497 $ - $ -
Subcontract and direct material costs (162,858) - -
-------------- -------------- --------------
Service Revenue 62,639 - -
Operating Expenses
Direct labor and fringe benefits 48,459 - -
Group overhead 10,937 - -
Corporate general and administrative 3,804 - -
Depreciation and amortization 1,481 - -
Other unusual charges 895 - -
Severance and restructuring - - -
Discontinued operations - - -
-------------- -------------- --------------
Operating Income (Loss) (2,937) - -
Other Income (Expense)
Gain on sale of business - - -
Interest income 268 - -
Interest expense (5,852) 211 (8) -
Equity in net income of unconsolidated subsidiaries 1,520 - -
-------------- -------------- --------------
Income (Loss) From Continuing Operations Before Income Taxes
and Minority Interest (7,001) 211 -
Income tax provision (benefit) (1,020) 83 -
-------------- -------------- --------------
Income (Loss) From Continuing Operations Before Minority Interest (5,981) 128 -
Minority interest in net income of subsidiaries 2,082 - -
-------------- -------------- --------------
Income (Loss) From Continuing Operations (8,063) 128 -
Discontinued Operations
Income (Loss) from operations of discontinued operations (net of tax) 2,344 (855) (2) (1,489)(5)
Gain (Loss) on Sale of discontinued operations (net of tax) - 15,557 (1) 30,834 (4)
-------------- -------------- --------------
Net Income from Continuing Operations before Extraordinary Item (5,719) 14,830 29,345
Extraordinary Item (net of tax) - 698 -
-------------- -------------- --------------
Net Income (Loss) $ (5,719) $ 14,132 $ 29,345
============== ============== ==============
Basic and Fully Diluted Earnings (Loss) Per Share
Income (Loss) From Continuing Operations $ (0.34) $ 0.01 $ -
Discontinued Operations 0.10 0.61 1.22
Extraordinary Item - (0.03) -
-------------- -------------- --------------
Income (Loss) Before Extraordinary Item $ (0.24) $ 0.59 $ 1.22
============== ============== ==============
Weighted average shares for basic and fully diluted earnings
(loss) per share 24,068 24,068 24,068
============== ============== ==============
<CAPTION>
Pro Forma Results
Pro Forma for the three
before months ended
Recapitalization Recapitalization March 31, 1999
---------------- ---------------- --------------
<S> <C> <C> <C>
Gross Revenue $ 225,497 $ - $ -
Subcontract and direct material costs (162,858) -
-------------- -------------- --------------
Service Revenue 62,639 - -
Operating Expenses 48,459 - -
Direct labor and fringe benefits 10,937 - -
Group overhead 3,804 - -
Corporate general and administrative 1,481 - -
Depreciation and amortization 895 - -
Other unusual charges - - -
Severance and restructuring - - -
-------------- -------------- --------------
Operating Income (Loss) (2,937) - -
Other Income (Expense)
Gain on sale of business - - -
Interest income 268 - -
Interest expense (5,641) - -
Equity in net income of unconsolidated subsidiaries 1,520 - -
-------------- -------------- --------------
Income (Loss) From Continuing Operations Before Income Taxes
and Minority Interest (6,790) - -
Income tax provision (benefit) (937) - -
-------------- -------------- --------------
Income (Loss) From Continuing Operations Before Minority Interest (5,853) - -
Minority interest in net income of subsidiaries 2,082 - -
-------------- -------------- --------------
Income (Loss) From Continuing Operations (7,935) - -
Discontinued Operations
Income (Loss) from operations of discontinued operations (net of tax) - - -
Gain (Loss) on Sale of discontinued operations (net of tax) 46,391 - -
-------------- -------------- --------------
Net Income from Continuing Operations before Extraordinary Item 38,456 - -
Extraordinary Item (net of tax) 698 - -
-------------- -------------- --------------
Net Income (Loss) $ 37,758 $ - $ -
============== ============== ==============
Basic and Fully Diluted Earnings (Loss) Per Share
Income (Loss) From Continuing Operations $ (0.33) $ - $ -
Discontinued Operations 1.93 - -
Extraordinary Item (0.03) - -
-------------- -------------- --------------
Income (Loss) Before Extraordinary Item $ 1.57 $ - $ -
============== ============== ==============
Weighted average shares for basic and fully diluted earnings
(loss) per share 24,068 24,068 24,068
============== ============== ==============
</TABLE>
Notes to the Pro Forma Financial Information:
1) On April 9, 1999, we sold specified assets and certain liabilities of our
Environmental and Facilities Management Group (EFM) for $82 million, less
$8 million in working capital, for total cash proceeds of $74 million. The
gain on the sale of EFM was calculated as follows, as if the transaction
had taken place on:
<TABLE>
<CAPTION>
January 1, January 1, March 31,
1998 1999 1999
---------- ---------- ---------
<S> <C> <C> <C>
Sale proceeds 74,000 74,000 74,000
Transaction fees (2,056) (2,056) (2,056)
-------- -------- --------
Net sales price 71,944 71,944 71,944
Net assets of discontinued operations (29,356) (30,560) (47,242)
-------- -------- --------
Gain 42,588 41,384 24,702
Tax provision (a) (28,826) (25,827) (19,446)
-------- -------- --------
Gain on sale, net of tax $ 13,762 $ 15,557 $ 5,256
======== ======== ========
</TABLE>
(a) Assumes goodwill expense is not deductible for tax purposes.
2) To record the removal of EFM's net assets and the results of operations for
the respective periods from the books and records.
3) The cash proceeds $74 million from the sale of EFM have been recorded as
follows:
$36,876 to pay off the outstanding balance on the revolving line of
credit
10,844 to pay trade accounts payable
2,500 to pay deferred salaries and related costs
11,724 to pay other accrued expenses, primarily related to settlements
on the Nitric
Acid projects
10,000 to collateralize outstanding letters of credit
2,056 to pay commissions and professional fees associated with
-------
$74,000 closing the EFM sale
=======
4) On June 30, 1999, we sold of 90% of our interest in the Consulting Group for
$70.55 million plus a $3 million adjustment of working capital in exchange
for $64 million in cash, $3 million in a short-term promissory note, and
$6.55 million in long-term notes. The gain on the sale of the Consulting
Group was calculated as follows, as if the transaction had taken place on:
<TABLE>
<CAPTION>
January 1, January 1, March 31,
1998 1999 1999
---------- ---------- ---------
<S> <C> <C> <C>
Sale proceeds $73,550 $73,550 $ 73,550
Transaction fees (800) (800) (800)
-------- -------- --------
Net sales price 72,750 72,750 72,750
Net assets of discontinued operations
and other asset write-offs (22,337) (20,301) (19,216)
-------- -------- --------
Gain 50,413 52,449 53,534
Tax provision (a) (20,889) (21,615) (15,179)
-------- -------- --------
Gain on sale, net of tax $ 29,524 $ 30,834 $ 38,355
======== ======== ========
</TABLE>
Assumes goodwill expense is not deductible for tax purposes.
5) To record the removal of the Consulting Group's net assets and results of
operations for the respective periods from the books and records.
6) The cash proceeds of $64 million from the sale of the Consulting Group have
been recorded as follows:
$ 8,761 to pay trade accounts payable
12,900 to collateralize additional outstanding letters of credit
41,539 retained cash
800 to pay commissions and professional fees associated with closing
of sale
---------
$ 64,000
=========
7) To reclassify the remaining 10% ownership in the Consulting Group as an
equity investment.
8) To reflect the pro forma reduction to interest expense as if the cash
proceeds had been used to pay off the revolving debt as of the beginning of
the period.
<PAGE>
OVERVIEW AND BACKGROUND OF THE RECAPITALIZATION
Kaiser incurred losses during 1997 and during 1998 suffered losses of
$100.5 million, largely as a result of significant cost overruns on fixed price
contracts to construct four nitric acid plants. During the second half of 1998,
Kaiser's Board of Directors formed a special committee of members of the Board
to consider strategic alternatives for Kaiser. The special committee engaged a
financial advisor and, with its assistance, evaluated various opportunities
available to Kaiser, including the sale of one or more of Kaiser's operating
groups. As a result of that process, Kaiser sold its EFM and Consulting Groups
during 1999.
Because of the cash drain and continuing obligations associated with
Kaiser's nitric acid plants and other losses, the sales of the EFM and
Consulting Groups were not enough to restore Kaiser to a competitive financial
condition. Kaiser has lost the earning power associated with the sold operating
groups and continues to have $140 million principal amount of outstanding notes,
including $125 million of the old notes.
The Board of Directors considered several alternative means of stabilizing
Kaiser's financial condition. Among the alternatives considered was the use of
the proceeds from the Consulting Group sale in an acquisition of a related
business or simply reinvesting the proceeds from the Consulting Group sale into
Kaiser's existing business activities. In considering these alternatives, the
Board of Directors met several times, reviewed the recommendations of its
financial, legal and other professional advisors, as well as the information
provided by management, and closely analyzed the information available to it. A
majority of the members of the Board of Directors ultimately determined that the
recapitalization described in this prospectus represents the strongest
opportunity for significantly improving Kaiser's financial position and future
business prospects.
As described in more detail below, the Board of Directors has approved a
recapitalization that consists of an exchange offer, an asset sale offer and
consents to substantial amendments to the indenture governing the old notes. If
this recapitalization is not consummated, Kaiser may continue to negotiate with
the holders of the old notes for a restructuring of the old notes or may invest
the proceeds in a related business investment.
THE EXCHANGE OFFER
Terms of the Exchange Offer
Kaiser is offering to exchange $____ million aggregate principal amount of
its new notes and ___ shares of its common stock for $______ principal amount of
old notes which are outstanding after the asset sale offer and which are
properly tendered and not withdrawn at or prior to the expiration date. For each
$1,000 of old notes tendered, we will exchange $______ of new notes and ____
shares of common stock.
The exchange offer is conditioned upon, among other things, at least 95% of
the outstanding principal amount of the old notes being tendered for exchange
and not withdrawn. In order to participate in the exchange offer, the holder of
old notes must tender all of the old notes beneficially owned by the holder. We
can extend the exchange offer and accept all old notes tendered for exchange or
amend the terms of the exchange offer and any amendment will apply to the old
notes tendered pursuant to the exchange offer. Additionally, we reserve the
right at any time to terminate the exchange offer and not accept for exchange
any old notes tendered for exchange. Tenders of the old notes may be withdrawn
at any time prior to the expiration date.
Kaiser shall be deemed to have accepted validly tendered old notes when, as
and if Kaiser has given oral or written notice to the
exchange/solicitation/paying agent. The exchange/solicitation/paying agent will
act as agent for the tendering holders of old notes and for the purposes of
receiving the new notes and cash from Kaiser.
If any tendered old notes are not accepted for exchange because of an
invalid tender, the occurrence of other events set forth in this prospectus or
otherwise, certificates for any unaccepted old notes will be returned, without
expense, to the tendering holder as promptly as practicable after the exchange
expiration date.
By agreeing to participate in the exchange and asset sale offers, a holder
also agrees to allocate the cash, common stock and new notes received for the
old notes in the same manner in which Kaiser will make this
15
<PAGE>
allocation. Kaiser will allocate the cash paid pursuant to the asset sale offer
to the principal amount of the old notes. Based on this allocation method, $___
million in cash will be allocated to the principal amount of the old notes.
Exchange Expiration Date; Extensions; Waiver; Termination; Amendments
The exchange expiration date will be ___________ ___, 1999 at 5:00 p.m.,
New York City time, unless Kaiser, in its sole discretion, extends the exchange
offer, in which case the exchange expiration date will be the latest date and
time to which the exchange offer is extended.
In order to extend the exchange offer, Kaiser will notify the
exchange/solicitation/paying agent of any extension by oral or written notice
and will make a public announcement. In either case it will do so prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled exchange expiration date.
Kaiser reserves the right, in its sole discretion:
. to delay accepting any old notes,
. to extend the expiration date and accept any old notes previously
tendered, subject to withdrawal rights,
. to waive any condition to the exchange offer and accept any old notes
tendered for exchange, subject to withdrawal rights
. to terminate the exchange offer, whether or not any of the conditions
set forth below under "Conditions of the Exchange Offer" shall have
been satisfied, and
. to amend the terms of the exchange offer in any manner by giving oral
or written notice of this delay, extension, termination or
modification to the exchange/solicitation/paying agent. Any amendment
will apply to old notes tendered, subject to withdrawal rights.
If the exchange offer is amended in a manner determined by Kaiser to constitute
a material change, Kaiser will promptly disclose these amendments by means of a
public announcement or a supplement to this prospectus that will be distributed
to the registered holders of the old notes.
Conditions of the Exchange Offer
The exchange offer is subject to the following conditions:
. the minimum tender condition of 95% must be met;
. holders of a majority of the old notes consent to the proposed
amendments to the indenture governing the old notes;
. Kaiser has obtained a new credit facility;
. Kaiser shareholders have approved the issuance of the shares of common
stock being offered as part of the exchange offer;
. no legal action or proceeding has been instituted or threatened with
respect to the exchange offer or the solicitation, or which, in the
sole judgment of Kaiser, may materially adversely affect the business,
operations or financial condition of Kaiser;
. There has not occurred
. any material adverse development in any existing action or
proceeding of any nature,
16
<PAGE>
. any general suspension of trading in, or limitation on prices
for, securities on the New York Stock Exchange,
. a declaration of a banking moratorium by United States
authorities or any governmental agency in the United States,
. the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly
involving the United States, or
. a material adverse change in general economic, political or
financial conditions, if the effect of any economic, political or
financial conditions on the financial markets of the United
States, in the sole judgment of Kaiser, shall make it
impracticable to consummate the exchange offer;
. There has not occurred any change, or development involving a
prospective change, in or affecting the business or financial
affairs of Kaiser which, in the sole judgment of Kaiser, would
materially impair the contemplated benefits of the exchange offer
or the solicitation to Kaiser;
. No statute, rule or regulation has been proposed or enacted, or
any action has been taken by any governmental authority, which,
in the sole judgment of Kaiser, would or might prohibit, restrict
or delay consummation of the exchange offer as presently proposed
or materially impair the contemplated benefits of the exchange
offer or the solicitation to Kaiser; and
. There does not exist, in the sole judgment of Kaiser, any other
actual or threatened legal impediment to the acquisition of the
old notes in the asset sale offer, or the issuance of the new
notes or common stock in the exchange offer.
At any time, we can waive any condition to the exchange offer and accept
all notes tendered for exchange pursuant to the exchange offer.
Accounting Treatment
The recapitalization transaction will be accounted for as a troubled debt
restructuring pursuant to Statement of Financial Accounting Standard No. 15 -
Accounting by Debtors and Creditors for Troubled Debt Restructurings.
. The face value of the old notes is $125 million.
. The carrying amount of the old notes represents the face value of the old
notes adjusted for the unamortized original issue discount and the
unamortized debt issuance costs of the old notes.
. $___million of the old notes have been purchased at face value for
$___million in cash and $___million (___ shares) in common stock and will
be removed from the accounting records.
. The par value of the newly issued shares of common stock will be
credited to the common stock account.
. The excess of the total fair market value of the shares of common
stock to be issued over the par value will be credited to paid in
capital, net of any issuance costs.
. The remaining carrying value of the old notes of $___million will be
exchanged for $___ in new notes and removed from the accounting records.
The carrying value of the new notes will represent the total future cash
payments specified by their terms, including accrued interest.
. No interest expense will be recognized on these notes between the
closing date of this recapitalization and December 31, 2003, the
maturity date of the new notes.
. Future cash payments on the remaining debt will be accounted for as
reduction of the carrying amount of the remaining debt.
. The difference between the face value of the old notes and all of the above
transactions will be recorded as an extraordinary gain on the restructuring
of the old notes, net of any other direct costs associated with this
transaction.
The following table summarizes the accounting for this transaction:
Face value of old notes $125,000,000
Less:
Unamortized original issue discount
Unamortized debt issuance costs
------------
Carrying value of old notes
Less:
Cash exchanged
Fair market value of common stock exchange
Carrying value of new notes
------------
Extraordinary gain on note restructuring
============
THE ASSET SALE OFFER
Simultaneously with the exchange offer, Kaiser will conduct an asset sale
offer pursuant to the terms of the indenture governing the old notes. Kaiser
will offer to purchase $____ million aggregate amount of old notes, consisting
of $___ principal and $___ interest amounts accrued. Kaiser will make the asset
sale offer to all holders of old notes. If the amount of old notes accepting the
asset sale offer exceeds $_______, Kaiser will repurchase up
17
<PAGE>
to an aggregate principal amount of $___ million, a pro rata portion of all old
notes properly tendered and not withdrawn. The cash to be used in the asset sale
offer will consist primarily of the proceeds from Kaiser's sale of its
Consulting Group. In the event Kaiser were to file for relief under Chapter 11
of the Bankruptcy Code within 90 days, or possibly one year, of making the
payments made in the asset sale offer, the payments may be avoidable as a
preference and could be subject to recovery by a trustee in bankruptcy, an
official creditors' committee, other representatives of creditors of Kaiser, or
Kaiser as a debtor in possession. If the payments were successfully challenged
as preferences, holders either could be required to return the funds received,
together with interest at a rate determined by the court, or could be precluded
from receiving any distribution on account of the holders' old or new notes.
The asset sale offer will expire at 5:00 p.m., New York City time, on
_____________, 1999. Kaiser's asset sale offer is made subject to satisfaction
of all of the conditions to the exchange offer being satisfied or waived by
Kaiser and Kaiser not having terminated the exchange offer. The asset sale offer
will not be consummated unless the exchange offer also is consummated and the
requisite consents are received.
THE CONSENT SOLICITATION
General
In connection with the exchange offer, we are soliciting consents from the
holders of old notes to approve the proposed amendments to the indenture. We are
also requesting holders to deliver an instruction to the trustee not to
interfere with our recapitalization. The proposed amendments will not become
operative unless the conditions of the exchange offer are met and will become
effective immediately preceding the consummation of the exchange offer. Consents
of registered holders of a majority of the outstanding aggregate principal
amount of the old notes are required to approve the proposed amendments to the
indenture. Both our acceptance of the exchange offer and consummation of the
asset sale offer is contingent upon our receipt of requisite consents. If the
proposed amendments become effective with respect to the old notes indenture,
they will apply to all old notes issued under the old notes indenture, and each
holder of old notes not tendered or accepted for exchange pursuant to the
exchange offer will be bound by the proposed amendments regardless of whether
the holder consented to the proposed amendments.
Proposed Amendments
Kaiser is seeking the consent of holders of the old notes to amend the
indenture governing the old notes. In order to approve these proposed
amendments, at least a majority of the total principal amount of the old notes
must tender their consents. If the requisite number of consents are received,
the indenture will be amended by eliminating substantially all of the
restrictive covenants governing the old notes. The proposed amendments will
eliminate the following covenants and events of default in the old notes'
indenture:
. Section 5.04 (Limitation on Additional Indebtedness)
. Section 5.06 (Limitations on Restricted Payments)
. Section 5.07 (Limitations on Restrictions on Distributions from
Subsidiaries)
. Section 5.08 (Limitations on Transactions with Affiliates)
. Section 5.11 (Limitations on Guarantees)
. Section 5.12 (SEC Reports)
Additionally, the following sections of the indenture will be amended as
follows:
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. a new section will be added to expressly provide that the new
notes will rank senior to the old notes, and
. Section 5.09 will be amended to provide that to the extent
proceeds from future asset sales are used to repurchase any of
the old notes or the new notes, they will be applied as follows:
. first, to repurchase the new notes at par on a pro rata
basis, and
. second, to repurchase the old notes at par on a pro rata
basis.
The proposed amendments will be set forth in a supplemental indenture
substantially in the form filed as exhibit ___ to the registration statement of
which this prospectus forms a part.
The proposed amendments will become effective only if the conditions
for the exchange offer are satisfied or waived and if Kaiser has received
consents of holders with respect to a majority of the aggregate principal amount
of outstanding old notes. A holder of old notes need not consent to the proposed
amendments in order to tender its old notes in the exchange offer.
Upon effectiveness of the proposed amendments, a consenting holder's
right to sell or transfer the old notes will be restricted, and each consenting
holder will be required to hold their old notes in certificated form as opposed
to holding them in "street name." See "The Solicitation-Restriction on Transfer
of Old Notes; Issuance of Certificated Notes."
Solicitation Expiration Date; Extensions; Amendments
The solicitation will expire at 5:00 p.m. New York City time, ________
__, 1999, unless Kaiser, in its sole discretion, extends the period during which
the solicitation is open, in which case the solicitation expiration date will be
the latest date and time to which the solicitation is extended.
In order to extend the solicitation expiration date, Kaiser will make
a public announcement prior to 9:00 a.m., New York time, on the next business
day after the previously scheduled solicitation expiration date.
Kaiser reserves the right, in its sole discretion,
. to delay accepting any consents,
. to extend the solicitation,
. to terminate the solicitation, and
. to amend the terms of the solicitation in any manner by giving
oral or written notice of this delay, extension, termination or
modification to the exchange agent.
If the solicitation is amended in a manner that Kaiser determines to constitute
an adverse change to the holders, Kaiser will promptly disclose these amendments
by means of a public announcement or a supplement to this prospectus that will
be distributed to the registered holders of old notes.
Waivers and Acceptance of Consents
Kaiser reserves the absolute right to waive any defects or
irregularities in the furnishing of the consents. If any consents are not
accepted for any reason, the old notes to which the consents relate will be
returned without expense to the submitting holder as promptly as practicable
after the expiration or termination of the solicitation. Any old notes that are
subject to effective consents and that are not repurchased will be reissued in
certificated form, if held and submitted in uncertificated form, will have noted
a restriction on transfer and will be returned to the submitting holder.
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Restriction on Transfer of Old Notes; Issuance of Certificated Notes
If the consents become effective on the solicitation expiration date,
any holder that has furnished a consent will have agreed
. not to transfer, sell, assign, encumber or otherwise dispose of
the beneficial ownership of the holder's old notes, unless the
holder provides evidence satisfactory to Kaiser that the holder's
transferee, and, if different, the beneficial owner of the old
notes so transferred, has agreed in writing in form and substance
satisfactory to Kaiser that the transferred old notes are subject
to the terms of the consent, and that the transferee, and, if
different, the beneficial owner, has agreed to be bound by the
terms of the consent, and
. that any old notes subject to consents that are held through DTC
will be reissued in certificated form.
The restriction on transfer will be noted on the old notes with respect to which
consents are received and none of these old notes will be transferred unless the
holder delivers to Kaiser an opinion of counsel in form and substance
satisfactory to Kaiser in its sole discretion that the transferee has agreed to
and is bound by the proposed consents.
PROCEDURES FOR PARTICIPATING IN THE EXCHANGE OFFER,
ASSET SALE OFFER AND CONSENT SOLICITATION
General
As previously discussed, each of the exchange offer, the asset sale
offer and the consent solicitation are interdependent. However, you must make a
separate decision as to each of these transactions. The procedures for
participating in each of the transactions are substantially similar, and are
described below.
As of______ __, 1999, there were __ registered holders of the old
notes. Solely for reasons of administration and for no other purpose, Kaiser has
fixed the close of business on _______ ___, 1999, as the record date for
determining the persons to whom this prospectus and the letter of transmittal
and consent form will be mailed initially. Only a holder of the old notes or the
holder's legal representative or attorney-in-fact may participate in the
exchange offer or deliver a consent.
Procedures for Tendering Old Notes in the Exchange Offer and the Asset Sale
Offer and the Tendering Consents in the Solicitation
The tender of a holder's old notes and its acceptance by Kaiser will
constitute a binding agreement between the tendering holder and Kaiser upon the
terms and subject to the conditions set forth in this prospectus and in the
accompanying letter of transmittal and consent form. Except as described below,
a holder who wishes to tender old notes for exchange in the exchange offer or
for purchase in the asset sale offer must transmit these old notes, together
with a properly completed and duly executed letter of transmittal and consent
form, including all other documents required by the letter of transmittal and
consent form to the exchange/solicitation/paying agent at the address set forth
on page __ of this prospectus prior to 5:00 p.m., New York City time, on the
exchange/asset sale offer expiration date. The method of delivery of old notes,
letter of transmittal and consent forms and all other required documents is at
the election and risk of the holder. If the delivery is by mail, it is
recommended that tendering holders use registered mail, properly insured, with
return receipt requested. Instead of delivery by mail, it is recommended that
the holder use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure timely delivery.
Any financial institution that is a participant in The Depository Trust
Company's book-entry transfer facility system may make book-entry delivery of
the old notes by causing The Depository Trust Company to transfer these old
notes into the exchange/solicitation/paying agent's account in accordance with
The Depository Trust Company's procedures for this transfer. In connection with
a book-entry transfer, a letter of transmittal and consent form need not be
transmitted to the exchange/solicitation/paying agent, provided that the
book-entry transfer
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procedure is completed prior to 5:00 p.m., New York City time, on the
exchange/asset sale offer expiration dates for the exchange offer and the asset
sale offer.
Each signature on a letter of transmittal and consent form or a notice
of withdrawal, as the case may be, must be guaranteed except that they do not
need to be guaranteed if the old notes surrendered for exchange are tendered:
. by a registered holder of the old notes who has not completed
either the box entitled "Special Exchange Instructions" or the
box entitled "Special Delivery Instructions" in the letter of
transmittal and consent form, or
. by an eligible institution.
In the event that a signature on a letter of transmittal and consent form or a
notice of withdrawal, as the case may be, is required to be guaranteed, this
guarantee must be by a firm which is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or otherwise be an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Securities Exchange Act of 1934. If the letter of
transmittal and consent form is signed by a person other than the registered
holder of the old notes, the old notes surrendered for exchange must either
. be endorsed by the registered holder, with the signature
guaranteed by an eligible institution, or
. be accompanied by a proxy, in a form determined to be
satisfactory by Kaiser, in its sole discretion, duly executed by
the registered holder, with the signature guaranteed by an
eligible institution.
All questions concerning the validity, form, eligibility, including
time of receipt, acceptance, and withdrawal of old notes tendered for exchange,
will be decided by Kaiser in its sole discretion, which decision shall be final
and binding. Kaiser reserves the absolute right to reject any and all old notes
not properly tendered and to reject any old notes which might, in the judgment
of Kaiser or its counsel, be unlawful for Kaiser to accept. Kaiser also reserves
the absolute right to waive any defects or irregularities or conditions of the
exchange offer as to particular old notes either before or after the
exchange/asset sale offer expiration date, including the right to waive the
ineligibility of any holder who seeks to tender old notes in the exchange offer
or the asset sale offer, whether or not similar defects or irregularities are
waived in the case of other holders of old notes. The interpretation by Kaiser
of the terms and conditions of the exchange offer, including the letter of
transmittal and its instructions, shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of old
notes for exchange or purchase must be cured within a period of time as Kaiser
shall determine. Kaiser will use reasonable efforts to give notification of
defects or irregularities with respect to tenders of old notes for exchange or
purchase but shall not incur any liability for failure to give this
notification. Tenders of the old notes will not be deemed to have been made
until any irregularities have been cured or waived.
If any letter of transmittal and consent form, endorsement, proxy,
power of attorney or any other document required by the letter of transmittal
and consent form is signed by a trustee, executor, corporation or other person
acting in a fiduciary or representative capacity, this person should indicate
when signing, and, unless waived by Kaiser, must submit proper evidence
satisfactory to Kaiser, in its sole discretion, of this person's authority to
act.
Any beneficial owner of old notes whose old notes are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
and who wants to tender old notes in the exchange offer or asset sale offer,
should contact the registered holder promptly and instruct the registered holder
to tender on the beneficial owner's behalf. If a beneficial owner wishes to
tender directly, the beneficial owner must, prior to completing and executing
the letter of transmittal and consent form and tendering old notes, make
appropriate arrangements to register ownership of the old notes in the
beneficial owner's name. Beneficial owners should be aware that the transfer of
registered ownership may take considerable time.
Guaranteed Delivery Procedures
Holders who wish to tender their old notes and
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. whose old notes are not immediately available or
. who cannot deliver their old notes or any other documents
required by the letter of transmittal and consent form to the
exchange/solicitation/paying agent prior to the exchange/asset
sale offer expiration date or complete the procedure for book-
entry transfer on a timely basis,
may tender their old notes according to the guaranteed delivery procedures
described in the letter of transmittal and consent form. Pursuant to these
procedures:
. the tender must be made by or through an eligible institution and
a notice of guaranteed delivery, as defined in the letter of
transmittal and consent form, must be signed by the holder,
. on or prior to the exchange/asset sale offer expiration date, the
exchange/solicitation/paying agent must have received from the
holder and the eligible institution a properly completed and duly
executed notice of guaranteed delivery by facsimile transmission,
mail or hand delivery setting forth the name and address of the
holder, the certificate number or numbers of the tendered old
notes, and the principal amount of tendered old notes, stating
that the tender is being made and guaranteeing that, within three
business days after the date of delivery of the notice of
guaranteed delivery, the tendered old notes, a duly executed
letter of transmittal and consent form and any other required
documents will be deposited by the eligible institution with the
exchange/solicitation/paying agent, and
. the properly completed and executed documents required by the
letter of transmittal and the tendered old notes in proper form
for transfer, or confirmation of a book-entry transfer of these
old notes into the exchange/solicitation/paying agent's account
at DTC, must be received by the exchange/solicitation/paying
agent within four business days after the exchange/asset sale
offer expiration date.
Any holder who wishes to tender old notes pursuant to the guaranteed delivery
procedures described above must ensure that the exchange/solicitation/paying
agent receives the notice of guaranteed delivery and letter of transmittal
relating to these old notes prior to 5:00 p.m., New York City time, on the
exchange/asset sale offer expiration date.
Acceptance of Old Notes for Exchange or Purchase; Delivery of New Notes
Upon satisfaction or waiver of all the conditions to the exchange
offer, Kaiser will accept any and all old notes that are properly tendered in
the exchange offer and/or the asset sale offer prior to 5:00 p.m., New York City
time, on the exchange/asset sale offer expiration date. The new notes issued
pursuant to the exchange offer will be delivered promptly after acceptance of
the old notes. For purposes of the exchange offer, Kaiser shall be deemed to
have accepted validly tendered old notes, when, as, and if Kaiser has given oral
or written notice to the exchange/solicitation/paying agent. Immediately prior
to consummation of the exchange offer, Kaiser will consummate the asset sale
offer and purchase for cash at par on a pro rata basis from the holders of old
notes who elect to participate an aggregate of $___ million principal amount of
old notes. Kaiser will repurchase a pro rata share of each participating
holder's old notes.
In all cases, issuances of new notes and common stock in exchange for
old notes that are accepted for exchange pursuant to the exchange offer and
repurchases of old notes will be made only after timely receipt by the
exchange/solicitation/paying agent of a properly completed and duly executed
letter of transmittal and consent form, the old notes and all other required
documents, or confirmation of a book-entry transfer of these old notes into the
exchange/solicitation/paying agent's account at DTC. However, Kaiser reserves
the absolute right to waive any defects or irregularities in the tender or
conditions of the exchange offer. If any tendered old notes are not accepted for
any reason, these unaccepted old notes will be returned without expense to the
tendering holder as promptly as practicable after the expiration or termination
of the exchange offer.
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Withdrawal Rights
Tenders of the old notes may be withdrawn by delivery of a written
notice to the exchange/solicitation/paying agent, at its address set forth on
page __ of this prospectus, at any time prior to 5:00 p.m., New York City time,
on the exchange/asset sale offer expiration date. Any notice of withdrawal must:
. specify whether the withdrawal relates to the exchange offer or
the asset sale offer,
. specify the name of the person having deposited the old notes to
be withdrawn,
. identify the old notes to be withdrawn, including the certificate
number or numbers and principal amount of the old notes, as
applicable,
. be signed by the holder in the same manner as the original
signature on the letter of transmittal and consent form by which
the old notes were tendered, including any required signature
guarantees, or be accompanied by a proxy in the name of the
person withdrawing the tender, in satisfactory form as determined
by Kaiser in its sole discretion, duly executed by the registered
holder, with the signature guaranteed by an eligible institution
together with the other documents required upon transfer by the
indenture, and
. specify the name in which the old notes are to be re-registered,
if different from the depositor, pursuant to these documents of
transfer.
Any questions as to the validity, form and eligibility, including time of
receipt, of these notices will be determined by Kaiser, in its sole discretion.
The old notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer and/or for repurchase for purposes
of the asset sale offer, as the case may be. Any old notes which have been
tendered for exchange but which are withdrawn will be returned to the holder
without cost to this holder as soon as practicable after withdrawal. Properly
withdrawn old notes may be retendered by following one of the procedures
described above under "Procedures for Tendering Old Notes" at any time on or
prior to the exchange/asset sale offer expiration date. A valid withdrawal of
tendered old notes, either to the exchange offer or asset sale offer, will not
be deemed to be a revocation of any consent. A valid revocation of a consent
will not be deemed a withdrawal of any tender of old notes.
Revocation of Consents
Kaiser will process all properly completed and executed letters of
transmittal and consent forms it receives, unless it receives from a holder a
properly completed and duly executed notice of revocation or a changed consent
bearing a date later than the date of the prior consent at any time prior to the
solicitation expiration date when the proposed consents become effective. Until
the solicitation expiration date, any holder may revoke the consent as to an old
note or portion of an old note if Kaiser receives notice of revocation.
The Exchange/Solicitation/Paying Agent; Assistance
___________________ is the exchange/solicitation/paying agent. All
tendered old notes, executed letters of transmittal and consent forms and other
related documents should be directed to the exchange/solicitation/paying agent.
Questions and requests for assistance and requests for additional copies of the
prospectus, the letter of transmittal and other related documents should be
addressed to the exchange/solicitation/paying agent as follows:
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Exchange/Solicitation/Paying Agent
By Hand or Overnight Courier:
By Registered or Certified Mail:
By Facsimile:
( )--------
Confirm by Telephone:
( )--------
Financial Advisor to Kaiser
Kaiser has engaged Jefferies & Company, Inc. to provide certain
financial advisory services to it in connection with the proposed
recapitalization. As part of such services, employees of Jefferies may solicit
on Kaiser's behalf holders of old notes to tender their old notes in the
exchange offer and the asset sale offer and to deliver their consent to the
proposed amendments to the indenture governing the old notes. As consideration
for providing these services, Kaiser has agreed to pay Jefferies certain fees,
to reimburse its reasonable out-of-pocket expenses and to indemnify it against
liabilities, including liabilities they may incur under the Securities Act of
1933 or the Securities Exchange Act of 1934.
Fees and Expenses
In addition to the fees and expenses payable to Jefferies that are
described above, Kaiser will pay all other fees and expenses incurred in
connection with the recapitalization, including each of the following:
. fees and disbursements of legal counsel and a financial advisor
retained by the ad hoc committee of holders of old notes formed
to participate with Kaiser representatives in the determination
of the terms of the recapitalization,
. fees and disbursements of counsel and independent certified
public accountants for Kaiser,
. SEC registration and NYSE listing fees, and
. reasonable and customary fees and out-of-pocket expenses incurred
by the exchange/solicitation/paying agent for their services in
connection with the recapitalization.
Kaiser will pay all transfer taxes, if any, applicable to the exchange
of old notes pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of old notes pursuant to the
exchange offer, then the amount of the transfer taxes, whether imposed on the
registered holder or any other persons, will be payable by the tendering holder.
If satisfactory evidence of payment of these taxes or exemption is not submitted
with the letter of transmittal and consent form, the amount of these transfer
taxes will be billed directly to the tendering holder.
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RECENT DEVELOPMENTS
During the second half of 1998, Kaiser's Board of Directors formed a
special committee of members of the Board to consider strategic alternatives for
Kaiser. The committee was formed in response to strains brought about by
substantial cost overruns associated with four nitric acid projects performed
under fixed price contracts. The special committee engaged a financial advisor
and, with its assistance, evaluated various opportunities available to Kaiser,
including the sale of one or more of Kaiser's operating groups.
On April 9, 1999 Kaiser sold the majority of its active contracts, and
transferred personnel related to its EFM Group to The IT Group, Inc. of
Monroeville, Pennsylvania for net cash proceeds, after a working capital
adjustment of $74 million. Kaiser retained the net working capital assets of the
EFM Group, contracts for the provision of non-environmental services to the
Federal government, and its 50% ownership interest in Kaiser-Hill Company, LLC,
the entity that serves as the integrating management contractor at the U.S.
Department of Energy's Rocky Flats Environmental Technology Site near Denver,
Colorado.
On June 30, 1999 Kaiser sold a 90% interest in its Consulting Group to
the group's management and CM Equity Partners, L.P. for $64 million in cash,
plus $6.6 million of interest bearing notes. Kaiser retained the 10% balance of
the new and independent consulting company, which is called ICF Consulting
Group, Inc.
At the time of the closing of the Consulting Group transaction, Kaiser
did not have any outstanding cash borrowings under its senior secured revolving
credit facility, which terminated upon the closing date. On the date of that
closing Kaiser used $_____ million of cash to collateralize outstanding letters
of credit. Kaiser does not expect to have available a new revolving credit
facility until the completion of the transactions described in this prospectus.
Until that time Kaiser will cash collateralize any additional letters of credit
of the type often required to support contract performance obligations and will
utilize other available cash for working capital purposes.
BUSINESS
Kaiser is a global provider of engineering, construction management,
and project and program management services. Kaiser also owns a 50% interest in
Kaiser-Hill Company LLC, which serves as the integrated management contractor at
the U.S. Department of Energy's Rocky Flats Environmental Technology Site.
Overview of Services and Markets
Kaiser's activities are focused on serving clients in five major lines
of business: transit and transportation; alumina/aluminum; facilities
engineering and management, including wastewater treatment; iron and steel; and
microelectronics and clean technology.
Transit and Transportation - Kaiser's transit and transportation
services support the planning, design, engineering, and construction of heavy-
and light-rail transit systems, high-speed rail, peoplemovers, bus systems,
highways and bridges, and airport improvements. We are developing state-of-the-
art transit systems for 20 cities worldwide and designing major highway projects
throughout the United States and in selected international markets. Domestic
growth is driven by the Federal Transportation Equity Act for the 21st Century.
Passed in July 1998, the bill authorized $217 billion of spending during the
next six years in transit and highway programs. Significant opportunities also
exist internationally as developing countries seek to improve their transit
systems. Current projects include transit systems in Seattle, Orlando, Los
Angeles, the Philippines, and Turkey; an intercity freight and passenger rail
line in Portugal; and multi-million dollar highway and bridge improvements in
California, Florida, Massachusetts, and Oklahoma.
Alumina/Aluminum - Kaiser provides design and construction services
for expansion and modernization of some of the world's largest alumina and
aluminum facilities in locations from Kentucky to the Middle East and Australia.
Our areas of expertise include bauxite mining and handling; alumina refining;
aluminum reduction; and fabrication and rolling. Domestic opportunities involve
maintaining and retrofitting existing plants and replacing
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aging production capacity with newer, more efficient, and environmentally
responsible facilities. Outside of the United States, there will be greater
focus on building new facilities. Current projects include detailed design
engineering, procurement, and construction management for the expansion of a
$500 million alumina refinery in Western Australia, and engineering and design
services for an aluminum expansion project in the mid-western United States.
Facilities Engineering and Management - Kaiser provides engineering
services to public- and private-sector clients who need to modernize or maintain
facilities; design and build new capacity for the future; or improve existing
operations and environmental conditions. Future growth in this area of activity
will be based in part on the trend toward outsourcing by both private- and
public-sector clients. Kaiser's largest project of this type involves serving,
through Kaiser-Hill Company, LLC, as the integrating management contractor at
the DOE Rocky Flats site, a former nuclear weapons production facility near
Denver, Colorado. In another significant project, Kaiser serves as construction
manager for the 12-year, $3.4 billion Boston Harbor cleanup project.
Iron and Steel - Kaiser supports the iron and steel industry by
providing traditional services such as engineering, design, and project and
construction management for plant expansions, modernizations, and greenfield
development. Kaiser is the sole U.S. domestic designer and builder of coke ovens
and coke oven machinery, and is active in the development of mini-mills as an
alternative, cost-effective method of making steel. For example, we are
providing turnkey engineering and construction services for the new $262 million
thin-slab casting mini-mill project for Nova Hut, a.s. in Ostrava, Czech
Republic.
Microelectronics and Clean Technology - Kaiser also provides
design/build services for the microelectronics, semiconductor, biotechnology,
and telecommunication industries. We have constructed or remodeled over seven
million square feet of manufacturing, office, and other facilities, including
more than 500,000 square feet of cleanrooms, from class 1 to class 10,000.
Following a contraction over the past several years, this market is expected to
experience growth over the next two years, driven primarily by the automotive
industry and advanced technology manufacturers' needs for increased
manufacturing capacity and capabilities. A major project is the $219 million
semiconductor facility for Motorola in Arizona, currently the largest project of
its type in the United States.
Kaiser-Hill Company, LLC is equally owned by Kaiser and CH2M Hill
Companies Ltd.; Kaiser designates a majority of the members of Kaiser-Hill's
Board of Managers. The scope of Kaiser-Hill's contract with the DOE includes all
elements of daily and long-term operation of the site, including stabilizing and
safely storing more than 14 tons of plutonium, cleaning up areas contaminated
with hazardous and radioactive waste, and restoring much of the 6,000-acre site
for future use by the public. Kaiser-Hill's contract with the DOE expires in
June 2000. We expect that the DOE will either award Kaiser-Hill an extension of
the existing contract or open the extension for competition in the very near
future. Although we believe that an extension of the existing contract is more
likely than a recompetition, Kaiser-Hill is prepared to aggressively bid in a
recompetition.
General Information about Kaiser
Competition and Contract Award Process
The market for Kaiser's services is highly competitive. Kaiser competes
with many other engineering and construction, program and project management
services firms ranging from small firms to large multinational firms having
substantially greater financial, management and marketing resources than Kaiser.
Other competitive factors include quality of services, technical qualifications,
reputation, geographic presence, price, and the availability of key professional
personnel.
Private-Sector Work. Competition for private-sector work generally is
based on several factors, including quality of work, reputation, price and
marketing approach. Kaiser's objective is to establish and maintain a strong
competitive position in its areas of operations by adhering to its basic
philosophy of delivering high-quality work in a timely fashion within its
clients' budget constraints.
Public-Sector Work. Most of Kaiser's contracts with public-sector
clients are awarded through a competitive bidding process that places no limit
on the number or type of offerors. The process usually begins with
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a government request for proposals that delineates the size and scope of the
proposed contract. Proposals are evaluated by the government on the basis of
technical merit, including responses to mandatory solicitation provisions,
corporate and personnel qualifications, experience, and cost. Kaiser believes
that its experience and ongoing work strengthen its technical qualifications
and, thereby, enhance its ability to compete successfully for future government
work.
Teaming Arrangements and Joint Ventures. In both the private and public
sectors, Kaiser, acting either as a prime contractor or as a subcontractor, may
join with other firms to form a team or a joint venture that competes for a
single contract or submits a single proposal. Because a team of firms or a joint
venture almost always can offer a stronger set of qualifications than any firm
standing alone, these arrangements often are very important to the success of a
particular competition or proposal. Kaiser maintains a large network of business
relationships with other companies and has drawn repeatedly upon these
relationships to form winning teams.
Contract Structure. Kaiser operates under a number of different types
of contract structures with its private- and public-sector clients, the most
common of which are cost plus and fixed price. Under cost plus contracts,
Kaiser's costs are reimbursed with a fee, either fixed or percentage of cost,
and/or an incentive or award fee offered to provide inducement for effective
project management. A variation of cost plus contracts are time-and-materials
contracts under which Kaiser is paid at a specified fixed hourly rate for direct
labor hours worked. Under fixed price contracts, Kaiser is paid a predetermined
amount for all services provided as detailed in the design and performance
specifications agreed to at the project's inception, and under which Kaiser
retains more performance risk than under cost plus contracts. While these fixed
price contracts can result in higher profit margins, they also can be costly if
Kaiser experiences cost overruns that are not recoverable from the client.
Customers
Kaiser's domestic clients include the DOE and other federal departments
and agencies; major corporations in the energy, transportation, chemical, steel,
aluminum, mining, and manufacturing industries; utilities; and a variety of
state and local government agencies throughout the United States. The DOE
accounted for approximately 54% of Kaiser's consolidated gross revenue for the
year ended December 31, 1998, approximately 56% for the year ended December 31,
1997, and approximately 69% for the year ended December 31, 1996. The DOE
percentage will increase for fiscal 1999 since Kaiser has disposed of its EFM
and Consulting Groups and continues to consolidate in its financial statements
the results of Kaiser-Hill Company, LLC.
Kaiser's international clients include both private firms and foreign
government agencies. For the years ended December 31, 1998, 1997, and 1996,
foreign clients accounted for approximately 10.1%, 14.2%, and 5.8% of Kaiser's
consolidated gross revenue, respectively. Mainly due to the sales of the EFM and
Consulting Groups, the Company currently expects this percentage to increase to
approximately 35-40% in 1999. For information concerning gross revenue,
operating income, and identifiable assets of Kaiser's business by geographic
area during 1998, see note 12 to the consolidated financial statements included
in Kaiser's 1998 Annual Report on Form 10-K for the year ended December 31,
1998, which is incorporated by reference into and delivered with this
prospectus.
Backlog
Backlog refers to the aggregate amount of gross contract revenue
remaining to be earned pursuant to signed contracts extending beyond one year.
Kaiser ended 1998 with $3.2 billion in contract backlog. The reduction from $4.1
billion of backlog at December 31, 1997 is due primarily to the completion of
another year of the Kaiser-Hill Rocky Flats contract, resulting in the
conversion of approximately $632.6 million of the 1997 backlog into revenue in
1998. The backlog of the EFM and Consulting Groups totaled $659 million and $540
million, respectively, at December 31, 1998. Kaiser expects to work off 42% of
the $2 billion engineering and construction and Kaiser-Hill backlog during 1999.
Kaiser believes that backlog is not a predictor of future gross or
service revenue. Most of Kaiser's backlog relates to the Kaiser-Hill Rocky Flats
contract. With the dispositions of the EFM and Consulting Groups, which were
involved, to a significant extent, in providing services to the Federal
government, backlog is less of an indicator of future revenue than was the case
prior to those dispositions.
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Potential Liabilities Involving Clients and Third Parties
In performing services for its clients, Kaiser could potentially be
liable for breach of contract, personal injury, property damage, and negligence,
including improper or negligent performance or design, failure to meet
specifications, and breaches of express or implied warranties. The damages
available to a client, should it prevail in its claims, are potentially large
and could include consequential damages.
Under Kaiser-Hill's contract with the DOE, Kaiser-Hill is not
responsible for, and the DOE pays all costs associated with, any liability,
including without limitation, a claim involving strict or absolute liability and
any civil fine or penalty, expense, or remediation cost, but limited to those of
a civil nature, which may be incurred by, imposed on, or asserted against
Kaiser-Hill arising out of any act or failure to act, condition, or exposure
which occurred before Kaiser-Hill assumed responsibility on July 1, 1995 ("pre-
existing conditions"). To the extent the acts or omissions of Kaiser-Hill
constitute willful misconduct, lack of good faith, or failure to exercise
prudent business judgment on the part of Kaiser-Hill's managerial personnel and
cause or add to any liability, expense, or remediation cost resulting from pre-
existing conditions, Kaiser-Hill is responsible, but only for the incremental
liability, expense, or remediation caused by Kaiser-Hill.
The Kaiser-Hill contract further provides that Kaiser-Hill will be
reimbursed for the reasonable cost of bonds and insurance allocable to the Rocky
Flats contract and for liabilities and expenses incidental to these liabilities,
including litigation costs, to third parties not compensated by insurance or
otherwise. The exception to this reimbursement provision applies to liabilities
caused by the willful misconduct or lack of good faith of Kaiser-Hill's
managerial personnel or the failure to exercise prudent business judgment by
Kaiser-Hill's managerial personnel.
Insurance
Kaiser has a comprehensive risk management and insurance program that
provides a structured approach to protecting Kaiser. Included in this program
are coverages for:
. general, automobile, pollution impairment, and professional
liability;
. workers' compensation; and
. employers and property liability.
Kaiser believes that the insurance it maintains, including self-insurance, is in
amounts and protects against risks as is customarily maintained by similar
businesses operating in comparable markets. At this time, Kaiser expects to
continue to be able to obtain insurance in amounts generally available to firms
in its industry. There can be no assurance that this situation will continue,
and if insurance of these types is not available, it could have a material
adverse effect on Kaiser.
Kaiser has pollution insurance coverage on a claims-made basis, in
amounts and on terms that are economically reasonable, against possible
liabilities that may be incurred in connection with its conduct of its
environmental business. An uninsured claim arising out of Kaiser's environmental
activities, however, if successful and of sufficient magnitude, could have a
material adverse effect on Kaiser.
Government Regulation
In the past, Kaiser had a number of cost-reimbursement contracts with
the U.S. government, the costs of which are subject to audit by the U.S.
government. Most of these contracts were held by Kaiser's former EFM and
Consulting Groups, but Kaiser has retained many of the liabilities associated
with the pre-closing performance of these contracts. As a result of pending
audits related to fiscal year 1986 forward, the government has asserted, among
other things, that some costs claimed as reimbursable under government contracts
either were not allowable or not allocated in accordance with federal
procurement regulations. Kaiser is actively working with the government to
resolve these issues. Kaiser has provided for its estimate of the potential
effect of issues that have been quantified, including its estimate of disallowed
costs for the periods currently under audit and for periods not yet audited.
Many of the issues, however, have not been quantified by the government or
Kaiser, and others are
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qualitative in nature, and their potential financial impact, if any, is not
quantifiable by the government or Kaiser at this time. This provision will be
reviewed periodically as discussions with the government progress.
Kaiser may, from time to time, either individually or in conjunction
with other government contractors operating in similar types of businesses, be
involved in U.S. government investigations for alleged violations of procurement
or other federal laws and regulations. Kaiser currently is the subject of a
number of U.S. government investigations and is cooperating with the responsible
government agencies involved. No charges presently are known to have been filed
against Kaiser by these agencies.
Employees
As of June 30, 1999 Kaiser had approximately 3,300 employees, and Kaiser
believes that its relations with its employees are good. Of this total,
approximately 1,700 persons are employed at Kaiser-Hill's Rocky Flats site in
Colorado. Approximately 1,300 of the Rocky Flats employees are represented by
the United Steelworkers of America, Local 8031. Almost all of the union
employees are contracted out to other companies working at Rocky Flats. Kaiser
believes that its relations with the union are good.
Corporate History and Properties
ICF Kaiser International, Inc. is a Delaware corporation incorporated in
1987 under the name American Capital and Research Corporation. It is the
successor to ICF Incorporated, a nationwide consulting firm organized in 1969.
In 1998 Kaiser acquired the Kaiser Engineers business, which dates from 1914. In
the near future, Kaiser plans to announce a name and ticker-symbol change that
will reflect the 85-year history of Kaiser Engineers.
Kaiser's activities are carried out through operating subsidiaries and more
than 30 offices throughout the world. Kaiser's headquarters are located at 9300
Lee Highway, Fairfax, Virginia 22031-1207, and its telephone number is (703)
93-4-3600. Kaiser's operations are organized into North American and
International regions. The North American regional headquarters is located in
Fairfax, Virginia, and the International regional headquarters is located at
Q.V. 1 Building, George's Terrace, Perth WA 6000 Australia, telephone 61-89-366-
5366.
Kaiser's operations are conducted in leased facilities or in facilities
provided by the Federal government or other clients. Because Kaiser's operations
generally do not require the maintenance of unique facilities, suitable office
space is available for lease in all of the geographic areas currently served.
Kaiser believes that adequate space to conduct its operations will be available
for the foreseeable future. For information concerning an investment by Kaiser
in Fairfax, Virginia land and buildings where Kaiser's headquarters are located,
see notes 4 and 9 to the consolidated financial statements included in Kaiser's
1998 Annual Report on Form 10-K for the year ended December 31, 1998, which is
incorporated by reference into and delivered with this prospectus.
Legal Proceedings
In the course of Kaiser's normal business activities, various claims or
charges have been asserted and litigation commenced against Kaiser arising from
or related to properties, injuries to persons, and breaches of contract, as well
as claims related to acquisitions and dispositions. Claimed amounts may not bear
any reasonable relationship to the merits of the claim or to a final court
award. In the opinion of management, an adequate reserve has been provided for
final judgments, if any, in excess of insurance coverage, that might be rendered
against Kaiser in the event of litigation. See "Risk Factors" and note 13 to the
consolidated financial statements included in Kaiser's 1998 Annual Report on
Form 10-K for the year ended December 31, 1998, which is incorporated by
reference into and delivered with this prospectus for a description of certain
pending legal proceedings.
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MANAGEMENT
During 1999, Kaiser implemented certain changes in its executive
management. These changes were made in light of the changes in Kaiser's business
focus that resulted from its sale of the EFM and Consulting Groups, and in order
to manage Kaiser's operations during what is expected to be a period of
significant changes, including the recapitalization described in this
prospectus. The following individuals currently serve as the principal executive
officers of the Company:
James J. Maiwurm, 50, Chairman of the Board, President and Chief Executive
Officer. Mr. Maiwurm has been President and Chief Executive Officer of Kaiser
since April 19, 1999. Mr. Maiwurm was elected to, and as Chairman of, the Board
of Directors of Kaiser on June 7, 1999. Mr. Maiwurm serves as Managing Member of
the board of managing directors of Kaiser-Hill Company, LLC, the joint venture
that conducts the performance based integrating management services at the
Department of Energy's Rocky Flats Environmental Technology Site near Denver,
Colorado. From August 1998 until elected as Kaiser's President and Chief
Executive Officer, Mr. Maiwurm was a partner of Squire Sanders & Dempsey L.L.P.,
Washington, D.C., and prior to August 1998 was a partner of Crowell & Moring
LLP, Washington, D.C. Both law firms served as counsel to Kaiser. Mr. Maiwurm is
a member of the Board of Trustees of Davis Memorial Goodwill Industries,
Washington, D.C., a non-profit entity. Mr. Maiwurm graduated from the College of
Wooster (B.A.) and the University of Michigan Law School (J.D.).
S. Robert Cochran, 43, Executive Vice President and President, North
America. Mr. Cochran has been President, North America for ICF Kaiser
International, Inc. since April 1999. Mr. Cochran serves on the board of
managing directors of Kaiser-Hill Company, LLC, the joint venture that conducts
the performance based integrating management services at the Department of
Energy's Rocky Flats Environmental Technology Site near Denver, Colorado. Prior
to that, he was Senior Vice President for Business Development for Kaiser's
former EFM Group. Before joining Kaiser in 1995, Mr. Cochran was Senior Vice
President of Hazwaste Industries, Inc. & Earth Technology Incorporated, focusing
primarily on business development in the hazardous and radioactive site cleanup
area. He was Senior Vice President and partner with Interface Incorporated;
served as Vice President of PEI/IT; was senior project and geotechnical group
manager with JRB/SAIC; and for Versar, Inc., worked as a senior project
geologist. He received a B.S. in Geology from James Madison University and is a
registered professional geologist.
Richard A. Leupen, 45, has been Executive Vice President and President,
International of Kaiser since April 1999. Prior thereto, he was President of
the Engineers & Constructors Group of Kaiser from August 1998. Mr. Leupen has
held senior management positions in Kaiser's former Engineers & Constructors
Group since 1995. Prior to joining Kaiser, Mr. Leupen worked for Protech Pty.
Ltd. Mr. Leupen also serves as Managing Director of KWP Kenwalt Australia Pty.
Limited, and as a director of Weda Bay Minerals Ltd. (Calgary), Strand Mining
Pte. Ltd. (Singapore) Pty. Limited, Strand Management Pty. Limited as well as
serving as a director of a number of Kaiser subsidiaries and affiliates. Mr.
Leupen graduated from the University of South Wales in Australia (B.S.).
Timothy P. O'Connor, 34, Executive Vice President and Chief Financial
Officer. Mr. O'Connor has been Executive Vice President and Chief Financial
Officer of ICF Kaiser International, Inc. since 1999. He had been Treasurer of
Kaiser since May 1997 and has been employed by Kaiser in various financial
positions since 1995. From 1990 until 1995, Mr. O'Connor was employed by
Lockheed Martin Corporation of Bethesda, Maryland, where he held a number of
financial positions. Prior to that, Mr. O'Connor worked for General Electric
Company and Lazard Freres and Co. of New York. Mr. O'Connor, who is a Certified
Cash Manager, graduated from the University of Delaware (B.S.).
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DESCRIPTION OF NEW REVOLVING LINE OF CREDIT
[TO COME]
MATERIAL UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material United States
federal income tax consequences to a holder of old notes resulting from the
exchange and the solicitation. The summary assumes that holders hold the old
notes, new notes and common stock as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"), and
that neither the old notes nor the new notes will be considered traded on an
"established securities market," as the term is defined in Code Section
1273(b)(3) at the time of the exchange. Further, this summary assumes that the
old notes are, and the new notes will be, treated as debt and not equity for
United States federal income tax purposes. This discussion does not purport to
deal with all aspects of United States federal income taxation that may be
relevant to holders who may be subject to special federal income tax laws, such
as dealers in securities, financial institutions, life insurance companies,
individuals who are not citizens or residents of the United States or
corporations, partnerships or other entities that are not organized under the
laws of the United States or any political subdivision thereof, or persons that
hold the old notes, the new notes or the common stock as part of a hedge,
conversion transaction, straddle or other risk reduction transaction. In
addition, the following discussion does not consider the effect of any
applicable foreign, state or local tax laws.
The discussion below is based upon the current provisions of the Code,
existing and proposed Treasury Regulations promulgated under the Code, rulings
of the Internal Revenue Service and judicial decisions now in effect as of the
date hereof. Such authorities may be repealed, revoked or modified, possibly
with retroactive effect, so as to result in United States federal income tax
consequences different from those discussed below.
As discussed below, the exchange should constitute a recapitalization
under Section 368(a)(1)(E) of the Code. Kaiser, however, will not seek a ruling
from the Internal Revenue Service regarding any of the tax issues discussed
herein, including the tax treatment of the exchange as a recapitalization.
Moreover, as noted in the discussion, issues material to the federal income tax
consequences of some matters are factual in nature, and other issues involve
areas of law that are ambiguous or with respect to which legal authority is
lacking and as to which Kaiser is able to offer limited guidance. It is
possible, for example, that the Internal Revenue Service may challenge the
treatment of the exchange as a recapitalization and assert that the exchange is
a taxable transaction because the old notes do not constitute "securities" or
because of other legal positions. Consequently, there can be no assurance that
the Service will not challenge one or more of the tax consequences described
herein.
This section does not purport to deal with all aspects of United States
federal income taxation that might be relevant to a holder's decision to
participate in the exchange or solicitation or to the ownership and disposition
of the new notes and common stock. Holders are urged to consult their tax
advisors concerning the United States federal income tax considerations that may
be specific to them as well as any tax consequences arising under the laws of
any other taxing jurisdiction.
Tax Consequences to the Holders Upon the Exchange
Importance of Whether the Old Notes and the New Notes Constitute
"Securities." The federal income tax consequences to the holders will depend, in
part, on whether the old notes and the new notes constitute "securities" for
federal income tax purposes. The term "security" is not defined in the Code or
in the Treasury Regulations and has not been clearly defined in court decisions.
Although there are a number of factors that may affect the determination of
whether a debt instrument is a "security," one of the most important factors is
the original term of the instrument, i.e., the length of time between the
issuance of the instrument and its maturity. In general, instruments with an
original term of more than ten years are likely to be treated as "securities,"
and instruments with an original term of less than five years are unlikely to be
treated as "securities." Kaiser is not rendering federal income tax advice as to
whether the old notes or the new notes are, or are not, "securities."
ACCORDINGLY, HOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE
PROPER TREATMENT OF THE OLD NOTES AND THE NEW NOTES.
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Treatment of the Exchange as a Recapitalization Under Code Section 368.
The exchange of old notes for new notes and common stock should be treated as a
recapitalization under Section 368(a)(1)(E) of the Code if the old notes are
considered "securities" for federal income tax purposes. The extent to which a
holder will recognize gain or loss on a recapitalization will depend on whether
the new notes received in the exchange are likewise considered "securities" for
federal income tax purposes.
Treatment of the Exchange as a Recapitalization and the New Notes as
Securities. If the exchange qualifies as a recapitalization, and if the new
notes received in the exchange are "securities," a holder that exchanges old
notes for new notes and common stock will not recognize gain or loss upon the
exchange. In that event, a holder's tax basis in the old notes surrendered will
be allocated between the new notes and common stock received in proportion to
their relative fair market values on the date of the exchange. A holder's
holding period for the new notes and common stock will include the holding
period for the old notes exchanged.
Treatment of the Exchange as a Recapitalization and the New Notes as
Not Securities. If the exchange qualifies as a recapitalization, but the new
notes received in the exchange do not constitute "securities" for federal income
tax purposes, a holder that exchanges old notes for new notes and common stock
will recognize gain, but not loss, equal to the lesser of:
. the fair market value of the new notes received in the exchange or
. the amount of gain realized in the exchange, which is the excess,
if any, of (a) the sum of the fair market values of the new notes
and the shares of common stock received in the exchange over (b)
the holder's adjusted tax basis in the old notes.
Any recognized gain will generally be treated as capital gain and will be
long-term capital gain if the holder held the old notes for more than 12 months.
If, however, a holder purchased the old notes at a market discount within the
meaning of Code Section 1278, any gain recognized will be treated as ordinary
income to the extent of the accrued market discount on the old notes. Any
accrued market discount not taken into account as ordinary income will be
treated as accrued market discount with respect to the new notes.
Following the exchange, a holder's tax basis in the common stock will
equal the holder's adjusted tax basis in the old notes exchanged, decreased by
the fair market value of the new notes received in the exchange and increased by
the amount of gain, if any, recognized in the exchange. A holder's tax basis in
the new notes will equal the fair market value of the new notes. A holder's
holding period for the common stock will include the holding period for the old
notes exchanged therefor. A holder's holding period for the new notes will
commence following the day of the exchange.
Treatment of the Exchange as a Taxable Exchange. Provided that the old
notes constitute "securities" for federal income tax purposes, the exchange
should constitute a recapitalization under Code Section 368 resulting in the
federal income tax consequences discussed above under "Treatment of the Exchange
as a Recapitalization Under Internal Revenue Code Section 368." Kaiser, however,
will not seek a ruling from the Internal Revenue Service regarding the treatment
of the old notes as "securities", and it is possible that the Internal Revenue
Service may challenge this treatment. If this challenge were successful, the
exchange would be considered a taxable exchange with the likely result that a
holder would recognize gain or loss at the time of the exchange equal to the
difference between
. the sum of the fair market values of the new notes and the shares of
common stock received in the exchange and
. the holder's adjusted tax basis in the old notes.
Subject to the market discount rules discussed above, any recognized
gain or loss would generally be treated as capital gain or loss and would be
long-term capital gain or loss if the holder held the old notes for more than 12
months. A holder's tax basis in the new notes and common stock would equal the
fair market value of the
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new notes and common stock, and the holding period for the new notes and common
stock would commence following the day of the exchange.
Payment of Accrued Interest on the Old Notes. Whether the exchange is
treated as a recapitalization under Code Section 368 or as a taxable exchange, a
holder, in addition to any gain recognized as a result of the exchange, will
recognize ordinary income attributable to any consideration received as payment
for accrued interest on the old notes that was not previously included in the
holder's income. Holders that have already included the accrued interest in
income should not recognize any additional income as a result of the
consideration received as payment for the accrued interest on the old notes.
Disposition of New Notes or Common Stock. A holder will generally
recognize gain or loss upon the sale, exchange, retirement or other disposition
of the new notes or common stock equal to the difference between the amount
realized on the disposition and the holder's adjusted tax basis in the new notes
or common stock, as applicable. Subject to the market discount rules, the gain
or loss recognized on a disposition of new notes or common stock generally will
be capital gain or loss and would be long-term capital gain or loss if the
holder held the new notes or common stock for more than 12 months.
Purchase of a Portion of the Old Notes for Cash
In connection with the exchange offer, Kaiser will offer to purchase on
a pro rata basis from holders of old notes an aggregate of $____ million
principal amount of old notes. A holder will recognize gain or loss at the time
of any purchase equal to the difference between
. the amount of cash received for the principal amount of old notes
purchased and
. the holder's adjusted tax basis in the old notes purchased.
Subject to the market discount rules, this gain or loss will generally be
treated as capital gain or loss and will be long-term capital gain or loss if
the holder held the old notes for more than 12 months.
In addition to any gain or loss recognized, a holder will recognize
ordinary income attributable to the cash received as payment for any accrued
interest on the old notes repurchased that was not previously included in the
holder's income. For federal income tax purposes, it is unclear how the
approximate $___ million cash payment to be made by Kaiser should be allocated
between the principal amount of the old notes and the accrued interest.
Consistent with the form of the transaction to be consummated as part of the
solicitation, Kaiser intends to take the position for tax and accounting
purposes and for purposes of backup withholding and information reporting, that
approximately $______ will be paid to holders as payment for accrued interest on
the old notes and approximately $___ million will be paid to repurchase an
equivalent principal amount of old notes. By consenting to the solicitation, a
holder agrees to allocate the cash received for the principal amount of the old
notes and accrued and unpaid interest in the same manner in which Kaiser will
make this allocation. It is possible, however, that the Internal Revenue Service
may challenge this allocation and require a holder to allocate the cash received
first to accrued and unpaid interest on all of the old notes held by the holder,
and allocate any remaining cash to the principal amount of the old notes. This
will have the effect of causing a cash basis holder to report a greater portion
of the accrued interest on its old notes as ordinary income.
Solicitation of the Consents of Holders
Concurrently with the exchange offer, Kaiser will solicit the consents
of the holders to remove certain covenants in the old notes. The removal of
these covenants should not constitute a "significant modification" of the old
notes. Accordingly, the removal of the covenants should not constitute a taxable
exchange under Code Section 1001.
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Backup Withholding and Information Reporting
Under some circumstances, a holder may be subject to backup withholding at
a 31% rate on payments received in the solicitation or exchange and with respect
to the new notes and common stock issued in the exchange. This withholding
generally applies only if the holder
. fails to furnish the holder's social security or other taxpayer
identification number,
. furnishes an incorrect taxpayer identification number,
. is notified by the Internal Revenue Service that the holder has failed
to report payment of interest and dividends properly and the Internal
Revenue Service has notified Kaiser that the holder is subject to
backup withholding, or
. fails, under some circumstances, to provide a certified statement,
signed under penalties of perjury, that the taxpayer identification
number provided is the holder's correct number and that the holder is
not subject to backup withholding.
Any amount withheld from a payment to a holder under the backup withholding
rules is allowable as a credit against the holder's federal income tax
liability, provided that the required information is furnished to the Internal
Revenue Service. Some holders, such as corporations and financial institutions,
are not subject to backup withholding. Holders should consult their tax advisors
as to their qualification for exemption from backup withholding and the
procedure for obtaining this exemption.
Kaiser will, to the extent required by Code Section 6049, report
annually to the Internal Revenue Service and to each holder of record
information with respect to the amount of interest and original issue discount,
if any, accruing during the calendar year. Also, because the exchange should be
treated as a recapitalization under Internal Revenue Code Section 368, holders
will be required to file information regarding the exchange in connection with
filing their federal income tax returns for the period in which the exchange
occurs.
Tax Consequences to Kaiser Upon the Exchange and the Purchase
Discharge of Indebtedness. The principal amount of Kaiser's aggregate
outstanding indebtedness will be reduced upon the exchange and the purchase.
Generally, the cancellation or other discharge of indebtedness triggers ordinary
income to a debtor unless payment of the liability would have given rise to a
deduction. The amount of the discharge of indebtedness income generally will be
equal to the excess of the adjusted issue price, as defined in Treasury
Regulation Section 1.1275-1(b), of the indebtedness discharged over the
aggregate value of cash and other property, including the new notes and Kaiser
common stock, transferred in satisfaction of the indebtedness.
However, Kaiser may not realize taxable income from discharge of
indebtedness if the discharge of indebtedness occurs while Kaiser is
"insolvent", as defined in Code Section 108(d)(3). Instead, to the extent that
the amount of the discharge of indebtedness does not exceed the amount by which
Kaiser is insolvent, some tax attributes, including net operating losses,
otherwise available to Kaiser will be reduced, generally by the amount that
would otherwise be included as ordinary income. These attribute reductions will
generally have the effect of increasing Kaiser's federal income tax liability in
subsequent taxable years. The extent, if any, to which Kaiser is insolvent is
determined for this purpose immediately before the discharge of indebtedness.
DESCRIPTION OF COMMON STOCK
As part of the exchange offer, Kaiser is offering to issue, on a pro
rata basis to holders of the old notes, up to ___________ shares of its common
stock. As a result of this issuance, holders of the new notes will hold, in the
aggregate, approximately _% of the total common stock to be outstanding
following the consummation of the exchange offer.
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Description of Kaiser's Capital Stock
Kaiser's Board of Directors has submitted a proposal to its
shareholders that some terms and provisions of the Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws that govern the
terms, rights and preferences of Kaiser's capital stock be amended. If these
proposals are adopted, the rights attributable to holders of Kaiser common stock
would be altered. A summary of the substance of those proposals is included
under "Summary of Proposed Amendments to Kaiser's Certificate of Incorporation
and Bylaws" below. The following summary does not give effect to the adoption of
any of these proposals.
The authorized capital stock of Kaiser consists of 90,000,000 shares of
common stock, par value $0.01 per share, and 2,000,000 shares of preferred
stock, par value $0.01 per share. As of ________ __, 1999, the outstanding
capital stock of Kaiser consisted of _________ shares of common stock and no
shares of preferred stock.
Common Stock
Each share of common stock has one vote per share on all matters
submitted to a vote of shareholders. Kaiser's Amended and Restated Certificate
of Incorporation provides that no action may be taken by the holders of shares
of common stock by written consent in lieu of holding a meeting of shareholders.
Kaiser has never paid cash dividends on its common stock. The Board of
Directors anticipates that for the foreseeable future no cash dividends will be
paid on its common stock and that Kaiser's earnings will be retained for use in
the business. The Board of Directors determines Kaiser's common stock dividend
policy based on Kaiser's results of operations, payment of dividends on
preferred stock, if any is outstanding, financial condition, capital
requirements, and other circumstances. Kaiser's debt agreements currently do not
permit dividends to be paid on its common stock.
Holders of common stock have no preemptive or other rights to subscribe
for additional shares of capital stock. Upon liquidation, dissolution, or
winding up of Kaiser, each share of common stock will share equally in assets
legally available for distribution to shareholders.
The transfer agent and registrar for the common stock is [First Chicago
Trust Company of New York], 14 Wall Street, Mail Suite 4680, New York, New York
10005. The shareholder relations telephone number at First Chicago is (201)
324-0498, and the [First Chicago] Web site address is http://www.fctc.com.
Since September 14, 1993, the common stock has been traded on the New
York Stock Exchange under the symbol "ICF." From December 14, 1989, to September
13, 1993, the common stock was traded on the Nasdaq National Market. The number
of holders of record of Kaiser common stock was _________ as of ______________,
1999. On ___________ ___, 1999, the closing price per share of Kaiser common
stock on the NYSE was $_______. Included in [Kaiser's Annual Report on Form 10-K
for the year ended December 31, 1998, which is incorporated by reference into
and delivered with this prospectus,] is information concerning the high and low
sales prices of Kaiser common stock during each of the fiscal quarters during
1997 and 1998. The table below sets forth this price information, as reported by
NYSE, for each of the quarterly periods ended since December 31, 1998.
High Low
1999 ---- ---
- ----------------------
First Quarter $ $
Second Quarter $ $
Third Quarter (through ____________ ____, 1999) $ $
Preferred Stock
Preferred stock is available for issuance from time to time at the
discretion of the Board of Directors of Kaiser and without shareholder approval.
No shares are currently outstanding. For each series of preferred stock it
establishes, the Board of Directors has authority to prescribe the number of
shares in that series and the dividend rate. In addition, the Board of Directors
has authority to prescribe the voting rights, conversion privileges, redemption,
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sinking fund provisions and liquidation rights, if any, and any other rights,
preferences and limitations of the particular series. The issuance of preferred
stock could decrease the amount of earnings and assets available for
distribution to the holders of common stock or adversely affect the rights and
powers, including voting rights, of the holders of common stock. Additionally,
the issuance of preferred stock could have the effect of delaying, deferring or
preventing a change in control of Kaiser without further action by the
shareholders. Kaiser's debt and credit agreements currently do not permit
dividends to be paid on its preferred stock if any shares of preferred stock
were to be issued.
Senior Debt Warrants Issued in 1996
A total of 105,000 Senior Debt Warrants (the "1996 Warrants") were issued
by Kaiser under a warrant agreement (the "1996 Warrant Agreement") dated as of
December 23, 1996, between Kaiser and ____________________, a New York
banking corporation, as warrant agent. Each 1996 senior warrant entitles the
holder to acquire one share of common stock of Kaiser, upon payment of the
exercise price of $2.30, subject to adjustment as described below. All
outstanding 1996 Warrants terminate and become void on December 31, 1999. The
1996 Warrants are subject to the terms contained in the 1996 Warrant Agreement;
capitalized terms that are not otherwise defined below are used as defined in
the 1996 Warrant Agreement. The common stock issuable upon exercise of the 1996
Warrants has been registered with the Securities and Exchange Commission and
listed on the New York Stock Exchange.
Non-Surviving Combination. If Kaiser proposes to enter into a
-------------------------
transaction that would constitute a Non-Surviving Combination if consummated,
Kaiser must give written notice to the holders promptly after an agreement is
reached with respect to the Non-Surviving Combination but in no event less than
30 days prior to the consummation. As used herein, a "Non-Surviving Combination"
means any merger, consolidation, or other business combination by Kaiser with
one or more persons other than a wholly owned subsidiary of Kaiser in which
Kaiser is not the survivor, or a sale of all or substantially all of the assets
of Kaiser to one or more of the other persons, if, in connection with any of the
foregoing, consideration other than consideration which includes common stock or
securities convertible into, or exercisable or exchangeable for, common stock or
rights or options to acquire common stock or other securities is distributed to
holders of common stock in exchange for all or substantially all of their equity
interest in Kaiser.
In a Non-Surviving Combination, the surviving entity will be obligated
to distribute or pay to each holder of the 1996 Warrants, upon payment of the
purchase price prior to the expiration date, the number of shares of stock or
other securities or other property, including any cash, of the survivor that
would have been distributable or payable on account of the common stock if the
holder's 1996 Warrants had been exercised immediately prior to the Non-Surviving
Combination or, if applicable, the record date. Following the consummation of a
Non-Surviving Combination, the 1996 Warrants will represent only the right to
receive these shares of stock or other property from the survivor upon payment
of the purchase price prior to the expiration date.
No transaction is presently in progress or under negotiation that would
constitute a Non-Surviving Combination.
Adjustment. The number of shares of common stock issuable upon the
----------
exercise of each 1996 Warrant and the purchase price are subject to adjustment
in some circumstances, including:
. a dividend or distribution on Kaiser's common stock in shares of
its common stock or a combination, subdivision, reorganization, or
reclassification of common stock,
. the issuance of shares of common stock for a consideration per
share less than the market price per share at the time of
issuance,
. the issuance of rights, warrants, or options for the purchase of
common stock or for the purchase of securities convertible into or
exchangeable for common stock where the aggregate amount of
consideration, taking into account the consideration received for
the issuance of the right, warrant, or option plus any
consideration to be received upon the exercise and including, in
the case of a right, warrant, or option to purchase a convertible
or exchangeable security, any consideration to be received upon
the eventual conversion or exchange of the security for common
stock per share of common stock
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received or receivable by Kaiser is less than the market price per
share at the time of issuance of the right, warrant, or option,
. the issuance of any securities convertible into or exchangeable
for common stock where the aggregate amount of consideration
taking into account the consideration received for the issuance of
the convertible or exchangeable security and the consideration to
be received upon the conversion or exchange per share of common
stock received or receivable by Kaiser is less than the market
price per share of common stock on the date of issuance of the
convertible or exchangeable security, and
. a dividend or distribution on Kaiser's common stock of cash,
evidences of its indebtedness, other securities, or other
properties or assets other than any cash dividend which, when
aggregated with all other cash dividends paid in the year prior to
the declaration of the cash dividend, does not exceed 10% of the
market price per share of common stock on the date of this
declaration.
If the terms of any of Kaiser's outstanding rights, warrants, or options for the
purchase of common stock or securities convertible into or exchangeable for
common stock change, in each case where the issuance caused an adjustment in the
terms of the 1996 Warrants, including by way of expiration of the securities but
excluding by way of antidilution provisions triggering an adjustment of the
terms upon the occurrence of an event that would cause an adjustment of the
terms of the 1996 Warrant, then the purchase price and the number of shares of
common stock issuable upon the exercise of each 1996 Warrant shall be readjusted
to take account of the change. Notwithstanding the foregoing, no adjustment in
the purchase price or the number of shares of common stock issuable upon
exercise of 1996 Warrants will be required:
. until cumulative adjustments would result in an adjustment of at least
one percent in the purchase price,
. for the granting, in a transaction which would otherwise trigger
an adjustment, of any rights, warrants, or options or the issuance
of any common stock to officers, directors, or employees of, or
consultants or advisors to, Kaiser where the issuances are
registered with the Securities and Exchange Commission on Form S-8
and do not, in the aggregate exceed five percent of the number of
shares of common stock outstanding assuming the exercise of the
options so granted and all rights, warrants, options, and
convertible securities then outstanding, or
. the issuance of common stock pursuant to any dividend reinvestment
plan where the purchase price of common stock is no less than 95%
of the market price on the date of issuance.
Shareholder Rights Plan
On January 13, 1992, the Board of Directors of Kaiser declared a
dividend distribution to shareholders of record at the close of business on
January 31, 1992 of one right for each outstanding share of common stock.
Each right entitles the registered holder of common stock to purchase
from Kaiser a unit consisting of one 1/100th of a share (a "Preferred Stock
Unit") of Series 4 Junior Preferred Stock ("Series 4 Preferred Stock"), at a
purchase price of $50.00 per Preferred Stock Unit, subject to adjustment. The
rights also are subject to antidilution adjustments. The description of the
rights is set forth in a rights agreement between Kaiser and the rights agent.
The rights agent is First Chicago Trust Company of New York.
A distribution date for the rights will occur upon the earlier of:
. 10 business days following a "Stock Acquisition Date," which is
the public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of
common stock or
. 10 business days following the commencement of a tender offer or
exchange offer that would if consummated result in a person or group
becoming an acquiring person.
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The rights are not exercisable until the distribution date and will expire at
the close of business on January 13, 2002, unless earlier redeemed by Kaiser as
described below.
Until the distribution date:
. the rights will be evidenced by the common stock certificates and
will be transferred with and only with these certificates and
. the surrender for transfer of any certificates for common stock
outstanding will also constitute the transfer of the rights
associated with the common stock represented by the certificate.
In the event that, at any time following the distribution date, a
person becomes an acquiring person, then each holder of a right other than the
acquiring person will have the right to receive:
. upon exercise and payment of the purchase price, common stock or,
in some circumstances, cash, property or other securities of
Kaiser having a value equal to two times the purchase price of the
right or
. at the discretion of the Board of Directors, upon exercise and
without payment of the purchase price, common stock or, in some
circumstances, cash, property or other securities of Kaiser having
a value equal to the purchase price of the right.
In the event that, at any time following the Stock Acquisition Date:
. Kaiser is acquired in a merger or other business combination
transaction in which Kaiser is not the surviving corporation,
. Kaiser is the surviving corporation in a merger with any person,
as defined in the rights agreement, and its common stock is
changed into or exchanged for stock or other securities of any
other person or cash or any other property, or
. 50% or more of Kaiser's assets or earning power is sold or transferred,
each holder of a right, except rights held by an acquiring person or which
previously have been exercised as set forth above shall have the right to
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the purchase price of the right. The events set forth in this
paragraph and in the immediately preceding paragraph are referred to as the
"Triggering Events."
As noted above, following the occurrence of any of the events described
above, all rights that are, or under some circumstances specified in the rights
agreement were, beneficially owned by any acquiring person will be null and
void.
The purchase price payable, and the number of Preferred Stock Units or
other securities or property issuable upon exercise of the rights, are subject
to amendment from time to time to prevent dilution:
. in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series 4 Preferred Stock,
. if holders of the Series 4 Preferred Stock are granted rights or
warrants to subscribe for Series 4 Preferred Stock or convertible
securities at less than the current market price of the Series 4
Preferred Stock, or
. upon the distribution to holders of the Series 4 Preferred Stock
of evidences of indebtedness or assets, excluding regular
quarterly cash dividends, or of subscription rights or warrants
other than those referred to above.
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With exceptions, no adjustment in the purchase price will be required until
cumulative adjustments amount to at least one percent of the purchase
priceFinancial Printing GroupFinancial Printing GroupWith exceptions, no
adjustment in the purchase price will be required until cumulative adjustments
amount to at least one percent of the purchase price. In addition, to the extent
that Kaiser does not have sufficient shares of common stock issuable upon
exercise of the rights following the occurrence of a Triggering Event, Kaiser
may, under some circumstances, reduce the purchase price. No fractional
Preferred Stock Units will be issued and an adjustment in cash will be made.
In general, Kaiser may redeem the rights in whole, but not in part, at a
price of $0.01 per right payable in cash, common stock or other consideration
deemed appropriate by the Board of Directors, at any time until 10 business days
following the Stock Acquisition Date. After the redemption period has expired,
Kaiser's right of redemption may be reinstated if an acquiring person reduces
its beneficial ownership to less than 10% of the outstanding shares of common
stock in a transaction or series of transactions not involving Kaiser and there
are no other acquiring persons. Immediately upon the action of the Board of
Directors ordering redemption of the rights, and without any notice to the
holder of these rights prior to the redemption, the rights will terminate and
the only right of the holders of rights will be to receive the $0.01 redemption
price.
Until a right is exercised, the holder will have no rights as a shareholder
of Kaiser, including, without limitation, the right to vote or to receive
dividends.
Other than those provisions relating to the principal economic terms of the
rights, except with respect to increasing the purchase price under some
circumstances described in the rights agreement, any of the provisions of the
rights agreement may be amended by the Board of Directors of Kaiser prior to the
distribution date. After the distribution date, the provisions of the rights
agreement may be amended by the Board in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of rights,
excluding the interests of any acquiring person, or to shorten or lengthen any
time period under the rights agreement. However, no amendment to adjust the time
period governing redemption shall be made when the rights are not redeemable.
One right will be distributed to shareholders of Kaiser for each share of
common stock owned of record by them at the close of business on the record
date. Until the distribution date, Kaiser will issue a right with each share of
common stock so that all shares of common stock will have attached rights.
The rights may be deemed to have anti-takeover effects. The rights
generally may cause substantial dilution to a person or group that attempts to
acquire Kaiser under circumstances not approved by the Board of Directors of
Kaiser. The rights should not interfere with any merger or other business
combination approved by the Board of Directors of Kaiser since the Board of
Directors may, at its option, at any time prior to the close of business on the
earlier of:
. the tenth business day following the Stock Acquisition Date or
. January 13, 2002,
redeem all but not less than all of the then outstanding rights at $0.01 per
right.
Provisions Affecting Changes of Control and Extraordinary Transactions
In addition to the shareholder rights plan, some provisions of Kaiser's
Certificate of Incorporation and By-laws and other agreements could have the
effect of delaying, deferring, or preventing a change in control of Kaiser or
other extraordinary corporate transaction.
Kaiser's Amended and Restated Certificate of Incorporation and By-laws
provide for classification of the Board of Directors into three classes, as
nearly equal in number as possible, with one class of directors being elected
each year for three-year terms. Under Delaware law, members of a classified
board may be removed only for cause. Thus, at least two years would be required
to effect a change of control in the Board of Directors, unless a shareholder
had sufficient voting power to amend or repeal the Certificate of Incorporation
and By-law provisions relating to classification of the Board of Directors.
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In addition, the Certificate of Incorporation imposes supermajority voting
requirements for some corporate transactions that apply if a majority of the
Board of Directors has not served in the positions for at least 12 months. Under
those circumstances, the approval of two-thirds of the voting power of Kaiser's
capital stock would be required in order for Kaiser to:
. merge with or consolidate into any other entity, other than a
subsidiary of Kaiser,
. sell, lease or assign all or substantially all of the assets or
properties of Kaiser, or
. amend the voting provisions of the Certificate of Incorporation.
Other Certificate of Incorporation provisions of the type referred to above
include:
. the denial of the right of holders of common stock to take action by
written consent in lieu of a shareholders' meeting and
. the ability of the Board of Directors to determine the rights and
preferences, including voting rights, of Kaiser's authorized but
unissued preferred stock, and then to issue this stock.
Relevant By-law provisions include those that:
. require advance nomination of directors,
. require advance notice of business to be conducted at shareholders'
meetings, and
. provide that shareholders owning at least 50% of the voting power of
the capital stock are required to call a special meeting of
shareholders.
With the exception of the provision that authorizes the Board of Directors
to fix the terms of and issue authorized but unissued shares of preferred stock,
the approval of the holders of at least two-thirds of the voting power of
Kaiser's capital stock is required to amend, alter, or repeal, or to adopt
provisions inconsistent with, the Certificate of Incorporation and By-law
provisions described above, regardless of whether a majority of the members of
the Board of Directors has served in such positions for more than 12 months at
the time of the action.
Delaware Takeover Statute
Section 203 of the Delaware General Corporation Law applies to Delaware
corporations with a class of voting stock listed on a national securities
exchange, authorized for quotation on an inter-dealer quotation system, or held
of record by 2,000 or more persons, and restricts transactions which may be
entered into by such a corporation and certain of its shareholders. The Delaware
takeover statute provides, in essence, that a stockholder acquiring more than
15% of the outstanding voting shares of a corporation subject to the statute (an
"Interested Stockholder"), but less than 85% of the shares, may not engage in
certain "Business Combinations" with the corporation for a period of three years
subsequent to the date on which the stockholder became an Interested
Stockholder, unless:
. prior to the date the corporation's board of directors approved either
the Business Combination or the transaction in which the stockholder
became an Interested Stockholder or
. the Business Combination is approved by the corporation's board of
directors and authorized by a vote of at least 66 2/3% of the
outstanding voting stock of the corporation not owned by the
Interested Stockholder.
The Delaware takeover statute defines the term "Business Combination" to
encompass a wide variety of transactions with or caused by an Interested
Stockholder in which the Interested Stockholder receives or could receive a
benefit on other than a pro rata basis with other stockholders, including
mergers, some asset sales, some issuances of
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additional shares to the Interested Stockholder, transactions with the
corporation which increase the proportionate interest of the Interested
Stockholder, or transactions in which the Interested Stockholder receives some
other benefits.
Summary of Proposed Amendments to Kaiser's Certificate of Incorporation and
Bylaws
The 1999 Annual Meeting of Shareholders of Kaiser will be held on
___________, ____________ ____, 1999, at 9:00 a.m. At the annual meeting,
Kaiser's shareholders will be asked to vote upon, among other things, proposals
to:
. approve the issuance of shares of Kaiser common stock in connection
with the exchange offer;
. approve a reverse stock split of Kaiser's common stock;
. approve amendments to Kaiser's certificate of incorporation and bylaws
to:
. eliminate the provisions of the certificate of incorporation and,
where applicable, the bylaws that:
. require the affirmative vote of holders of 66 2/3% of the
outstanding capital stock to approve certain transactions
following a change in the majority of directors within 12
months;
. provide for staggered, three-year terms for members of the
board of directors;
. prohibit shareholders from filling vacancies on the board of
directors; and
. require the affirmative vote of the holders of 66 2/3% of
the outstanding capital stock to approve certain amendments
to the certificate of incorporation and bylaws; and
. provide that shareholders owning at least twenty percent (20%) of
the voting power of the outstanding capital stock could require a
special meeting of shareholders to be called;
. approve an amendment to Kaiser's certificate of incorporation and
Bylaws to provide that no new shareholder rights plan, sometimes
referred to as a poison pill, shall be adopted without the approval of
the shareholders;
. approve an amendment to Kaiser's certificate of incorporation to
eliminate provisions related to the terms of series of preferred stock
that are obsolete and no longer outstanding; and
. approve an amendment to Kaiser's stock incentive plan to increase the
number of shares of common stock available for issuance under the
plan, to permit the transfer of options granted under the incentive
plan to immediate family members of plan participants and to provide
greater flexibility to Kaiser's board of directors to make future
amendments to the plan.
If the shareholders approve one or more of the foregoing proposals, the above
description of the common stock and shareholder rights plan would be altered
accordingly.
DESCRIPTION OF NEW NOTES
The following is only a summary of the terms of the new notes. You
should read the indenture and the exhibits to the indenture for a complete
description of the terms of the new notes, copies of which are available upon
request from ______________________________. The terms of the new notes include
those stated in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939 as in effect on the date of the indenture.
The definitions of some terms used here are set forth in "Certain Definitions"
below. The terms of the new notes may differ in material respects from the terms
of the old notes. Holders of old notes should review "Description of the New
Notes" carefully.
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General
The new notes being offered will be issued in exchange for the old notes
and will be governed under the indenture to be dated as of the date following
the exchange expiration date among Kaiser, as issuer, and [_______________], as
Trustee.
The new notes:
. will be general unsecured obligations of Kaiser;
. will be subordinated in right of payment to all Senior
Indebtedness of Kaiser;
. will be limited to an aggregate principal amount of $___ million;
. will bear interest at the rate of 13% per annum, payable on June
30 and December 31 of each year, commencing on December 31, 1999,
to holders of record at the close of business on the preceding
June 15 or December 15, as the case may be;
. will mature on December 31, 2003; and
. will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof.
Principal of and interest on the new notes will be payable, and the new
notes may be presented for registration of transfer or exchange, at the office
of the Trustee. The new notes may be presented for registration of transfer
and/or exchange at the corporate trust office of the Trustee in _____________,
_____________, or at an office or agency maintained by Kaiser in the city of New
York, New York.
Methods of Making Payments on the New Notes
Payments may be paid by check mailed to the registered addresses of the
holders of record of the new notes. Holders must surrender their notes to the
paying agent to collect principal payments. Kaiser may require payment of a sum
sufficient to cover any transfer tax or other governmental charge payable in
connection with certain transfers or exchanges of the new notes. Initially, the
Trustee will act as the paying agent and the registrar under the indenture.
Kaiser or any of its subsidiaries subsequently may act as the paying agent and
the registrar and Kaiser may change any paying agent and any registrar without
prior notice to the holders of the new notes.
Ranking
The new notes will be subordinated in right of payment to all existing and
future Senior Indebtedness of Kaiser, including all obligations of Kaiser under
the New Revolver. The new notes will be senior in right of payment to the old
notes and to all indebtedness of Kaiser that by its terms is expressly
subordinated in right of payment to the new notes. As of ________ __, 1999,
Kaiser would have had approximately $___ million of Senior Indebtedness
outstanding. See "Capitalization." Although the indenture contains limitations
on the amount of additional indebtedness that Kaiser may incur, under certain
circumstances the amount of such indebtedness could be substantial and such
indebtedness may be Senior Indebtedness. See "Certain Covenants - Limitations on
Additional Indebtedness."
Kaiser is a holding company that derives substantially all of its income
from its subsidiaries. Kaiser must rely on dividends or other intercompany
transfers from its subsidiaries to generate the funds necessary to meet its debt
service and other obligations, including payment of principal and interest on
the new notes. The ability of its subsidiaries to pay such dividends or other
intercompany transfers is subject to the laws of the jurisdictions where the
subsidiaries are located. Claims of creditors of its subsidiaries, including
trade creditors, secured creditors and creditors holding guarantees of its
subsidiaries, and claims of holders of preferred stock of its subsidiaries,
generally
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will have priority as to the assets of its subsidiaries over the equity
interests of Kaiser and the holders of indebtedness of Kaiser. See
"Capitalization" and "Description of Credit Facility."
The term "Senior Indebtedness" is defined under "Certain Definitions." If
any Senior Indebtedness is disallowed, avoided or subordinated pursuant to the
provisions of Section 548 of the Bankruptcy Code or any applicable state
fraudulent conveyance law, such indebtedness nevertheless will constitute Senior
Indebtedness for purposes of the indenture.
Only indebtedness of Kaiser that is Senior Indebtedness will rank senior to
the new notes in accordance with the provisions of the indenture. Kaiser has
agreed in the indenture that it will not issue, assume, guarantee, incur or
otherwise become liable for, directly or indirectly, any indebtedness that is
subordinate or junior in ranking in any respect to Senior Indebtedness unless
such indebtedness is expressly subordinated in right of payment to the new
notes. Unsecured indebtedness is not deemed to be subordinate or junior to
secured indebtedness merely because it is unsecured.
Kaiser may not make any payment with respect to the new notes if:
. any Senior Indebtedness (other than Non-Recourse Indebtedness) is not
paid when due, or
. any other default on Senior Indebtedness (other than Non-Recourse
Indebtedness) occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms,
unless, any default has been cured or waived and any acceleration has been
rescinded or unless the Senior Indebtedness has been paid in full.
During any default on any Senior Indebtedness (other than a payment default
or acceleration as described above) which would permit the maturity thereof to
be accelerated immediately without further notice or the expiration of any
applicable grace periods, Kaiser may not pay the new notes for a period (a
"Payment Blockage Period"):
. commencing upon the receipt by Kaiser and the Trustee of written
notice of such default from or on behalf of the holders of Senior
Indebtedness, specifying an election to effect a Payment Blockage
Period (a "Payment Notice"); and
. ending 179 days thereafter, or earlier if such Payment Blockage Period
is terminated (1) by written notice to the Trustee and Kaiser from the
person or persons who gave the Payment Notice, (2) by repayment in
full of the Senior Indebtedness or (3) because the default giving rise
to the Payment Notice is no longer continuing.
Unless the holders of Senior Indebtedness have accelerated the maturity of
their Senior Indebtedness, Kaiser may resume payments on the new notes after a
Payment Blockage Period expires. Not more than one Payment Notice may be given
in any consecutive 360-day period, irrespective of the number of defaults on the
Senior Indebtedness during the period.
No default or event of default which served as the basis for any Payment
Blockage Period may be used by the holders of the Senior Indebtedness to
commence a subsequent Payment Blockage Period unless the default has been cured
or waived for a period of at least 90 consecutive days.
In the following circumstances, the holders of Senior Indebtedness are
entitled to receive payment in full before the holders of the new notes are
entitled to receive any payment:
. upon a total or partial liquidation or dissolution of Kaiser;
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. in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Kaiser or its property;
. following an assignment for the benefit of creditors; or
. in any other marshaling of Kaiser's assets and liabilities.
If payment of the new notes is accelerated because of an Event of Default,
Kaiser or the Trustee shall promptly notify the holders of Senior Indebtedness,
[the Agent under the New Revolver] and the Trustee for the holders of any other
Senior Indebtedness of the acceleration. If the Trustee provides such notice,
the Trustee also will notify Kaiser of the acceleration.
By reason of such subordination provisions contained in the indenture, in
the event of insolvency, holders of the new notes may recover a smaller
percentage of the amount owed to them than other creditors of Kaiser.
Optional Redemption of the New Notes
Kaiser may choose to redeem the new notes in whole or in part, at any time,
at a redemption price equal to 100% of the aggregate principal amount of the new
notes, plus accrued and unpaid interest.
If less than all of the new notes are to be redeemed at any time, the
Trustee will select the new notes to be redeemed from among the outstanding new
notes on a pro rata basis, by lot or by any other method permitted in the
indenture. Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder whose new notes are to be
redeemed at the registered address of such holder. On and after the redemption
date, interest will cease to accrue on the new notes or portions thereof called
for redemption.
Sinking Fund
There will be no mandatory sinking fund for the new notes.
Mandatory Offers to Purchase the New Notes
The indenture requires Kaiser to offer to purchase a portion of the
outstanding old notes under certain other circumstances. See "Certain Covenants-
Limitations on Asset Sales."
Certain Covenants
Limitations on Additional Indebtedness. The indenture provides that Kaiser
will not, and will not permit any of is Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, extend the maturity of or
otherwise become liable with respect to any indebtedness (other than Permitted
Indebtedness) unless it is able to demonstrate that for the four quarterly
periods preceding the incurrence of such debt, its ratio of EBITDA to Interest
Expense plus preferred stock dividends (after giving pro forma effect to the
issuance of capital stock and the application of any proceeds therefrom) would
be at least __ to 1.0.
Limitations on Subsidiary Debt and Preferred Stock. The indenture further
will provide that Kaiser will not permit any of its Restricted Subsidiaries,
directly or indirectly, to create, incur, assume, guarantee, extend the maturity
of or otherwise become liable with respect to any indebtedness (which, with
respect to any Restricted Subsidiary, includes preferred stock of the Restricted
Subsidiary) except for the following:
. guarantees by any Restricted Subsidiary of the payment of indebtedness
incurred pursuant to the New Revolver and in compliance with the
covenant described under "Limitations on Additional Indebtedness" and
with the covenant described under "Limitations on Guarantees";
. Indebtedness issued to and held by Kaiser or a wholly owned Restricted
Subsidiary (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
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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);
. Indebtedness to Kaiser or any of its wholly owned Restricted
Subsidiaries of Kaiser that are not wholly owned Restricted
Subsidiaries that are engaged in Permitted Businesses in an aggregate
amount (together with all Designated Investments made in subsidiaries
that are not wholly owned Restricted Subsidiaries in compliance with
the provisions of [clause (E) of the second paragraph of] the covenant
described under "Limitations on Restricted Payments") not to exceed 5%
of Consolidated Tangible Assets; and
. Non-recourse indebtedness incurred by a Single Purpose Subsidiary.
Limitations on Restricted Payments. The indenture provides that Kaiser will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, make any Restricted Payment if, at the time of a potential
Restricted Payment, any of the following conditions exist:
. a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof;
. Kaiser 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
. the amount of such Restricted Payment, when added to the aggregate
amount of all Restricted Payments (other than those made pursuant to
the exceptions described in the following paragraph) made after the
date of the indenture, exceeds the sum of: (a) 50% of Kaiser's
Consolidated Net Income accrued during the period since _______ __,
1999 (or, if that aggregate Consolidated Net Income is a deficit,
minus 100% of such aggregate deficit); plus (b) $___ million.
Notwithstanding the foregoing, the monetary limitations described in the
immediately preceding paragraph will not prevent the following: [TO BE
REVISED/CONFIRMED IN LIGHT OF TERMS OF INDENTURE NEGOTIATED WITH BONDHOLDERS]
. Kaiser or any wholly owned Restricted Subsidiary from making
investments in subsidiaries, in an aggregate amount not to exceed $4
million, pursuant to contractual obligations in existence on the date
of the indenture or directly related to projects in existence on the
date of the indenture;
. Kaiser 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;
. Kaiser from purchasing or redeeming and retiring any shares of capital
stock of Kaiser, 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 Kaiser or an employee stock ownership plan)
of, shares of Qualified Capital Stock of Kaiser;
. Kaiser or any subsidiary from making (1) investments pursuant to the
provisions of employee benefit plans of Kaiser or any of its
subsidiaries in an aggregate amount not to exceed $500,000 in a fiscal
year, or (2) making loans to officers of Kaiser in connection with any
relocation of residence, approved by a majority of the independent
members of the Board of Directors of Kaiser, provided that the
aggregate amount of investments and loans under this clause may not
exceed $1 million in any fiscal year;
. Kaiser or any wholly owned Restricted Subsidiary from making
Designated Investments (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
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in compliance with the provisions of the third clause of the covenant
described under "Limitations on Subsidiary Debt and Preferred Stock")
not to exceed 5% of Consolidated Tangible Assets or (2) in Joint
Ventures in an aggregate amount not to exceed 5% of Consolidated
Tangible Assets, provided that: (a) the person in whom the investment
is made is engaged only in Permitted Businesses; (b) Kaiser, directly
or through wholly owned Restricted Subsidiaries of Kaiser, controls,
under an operating management agreement or otherwise, the day-to-day
management and operation of 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 (c) after
giving effect to such Investment, the aggregate amount of indebtedness
and investments made by Kaiser and its subsidiaries in such person
does not exceed $5 million; or
. Kaiser or any wholly owned Restricted Subsidiary from making
Designated Investments in subsidiaries that are not wholly owned
Restricted Subsidiaries or in Joint Ventures; provided that such
Designated Investments are made solely from (1) the net proceeds of a
substantially concurrent sale (other than to a subsidiary of Kaiser or
an employee stock ownership plan) of shares of Qualified Capital Stock
of Kaiser, (2) 50% of Kaiser's Consolidated Net Income accrued during
the period since August 31, 1993 or (3) the aggregate amount of net
reductions in investments (not to exceed the aggregate amount of such
Designated Investments) made by Kaiser or any Subsidiary subsequent to
the date of the indenture.
Limitations on Restrictions on Distributions from Subsidiaries. The
indenture provides that Kaiser will not, and will not permit any of its
Restricted Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual Payment Restriction with respect to any of its
Restricted Subsidiaries, except for the following:
. Payment Restrictions covering not more than $1 million in the
aggregate of retained earnings of Kaiser Servicios Ambientales, S.A.
de C.V.;
. any Payment Restriction contained in Existing Indebtedness or existing
contracts to which Kaiser or any of its Restricted Subsidiaries are
parties;
. any Payment Restriction under any agreement evidencing any Acquired
Indebtedness that was permitted to be incurred pursuant to the
indenture, provided that the Payment Restriction only applies to
assets that were subject to such restrictions and encumbrances prior
to the acquisition of such assets by Kaiser or its Restricted
Subsidiaries; and
. any Payment Restriction arising in connection with Refinancing
Indebtedness; provided that any Payment Restrictions that arise under
the Refinancing Indebtedness are not, taken as a whole, more
restricted than those under the agreement creating or evidencing the
Indebtedness being refunded or refinanced.
Limitations on Transactions with Affiliates. The indenture will provide
that Kaiser will not, and will not permit any of its Restricted Subsidiaries to,
make any loan, advance, guarantee or capital contribution to or for the benefit
of, or sell, lease, transfer or otherwise dispose of any of its properties or
assets to or for the benefit of, or make any Investment in, or purchase or lease
any property or assets from, or enter into or amend any contract, agreement or
understanding with or for the benefit of, any Affiliate of Kaiser or any of its
subsidiaries (each an "Affiliate Transaction"), except for the following:
. Affiliate Transactions in the ordinary course of business and
consistent with past practice that are fair to Kaiser or 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 Kaiser or the 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
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Kaiser or the 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;
. for any Affiliate Transaction or series of Affiliate Transactions
involving or having a value of more than $1 million, unless a majority
of the members of the Board of Directors of Kaiser who are not
affiliated with any other party to the Affiliate Transaction
reasonably and in good faith shall have determined that the Affiliate
Transaction or series of Affiliate Transactions is fair to Kaiser or
the 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
. for any Affiliate Transaction or series of Affiliate Transactions
involving or having a value of more than $5 million, unless Kaiser or
the Restricted Subsidiary, as the case may be, has received an opinion
from an Independent Financial Advisor to the effect that the financial
terms of the Affiliate Transaction are fair to Kaiser or the
Restricted Subsidiary, as the case may be, from a financial point of
view.
The limitations described in the foregoing paragraph do not apply to:
. transactions exclusively between or among Kaiser and any of its wholly
owned Restricted Subsidiaries or exclusively between or among any of
Kaiser's wholly owned Restricted Subsidiaries, provided that such
transactions are not otherwise prohibited by the indenture;
. arms-length transactions between Kaiser or any of its wholly owned
Restricted Subsidiaries and the other owners of any subsidiary or
Joint Venture [described in the last sentence of the definition of
Affiliate]; and
. reasonable compensation, indemnification and other benefits paid or
made available to officers, directors and employees of Kaiser or any
Subsidiary for services rendered in such Person's capacity as an
officer, director or employee.
Limitations on Asset Sales. The indenture will provide that Kaiser will
not, and will not permit any of its Restricted Subsidiaries to, consummate any
Asset Sale unless:
. Kaiser or its Restricted Subsidiaries receive consideration at the
time of the Asset Sale at least equal to the fair market value of the
assets or Capital Stock included in the Asset Sale;
. the aggregate fair market value of the consideration from the Asset
Sale (other than consideration in the form of assumption of
Indebtedness of Kaiser or one or more of its Restricted Subsidiaries
from which Kaiser or the Restricted Subsidiaries, 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 Kaiser and
its Restricted Subsidiaries from all previous Asset Sales since the
date of the indenture that have not yet been converted into cash or
Cash Equivalents, exceed 5% of Consolidated Tangible Assets of Kaiser
at the time of the Asset Sale; and
. if the aggregate fair market value of the assets or Capital Stock to
be sold in the Asset Sale exceeds $3 million, the Asset Sale has been
approved by Kaiser's Board of Directors.
Within six months after consummation of any Asset Sale, Kaiser shall, or
shall cause the applicable Restricted Subsidiary to:
. reinvest the cash and Cash Equivalent portion of the Net Proceeds of
the Asset Sale in a manner that would constitute a Related Business Investment;
. apply the cash and Cash Equivalent portion of the Net Proceeds of the
Asset Sale to repay outstanding Senior Indebtedness of Kaiser or any Restricted
Subsidiary, provided, however, that any such
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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
. apply the cash and Cash Equivalent portion of the Net Proceeds of the
Asset Sale that is neither reinvested nor applied to the repayment of
Senior Indebtedness to the purchase of new notes tendered to Kaiser at
a purchase price equal to 100% of the principal thereof, plus accrued
interest thereon to the date of purchase, pursuant to an offer to
purchase made by Kaiser as set forth below (an "Asset Sale Offer");
provided, however, that Kaiser may defer the Asset Sale Offer until
the amount subject thereto would be at least $5 million.
Notwithstanding the foregoing provisions:
. 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 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 (Kaiser hereby agreeing to cause the
applicable Foreign Subsidiary promptly to take all actions required by
the applicable local law to permit such repatriation) and, once such
repatriation of any of such affected net proceeds is permitted under
the applicable local law, such repatriation will be immediately
effected and such repatriated net proceeds will be applied in the
manner set forth in this covenant; and
. to the extent that the Board of Directors has determined in good faith
that repatriation of any or all of the net proceeds of any Foreign
Asset Sale would have a material adverse tax consequence, the net
proceeds so affected may be retained by the applicable Foreign
Subsidiary for so long as such material adverse tax event would
continue.
Each Asset Sale Offer must:
. be mailed to the record holders of the new notes as shown on the
register of holders of new notes, with a copy to the Trustee;
. specify the purchase date (which must be between 30 days and 60 days
from the date 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
. otherwise comply with the procedures set forth in the indenture.
Upon receiving notice of an Asset Sale offer, holders of new notes may
elect to tender their new notes in whole or in part in integral multiples of
$1,000 in exchange for cash. To the extent holders properly tender notes in an
amount exceeding the amount of Net Proceeds used to make the Asset Sale Offer,
new notes of tendering holders will be repurchased on a pro rata basis (based on
amounts tendered).
Kaiser will comply with the requirements of Section 14(e) under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of new notes pursuant to any Asset Sale Offer.
Restrictions on Sale of Stock of subsidiaries. The indenture will provide
that Kaiser may not sell or otherwise dispose of any of the Capital Stock of any
Restricted Subsidiary of Kaiser unless:
. Kaiser either retains ownership of more than 50% of the common stock
of such Restricted Subsidiary or sells all of the Capital Stock of
such Restricted Subsidiary and the net proceeds from any such sale or
disposition are treated in a manner consistent with the treatment of
Asset Sale proceeds; or
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. Kaiser elects to treat the amount of its remaining investment in any
such Restricted Subsidiary that has become a Joint Venture as a result
of such sale or disposition as an Investment in such Joint Venture
subject to the provisions described under "Limitations on Restricted
Payments."
Limitations on Mergers and Certain Other Transactions. The indenture
provides that Kaiser will not, (1) in a single transaction or a series of
related transactions, consolidate or merge with or into, or sell, lease, convey
or otherwise dispose of all or substantially all of its assets, or assign any of
its obligations under the new notes or the indenture, to any Person, or (2)
adopt a Plan of Liquidation unless, in either case:
. the Person formed by or surviving such consolidation or merger (if
other than Kaiser) 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 domestic corporation and the
Successor assumes by supplemental indenture in a form satisfactory to
the Trustee all of the obligations of Kaiser under the new notes and
the indenture;
. immediately prior to and immediately after and giving effect to such
transaction and the assumption of the obligations as set forth in the
preceding clause 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
. immediately after and giving effect to such transaction and the
assumption of the obligations as set forth in the first clause 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 Kaiser or the
Successor, as the case may be, would be at least equal to the
Consolidated Tangible Net Worth of Kaiser immediately prior to such
transaction and (2) Kaiser 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 provides that Kaiser 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 merging Single Purpose
Subsidiary owns an interest.
The foregoing provisions of the indenture will not prohibit a transaction
the sole purpose of which (as determined in good faith by the Board of Directors
and evidenced by a Board Resolution) is to change the state of incorporation of
Kaiser or a Single Purpose Subsidiary, as the case may be, and such transaction
does not have as one of its purposes the evasion of the limitations described
above.
Limitations on Guarantees. The indenture will provide that Kaiser will not
permit any of its Restricted Subsidiaries to guarantee any Indebtedness (other
than guarantees of indebtedness under the New Revolver permitted under the
provisions of the covenant described under "Limitations on Subsidiary Debt and
Preferred Stock" by subsidiaries of Kaiser who have delivered similar guarantees
prior to the date of the indenture) unless Kaiser causes each 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 and interest on the new notes. Any such guarantee shall
be subordinated in right of payment to the guarantee by such Subsidiary pursuant
to the New Revolver.
Events of Default
An "Event of Default" is defined in the indenture to include any of the
following:
. failure by Kaiser to pay interest on any of the new notes when it
becomes due and payable and the continuance of any such failure for 30
days, whether or not such payment is prohibited by the provisions
described under "Ranking";
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. failure by Kaiser to pay the principal of the new notes when it
becomes due and payable, whether at stated maturity, upon redemption,
upon acceleration or otherwise (including failure to make payment
pursuant to an Asset Sale Offer), whether or not such payment is
prohibited by the provisions described under "Ranking";
. failure by Kaiser 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 Kaiser by the Trustee or by the holders of at least
25% of the aggregate principal amount of the new notes then
outstanding;
. failure by Kaiser 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 Kaiser
or any of its subsidiaries, other than Non-Recourse Indebtedness of a
Single Purpose Subsidiary, that has an aggregate outstanding principal
amount of $2 million or more;
. a default under any indebtedness, other than Non-Recourse Indebtedness
of a Single Purpose Subsidiary, if (1) such default results in the
holder or holders of the indebtedness causing the indebtedness to
become due prior to its stated maturity and (2) the principal amount
of the indebtedness, together with the principal amount of any other
indebtedness the maturity of which has been so accelerated, aggregates
$2 million or more at any one time outstanding;
. a court or courts of competent jurisdiction have entered one or more
final judgments or orders against Kaiser or any of its subsidiaries
for payment of amounts which exceed $2 million in the aggregate and
such judgment or judgments have not been satisfied, stayed, annulled
or rescinded within 60 days of being entered; and
. certain events of bankruptcy, insolvency or reorganization involving
Kaiser or any of its subsidiaries.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization involving Kaiser) shall have occurred
and be continuing under the indenture, the Trustee by written notice to Kaiser,
or the holders of at least 25% in aggregate principal amount of the new notes
then outstanding by written notice to Kaiser and the Trustee, may declare all
amounts owing under the new notes to be due and payable immediately. Upon
declaration of acceleration, the aggregate principal of and interest on the
outstanding Notes shall immediately become due and payable. If an Event of
Default results from bankruptcy, insolvency or reorganization involving Kaiser,
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 new notes then outstanding may waive an existing Default or Event
of Default and its consequences, except a default in the payment of principal
of, and interest on the new notes.
The holders of new notes may not directly enforce the provisions of the
indenture or the new notes except as provided in the indenture. Subject to
certain limitations, holders of a majority in principal amount of the new notes
then outstanding may direct the Trustee in its exercise of any trust or power;
provided however, that such direction does not conflict with the terms of the
indenture. The Trustee may withhold from the holders of new notes notice of any
continuing Default or Event of Default (except any Default or Event of Default
in payment of, or interest on the new notes) if the Trustee determines that
withholding such notice is in the holders' interest.
Kaiser is required to deliver to the Trustee annually a statement regarding
compliance with the indenture and, upon any Officer of Kaiser becoming aware of
any Default or Event of Default, a statement specifying such Default or Event of
Default and what action Kaiser is taking or proposes to take with respect
thereto.
Discharge of Indenture
The indenture will permit Kaiser to terminate all of its obligations under
the indenture, other than the obligation to pay the principal of and interest on
the new notes, and certain other obligations at any time by taking the following
actions:
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. 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 and interest on the new notes to their
maturity or redemption, as the case may be, and
. 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 of new notes will
not recognize income, gain or loss for federal income tax purposes as
a result of Kaiser's exercise of such right and will be subject to
federal income tax on the same amount and in the same manner and at
the same times as would have been the case otherwise.
Transfer and Exchange
A holder of new notes will be able to register the transfer of or exchange
of his notes only in accordance with the provisions of the indenture. The
Trustee may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the indenture. Without the prior consent of Kaiser, the
Trustee is not required:
. to register the transfer or exchange of any new note selected for
redemption;
. to register the transfer or exchange of any new note for a period of
15 days before a selection of new notes to be redeemed; or
. to register the transfer or exchange of a new note between a record
date and the next succeeding interest payment date. The holder of a
new note will be treated as the owner of a new note for all purposes.
Amendment, Supplement and Waiver
Subject to certain exceptions, the indenture or the new notes may be
amended or supplemented with the consent (which may include consents obtained in
connection with a tender offer or exchange offer for Notes) of the holders of at
least a majority in principal amount of the new notes then outstanding, and any
existing Default under, or compliance with any provision of, the indenture may
be waived (other than any continuing Default or Event of Default in the payment
of the principal of, or interest on the new notes or that resulted from the
failure to comply with the covenant described under "Change of Control") with
the consent (which may include consents obtained in connection with a tender
offer or exchange offer for Notes) of the holders of a majority in principal
amount of the new notes then outstanding. Without the consent of any holder,
Kaiser and the Trustee may amend or supplement the indenture or the new notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated new
notes in addition to or in place of certificated new notes, to provide for the
assumption of Kaiser's obligations to holders in the case of a merger or
acquisition, or to make any change that does not adversely affect the rights of
any holder.
Kaiser may not, without the consent of each affected holder of new notes:
. extend the maturity of any new note;
. affect the terms of any scheduled payment of interest on or principal
of the new notes (including without limitation any redemption
provisions);
. make any change in the subordination provisions of the indenture that
adversely affects the rights of any holder; or
. reduce the percentage of holders necessary to consent to an amendment,
supplement or waiver to the indenture.
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The right of any holder of new notes to participate in any consent required
or sought pursuant to any provision of the indenture (and the obligation of
Kaiser to obtain 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 new notes with respect to which such consent is required or sought as of
a date identified by the Trustee in a notice furnished to holders in accordance
with the terms of the indenture.
Concerning the Trustee
The indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of Kaiser, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest (as defined in
the indenture), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding new
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The indenture provides that, in case an Event of Default
occurs and is not cured, the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent person in similar circumstances in
the conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any holder of new notes, unless such holder shall have offered
to the Trustee security and indemnity satisfactory to the Trustee.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
indenture. Reference is made to the indenture for the full definition of all
such terms included within the indenture.
"Acquired Indebtedness" means: (i) with respect to any Person that becomes
a direct or indirect Subsidiary of Kaiser after the date of the indenture,
Indebtedness of such Person and its subsidiaries existing at the time such
Person becomes a Subsidiary of Kaiser that was not incurred in connection with,
or in contemplation of, such Person becoming a Subsidiary of Kaiser; and (ii)
with respect to Kaiser or any of its subsidiaries, any Indebtedness assumed by
Kaiser or any of its subsidiaries in connection with the acquisition of an asset
from another Person that was not incurred by 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 Kaiser or any wholly owned Restricted Subsidiary of
Kaiser, (a) any wholly owned Subsidiary of Kaiser or (b) any Subsidiary of
Kaiser 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 Kaiser.
"Asset Sale" for any Person means the sale, lease, transfer or other
disposition or series of sales, leases, transfers or other dispositions
(including without limitation by merger or consolidation, and whether by
operation of law or otherwise) of any of that Person's assets (including without
limitation the sale or other disposition of Capital Stock of any Subsidiary of
such Person, whether by such Person or by such Subsidiary); whether owned on the
date of the indenture or subsequently acquired, excluding, however: (i) any
sale, lease, transfer or other disposition between Kaiser and any of its wholly
owned Restricted Subsidiaries; (ii) any transfer of assets of Kaiser or any of
its Restricted Subsidiaries that constitutes and is treated as a Designated
Investment; (iii) any transfer of assets of Kaiser or any of its Restricted
Subsidiaries that constitutes a Change of Control and that is governed by and
effected in accordance with the covenants described under "Limitations on
Mergers and Certain Other Transactions" and "Change in Control"; and (iv) any
sale, lease, transfer or other disposition, or series of sales, leases,
transfers or
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other dispositions, of assets having a purchase price or transaction value, as
the case may be, of $1 million or less, provided that no Default or Event of
Default exists at the time of such sale.
"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.
"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.
"Consolidated Depreciation Expense" of any Person for any period means the
depreciation expense of such Person and its Restricted Subsidiaries for any
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 Kaiser's Consolidated Fixed Charge Coverage Ratio requires the
use of any quarter beginning prior to the date of the indenture, such
calculation shall be made on a pro forma basis, giving effect to the issuance of
the new 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
Kaiser 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 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 includable 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 (vi) 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 (vi) 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; and (vi) in the case of a
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successor to such Person by consolidation, merger or transfer of its assets, any
earnings of the successor prior to such merger, consolidation or transfer of
assets.
"Consolidated Net Tangible Assets" of any Person as of any date means the
Consolidated Tangible Assets of such Person and its Restricted Subsidiaries less
the total current liabilities of such Person and its Restricted Subsidiaries, on
a consolidated basis as of such date.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Restricted Subsidiaries (excluding any assets that
would be classified as "intangible assets" under GAAP) on a consolidated basis
at such date, determined in accordance with GAAP, less all write-ups subsequent
to August 31, 1993 in the book value of any asset owned by such Person or any of
its Restricted Subsidiaries.
"Consolidated Tangible Net Worth" of any Person as of any date means the
stockholders' equity (including any preferred stock that is classified as equity
under GAAP, other than Disqualified Stock) of such Person and its Restricted
Subsidiaries (excluding any equity adjustment for foreign currency translation
for any period subsequent to August 31, 1993 and any assets that would be
classified as "intangible assets" under GAAP) on a consolidated basis at such
date, as determined in accordance with GAAP, less all write-ups subsequent to
August 31, 1993 in the book value of any asset owned by such Person or any of
its Restricted Subsidiaries.
"Continuing Director" of Kaiser as of any date means a member of the Board
of Directors of Kaiser who (i) was a member of the Board of Directors of Kaiser
on the date of the indenture or (ii) was nominated for election or elected to
the Board of Directors of Kaiser with the affirmative vote of at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Designated Investments" means Investments made after the date of the
indenture in (i) any Subsidiary of Kaiser 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 new 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 Persons and its Restricted
Subsidiaries, in each case determined on a consolidated basis in accordance with
GAAP (provided, however, that the amounts set forth in clauses (ii) through (vi)
shall be included only to the extent such amounts reduce Consolidated Net
Income), less the aggregate amount of all non-cash items, determined on a
consolidated basis, to the extent such items increase Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934.
"Existing Indebtedness" means all of the Indebtedness of Kaiser and its
Restricted Subsidiaries that is outstanding on the date of the indenture.
"Fixed Charges" means, with respect to any Person for any period, the
aggregate amount of (i) interest, whether expensed or capitalized, paid, accrued
or scheduled to be paid or accrued during such period (except to the extent
accrued in a prior period) in respect of all Indebtedness of such Person and its
Restricted Subsidiaries (including (a) original issue discount on any
Indebtedness and (b) the interest portion of all deferred payment
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obligations, calculated in accordance with the effective interest method, in
each case to the extent attributable to such period) and (ii) dividend
requirements on preferred stock of such Person and its subsidiaries (whether in
cash or otherwise), but not including dividends payable solely in shares of
Qualified Capital Stock paid, accrued or scheduled to be paid or accrued during
such period (except to the extent accrued in a prior period), and excluding
items eliminated in consolidation. For purposes of this definition, (1) interest
on a Capitalized Lease Obligation shall be deemed to accrue at the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP,
(2) interest on Indebtedness that is determined on a fluctuating basis shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
of such Indebtedness in effect on the last day of the period with respect to
which Fixed Charges are being calculated, (3) interest on Indebtedness that may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate or other rates, shall be
deemed to have been based upon the rate actually chosen, or, if none, then based
upon such optional rate chosen as such Person may designate and (4) Fixed
Charges shall be increased or reduced by the net cost (including without
limitation amortization of discount) or benefit associated with Hedging
Obligations attributable to such period. For purposes of clause (ii) above,
dividend requirements (other than dividends payable solely in shares of
Qualified Capital Stock) shall be increased to an amount representing the pretax
earnings that would be required to cover such dividend requirements;
accordingly, the increased amount shall be equal to a fraction, the numerator of
which is such dividend requirements and the denominator of which is 1 minus the
applicable actual combined Federal, state, local and foreign income tax rate of
such Person and its subsidiaries (expressed as a decimal), on a consolidated
basis, for the fiscal year immediately preceding the date of the transaction
giving rise to the need to calculate Fixed Charges.
"Foreign Asset Sale" means any Asset Sale in respect of the Capital Stock
or assets of a Foreign Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, as in effect from time to time.
"Hedging Obligations" of any Person means the obligations of 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 or borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof); (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto), other than
standby letters of credit issued for the benefit of, or surety or performance
bonds issued by, such Person in the ordinary course of business to the extent
such letters of credit are not drawn upon; (iv) all obligations of such Person
with respect to Hedging Obligations; (v) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred by such Person in the ordinary course of
business in connection with obtaining goods, materials or services, which
payable is not overdue according to industry practice or the original terms of
sale unless such payable is being contested in good faith; (vi) the maximum
fixed repurchase price of all Disqualified Stock of such Person; (vii) all
Capitalized Lease Obligations of such Person; (viii) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person, other than a pledge by a Single Purpose Subsidiary of
the Capital Stock of an Unrestricted Subsidiary or Joint Venture of such Single
Purpose Subsidiary to secure Indebtedness of such Unrestricted Subsidiary or
Joint Venture incurred to finance a project constituting one or more Permitted
Businesses; (ix) all Indebtedness of others guaranteed by, or otherwise the
Liability of, such Person to the extent of such guarantee or Liability; and (x)
all Attributable Indebtedness. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above, the maximum liability of such Person for any
such contingent obligations at such date and, in the case of clause (viii), the
fair market value of any asset subject to a Lien securing the Indebtedness of
others on the date that the Lien attaches. For purposes of the first sentence
hereof, the "maximum fixed repurchase price" of any Disqualified Stock that does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Stock as if such Disqualified Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the indenture, and if such price is
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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.
"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 purchase (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
Kaiser or its Restricted Subsidiaries and (ii) any entity other than a
corporation in which Kaiser and its Restricted Subsidiaries own less than a
majority of the Common Equity of such entity.
"Junior Subordinated Indebtedness" of Kaiser at any date means Indebtedness
of Kaiser 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 new 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 Kaiser (including without limitation at the
option of the holder thereof) at any time prior to the maturity of the new
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) or 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).
"New Revolver" means _______________________________________, 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.
"Non-Recourse Indebtedness" of a Single Purpose Subsidiary means
Indebtedness for which (i) the sole legal recourse for collection of principal
and interest on such Indebtedness is against (a) the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days of the acquisition of such property or
(b) the Capital Stock of such Single Purpose Subsidiary, provided that such
Single Purpose Subsidiary has no assets other than the specific property
acquired with the proceeds of such Indebtedness plus a reasonable amount of
working capital, (ii) no assets of such Single Purpose Subsidiary, other than
the assets identified in clause (i)(a) of this definition, may be realized upon
in collection of principal or interest on such Indebtedness and (iii) neither
Kaiser nor any Restricted Subsidiary of Kaiser, other than the Single Purpose
Subsidiary, is directly or indirectly
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liable to make any payment thereon, has made any guarantee of payment or
performance of such Indebtedness or has pledged or granted any lien or
encumbrances on any assets as collateral or security with respect thereto, other
than the Capital Stock of the referent Single Purpose Subsidiary.
"Payment Restriction," with respect to a Subsidiary of any Person, means
any encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (i) such Subsidiary
to (a) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary of such Person, (b) make loans or advances to such Person or
any other Subsidiary of such Person or (c) transfer any of its properties or
assets to such Person or any other Subsidiary of such Person or (ii) such Person
or any other Subsidiary of such Person to 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 million or
more; and (iii) commercial paper given the highest rating by two established
national credit rating agencies and maturing not more than 180 days from the
date of acquisition thereof.
"Plan of Liquidation," with respect to any Person, means a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise): (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety; and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such Person to holders of
Capital Stock of such Person.
"Qualified Capital Stock" means Capital Stock that is not Disqualified
Stock.
"Refinancing Indebtedness" means Indebtedness of Kaiser or a Restricted
Subsidiary of Kaiser issued in exchange for, or the proceeds from the issuance
and sale or disbursement of which are used substantially concurrently to repay,
redeem, refund, refinance, discharge or otherwise retire for value, in whole or
in part (collectively, "repay"), or constituting an amendment, modification or
supplement to or a deferral or renewal of (collectively, an "amendment"), any
Indebtedness of Kaiser or any of its Restricted Subsidiaries existing
immediately after the original issuance of the new notes or incurred pursuant to
the provisions of the covenant described under "Limitations on Additional
Indebtedness" in a principal amount not in excess of the principal amount of the
Indebtedness so refinanced; provided that: (i) the Refinancing Indebtedness is
the obligation of the same Person, and is subordinated to the new notes, if at
all, to the same extent, as the Indebtedness being repaid; (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 new 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 new 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 new notes.
"Related Business Investment" means any Investment directly by Kaiser or
one or more of its wholly owned Restricted Subsidiaries in any business that is
closely related to or complements the business of Kaiser and its subsidiaries as
such business exists on the date thereof.
"Restricted Debt Payment" means any purchase, redemption, defeasance
(including without limitation in substance or legal defeasance) or other
acquisition or retirement for value, directly or indirectly, by Kaiser or a
Subsidiary of Kaiser, prior to the scheduled maturity or prior to any scheduled
repayment of principal or sinking
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fund payment, as the case may be, in respect of Indebtedness of Kaiser that is
subordinate in right of payment to the new notes other than a Restricted Debt
Payment made with the proceeds of a substantially concurrent sale (other than to
a Subsidiary of Kaiser or an employee stock ownership plan) of Kaiser's
Qualified Capital Stock, 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 Kaiser or an employee stock ownership plan) of Kaiser's
Qualified Capital Stock.
"Restricted Payment" means with respect to any Person: (i) the declaration
of any dividend (other than a dividend declared by a wholly owned Restricted
Subsidiary to holders of its Common Equity) or the making of any other payment
or distribution of cash, securities or other property or assets in respect of
such Person's Capital Stock, except that a dividend payable solely in Qualified
Capital Stock of such Person shall not constitute a Restricted Payment (for
purposes of this clause (i), the declaration of any such dividend, or the making
of any other such distribution, by any Restricted Subsidiary shall only
constitute a Restricted Payment to the extent of the amounts paid or payable to
Persons other than Kaiser 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 Kaiser which, as
of the determination date, is not an Unrestricted Subsidiary of Kaiser.
"Senior Indebtedness" means all Indebtedness of Kaiser 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
new notes.
"Single Purpose Subsidiary" of any Person means a Subsidiary of such Person
which has no subsidiaries other than Unrestricted Subsidiaries and the
activities of which are limited to (i) ownership of all or a portion of the
interests in a single project constituting one or more Permitted Businesses,
either directly or through the ownership of the Capital Stock of another Person,
and (ii) the development, engineering, design, project management, construction
or operation of such project.
"Unrestricted Subsidiary" means: [American Venture Holdings, Inc., a
Delaware corporation; American Venture Investments Incorporated, a Delaware
corporation; Excell Development Construction, Inc., a Delaware corporation;
International Systems, Inc., a Colorado corporation; ICF Environment, a French
corporation; ICF Kaiser Holdings Unlimited, Inc., a Delaware corporation; ICF
Leasing Corporation, Inc., a Delaware corporation; Cygna Energy Services, a
California corporation; and Cygna Energy Services Michigan, Inc., a Michigan
corporation], and each of the other subsidiaries of Kaiser so designated by a
resolution adopted by the Board of Directors of Kaiser and whose creditors have
no direct or indirect recourse (including without limitation recourse with
respect to the payment of principal of or interest on Indebtedness of such
Subsidiary) to Kaiser 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 Kaiser will be
prohibited after the date of the indenture from designating as an Unrestricted
Subsidiary any Subsidiary existing on the date of the indenture. The Board of
Directors of Kaiser may designate an Unrestricted Subsidiary to be a Restricted
Subsidiary, provided that (i) any such designation shall be deemed to be an
incurrence by Kaiser and its Restricted Subsidiaries of the Indebtedness (if
any) of such designated Subsidiary for purposes of the Limitations on Additional
Indebtedness covenant in the indenture as of the date of such designation and
(ii) immediately after giving effect to such designation and the incurrence of
any such additional Indebtedness, Kaiser and its Restricted Subsidiaries could
incur $1.00 of additional Senior Indebtedness pursuant to the Consolidated Fixed
Charge Coverage Ratio set forth in the Limitations on Additional Indebtedness
covenant described above. Any such designation or redesignation by the Board of
Directors shall be evidenced to the Trustee by the filing with the Trustee of a
certified copy of the Resolution of Kaiser's Board of Directors giving effect to
such designation or redesignation and an officer's
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certificate certifying that such designation or redesignation complied with the
foregoing conditions and setting forth the underlying calculations of such
certificate and upon which certificate the Trustee shall conclusively rely
without any investigation whatsoever.
"Voting Stock," with respect to any Person, means securities of any class
of Capital Stock of such Person entitling the holders thereof (whether at all
times or only so long as no senior class of stock has voting power by reason of
any contingency) to vote in the election of members of the board of directors of
such Person.
"Weighted Average Life to Maturity," when applied to any Indebtedness at
any date, means the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of Kaiser means a Restricted
Subsidiary of Kaiser, of which 100% of the Common Equity (except for directors'
qualifying shares or certain minority interests owned by other Persons solely
due to local 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 Kaiser or through one or more wholly owned Restricted Subsidiaries
of Kaiser.
Satisfaction and Discharge of Indebtedness
The indenture will be discharged and canceled upon payment of all the
principal of, and interest on, the new notes, redemption of all the new notes or
deposit with the Trustee of funds or obligations issued or guaranteed by the
United States sufficient for such payment or redemption.
The Trustee
The Trustee is [____________________].
The indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only those duties as are specifically set
forth in the indenture. During the existence of an Event of Default, the Trustee
will exercise those rights and powers vested in it under the indenture and will
use the same degree of care and skill in its exercise as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
The holders of a majority in outstanding amount of the new notes will have the
right, during the continuance of an Event of Default, to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the Trustee. Subject to these provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request of any of the holders of new notes, unless they shall offer to the
Trustee security or indemnity satisfactory to it.
The indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference into the indenture, contain limitations on
the rights of the Trustee, should it become a creditor of Kaiser, to obtain
payment of claims in certain cases, or to realize on property received in
respect of any of these claims as security or otherwise. The Trustee will be
permitted to engage in other transactions with Kaiser, provided, however, if it
acquires any conflicting interest within the meaning of the Trust Indenture Act
of 1939, as amended, it must eliminate this conflict or resign.
Book-Entry, Delivery and Form
The new notes will initially be issued in the form of one global new note.
The global new note will be deposited on the date of the consummation of the
exchange offer with the Trustee as custodian for The Depository Trust Company
and registered in the name of Cede & Co., as nominee of the DTC.
The DTC is a limited-purpose trust company that was created to hold
securities for its participating organizations and to facilitate the clearance
and settlement of transactions in securities between participants through
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electronic book-entry changes in accounts of its participants. The DTC's
participants include securities brokers and dealers, banks and trust companies,
clearing corporations and certain other organizations. Access to the DTC's
system is also available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not participants may
beneficially own securities held by or on behalf of the DTC only through the
DTC's participants or indirect participants.
Kaiser expects that pursuant to procedures established by the DTC:
. upon deposit of the global new note, the DTC will credit the accounts
of participants exchanging old notes for new notes with portions of
the principal amount of the global new note and
. ownership of the notes evidenced by the global new note will be shown
on, and the transfer of ownership will be effected only through,
records maintained by the DTC, with respect to the interests of the
DTC's participants and the DTC's indirect participants.
Holders of new notes are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer notes evidenced by the global
new note will be limited to such extent.
So long as the holder of the global new note is the registered owner of any
new notes, the global new note holder will be considered the sole holder under
the indenture of any notes evidenced by the global new note. Beneficial owners
of new notes evidenced by the global new note will not be considered the owners
or holders under the indenture for any purpose, including with respect to the
giving of any directions, instructions or approvals to the Trustee. Neither
Kaiser nor the Trustee will have any responsibility or liability for any aspect
of the records of the depository or for maintaining, supervising or reviewing
any records of the depository relating to the new notes.
Payments in respect of the principal of and interest, if any, on any new
notes registered in the name of the global new note holder on the applicable
record date will be payable by the Trustee to or at the direction of the global
new note holder in its capacity as the registered holder under the indenture.
Under the terms of the indenture, Kaiser and the Trustee may treat the persons
in whose names new notes, including the global new note, are registered as the
owners for the purpose of receiving these payments. Consequently, neither Kaiser
nor the Trustee has or will have any responsibility or liability for the payment
of these amounts to beneficial owners of new notes. Kaiser believes, however,
that it is currently the policy of the DTC to immediately credit the accounts of
the relevant participants with these payments, in amounts proportionate to their
respective holdings of beneficial interests in the relevant security as shown on
the records of the DTC. Payments by the DTC's participants and the DTC's
indirect participants to the beneficial owners of new notes will be governed by
standing instructions and customary practice and will be the responsibility of
the DTC's participants or the DTC's indirect participants.
Certificated Notes. Any beneficial owner of new notes evidenced by the
global new note may obtain notes in the form of registered certificated new
notes. If Kaiser notifies the Trustee in writing that the DTC is no longer
willing or able to act as a depository and Kaiser is unable to locate a
qualified successor within 90 days then, upon surrender by the global new note
holder of its global new note, new notes in this form will be issued to each
person that the global new note holder and the DTC identify as being the
beneficial owner of the related new notes.
Neither Kaiser nor the Trustee will be liable for any delay by the global
new note holder or the DTC in identifying the beneficial owners of notes and
Kaiser and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the global new note holder or the DTC for all
purposes.
Same-Day Settlement and Payment. The indenture will require that payments
for the notes represented by the global new note, including principal, interest
and liquidated damages, if any, be made by wire transfer of immediately
available funds to the accounts specified by the global new note holder. With
respect to certificated new notes, Kaiser will make all payments of principal,
interest and liquidated damages, if any, by wire transfer of immediately
available funds to the accounts specified by the holders or, if no account is
specified, by mailing a check to each holder's registered address. Secondary
trading in long-term notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, the notes represented
by the global new note are expected to trade in the DTC's same-day funds
settlement system, and any permitted secondary market trading
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activity in these notes will, therefore, be required by the DTC to be settled in
immediately available funds. Kaiser expects that secondary trading in the
certificated new notes will also be settled in immediately available funds.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1998, have been incorporated by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
LEGAL MATTERS
Squire, Sanders & Dempsey L.L.P. will pass upon the validity of the common
stock and debt securities to be issued in the exchange offer.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. Indemnification of directors and officers.
Under the Delaware General Corporation Law (the "Delaware Law"), a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to an action by reason of the person's past or present service
as a director, officer, employee, or agent of the corporation or of the person's
past or present service, at the corporation's request, as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise. Under the Delaware Law, a corporation may indemnify such
persons against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement that are actually and reasonably incurred by that
person in connection with such action. The Delaware Law provides, however, that
such person must have acted in good faith and in a manner that such person
reasonably believed to be in (or not opposed to) the corporation's best
interests. In respect of any criminal action or proceeding, an indemnifiable
person must have no reasonable cause to believe such conduct to be unlawful. In
addition, the Delaware Law permits no indemnification in any action by or in the
right of the corporation where such person has been adjudged liable to the
corporation, unless, and only to the extent that, a court determines that such
person fairly and reasonably is entitled to indemnity for such costs the court
deems proper in spite of liability adjudication.
The sections of the Company's Restated Certificate of Incorporation
and Amended and Restated Bylaws relating to indemnification of directors and
officers provide for mandatory indemnification of directors and officers on
generally the same terms as permitted by the Delaware Law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
3(a) Restated Certificate of Incorporation of ICF Kaiser
International, Inc. (restated through June 26, 1993)
(Incorporated by reference to Exhibit No. 3(a) to Quarterly
Report on Form 10-Q (Registrant No. 1-12248) for the second
quarter of fiscal 1994 filed with the Commission on October
15, 1 993)
3(b) Amended and Restated By-laws of ICF Kaiser International,
Inc. (as amended through June 23, 1995) (Incorporated by
reference to Exhibit No. 3(b) to Quarterly Report on Form
10-Q (Registrant No. 1-12248) for the second quarter of
fiscal 1995 filed with the Commission on October 13, 1995)
4(a) Indenture dated as of January 11, 1994, between ICF Kaiser
International, Inc. and The Bank of New York, as Trustee
(Incorporated by reference to Exhibit No. 4(a) to Quarterly
Report on Form 10-Q (Registrant No. 1-12248) for the third
quarter of fiscal 1994 filed with the Commission on January
14, 1994)
4(a)(1) First Supplemental Indenture dated as of February 17, 1995
(Incorporated by reference to Exhibit No. 4(a)(1) to Annual
Report on Form 10-K (Registrant No. 1-12248) for fiscal year
1995 filed with the Commission on May 23, 1995)
4(a)(2) Second Supplemental Indenture dated September 1, 1995
(Incorporated by reference to Exhibit No. 4(a)(2) to
Registration Statement on Form S-1 Registration No. 33-64655
filed with the Commission on November 30, 1995)
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4(a)(3) Third Supplemental Indenture dated October 20, 1995
(Incorporated by reference to Exhibit No. 4(a)(3) to
Registration Statement on Form S-1 Registration No. 33-64655
filed with the Commission on November 30, 1995)
4(a)(4) Fourth Supplemental Indenture dated as of March 8, 1996
(Incorporated by reference to Exhibit No. 4(a)(4) to
Transition Report on Form 10-K (Registrant No. 1-12248) for
the transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996)
4(a)(5) Fifth Supplemental Indenture dated as of June 24, 1996
(Incorporated by reference to Exhibit No. 4(a)(5) to
Registration Statement on Form S-1 Registration No. 333-
16937 filed with the Commission on November 27, 1996)
4(a)(6) Sixth Supplemental Indenture dated as of December 3, 1997
(Incorporated by reference to Exhibit No. 4(a)(6) to Annual
Report on Form 10-K (Registrant No. 1-12248) for fiscal year
1997 filed with the Commission on March 31, 1998)
4(a)(7) Seventh Supplemental Indenture dated as of August 13, 1998
(Incorporated by reference to Exhibit No. 4(a)(7) to
Quarterly Report on Form 10-Q (Registrant No. 1-12248) for
the third quarter of fiscal 1997 filed with the Commission
on November 16, 1998)
4(b) Form of 12% Senior Subordinated Note due 2003 (Incorporated
by reference to Exhibit No. 4(b) to Quarterly Report on Form
10-Q (Registrant No. 1-12248) for the third quarter of
fiscal 1994 filed with the Commission on January 14, 1994)
4(c) Rights Agreement, dated as of January 13, 1992, between ICF
Kaiser International, Inc. and Office of the Secretary, ICF
Kaiser International, Inc. as Rights Agent, including (1)
Form of Certificate of Designations of Series 4 Junior
Preferred Stock; (2) Form of Rights Certificate; and (3)
Summary of Rights to Purchase Preferred Stock (Incorporated
by reference to Exhibit No. 4(h) to Quarterly Report on Form
10-Q (Registrant No. 0-18025) for the third quarter of
fiscal 1992 filed with the Commission on January 14, 1992)
4(d) Indenture dated as of December 23, 1996, between ICF Kaiser
International, Inc. and The Bank of New York, as Trustee,
including Guarantees, dated December 23, 1996, by each of
the Subsidiary Guarantors (Incorporated by reference to
Exhibit No. 4(g) to Registration Statement on Form S-1
Registration No. 333-19519 filed with the Commission on
January 10, 1997)
4(d)(1) First Supplemental Indenture dated as of December 3, 1997
(Incorporated by reference to Exhibit No. 4(a)(6) to Annual
Report on Form 10-K (Registrant No. 1-12248) for fiscal year
1997 filed with the Commission on March 31, 1998)
4(d)(2) Second Supplemental Indenture dated as of August 13, 1998
(Incorporated by reference to Exhibit No. 4(g)(2) to
Quarterly Report on Form 10-Q (Registrant No. 1-12248) for
the third quarter of fiscal 1997 filed with the Commission
on November 16, 1998)
4(e) Form of 12% Senior Note due 2003, Series B(Incorporated by
reference to Exhibit No. 4(i) to Registration Statement on
Form S-1 Registration No. 333-19519 filed with the
Commission on January 10, 1997)
4(f) Warrant Agreement dated as of December 23, 1996, between ICF
Kaiser International, Inc. and The Bank of New York, as
Warrant Agent (Incorporated by reference to Exhibit No. 4(j)
to Registration Statement on Form S-1 Registration No. 333-
19519 filed with the Commission on January 10, 1997)
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4(g) Form of Warrant expiring December 31, 1999 issued under
Warrant Agreement dated as of December 23, 1996
(Incorporated by reference to Exhibit No. 4(k) to
Registration Statement on Form S-1 Registration No. 333-
19519 filed with the Commission on January 10, 1997)
*5 Opinion of Squire, Sanders & Dempsey L.L.P. regarding
securities being registered
10(a) Loan and Security Agreement dated as of December 18, 1998,
with Madeleine L.L.C. as agent (Incorporated by reference to
Exhibit No. 10(a) to Annual Report on Form 10-K (Registrant
No. 1-12248) filed with the Commission on April 15, 1999)
10(b) ICF Kaiser International, Inc. Employee Stock Ownership Plan
(as amended and restated as of March 1, 1993) (and further
amended with respect to name change only as of June 26,
1993) (Incorporated by reference to Exhibit No. 10(c) to
Quarterly Report on Form 10-Q (Registrant No. 1-12248) for
the second quarter of fiscal 1994 filed with the Commission
on October 15, 1993)
10(b)(1) Amendment No. 1 dated April 24, 1995 (Incorporated by
reference to Exhibit No. 10(l)(1) to Annual Report on Form
10-K (Registrant No. 1-12248) for fiscal 1995 filed with the
Commission on May 23, 1995)
10(b)(2) Amendment No. 2 dated December 15, 1995 (Incorporated by
reference to Exhibit No. 10(b)(2) to Transition Report on
Form 10-K (Registrant No. 1-12248) for the transition period
from March 1, 1995 to December 31, 1995 filed with the
Commission on March 29, 1996)
10(b)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by
reference to Exhibit No. 10(b)(3) to Registration Statement
on Form S-1 Registration No. 333-19519 filed with the
Commission on January 10, 1997)
10(c) Trust Agreement with Vanguard Fiduciary Trust Company dated
as of August 31, 1995, for ICF Kaiser International, Inc.
Employee Stock Ownership Plan (Incorporated by reference to
Exhibit No. 10(c) to Registration Statement on Form S-1
Registration No. 33-64655 filed with the Commission on
November 30, 1995)
10(d) ICF Kaiser International, Inc. Retirement Plan (as amended
and restated as of March 1, 1993) (and further amended with
respect to name change only as of June 26, 1993)
(Incorporated by reference to Exhibit No. 10(d) to Quarterly
Report on Form 10-Q (Registrant No. 1-12248) for the second
quarter of fiscal 1994 filed with the Commission on October
15, 1993)
10(d)(1) Amendment No. 1 dated April 24, 1995 (Incorporated by
reference to Exhibit No. 10(d)(1) to Annual Report on Form
10-K (Registrant No. 1-12248) filed with the Commission on
May 23, 1995)
10(d)(2) Amendment No. 2 dated December 15, 1995 (Incorporated by
reference to Exhibit No. 10(d)(2) to Transition Report on
Form 10-K (Registrant No. 1-12248) for the transition period
from March 1, 1995 to December 31, 1995 filed with the
Commission on March 29, 1996)
10(d)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by
reference to Exhibit No. 10(d)(3) to Registration Statement
on Form S-1 Registration No. 333-19519 filed with the
Commission on January 10, 1997)
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<PAGE>
10(e) Trust Agreement with Vanguard Fiduciary Trust Company dated
as of August 31, 1995, for ICF Kaiser International, Inc.
Retirement Plan (Incorporated by reference to Exhibit No.
10(e) to Registration Statement on Form S-1 Registration No.
33-64655 filed with the Commission on November 30, 1995)
10(f) Consolidated, Amended and Restated Deed of Lease Agreement
between HMCE Associates Limited Partnership R.L.L.P. (as
Landlord) and ICF Kaiser Hunters Branch Leasing, Inc. (as
Tenant), dated November 12, 1997, for the lease of the
Registrant's headquarters in Fairfax, Virginia known as
Hunters Branch--Phase I (Incorporated by reference to
Exhibit No. 10(g) to Annual Report on Form 10-K (Registrant
No. 1-12248) filed with the Commission on March 25, 1997)
10(g) Consolidated, Amended and Restated Deed of Lease Agreement
between HMCE Associates Limited Partnership R.L.L.P. (as
Landlord) and ICF Kaiser Hunters Branch Leasing, Inc. (as
Tenant), dated November 12, 1997, for the lease of space in
the building adjacent to the Registrant's headquarters in
Fairfax, Virginia known as Hunters Branch--Phase II
(Incorporated by reference to Exhibit No. 10(h) to Annual
Report on Form 10-K (Registrant No. 1-12248) filed with the
Commission on March 25, 1997)
10(h) Contribution Agreement by and among HMCE Associates Limited
Partnership R.L.L.P.; ICF Kaiser Hunters Branch Leasing,
Inc.; and IFA Nutley Partners, LLC dated November 3, 1997
(Incorporated by reference to Exhibit No. 10(i) to Annual
Report on Form 10-K (Registrant No. 1-12248) filed with the
Commission on March 25, 1997)
10(i) ICF Kaiser International, Inc. Stock Incentive Plan (as
amended and restated through March 1, 1996) (Incorporated by
reference to Exhibit No. 10(j) to Registration Statement on
Form S-1 Registration No. 333-16937 filed with the
Commission on November 27, 1996)
10(j) Contract (#DE-AC3495RF00825) between Kaiser-Hill Company,
LLC, a subsidiary of the Corporation, and the U.S.
Department of Energy dated as of April 4, 1995 (IN
ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS EXHIBIT NO.
10(j) WAS FILED IN PAPER ON MAY 23, 1995, ON FORM SE
PURSUANT TO A CONTINUING HARDSHIP EXEMPTION and is
incorporated herein by reference thereto)
10(j)(1) Modifications 1 to 40 to Contract #DE-AC3495RF00825
(Incorporated by reference to Exhibit No. 10(p)(l) to
Registration Statement on Form S-1 Registration No. 333-
16937 filed with the Commission on November 27, 1996)
10(j)(2) Modifications 42 to 46 to Contract #DE-AC3495RF00825
(Modification 41 not received) (Incorporated by reference to
Exhibit No. 10(p)(2) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on March
25, 1997)
10(j)(3) Modifications 47 to 81 to Contract #DE-AC3495RF00825
(Modifications 72 and 78 not received) (Incorporated by
reference to Exhibit No. 10(j)(3) to Annual Report on Form
10-K (Registrant No. 1-12248) filed with the Commission on
April 15, 1999)
10(k) ICF Kaiser International, Inc. Section 401(k) Plan (as
amended and restated as of March 1, 1993) (and further
amended with respect to name change only as of June 26,
1993) (Incorporated by reference to Exhibit No. 10(f) to
Quarterly Report on Form 10-Q (Registrant No. 1-12248) for
the second quarter of fiscal 1994 filed with the Commission
on October 15, 1993)
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<PAGE>
10(k)(1) Amendment No. 1 dated April 24, 1995 (Incorporated by
reference to Exhibit No. 10(p)(1) to Annual Report on Form
10-K (Registrant No. 1-12248) for fiscal 1995 filed with the
Commission on May 23, 1995)
10(k)(2) Amendment No. 2 dated December 15, 1995 (Incorporated by
reference to Exhibit No. 10(p)(2) to Transition Report on
Form 10-K (Registrant No. 1-12248) for the transition period
from March 1, 1995 to December 31, 1995 filed with the
Commission on March 29, 1996)
10(k)(3) Amendment No. 3 dated December 13, 1996 (Incorporated by
reference to Exhibit No. 10(q)(3) to Registration Statement
on Form S-1 Registration No. 333-19519 filed with the
Commission on January 10, 1997)
10(l) Trust Agreement with Vanguard Fiduciary Trust Company dated
as of March 1, 1989, for the ICF Kaiser International, Inc.
Section 401(k) Plan (Incorporated by reference to Exhibit
No. 28(b) to Registration Statement on Form S-8 Registration
No. 33-51460 filed with the Commission on August 31, 1992)
Exhibit No. 10--Material Contracts (management contracts, compensatory plans, or
arrangements)
10(aa) Agreement dated as of May 19, 1997 with James O. Edwards,
Chairman and Chief Executive Officer of the Registrant
(Incorporated by reference to Exhibit No. 10(ll) to
Quarterly Report on Form 10-Q (Registrant No. 1- 12248) for
the second quarter of fiscal 1997 filed with the Commission
on August 14, 1997)
10(aa)(1) Agreement dated as of November 6, 1998, terminating Mr.
Edwards' employment agreement (Incorporated by reference to
Exhibit No. 10(aa)(1) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on April
15, 1999)
10(bb) ICF Kaiser International, Inc. 1998 Compensation (IC) Plan
for Senior Executives (adopted by the Board of Directors on
February 27, 1998) (Incorporated by reference to Exhibit No.
10(bb) to Annual Report on Form 10-K (Registrant No. 1-
12248) filed with the Commission on March 25, 1997)
10(cc) ICF Kaiser International, Inc. Non-employee Director Stock
Option Plan (as amended and restated as of June 26, 1993)
(Incorporated by reference to Exhibit No. 10(bb) to
Quarterly Report on Form 10-Q (Registrant No. 1-12248) for
the second quarter of fiscal 1994 filed with the Commission
on October 15, 1993)
10(dd) Agreement dated as of May 19, 1997 with Marc Tipermas,
President and Chief Operating Officer of the Registrant
(Incorporated by reference to Exhibit No. 10(mm) to
Quarterly Report on Form 10-Q (Registrant No. 1- 12248) for
the second quarter of fiscal 1997 filed with the Commission
on August 14, 1997)
10(dd)(1) Agreement dated as of August 7, 1998, terminating Dr.
Tipermas' employment agreement (Incorporated by reference to
Exhibit No. 10(dd)(1) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on April
15, 1999)
10(ee) ICF Kaiser International, Inc. Senior Executive Officers
Severance Plan as approved by the Compensation Committee of
the Board of Directors on April 4, 1994, and adopted by the
Board of Directors on May 5, 1994, as further amended
through May 1, 1997 (Incorporated by reference to Exhibit
No. 10(ee) to Annual Report on Form 10-K (Registrant No. 1-
12248) filed with the Commission on March 25, 1997)
10(ff) Employment Agreement with Thomas P. Grumbly, Executive Vice
President of the Registrant, effective as of April 7, 1997
(Incorporated by reference to Exhibit No. 10(ff)
II-5
<PAGE>
to Annual Report on Form 10-K (Registrant No. 1-12248) filed
with the Commission on April 15, 1999)
10(ff)(1) Letter dated March 15,1999, amending Mr. Grumbly's
employment agreement (Incorporated by reference to Exhibit
No. 10(ff)(1) to Annual Report on Form 10-K (Registrant No.
1-12248) filed with the Commission on April 15, 1999)
10(gg) ICF Kaiser International, Inc. Consultants, Agents and Part-
Time Employees Stock Plan dated as of June 23, 1995
(Incorporated by reference to Exhibit No. 99 to Registration
Statement on Form S-8 Registration No. 33-60665 filed with
the Commission on June 28, 1995)
10(hh) ICF Kaiser International, Inc. Stock Incentive Plan (as
amended and restated through March 1, 1996) (Incorporated by
reference to Exhibit No. 10(j) to Registration Statement on
Form S-1 Registration No. 333-16937 filed with the
Commission on November 27, 1996)
10(ii) Amended Employment Agreement dated as of December 1, 1996,
with David Watson, Executive Vice President and President,
ICF Kaiser Engineers and Constructors Group of the
Registrant (Incorporated by reference to Exhibit No. 10(kk)
to Annual Report on Form 10-K (Registrant No. 1-12248) filed
with the Commission on March 25, 1997)
10(ii)(1) Agreement and Mutual Release dated August 17, 1998,
terminating Mr. Watson's employment agreement (Incorporated
by reference to Exhibit No. 10(ii)(1) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the Commission
on April 15, 1999)
10(jj) Intentionally Omitted
10(kk) Employment Agreement with Michael F. Gaffney, Executive Vice
President of the Registrant, effective as of January 1, 1997
(Incorporated by reference to Exhibit No. 10(kk) to Annual
Report on Form 10-K (Registrant No. 1-12248) for fiscal year
1997 filed with the Commission on March 31, 1998)
10(kk)(1) Agreement dated March 8, 1999, terminating Mr. Gaffney's
employment agreement (Incorporated by reference to Exhibit
No. 10(kk)(1) to Annual Report on Form 10-K (Registrant No.
1-12248) filed with the Commission on April 15, 1999)
10(ll) Letter Agreement with Cowen Incorporated and Jarrod M.
Cohen, dated as of March 13, 1998 (Incorporated by reference
to Exhibit No. 10(ll) to Annual Report on Form 10-K
(Registrant No. 1-12248) for fiscal year 1997 filed with the
Commission on March 31, 1998) (Incorporated by reference to
Exhibit No. 10(mm) to Annual Report on Form 10-K (Registrant
No. 1-12248) filed with the Commission on March 25, 1997)
10(mm) ICF Kaiser International, Inc. Non-employee Directors
Compensation and Phantom Stock Plan as adopted by the Board
of Directors on February 28, 1997, with an effective date of
March 1, 1997 (Incorporated by reference to Exhibit No.
10(mm) to Annual Report on Form 10-K (Registrant No. 1-
12248) filed with the Commission on April 15, 1999)
10(nn) Letter Agreement with Tennenbaum & Co., L.L.C. and Michael
E. Tennenbaum, dated as of March 13, 1998 (Incorporated by
reference to Exhibit No. 10(nn) to Annual Report on Form 10-
K (Registrant No. 1-12248) for fiscal year 1997 filed with
the Commission on March 31, 1998)
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<PAGE>
10(oo) Employment Agreement with Keith M. Price, President and
Chief Executive Officer of the Registrant, effective as of
August 27, 1998 (Incorporated by reference to Exhibit No.
10(oo) to Quarterly Report on Form 10-Q (Registrant No. 1-
12248) for the third quarter of 1998 filed with the
Commission on November 16, 1998)
10(oo)(1) Terms of Promotion for Mr. Price effective as of November 4,
1998 (Incorporated by reference to Exhibit No. 10(oo)(1) to
Annual Report on Form 10-K (Registrant No. 1-12248) filed
with the Commission on April 15, 1999)
10(oo)(2) Agreement dated April 27, 1999, terminating Mr. Price's
employment agreement
10(pp) Employment Agreement with James J. Maiwurm, President and
Chief Executive Officer of the Registrant, effective as of
June 1, 1999
10(qq) Employment Agreement with S. Robert Cochran, Executive Vice
President and President, North America of the Registrant,
effective as of June 1, 1999
10(rr) Employment Agreement with Timothy P. O'Connor, Executive
Vice President and Chief Financial Officer of the
Registrant, effective as of June 1, 1999
*12 Statement regarding computation of ratio of earnings to
fixed charges
21 Consolidated subsidiaries of the Registrant as of July 9,
1999
*23(a) Consent of Squire, Sanders & Dempsey L.L.P. (included in
opinion filed as Exhibit 5)
23(b) Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included as part of the signature page to
this Form S-4 Registration Statement)
*25 Statement of Eligibility and Qualification on Form T-1 of
Trustee
*99 Form of Letter of Transmittal and Consent Form and related
documents
____________
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(2) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 23(a) or Section 15(d) of the
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<PAGE>
Securities Exchange Act of 1934 (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(4) The undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers and sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered
would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering
price set forth in "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13
of 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(b) That for the purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Fairfax, Virginia on July 9, 1999.
ICF KAISER INTERNATIONAL, INC.
By: /s/ James J. Maiwurm
--------------------
Name: J. J. Maiwurm
Title: Chairman, President and
Chief Executive Officer
- -------------------------------------------------------------------------------
POWER OF ATTORNEY
Each of the undersigned hereby appoints James J. Maiwurm, Timothy P.
O'Connor and Shaun M. Martin, and each of them severally, his or her true and
lawful attorneys-in-fact to execute (in the name of and on behalf of and as
attorneys for the undersigned) this Registration Statement on Form S-4 and any
and all pre- and post-effective amendments to this Registration Statement on
Form S-4 (including all amendments filed pursuant to Rule 462(b)), and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting each of such attorneys-in-
fact full power and authority to do and perform each and every act requisite and
necessary to be done as fully and to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that such attorneys-
in-fact, or each of them, may lawfully do or cause to be done by virtue hereof.
- -------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed below by the following
persons in the capacities and on the dates indicated.
(1) Principal executive officer
Date: July 8, 1999 By /s/ James J. Maiwurm
------------------------------
James J. Maiwurm
Chairman, President and Chief
Executive Officer
(2) Principal financial and accounting officer
Date: July 8, 1999 By /s/ Timothy P. O'Connor
------------------------------
Timothy P. O'Connor
Executive Vice President and
Chief Financial Officer
(3) The Board of Directors
Date: July 8, 1999 By /s/ Tony Coelho
------------------------------
Tony Coelho
Director
S-1
<PAGE>
Date: July 8, 1999 By /s/ Jarrod M. Cohen
---------------------------------
Jarrod M. Cohen
Director
Date: July 8, 1999 By /s/ James O. Edwards
---------------------------------
James O. Edwards
Director
Date: , 1999 By _______________________________
Thomas C. Jorling
Director
Date: July 8, 1999 By /s/ James J. Maiwurm
---------------------------------
James J. Maiwurm
Director
Date: , 1999 By _______________________________
Hazel R. O'Leary
Director
Date: July 8, 1999 By /s/ Keith M. Price
---------------------------------
Keith M. Price
Director
Date: July 8, 1999 By /s/ James T. Rhodes
---------------------------------
James T. Rhodes
Director
Date: July 8, 1999 By /s/ Michael Tennenbaum
---------------------------------
Michael E. Tennenbaum
Director
S-2
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ---------- ----------------------
3(a) Restated Certificate of Incorporation of ICF Kaiser
International, Inc. (restated through June 26, 1993)
(Incorporated by reference to Exhibit No. 3(a) to
Quarterly Report on Form 10-Q (Registrant No. 1-
12248) for the second quarter of fiscal 1994 filed
with the Commission on October 15, 1993)
3(b) Amended and Restated By-laws of ICF Kaiser
International, Inc. (as amended through June 23,
1995) (Incorporated by reference to Exhibit No. 3(b)
to Quarterly Report on Form 10-Q (Registrant No. 1-
12248) for the second quarter of fiscal 1995 filed
with the Commission on October 13, 1995)
4(a) Indenture dated as of January 11, 1994, between ICF
Kaiser International, Inc. and The Bank of New York,
as Trustee (Incorporated by reference to Exhibit No.
4(a) to Quarterly Report on Form 10-Q (Registrant No.
1-12248) for the third quarter of fiscal 1994 filed
with the Commission on January 14, 1994)
4(a)(1) First Supplemental Indenture dated as of February 17,
1995 (Incorporated by reference to Exhibit No.
4(a)(1) to Annual Report on Form 10-K (Registrant No.
1-12248) for fiscal year 1995 filed with the
Commission on May 23, 1995)
4(a)(2) Second Supplemental Indenture dated September 1, 1995
(Incorporated by reference to Exhibit No. 4(a)(2) to
Registration Statement on Form S-1 Registration No.
33-64655 filed with the Commission on November 30,
1995)
4(a)(3) Third Supplemental Indenture dated October 20, 1995
(Incorporated by reference to Exhibit No. 4(a)(3) to
Registration Statement on Form S-1 Registration No.
33-64655 filed with the Commission on November 30,
1995)
4(a)(4) Fourth Supplemental Indenture dated as of March 8,
1996 (Incorporated by reference to Exhibit No.
4(a)(4) to Transition Report on Form 10-K (Registrant
No. 1-12248) for the transition period from March 1,
1995 to December 31, 1995 filed with the Commission
on March 29, 1996)
4(a)(5) Fifth Supplemental Indenture dated as of June 24,
1996 (Incorporated by reference to Exhibit No.
4(a)(5) to Registration Statement on Form S-1
Registration No. 333-16937 filed with the Commission
on November 27, 1996)
4(a)(6) Sixth Supplemental Indenture dated as of December 3,
1997 (Incorporated by reference to Exhibit No.
4(a)(6) to Annual Report on Form 10-K (Registrant No.
1-12248) for fiscal year 1997 filed with the
Commission on March 31, 1998)
4(a)(7) Seventh Supplemental Indenture dated as of August 13,
1998 (Incorporated by reference to Exhibit No.
4(a)(7) to Quarterly Report on Form 10-Q (Registrant
No. 1-12248) for the third quarter of fiscal 1997
filed with the Commission on November 16, 1998)
4(b) Form of 12% Senior Subordinated Note due 2003
(Incorporated by reference to Exhibit No. 4(b) to
Quarterly Report on Form 10-Q (Registrant No. 1-
12248) for the third quarter of fiscal 1994 filed
with the Commission on January 14, 1994)
4(c) Rights Agreement, dated as of January 13, 1992,
between ICF Kaiser International, Inc. and Office of
the Secretary, ICF Kaiser International, Inc. as
Rights Agent, including (1) Form of Certificate of
Designations of Series 4 Junior Preferred Stock; (2)
Form of
<PAGE>
Rights Certificate; and (3) Summary of Rights to
Purchase Preferred Stock (Incorporated by reference
to Exhibit No. 4(h) to Quarterly Report on Form 10-Q
(Registrant No. 0-18025) for the third quarter of
fiscal 1992 filed with the Commission on January 14,
1992)
4(d) Indenture dated as of December 23, 1996, between ICF
Kaiser International, Inc. and The Bank of New York,
as Trustee, including Guarantees, dated December 23,
1996, by each of the Subsidiary Guarantors
(Incorporated by reference to Exhibit No. 4(g) to
Registration Statement on Form S-1 Registration No.
333-19519 filed with the Commission on January 10,
1997)
4(d)(1) First Supplemental Indenture dated as of December 3,
1997 (Incorporated by reference to Exhibit No.
4(a)(6) to Annual Report on Form 10-K (Registrant No.
1-12248) for fiscal year 1997 filed with the
Commission on March 31, 1998)
4(d)(2) Second Supplemental Indenture dated as of August 13,
1998 (Incorporated by reference to Exhibit No.
4(g)(2) to Quarterly Report on Form 10-Q (Registrant
No. 1-12248) for the third quarter of fiscal 1997
filed with the Commission on November 16, 1998)
4(e) Form of 12% Senior Note due 2003, Series B
(Incorporated by reference to Exhibit No. 4(i) to
Registration Statement on Form S-1 Registration No.
333-19519 filed with the Commission on January 10,
1997)
4(f) Warrant Agreement dated as of December 23, 1996,
between ICF Kaiser International, Inc. and The Bank
of New York, as Warrant Agent (Incorporated by
reference to Exhibit No. 4(j) to Registration
Statement on Form S-1 Registration No. 333-19519
filed with the Commission on January 10, 1997)
4(g) Form of Warrant expiring December 31, 1999 issued
under Warrant Agreement dated as of December 23, 1996
(Incorporated by reference to Exhibit No. 4(k) to
Registration Statement on Form S-1 Registration No.
333-19519 filed with the Commission on January 10,
1997)
*5 Opinion of Squire, Sanders & Dempsey L.L.P. regarding
securities being registered
10(a) Loan and Security Agreement dated as of December 18,
1998, with Madeleine L.L.C. as agent (Incorporated by
reference to Exhibit No. 10(a) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the
Commission on April 15, 1999)
10(b) ICF Kaiser International, Inc. Employee Stock
Ownership Plan (as amended and restated as of March
1, 1993) (and further amended with respect to name
change only as of June 26, 1993) (Incorporated by
reference to Exhibit No. 10(c) to Quarterly Report on
Form 10-Q (Registrant No. 1-12248) for the second
quarter of fiscal 1994 filed with the Commission on
October 15, 1993)
10(b)(1) Amendment No. 1 dated April 24, 1995 (Incorporated by
reference to Exhibit No. 10(l)(1) to Annual Report on
Form 10-K (Registrant No. 1-12248) for fiscal 1995
filed with the Commission on May 23, 1995)
10(b)(2) Amendment No. 2 dated December 15, 1995 (Incorporated
by reference to Exhibit No. 10(b)(2) to Transition
Report on Form 10-K (Registrant No. 1-12248) for the
transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996)
<PAGE>
10(b)(3) Amendment No. 3 dated December 13, 1996 (Incorporated
by reference to Exhibit No. 10(b)(3) to Registration
Statement on Form S-1 Registration No. 333-19519
filed with the Commission on January 10, 1997)
10(c) Trust Agreement with Vanguard Fiduciary Trust Company
dated as of August 31, 1995, for ICF Kaiser
International, Inc. Employee Stock Ownership Plan
(Incorporated by reference to Exhibit No. 10(c) to
Registration Statement on Form S-1 Registration No.
33-64655 filed with the Commission on November 30,
1995)
10(d) ICF Kaiser International, Inc. Retirement Plan (as
amended and restated as of March 1, 1993) (and
further amended with respect to name change only as
of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(d) to Quarterly Report on Form 10-Q
(Registrant No. 1-12248) for the second quarter of
fiscal 1994 filed with the Commission on October 15,
1993)
10(d)(1) Amendment No. 1 dated April 24, 1995 (Incorporated by
reference to Exhibit No. 10(d)(1) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the
Commission on May 23, 1995)
10(d)(2) Amendment No. 2 dated December 15, 1995 (Incorporated
by reference to Exhibit No. 10(d)(2) to Transition
Report on Form 10-K (Registrant No. 1-12248) for the
transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996)
10(d)(3) Amendment No. 3 dated December 13, 1996 (Incorporated
by reference to Exhibit No. 10(d)(3) to Registration
Statement on Form S-1 Registration No. 333-19519
filed with the Commission on January 10, 1997)
10(e) Trust Agreement with Vanguard Fiduciary Trust Company
dated as of August 31, 1995, for ICF Kaiser
International, Inc. Retirement Plan (Incorporated by
reference to Exhibit No. 10(e) to Registration
Statement on Form S-1 Registration No. 33-64655 filed
with the Commission on November 30, 1995)
10(f) Consolidated, Amended and Restated Deed of Lease
Agreement between HMCE Associates Limited Partnership
R.L.L.P. (as Landlord) and ICF Kaiser Hunters Branch
Leasing, Inc. (as Tenant), dated November 12, 1997,
for the lease of the Registrant's headquarters in
Fairfax, Virginia known as Hunters Branch--Phase I
(Incorporated by reference to Exhibit No. 10(g) to
Annual Report on Form 10-K (Registrant No. 1-12248)
filed with the Commission on March 25, 1997)
10(g) Consolidated, Amended and Restated Deed of Lease
Agreement between HMCE Associates Limited Partnership
R.L.L.P. (as Landlord) and ICF Kaiser Hunters Branch
Leasing, Inc. (as Tenant), dated November 12, 1997,
for the lease of space in the building adjacent to
the Registrant's headquarters in Fairfax, Virginia
known as Hunters Branch--Phase II (Incorporated by
reference to Exhibit No. 10(h) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the
Commission on March 25, 1997)
10(h) Contribution Agreement by and among HMCE Associates
Limited Partnership R.L.L.P.; ICF Kaiser Hunters
Branch Leasing, Inc.; and IFA Nutley Partners, LLC
dated November 3, 1997 (Incorporated by reference to
Exhibit No. 10(i) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on
March 25, 1997)
10(i) ICF Kaiser International, Inc. Stock Incentive Plan
(as amended and restated through March 1, 1996)
(Incorporated by reference to Exhibit No. 10(j) to
Registration Statement on Form S-1 Registration No.
333-16937 filed with the Commission on November 27,
1996)
<PAGE>
10(j) Contract (#DE-AC3495RF00825) between Kaiser-Hill
Company, LLC, a subsidiary of the Corporation, and
the U.S. Department of Energy dated as of April 4,
1995 (IN ACCORDANCE WITH RULE 202 OF REGULATION S-T,
THIS EXHIBIT NO. 10(j) WAS FILED IN PAPER ON MAY 23,
1995, ON FORM SE PURSUANT TO A CONTINUING HARDSHIP
EXEMPTION and is incorporated herein by reference
thereto)
10(j)(1) Modifications 1 to 40 to Contract #DE-AC3495RF00825
(Incorporated by reference to Exhibit No. 10(p)(l) to
Registration Statement on Form S-1 Registration No.
333-16937 filed with the Commission on November 27,
1996)
10(j)(2) Modifications 42 to 46 to Contract #DE-AC3495RF00825
(Modification 41 not received) (Incorporated by
reference to Exhibit No. 10(p)(2) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the
Commission on March 25, 1997)
10(j)(3) Modifications 47 to 81 to Contract #DE-AC3495RF00825
(Modifications 72 and 78 not received) (Incorporated
by reference to Exhibit No. 10(j)(3) to Annual Report
on Form 10-K (Registrant No. 1-12248) filed with the
Commission on April 15, 1999)
10(k) ICF Kaiser International, Inc. Section 401(k) Plan
(as amended and restated as of March 1, 1993) (and
further amended with respect to name change only as
of June 26, 1993) (Incorporated by reference to
Exhibit No. 10(f) to Quarterly Report on Form 10-Q
(Registrant No. 1-12248) for the second quarter of
fiscal 1994 filed with the Commission on October 15,
1993)
10(k)(1) Amendment No. 1 dated April 24, 1995 (Incorporated by
reference to Exhibit No. 10(p)(1) to Annual Report on
Form 10-K (Registrant No. 1-12248) for fiscal 1995
filed with the Commission on May 23, 1995)
10(k)(2) Amendment No. 2 dated December 15, 1995 (Incorporated
by reference to Exhibit No. 10(p)(2) to Transition
Report on Form 10-K (Registrant No. 1-12248) for the
transition period from March 1, 1995 to December 31,
1995 filed with the Commission on March 29, 1996)
10(k)(3) Amendment No. 3 dated December 13, 1996 (Incorporated
by reference to Exhibit No. 10(q)(3) to Registration
Statement on Form S-1 Registration No. 333-19519
filed with the Commission on January 10, 1997)
10(l) Trust Agreement with Vanguard Fiduciary Trust Company
dated as of March 1, 1989, for the ICF Kaiser
International, Inc. Section 401(k) Plan (Incorporated
by reference to Exhibit No. 28(b) to Registration
Statement on Form S-8 Registration No. 33-51460 filed
with the Commission on August 31, 1992)
Exhibit No. 10--Material Contracts (management contracts, compensatory plans, or
arrangements)
10(aa) Agreement dated as of May 19, 1997 with James O.
Edwards, Chairman and Chief Executive Officer of the
Registrant (Incorporated by reference to Exhibit No.
10(ll) to Quarterly Report on Form 10-Q (Registrant
No. 1- 12248) for the second quarter of fiscal 1997
filed with the Commission on August 14, 1997)
10(aa)(1) Agreement dated as of November 6, 1998, terminating
Mr. Edwards' employment agreement (Incorporated by
reference to Exhibit No. 10(aa)(1) to Annual Report
on Form 10-K (Registrant No. 1-12248) filed with the
Commission on April 15, 1999)
<PAGE>
10(bb) ICF Kaiser International, Inc. 1998 Compensation (IC)
Plan for Senior Executives (adopted by the Board of
Directors on February 27, 1998) (Incorporated by
reference to Exhibit No. 10(bb) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the
Commission on March 25, 1997)
10(cc) ICF Kaiser International, Inc. Non-employee Director
Stock Option Plan (as amended and restated as of June
26, 1993) (Incorporated by reference to Exhibit No.
10(bb) to Quarterly Report on Form 10-Q (Registrant
No. 1-12248) for the second quarter of fiscal 1994
filed with the Commission on October 15, 1993)
10(dd) Agreement dated as of May 19, 1997 with Marc
Tipermas, President and Chief Operating Officer of
the Registrant (Incorporated by reference to Exhibit
No. 10(mm) to Quarterly Report on Form 10-Q
(Registrant No. 1- 12248) for the second quarter of
fiscal 1997 filed with the Commission on August 14,
1997)
10(dd)(1) Agreement dated as of August 7, 1998, terminating Dr.
Tipermas' employment agreement (Incorporated by
reference to Exhibit No. 10(dd)(1) to Annual Report
on Form 10-K (Registrant No. 1-12248) filed with the
Commission on April 15, 1999)
10(ee) ICF Kaiser International, Inc. Senior Executive
Officers Severance Plan as approved by the
Compensation Committee of the Board of Directors on
April 4, 1994, and adopted by the Board of Directors
on May 5, 1994, as further amended through May 1,
1997 (Incorporated by reference to Exhibit No. 10(ee)
to Annual Report on Form 10-K (Registrant No. 1-
12248) filed with the Commission on March 25, 1997)
10(ff) Employment Agreement with Thomas P. Grumbly,
Executive Vice President of the Registrant, effective
as of April 7, 1997 (Incorporated by reference to
Exhibit No. 10(ff) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on
April 15, 1999)
10(ff)(1) Letter dated March 15,1999, amending Mr. Grumbly's
employment agreement (Incorporated by reference to
Exhibit No. 10(ff)(1) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on
April 15, 1999)
10(gg) ICF Kaiser International, Inc. Consultants, Agents
and Part-Time Employees Stock Plan dated as of June
23, 1995 (Incorporated by reference to Exhibit No. 99
to Registration Statement on Form S-8 Registration
No. 33-60665 filed with the Commission on June 28,
1995)
10(hh) ICF Kaiser International, Inc. Stock Incentive Plan
(as amended and restated through March 1, 1996)
(Incorporated by reference to Exhibit No. 10(j) to
Registration Statement on Form S-1 Registration No.
333-16937 filed with the Commission on November 27,
1996)
10(ii) Amended Employment Agreement dated as of December 1,
1996, with David Watson, Executive Vice President and
President, ICF Kaiser Engineers and Constructors
Group of the Registrant (Incorporated by reference to
Exhibit No. 10(kk) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on
March 25, 199 7)
10(ii)(1) Agreement and Mutual Release dated August 17, 1998,
terminating Mr. Watson's employment agreement
(Incorporated by reference to Exhibit No. 10(ii)(1)
to Annual Report on Form 10-K (Registrant No. 1-
12248) filed with the Commission on April 15, 1999)
10(jj) Intentionally Omitted
<PAGE>
10(kk) Employment Agreement with Michael F. Gaffney,
Executive Vice President of the Registrant, effective
as of January 1, 1997 (Incorporated by reference to
Exhibit No. 10(kk) to Annual Report on Form 10-K
(Registrant No. 1-12248) for fiscal year 1997 filed
with the Commission on March 31, 1998)
10(kk)(1) Agreement dated March 8, 1999, terminating Mr.
Gaffney's employment agreement (Incorporated by
reference to Exhibit No. 10(kk)(1) to Annual Report
on Form 10-K (Registrant No. 1-12248) filed with the
Commission on April 15, 1999)
10(ll) Letter Agreement with Cowen Incorporated and Jarrod
M. Cohen, dated as of March 13, 1998 (Incorporated by
reference to Exhibit No. 10(ll) to Annual Report on
Form 10-K (Registrant No. 1-12248) for fiscal year
1997 filed with the Commission on March 31, 1998)
(Incorporated by reference to Exhibit No. 10(mm) to
Annual Report on Form 10-K (Registrant No. 1-12248)
filed with the Commission on March 25, 1997)
10(mm) ICF Kaiser International, Inc. Non-employee Directors
Compensation and Phantom Stock Plan as adopted by the
Board of Directors on February 28, 1997, with an
effective date of March 1, 1997 (Incorporated by
reference to Exhibit No. 10(mm) to Annual Report on
Form 10-K (Registrant No. 1-12248) filed with the
Commission on April 15, 1999)
10(nn) Letter Agreement with Tennenbaum & Co., L.L.C. and
Michael E. Tennenbaum, dated as of March 13, 1998
(Incorporated by reference to Exhibit No. 10(nn) to
Annual Report on Form 10-K (Registrant No. 1-12248)
for fiscal year 1997 filed with the Commission on
March 31, 1998)
10(oo) Employment Agreement with Keith M. Price, President
and Chief Executive Officer of the Registrant,
effective as of August 27, 1998 (Incorporated by
reference to Exhibit No. 10(oo) to Quarterly Report
on Form 10-Q (Registrant No. 1-12248) for the third
quarter of 1998 filed with the Commission on November
16, 1998)
10(oo)(1) Terms of Promotion for Mr. Price effective as of
November 4, 1998 (Incorporated by reference to
Exhibit No. 10(oo)(1) to Annual Report on Form 10-K
(Registrant No. 1-12248) filed with the Commission on
April 15, 1999)
10(oo)(2) Agreement dated April 27, 1999, terminating Mr.
Price's employment agreement
10(pp) Employment Agreement with James J. Maiwurm, President
and Chief Executive Officer of the Registrant,
effective as of June 1, 1999
10(qq) Employment Agreement with S. Robert Cochran,
Executive Vice President and President, North America
of the Registrant, effective as of June 1, 1999
10(rr) Employment Agreement with Timothy P. O'Connor,
Executive Vice President and Chief Financial Officer
of the Registrant, effective as of June 1, 1999
*12 Statement regarding computation of ratio of earnings
to fixed charges
21 Consolidated subsidiaries of the Registrant as of
July 9, 1999
*23(a) Consent of Squire, Sanders & Dempsey L.L.P. (included
in opinion filed as Exhibit 5)
23(b) Consent of PricewaterhouseCoopers LLP
24 Power of Attorney (included as part of the signature
page to this Form S-4 Registration Statement)
<PAGE>
*25 Statement of Eligibility and Qualification on Form
T-1 of Trustee
*99 Form of Letter of Transmittal and Consent Form and
related documents
_____________
* To be filed by amendment.
<PAGE>
EXHIBIT 10(00)(2)
AGREEMENT
AGREEMENT (this "Agreement"), dated as of April 27, 1999, by and between
Keith M. Price, a resident of the State of Idaho ("Price") and his wife
Georganne Price ("Spouse") on the one hand, and ICF Kaiser International, Inc.,
a Delaware corporation (the "Company") on the other hand. As used in this
Agreement, unless the context indicates otherwise, the term "ICF" shall be
deemed to refer to ICF Kaiser International, Inc. and each and every one of its
affiliated entities.
WITNESSETH
WHEREAS, Price presently serves as a member of the Board of Directors and
President and Chief Executive Officer of ICF Kaiser International, Inc. and as a
director and officer of certain subsidiaries and affiliates of ICF Kaiser
International, Inc.; and
WHEREAS, Price and ICF Kaiser International, Inc. are parties to an
Employment Agreement dated August 5, 1998, including any attachments thereto and
any other agreements referred to therein or entered into pursuant thereto
(collectively, the "Executive Agreement"); and
WHEREAS, Price and ICF wish consensually to terminate the Executive
Agreement and sever the employment relationship between Price and ICF.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises hereinafter provided and of the actions taken pursuant thereto, the
parties agree as follows:
<PAGE>
1. Effective Date. This Agreement shall be executed and become effective
--------------
April 30, 1999 (the "Effective Date").
2. Termination of Executive Agreement. As of the Effective Date, the
----------------------------------
Executive Agreement shall be deemed terminated and shall have no further force
or effect. Price and ICF agree that there are no existing defaults by either
party under the Executive Agreement and that, as of the Effective Date, each
party had fully performed all of its obligations to the other party under the
Executive Agreement.
3. Resignation and Termination of Existing Employment Relationship. As of
---------------------------------------------------------------
the Effective Date, Price shall be deemed to have resigned from all corporate
offices of ICF, and from all offices and directorships of ICF's subsidiaries,
joint ventures, and affiliated companies, organizations and entities, provided
--------
that Price shall be deemed to have resigned as President and Chief Executive
Officer of ICF Kaiser International, Inc. as of April 17, 1999. Price's
employment by ICF shall be deemed to have terminated as of the close of business
on the Effective Date. Price shall not be deemed to have resigned from the ICF
Kaiser International, Inc. Board of Directors. Following the Effective Date he
shall be compensated for service as such director on the same basis as other
non-employee directors.
4. Records and Bank Accounts. As soon as practicable after the Effective
-------------------------
Date, ICF shall take such steps as may be necessary to (a) reflect in the
corporate records of ICF, its subsidiaries, joint ventures, and affiliated
companies, organizations and entities that Price has resigned as an officer of
the Company and as an officer and director of ICF's subsidiaries, joint
ventures, and affiliated companies, organizations and entities; and (b) remove
Price as an authorized signatory on all corporate bank accounts.
-2-
<PAGE>
5. Payment for Cancellation of the Employment Agreement and Release. In
----------------------------------------------------------------
consideration of the cancellation of the Executive Agreement and the execution
by Price and Spouse of the Release attached hereto, the following payments shall
be made to Price and by wire transfer or direct deposit as directed by Price,
except that Price hereby requests voluntary withholding of Federal and state
wage-type withholding in respect of such amount (calculated as though such
amount were wages and in accordance with Price's elections): $ 677,450 within
ten (10) business days after the Effective Date.
6. Consultation. During the period from the Effective Date until
------------
September 30, 2000, Price will consult with ICF as and when requested by the
Company's Chief Executive Officer or the Board of Directors, such consultations
to be at times reasonably convenient to both Price and ICF. Such consultations
shall include, without limitation, Price's service as Chair of the Company's
Strategic Planning Committee. The activities of such Committee are outlined on
Exhibit D attached hereto. Price's service as Chair of the Strategic Planning
Committee shall include his active promotion of the interests of the Company as
set forth in Exhibit D. Price shall be compensated monthly for services provided
pursuant to this Section 6 at the rate of $200 per hour with a $10,000 per month
minimum. In the event of Price's death or disability prior to September 30,
2000, and provided that he actively consults with the Company as contemplated by
this Section 6 prior to such death or disability, the minimum payments
contemplated by the preceding sentence shall continue to be made to Price (or
Price's estate) through September 30, 2000. ICF shall reimburse Price for
reasonable expenses incurred in connection with his consultation with ICF,
subject to normal ICF reimbursement procedures.
7. Health and Insurance Benefits. Until April 30, 1999, Price and his
-----------------------------
dependents shall receive the same health, welfare and life insurance benefits
that would have been made
-3-
<PAGE>
available to them had Price continued as an employee, and Price's family health
benefits shall continue thereafter until April 30, 1999. After April 30, 1999,
Price may elect to continue his family health benefits provided through ICF to
the extent permitted by Federal COBRA laws in effect on the Effective Date. For
purposes of COBRA compliance, the date on which Price's health benefits
terminate shall be April 30, 1999. Except as specifically provided in this
Section 7, all health, welfare and insurance benefits shall terminate on April
30, 1999.
8. Options. ICF and Price acknowledge and agree that (a) Price holds and
shall continue to hold the following options to purchase shares of ICF common
stock granted pursuant to ICF's Stock Incentive Plan and (b) such options have
the expiration dates set forth below:
<TABLE>
<CAPTION>
Fully
Total Vested Unvested Vesting Vested Expiration
Grant Date Options Options Options Schedule Date Date Price
<S> <C> <C> <C> <C> <C> <C> <C>
09/03/98 150,000 75,000 75,000 1 year 08/04/99 09/03/01 $1.39
11/04/98 50,000 0 50,000 1 year 11/04/99 11/04/01 $1.24
</TABLE>
Notwithstanding the terms of the grant of the options granted on September 3,
1998, and November 4, 1998, such options shall be fully vested as of the
Effective Date. Prior to the expiration dates referred to above, the options
referred to in this Section 8 shall be exercisable by Price or, in the event of
his death, his estate.
9. Payment of Certain Expenses.
---------------------------
(a) In connection with Price's move from the Washington, DC area to
Boise, Idaho, the Company will reimburse Price for the following costs and
expenses, provided in each case that such costs are reasonable and
--------
documentation is provided:
-4-
<PAGE>
1) the cost of moving Price's family and household goods from the
Washington, DC area to Boise, Idaho;
2) costs related to termination of leases of home and furniture in
Washington, DC area; and
3) travel expense for Price and his wife to return to Boise, Idaho from
the Washington, DC area.
(b) The expenses set forth in subsection (a) above shall, to the
extent appropriate, be "grossed up." For this purpose, "grossed-up" means in
case of a reimbursed expense that is taxable to Price and/or Spouse and is not
deductible for Federal income tax purposes, that Price and/or Spouse will be
paid an amount which, after Federal income taxes on such amount, will equal
the amount of the non-deductible reimbursable expense.
10. Non Compete/Non Solicitation.
-----------------------------
(a) Except as provided in paragraph (d) below, Price agrees that for
a period commending as of the Effective Date and running through September 30,
2000 (the "Non-Competition Period"), Price will not, except as otherwise
provided herein, engage or participate, directly or indirectly, as principal,
agent, employee, employer, consultant, stockholder, partner or in any other
individual capacity whatsoever, in the conduct of, planning for, or management
of, or own any stock or any other equity investment in or debt of, any business
which is directly in competition with any business conducted by the Company.
For the purpose of this Agreement, a business shall be considered to
be directly in competition with the business of the Company only if such
business is engaged in providing services (i) similar to (x) any service
currently provided by the Company or provided by the Company during Prices'
employment by the Company; (y) any services in the ordinary course
-5-
<PAGE>
during the Non-Competition Period which evolves from or results from
enhancements to the services provided by the Company as of the Effective Date
hereof or during the Non-Competition Period; or (z) any future service of the
Company as to which the Executive materially and substantially participated in
the design or enhancement, and (ii) to customers and clients of the type served
by the Company during the Non-Competition Period.
(b) Non-Solicitation of Employees. During the Non-Competition Period,
-----------------------------
Price will not (for his own benefit or for the benefit of any person or entity
other than the Company) solicit, or assist any person or entity other the
Company to solicit, any officer, director, executive or employee of the Company
or its affiliates to leave his or her employment.
(c) Reasonableness. Price acknowledges the (i) the markets served by
--------------
the Company are national and international and are not dependent on the
geographic location of executive personnel or the businesses by which they are
employed, (ii) the length of the Non-Competition Period is related to the length
of the Employment Period and the Company's agreement to provide severance
benefits and pay for consultation as set forth in Sections 5 and 6; and (iii)
the above covenants are manifestly reasonable on their face, and the parties
expressly agree that such restrictions have been designed to be reasonable and
no greater than is required for the protection of the Company.
(c) Investments. Nothing in the Agreement shall be deemed to prohibit
-----------
Price from owning equity or debt investments in any corporation, partnership or
other entity which is competitive with the Company, provided that such
--------
investments (i) are passive investments and constitute five percent (5%) or less
of the outstanding equity securities of such an entity the equity securities of
which are traded on a national securities exchange of other public market, or
(ii) are approved by the Company.
-6-
<PAGE>
11. Indemnification and Notice Concerning Nonrenewal of Directors and
-----------------------------------------------------------------
Officers Insurance Coverage.
- ---------------------------
(a) ICF acknowledges that its Certificate of Incorporation and By-
Laws and the charters and by-laws of certain of its direct and indirect
subsidiaries and pension trusts include provisions designed to provide to former
officers, directors and trustees indemnification in respect of threatened and
commenced actions, suits and proceedings in which an individual is a party or is
threatened to be made a party by reason of the fact that he is or was an
officer, director or trustee of ICF or such subsidiaries or trusts. ICF shall,
and shall cause such subsidiaries and trusts to, continue to provide
indemnification to Price under such provisions to the maximum extent permitted
by applicable law.
(b) So long as ICF maintains directors and officers liability
insurance coverage, or liability insurance for the trustees of its pension
trusts, Price shall be covered by such insurance, with respect to his tenure
with ICF, on the same terms as other existing and former officers, directors and
trustees. If, for any reason, ICF shall not continue to have such insurance
coverage in effect on terms substantially comparable to those presently in
effect, ICF shall provide Price with written notice of the cancellation or
nonrenewal of such coverage not less than 20 days prior to the effectiveness of
such cancellation or nonrenewal.
12. Employment References. Nothing in this Agreement shall prevent either
---------------------
party from stating the fact that Price was employed by ICF, the address of his
work location, the dates of his employment, his job titles and job duties, his
rate of pay, or that he resigned from his position as an officer of ICF on or
about the Effective Date.
13. Proprietary Information and Business and Personal Property
----------------------------------------------------------
-7-
<PAGE>
(a) Price will not directly or indirectly disclose any confidential
records, information, documents, data, formulae, specifications or other trade
secrets owned by ICF to any person, or use any such information, except (i) as
appropriate in connection with the activities contemplated by Section 6 or (ii)
pursuant to court order or as a result of a valid order, subpoena or discovery
request (and in the case of such disclosure Price will provide ICF with written
notice of the same sufficiently in advance of the required disclosure date to
allow ICF to lodge appropriate objections to such disclosure). The immediately
preceding sentence shall not apply to information: (x) disclosure of which is
required by law or by process lawfully issued; (y) which has been disclosed to
Price or to a third party by a person not under a duty of confidentiality with
respect to that information; or (z) which later enters the public domain through
no fault or breach of duty by Price.
(b) Price shall have no ownership interest in any records, files,
information, documents, or the like that belong to ICF which Price has used,
prepared or come into contact with during his employment by ICF, and, except as
appropriate in connection with the activities contemplated by Section 6, Price
shall not remove written copies thereof from the premises of ICF or any of its
affiliates without ICF's written consent. Within ten business days after the
Effective Date, Price shall have returned to ICF all ICF property (other than
the Toshiba Tecra 510 CDT laptop computer Serial No.02744 381-3 (ICF ID No.
1874) and associated software referred to in Section 13(c)below) that Price has
in his possession. Nothing in this Agreement shall limit Price's right to remove
personal effects from his office within five business days after the Effective
Date.
(c) Price shall be entitled to use the ICF-owned laptop computer and
associated software to support his consultation with the Company. Until the end
of his
-8-
<PAGE>
consulting services with the Company, ICF will allow Price to have access to his
voice mailbox on the ICF telephone system and to his ICF e-mail address.
14. No Disparaging Statements. Except as required by applicable law or
-------------------------
legal process:
(a) Each of ICF and Price covenant and agree that following the
Effective Date neither of them nor their or its officers, directors, affiliates,
agents and/or employees shall make disparaging statements concerning the others
(for this purpose, a disparaging statement shall refer to a statement or
statements that, individually or in the aggregate, have a materially detrimental
effect on the business affairs of ICF or Price, as the case may be); and
(b) Except for the press release attached as Exhibit A, neither the
Company, nor any director or executive officer of the Company other than Price,
James Maiwurm and Tony Coelho shall make any public statement or statement to
the press concerning Price or his tenure with the Company.
15. Confidentiality of Agreement. Except as required by applicable law or
----------------------------
legal process or as necessary to fulfill the terms of this Agreement or the
General Releases incorporated herein, or in connection with a party's family,
business, or tax affairs (in which case disclosure shall be on a confidential
basis to the extent practicable), the parties shall not disclose the terms or
provisions of this Agreement or such General Releases, or the fact of their
existence, to any person or entity.
16. No Admissions. Nothing contained in this Agreement or the General
-------------
Releases incorporated herein shall be considered an admission by either party of
any wrongdoing under any Federal, state or local statute, public policy, tort
law, contract law, common law or otherwise.
-9-
<PAGE>
17. No Third Party Claims. Each party represents and warrants that no
---------------------
other person or entity has, or to the best knowledge of such party claims, any
interest in any potential claims, demands, causes of action, obligations,
damages or suits released pursuant to this Agreement; that it or he is the owner
of all other claims, demands, causes of action, obligations, damages or suits so
released; that it or he has full and complete authority to execute this
Agreement; and that it or he has not sold, assigned, transferred, conveyed or
otherwise disposed of any claim, demand, cause of action, obligation or
liability subject to this Agreement and the General Releases contemplated
hereby.
18. Full Releases. Price and Spouse, on the one hand, and the Company, on
-------------
the other hand, each agrees and acknowledges that the consideration received by
it or them for this Agreement and the General Releases incorporated herein, and
for the execution hereof and thereof, shall constitute full payment,
satisfaction, discharge, compromise and release of and from all matters for
which the other party has mutually released it or them herein and in such
General Releases
19. Expenses. ICF shall reimburse Price for all fees and expenses of
--------
Price's counsel incident to the negotiation of this Agreement, up to a maximum
of $1,000. The amount of such reimbursement shall be considered a payment in
cancellation of rights under the Executive Agreement. Except as provided in the
first sentence of this Section 19, each party shall pay its own costs incident
to the negotiation, preparation, performance, execution, and enforcement of this
Agreement, and all fees and expenses of its or his counsel, accountants, and
other consultants, advisors and representatives for all activities of such
persons undertaken in connection with this Agreement.
-10-
<PAGE>
20. No Third Party Beneficiaries. Except as expressly stated herein, the
-----------------------------
parties do not intend to make any person or entity who is not a party to this
Agreement a beneficiary hereof, and this Agreement should not be construed as
being made for the benefit of any person or entity not expressly provided for
herein.
21. Advice of Counsel. The parties acknowledge that they have been
------------------
advised by competent legal counsel in connection with the execution of this
Agreement, that they have read each and every paragraph of this Agreement and
that they understand their respective rights and obligations. Price and Spouse
declare that they have completely read this Agreement, fully understand its
terms and contents, and freely, voluntarily and without coercion enters into
this Agreement.
22. Entire Agreement. This Agreement constitutes the entire agreement of
-----------------
the parties with respect to the subject matter hereof, and all prior
negotiations and representations are merged herein or replaced hereby.
23. Severability. If any provision of this Agreement is held illegal,
-------------
invalid or unenforceable, such illegality, invalidity, or unenforceability shall
not affect any other provision hereof. Any such provision and the remainder of
this Agreement shall, in such circumstances, be deemed modified to the extent
necessary to render enforceable the remaining provisions hereof.
24. Governing Law. This Agreement shall be construed and enforced in
--------------
accordance with the law of the Commonwealth of Virginia.
25. Releases and Effectiveness. This Agreement and General Releases in
--------------------------
the forms attached hereto as Exhibits B and C, which are incorporated herein by
reference, have been executed by or on behalf of Price and Spouse, on the one
hand, and the Company, on the other
-11-
<PAGE>
hand, on the dates shown opposite their respective signatures below, and this
Agreement and such General Releases are effective as of the Effective Date.
26. Disputes. In the event that any dispute arises between the parties
--------
hereto pertaining to the subject matter of this Agreement and the parties are
unable to resolve such dispute within a reasonable time through negotiations,
the parties shall attempt to resolve such dispute pursuant to a mutually agreed
upon alternate dispute resolution mechanism. Such resolution of the dispute
shall be initiated by written notice given by one party to the other. If within
10 days after submission of such notice the parties have not agreed upon an
alternate dispute resolution mechanism, the dispute shall be submitted to
arbitration in Fairfax County, Virginia. In the event the parties are unable to
agree on an alternate dispute resolution mechanism and the dispute is to be
resolved pursuant to arbitration, each party shall appoint an arbitrator within
20 days after the original notice of the dispute, and the two arbitrators so
chosen shall promptly appoint a third arbitrator. If either party fails to name
an arbitrator as aforesaid, such arbitrator shall be designated by the American
Arbitration Association. If any arbitrator becomes disabled, resigns or is
otherwise unable to discharge the arbitrator's duties, the arbitrator's
successor shall be appointed in the same manner as such arbitrator was
appointed. The parties shall not be permitted to conduct discovery in connection
with the arbitration, and, subject only to the availability of the arbitrators,
the arbitration hearing shall be held within 30 days after appointment of the
third arbitrator. Except as aforesaid, the arbitration shall be conducted under
the applicable rules of the American Arbitration Association. Any determination
of the arbitrators shall be binding and conclusive upon the parties hereto.
Application may be made by either party to any court having jurisdiction thereof
for judicial
-12-
<PAGE>
confirmation of any determination by the arbitrators and/or for an order of
enforcement of any such decision.
27. Counterparts. This Agreement may be executed in counterparts, all of
------------
which shall be considered one and the same agreement, and shall become effective
on the Effective Date.
IN WITNESS WHEREOF, Keith M. Price and Georganne Price, on the one hand,
and ICF Kaiser International, Inc., on the other hand, have executed this
Agreement.
ICF Kaiser International, Inc. KEITH M. PRICE GEORGANNE PRICE
By: __________________________ ______________________ _____________________
Dated: April 27, 1999 Dated: April 27, 1999 Dated: April 27, 1999
-13-
<PAGE>
EXHIBIT A
PRESS RELEASE
<PAGE>
EXHIBIT B
GENERAL RELEASE
Each of KEITH M. PRICE and his wife, GEORGANNE PRICE, on behalf of
themselves and their heirs, successors, agents, executors, administrators,
attorneys and assigns, in consideration of the terms of the Agreement effective
as of April 30, 1999 by and between ICF Kaiser International, Inc. ("ICF") and
the two of us (the "Agreement") and the execution of a General Release
("Release") by ICF, with effect as of April 30, 1999, hereby release and forever
discharge ICF and any and all of its present, former and future affiliated
entities, subsidiaries, departments, officers, directors, employees,
representatives, agents, attorneys, successors and assigns, from any and all
claims and causes of action (whether known or unknown) which either or us have
against them, in law or equity, relating to or arising under: Federal, Virginia,
or other state or local law; any employment contract or related agreements; any
employment statute or regulation; any employment discrimination law, including
but not limited to Title VII of the Civil Rights Act of 1964, as amended, and
the Age Discrimination in Employment Act of 1967, as amended; the Employee
Retirement Income Security Act of 1974, as amended; any other Federal, state, or
local civil rights, pension or labor law; contract law; tort law; and common
law, including but not limited to wrongful discharge or misrepresentation or
infliction of emotional distress; provided, however, that neither of us release
-------- -------
ICF from any of its obligations under the Agreement and/or under the terms of an
employee benefit plan, program or arrangement (other than any such plan, program
or arrangement providing for the payment of severance benefits). For purposes of
this Release, ICF shall be deemed to include each and every one of its
affiliated entities described in the Agreement.
<PAGE>
Each of us further agrees not to sue or otherwise institute or cause to be
instituted or in any way voluntarily participate in the prosecution of any
complaints or charges against any persons or entities released herein in any
Federal, state, District of Columbia or other court, administrative agency or
other forum concerning any claims released herein.
Except as required by law or as necessary to fulfill the terms of the
Agreement or this Release, or as necessary in connection with personal business
or tax affairs (in which case disclosure shall be on a confidential basis to the
extent practicable), each of us agree not to disclose the terms or provisions of
this Release, or the fact of its existence, to any person or entity.
Each of us understands and agrees that nothing contained in this Release is
to be considered an admission by ICF of any wrongdoing under any Federal, state,
or local statute, public policy, tort law, contract law, or common law.
Each of us acknowledges that we have been advised to consult with an
attorney prior to executing this Release. Each of us further acknowledge that we
have been given a period of at least twenty-one (21) days within which to
consider and execute this Release, unless we voluntarily choose to execute this
Release before the end of the said twenty-one (21) day period. Once executed, we
understand that we have seven (7) days following the execution of this Release
to revoke it, and that this Release is not effective or enforceable until after
said seven (7) day period.
-2-
<PAGE>
Each of us acknowledges that each has read this Release, that we understand
it, and that each is executing it freely and voluntarily. Each of us further
understands that once this Release becomes effective (after the seven (7) day
revocation period), it can only be altered, revoked or rescinded with the
express written permission of ICF.
Each of us further acknowledges and agrees that, in the event either of us
exercise our revocation rights within the specified seven-day period, all rights
and obligations under this Release and the Agreement will become null and void.
This Release is executed in connection with, and is subject to terms of,
the Agreement.
Date: April 27, 1999
______________________
Keith M. Price
______________________
Georganne Price
SUBSCRIBED AND SWORN to before me this ____ day of April 27, 1999.
______________________
Notary
My commission expires:
-3-
<PAGE>
ELECTION TO EXECUTE
PRIOR TO EXPIRATION OF
TWENTY-ONE DAY CONSIDERATION PERIOD
I, Keith M. Price, understand that I have at least twenty-one (21) days
within which to consider and execute the above General Release. However, after
consulting counsel, I have freely and voluntarily elected to execute the General
Release before the twenty-one (21) day period has expired.
Date: April 27, 1999 __________________________
Keith M. Price
I, Georganne Price, understand that I have at least twenty-one (21) days
within which to consider and execute the above General Release. However, after
consulting counsel, I have freely and voluntarily elected to execute the General
Release before the twenty-one (21) day period has expired.
Date: April 27, 1999 __________________________
Georganne Price
-4-
<PAGE>
EXHIBIT C
GENERAL RELEASE
ICF Kaiser International, Inc. ("ICF"), on behalf of ICF and all of its
current, former or future affiliated entities, subsidiaries, departments,
officers, directors, employees, representatives, agents, attorneys, successors
and assigns, in consideration of the terms of the Agreement effective as of
April 30, 1999 by and between Keith M. Price ("Price") and Georganne Price
("Spouse"), on the one hand, and ICF, on the other hand, (the "Agreement") and
the execution of a General Release ("Release") by Price and Spouse, with effect
as of April 30, 1999, hereby releases and forever discharges Price and Spouse
and their heirs, successors, agents, executors, administrators, attorneys and
assigns, from any and all claims and causes of action (whether known or unknown)
which ICF has against them, in law or equity, relating to or arising under:
Federal, Virginia or other state or local law; any employment contract; any
employment statute or regulation, contract law, tort law; and common law,
including but not limited to actions for fraud and breach of contract; provided,
--------
however, that ICF does not hereby release Price and Spouse from any of their
- -------
obligations under the Agreement.
ICF will not sue or otherwise institute or cause to be instituted or in any
way voluntarily participate in the prosecution of any complaints or charges
against Price or Spouse or the other persons released herein in any Federal,
state, District of Columbia, or other court, administrative agency or other
forum concerning any claims released herein.
<PAGE>
Except as required by law or as necessary to fulfill the terms of the
Agreement or this Release, or as necessary in connection with ICF's business,
legal or tax affairs (in which case disclosure shall be on a confidential basis
to the extent practicable), ICF agrees not to disclose the terms or provisions
of this Release, or the fact of its existence, to any person or entity
(including employees of ICF).
ICF understands and agrees that nothing contained in this Release is to be
considered an admission by Price or Spouse of any wrongdoing under any Federal,
state, or local statute, public policy, tort law, contract law, or common law.
ICF acknowledges that this Release can be altered, revoked or rescinded
only with the express written permission of Price and Spouse.
This Release is executed in connection with, and is subject to the terms
of, the Agreement.
ICF KAISER INTERNATIONAL, INC.
Date: April 27, 1999 By:________________________________
Its Duly Authorized Representative
SUBSCRIBED AND SWORN to before me this ______ day of April 1999.
_______________________
Notary
My commission expires:
-2-
<PAGE>
EXHIBIT D
STRATEGIC PLANNING COMMITTEE
----------------------------
Overview
- --------
Under the direction of Keith Price, the Strategic Planning Committee will:
1. Provide an evaluation of the remaining E&C lines of business.
2. Make recommendations as to what lines of business the Company should
focus on or de-emphasize, as the case may be.
3. Recommend targeted line of business opportunities not presently being
pursued, or not being pursued with sufficient vigor, that are consistent with
the Company's current operational structure and financial position.
4. Suggest potential customer-specific targeted business development
opportunities in which Keith Price will play a lead role.
5. Develop performance guidelines by which to measure the Company's
performance and progress toward meeting industry standards.
Evaluation of Current Lines of Business
- ---------------------------------------
The Committee will evaluate the Company's current lines of business,
including an analysis of the following factors:
1. Recent (1997, 1998, 1/st/ Quarter 1999) profitability
2. Current performance
3. Strength of backlog and "pipeline"
4. Working capital requirements
5. Current market perception of Company - including historical strengths
6. Strengths/weaknesses of existing personnel
<PAGE>
7. Overview of domestic and international customer/market growth
prospects
8. Recommendation for enhanced performance and growth
Prioritization of Existing Business Opportunities
- -------------------------------------------------
Based on the evaluation of the Company's existing lines of business as
described above, the Committee will formulate recommendations for areas of
emphasis and de-emphasis among the Company's current lines of business. The
analysis will include suggestions for domestic/international business mix,
government private business mix, engineering versus construction management, and
areas in which the Company should strive to become a leading turnkey services
provider. This evaluation should include recommended action plans for each
existing line of business.
Targeted Lines of Business Development
- --------------------------------------
The Committee will identify business activities consistent with the
Company's strengths and financial position that are not presently being pursued,
or not being pursued with sufficient vigor. This analysis will focus on new
lines of business opportunities that take advantage of the Company's current
strengths with little or no investment. The Committee will identify potential
domestic and international strategic alliances that could expand business
opportunities with little or not cash investment.
Targeted Customer-Specific Development Opportunities
- ----------------------------------------------------
Mr. Price has a wealth of contacts in the E&C business, and with the
assistance of other Committee members, Mr. Price will formulate plans as to how
the Company may take advantage of those contacts. This will include specific
action plans for each potential targeted customer, including identification of
individuals within the Company who should assist Mr. Price in follow-up
activities.
-2-
<PAGE>
Performance Guidelines
- ----------------------
The Committee will recommend yardsticks by which the Company should measure
its performance and progress toward achieving industry standards. For example,
the Committee may formulate recommendations as to overhead/indirect expense
levels, business development expenditures, target margin pricing guidelines,
etc.
-3-
<PAGE>
EXHIBIT 10(pp)
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of the 1st day of June, 1999, by and between ICF
Kaiser International, Inc., a Delaware corporation (the "Corporation"), and
James J. Maiwurm, a resident of the Commonwealth of Virginia (the "Executive").
WHEREAS, the Executive commenced employment on April 19, 1999 as President
and Chief Executive Officer of ICF Kaiser International, Inc.; and
WHEREAS, the Executive and the Corporation wish to formalize the terms of
the employment relationship;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, and intending to be legally bound hereby, the Corporation and the
Executive agree as follows:
1. Employment; Duties.
-------------------
(a) Employment and Employment Period. The Corporation shall employ
--------------------------------
the Executive to serve as President and Chief Executive Officer of ICF Kaiser
International, Inc., as set forth below, for a continuous period of 2 years
commencing June 1, 1999 (the "Employment Period"). The Employment Period may be
extended by mutual agreement of the parties.
(b) Offices, Duties and Responsibilities. Executive has been elected
------------------------------------
President and Chief Executive Officer of ICF Kaiser International, Inc. The
Executive shall report to the Board of Directors of the Corporation (the
"Board"). The Executive will have full authority over all operations of the
Corporation. The Executive's offices shall be located at the Corporation's
headquarters building in Fairfax, Virginia.
(c) Devotion to Interests of the Corporation. Except as expressly
----------------------------------------
authorized by the Board, or the Compensation and Human Resources Committee of
the Board (the "Compensation Committee"), until the effective date of notice of
termination of the Executive's employment by either the Executive or the
Corporation, the Executive will not, without the prior written consent of the
Company, directly or indirectly engage in any other business activities or
pursuits, except activities in connection with (i) any professional, charitable
or civic activities (other than as an officer or board member), (ii) personal
investments, and (iii) serving as an executor, trustee or in another similar
fiduciary capacity for a non-commercial entity; provided, however, that any such
activities do not materially interfere with the performance of his
responsibilities and obligations pursuant to this Agreement. The Executive
shall use his best efforts to promote the interests and welfare of the
Corporation.
<PAGE>
2. Compensation and Fringe Benefits.
--------------------------------
(a) Base Compensation. The Corporation shall pay the Executive a base
-----------------
salary at the rate of $375,000 per year through June 1, 2000, in installments in
accordance with the Corporation's regular practice for compensating executive
personnel. The amount of the Executive's base compensation shall be subject to
adjustment as recommended by the Compensation Committee.
(b) Annual Incentive Bonus. The Executive is entitled to an annual
----------------------
incentive bonus in an amount not to exceed $387,500 (representing a bonus
opportunity equal to 50% of the Executive's initial annual base salary that is
contingent on satisfaction of operational objectives and a special bonus
opportunity of $200,000 that is contingent on satisfaction of recapitalization
objectives) payable at the time and contingent upon the extent to which the
Corporation achieves specified objectives set forth at Attachment A. In
subsequent years, Executive shall be entitled to a bonus opportunity as set by
the Compensation Committee in its discretion.
(c) Retention Bonus. The Executive shall be entitled to a retention
---------------
bonus in the amount of $90,000, payable promptly following execution of this
Agreement. The Executive will be entitled to a second retention bonus in the
amount of $90,000, payable on May 1, 2000, provided that the Executive is
employed with the Corporation on May 1, 2000.
(d) Fringe Benefits. The Executive shall also be entitled to such
---------------
fringe benefits as are generally made available by the Corporation to executive
personnel. Such benefits shall include participation in the Corporation's
defined contribution retirement plan, 401(k) Plan, and health, term life and
disability insurance programs. The Executive also will be reimbursed for
reasonable expenses incurred in connection with travel and entertainment related
to the Corporation's business and affairs and will be paid by the Corporation in
a manner consistent with past practice and as amended by any subsequent changes
of corporate policy.
3. Trade Secrets. The Executive shall not use or disclose any of the
-------------
Corporation's trade secrets or other confidential information. The term "trade
secrets or other confidential information" includes, by way of example, matters
of a technical nature, such as scientific, trade and engineering secrets, "know-
how", formulae, secret processes or machines, inventions, computer programs
(including documentation of such programs) and research projects, and matters of
a business nature, such as proprietary information about costs, profits,
markets, sales, lists of customers, plans for future development, and other
information of a similar nature that is designated as confidential or generally
maintained as confidential or proprietary by the Corporation. After termination
of Executive's employment, the Executive shall not use or disclose trade secrets
or other confidential information unless such information becomes a part of the
public domain other than through a breach of the Corporation's policies or is
disclosed to the Executive by a third party who is entitled to receive and
disclose such information.
4. Return of Documents and Property. Upon the effective date of
--------------------------------
notice of the Executive's or the Corporation's election to terminate Executive's
employment, or at any time
2
<PAGE>
upon the request of the Corporation, the Executive (or his heirs or personal
representatives) shall deliver to the Corporation (a) all documents and
materials containing trade secrets or other confidential information relating to
the Corporation's business and affairs, and (b) all documents, materials and
other property belonging to the Corporation, which in either case are in the
possession or under the control of the Executive (or his heirs or personal
representatives).
5. Discoveries and Works. All discoveries and works made or conceived by
---------------------
the Executive during his employment by the Corporation, jointly or with others,
that relate to the Corporation's activities shall be owned by the Corporation.
The term "discoveries and works" includes, by way of example, inventions,
computer programs (including documentation of such programs), technical
improvements, processes, drawings and works of authorship. The Executive shall
(a) promptly notify, make full disclosure to, and execute and deliver any
documents requested by, the Corporation to evidence or better assure title to
such discoveries and works in the Corporation, (b) assist the Corporation in
obtaining or maintaining for itself at its own expense United States and foreign
patents, copyrights, trade secret protection or other protection of any and all
such discoveries and works, and (c) promptly execute, whether during his
employment by the Corporation or thereafter, all applications or other
endorsements necessary or appropriate to maintain patents and other rights for
the Corporation and to protect its title thereto. Any discoveries and works
which, within six months after the termination of the Executive's employment by
the Corporation, are made, disclosed, reduced to a tangible or written form or
description, or are reduced to practice by the Executive and which pertain to
the business carried on or products or services being sold or developed by the
Corporation at the time of such termination shall, as between the Executive and
the Corporation, be presumed to have been made during the Executive's employment
by the Corporation. Set forth on Schedule 5 attached hereto is a list of
inventions, patented or unpatented, including a brief description thereof, which
are owned by the Executive, which the Executive conceived or made prior to his
employment by the Corporation and which are excluded from this Agreement.
6. Termination.
-----------
(a) Upon 30 days' prior written notice the Corporation may terminate
the Executive's employment, with or without "cause," as defined in Section 6(f)
below. Upon 30 days' prior written notice the Executive may terminate his
employment, with or without "good reason," as defined in Section 6(e) below.
Upon any termination of the Executive's employment for any reason, the
Corporation shall:
(i) pay to the Executive any unpaid salary through the date of
termination;
(ii) pay to the Executive any unpaid bonus payments earned
through the date of termination under the terms of
applicable bonus arrangements; and
3
<PAGE>
(iii) provide to or for the benefit of the Executive the
benefits, if any, otherwise expressly provided under this
Section 6, Section 7 or Section 8, as applicable.
Any payments under this Section 6, Section 7 or Section 8 that are to be made in
connection with the termination of Executive's employment will be paid in cash
(with deduction of such amount as may be required to be withheld under
applicable law and regulations) within ten business days of Executive's
termination of employment. All other compensation and employment benefit
arrangements provided for in this Agreement shall cease upon such termination of
employment except to the extent required by law or otherwise expressly provided
by such arrangement. The Executive hereby agrees that he shall not under any
circumstances be entitled to benefits under the Corporation's Senior Executive
Officer's Severance Plan as in effect on the date hereof notwithstanding
anything to the contrary herein or under the terms of such plan, and hereby
releases any claims for benefits under such plan.
(b) In the event the Corporation terminates the Executive's
employment without "cause" or the Executive terminates his employment for "good
reason," then, in addition to the benefits provided for under Sections 6(a)(i)
and 6(a)(ii) and subject to the provisions of Section 8, the Corporation shall
pay to the Executive a severance payment equal to two times the Executive's
annual base salary. In addition, all unvested stock options and any other
equity-based compensation arrangements will vest in full on the effective date
of such termination and all vested stock options shall be exercisable for the
shorter of one (1) year from the date of such termination and until they expire
in accordance with their original maximum term.
(c) In the event the Corporation terminates the Executive's
employment for "cause," then, in addition to the benefits provided for under
Sections 6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-
based compensation arrangements shall be terminated and all vested stock options
shall be exercisable for the shorter of thirty (30) days from the date of such
termination and until they expire in accordance with their original maximum
term.
(d) In the event the Executive terminates his employment without
"good reason," then, in addition to the benefits provided for under Sections
6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-based
compensation arrangements shall be terminated and all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(e) For purposes of this Agreement, the Executive shall be considered
to have "good reason" to terminate his employment if without his express written
consent (i) the responsibilities of the Executive are substantially reduced or
altered (except in connection with the termination of his employment voluntarily
by the Executive, by the Corporation for "cause," or under the circumstances
described in Section 8 hereof), (ii) Executive's annual base salary is reduced,
or (iii) the Executive's offices are relocated anywhere other than within a
fifty (50) mile radius of his office in Fairfax, Virginia.
4
<PAGE>
(f) For purposes of this Agreement, the Corporation shall have
"cause" to terminate the Executive's employment hereunder upon (i) the
continued, willful and deliberate failure of the Executive to perform his
duties, in a manner substantially consistent with the manner prescribed by the
Board (other than any such failure resulting from his incapacity due to physical
or mental illness), (ii) the engaging by the Executive in misconduct materially
and demonstrably injurious to the Corporation, (iii) the conviction of the
Executive of commission of a felony, whether or not such felony was committed in
connection with the Corporation's business, or (iv) the circumstances described
in Section 8 hereof, in which case the provisions of Section 8 shall govern the
rights and obligations of the parties.
7. Change in Control.
-----------------
(a) All unvested stock options or any other equity-based compensation
arrangements theretofore granted to Executive shall vest in full on the date of
a "Change in Control" (as defined in Section 7(d) below).
(b) In the event that the Corporation terminates the Executive's
employment with the Corporation without "cause" within twelve months after a
"Change in Control" (as defined in Section 7(d) below), or if the Executive
terminates his employment with the Corporation for "good reason" within twelve
months after a "Change in Control" (as defined in Section 7(d) below), then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), the
Corporation shall pay to the Executive a severance payment equal to two times
the Executive's annual base salary. In addition, all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(c) If the Executive terminates his employment with the Corporation
without "good reason" within twelve months after a Change in Control, then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), the
Corporation shall pay to the Executive a severance payment equal to one times
the Executive's annual base salary. In addition, all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(d) For purposes of this Agreement, "Change in Control" shall mean an
occurrence of any of the following events:
(i) an acquisition (other than directly from the Corporation)
of any voting securities of the Corporation (the "Voting
Securities") by any "person or group" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934) other than an employee benefit plan of the
Corporation, immediately after which such person or group
has "Beneficial Ownership" (within the meaning of Rule 13d-
3 under the Exchange Act) of more than thirty-five percent
(35%) of the combined voting power of the Corporation's
then outstanding Voting Securities;
5
<PAGE>
(ii) approval by the stockholders of (1) a merger, consolidation
or reorganization involving the Corporation, unless the
company resulting from such merger, consolidation or
reorganization (the "Surviving Corporation") shall adopt or
assume this Agreement and either (A) the stockholders of
the Corporation immediately before such merger,
consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or
reorganization, at least fifty percent (50%) of the
combined voting power of the Surviving Corporation in
substantially the same proportion as their ownership
immediately before such merger, consolidation or
reorganization, or (B) at least a majority of the members
of the Board of Directors of the Surviving Corporation were
directors of the Corporation immediately prior to the
execution of the agreement providing for such merger,
consolidation or reorganization, (2) a complete liquidation
or dissolution of the Corporation, or (3) a sale or
transfer of all or substantially all of the assets of the
Corporation or of assets that during the current or either
of the prior two fiscal years accounted for more than 50%
of the Company's revenues or income (in each case, other
than to a wholly-owned Subsidiary), provided, however, that
-------- -------
the disposition of assets in connection with the sale of
the Environment and Facilities Management (EFM) Group or
the Consulting Group shall not be included in determining
whether there has been a Change in Control;
(iii) if for any reason a majority of the Board is not comprised
of "Continuing Directors," where a "Continuing Director" of
the Corporation as of any date means a member of the Board
who (1) was a member of the Board on April 19, 1999 or (2)
was nominated for election or elected to the Board with the
affirmative vote of at least two-thirds of the directors
who were Continuing Directors at the time of such
nomination or election; provided, however, that no
-------- -------
individual initially elected or nominated as a director of
the Corporation as a result of an actual or threatened
election contest with respect to directors or any other
actual or threatened solicitation of proxies or consents by
or on behalf of any person other than the Board shall be
deemed to be a Continuing Director; or
(iv) such other events as the Board or a duly authorized
committee of the Board from time to time may specify.
(e) In the event that, as a result of payments to or for the benefit
of Executive under this Agreement or otherwise in connection with a Change in
Control, any state, local or federal taxing authority imposes any taxes on the
Executive that would not be imposed but for
6
<PAGE>
the occurrence of a Change in Control, including any excise tax under Section
4999 of the Internal Revenue Code and any successor or comparable provision,
then, in addition to the benefits provided for under Sections 6(a)(i) and
6(a)(ii) and under Sections 7(a), 7(b) and 7(c) the Corporation (including any
successor to the Corporation) shall pay to the Executive at the time any such
tax becomes payable an amount equal to the amount of any such tax imposed on the
Executive (the amount of any such payment, the "Parachute Tax Reimbursement").
In addition, the Corporation (including any successor to the Corporation) shall
"gross up" such Parachute Tax Reimbursement by paying to the Executive at the
time any such tax becomes payable an additional amount equal to the aggregate
amount of any additional taxes (whether income taxes, excise taxes, special
taxes, employment taxes or otherwise) that are payable by the Executive as a
result of the Parachute Tax Reimbursement being payable to the Executive and/or
as a result of the additional amounts payable to the Executive pursuant to this
sentence, such that after payment of such additional taxes the Executive shall
have been paid on an after-tax basis an amount equal to the Parachute Tax
Reimbursement.
8. Disability; Death.
-----------------
(a) If, prior to the expiration or termination of the Employment
Period, the Executive shall be unable to perform his duties by reason of
disability or impairment of health for at least six consecutive calendar months,
the Corporation shall have the right to terminate the Executive's employment on
account of disability by giving written notice to the Executive to that effect,
but only if at the time such notice is given such disability or impairment is
still continuing. In the event of a dispute as to whether the Executive is
disabled within the meaning of this Section 8(a), either party may from time to
time request a medical examination of the Executive by a doctor appointed by the
Chief of Staff of a hospital selected by mutual agreement of the parties, or as
the parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive has
become disabled and the date when such disability arose. The cost of any such
medical examinations shall be borne by the Corporation. If the Corporation
terminates the Executive's employment on account of disability, then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all
unvested stock options and any other equity-based compensation arrangements
shall be terminated and all vested stock options shall be exercisable for the
shorter of one (1) year from the date of such termination and until they expire
in accordance with their original maximum term.
(b) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, then, in addition to the benefits provided for
under Sections 6(a)(i) and 6(a)(ii), the Employment Period shall terminate
without further notice. In such an event, all unvested stock options and any
other equity-based compensation arrangements shall be terminated and all vested
stock options shall be exercisable for the shorter of one (1) year from the date
of Executive's death and until they expire in accordance with their original
maximum term.
(c) Nothing contained in this Section 8 shall impair or otherwise
affect any rights and interests of the Executive under any insurance
arrangements, death benefit plan or
7
<PAGE>
other compensation plan or arrangement of the Corporation which may be adopted
by the Board.
9. Non-Competition/Non-Solicitation.
--------------------------------
(a) Non-Competition. The Executive agrees that for a period
----------------
commencing on the Effective Date and ending (i) on the date of termination of
the Executive's employment (x) by the Corporation for reasons that do not
constitute "cause" as defined in Section 6, above, or (y) by the Executive for
"good reason" as defined in Section 6(b), above, or (ii) one year following
termination of the Executive's employment (x) by the Corporation for "cause" or
(y) by the Executive for reasons that do not constitute "good reason", provided
--------
that the Corporation is not in material breach of this Agreement (the "Non-
Competition Period"), the Executive will not, except as otherwise provided
herein, engage or participate, directly or indirectly, as principal, agent,
employee, employer, consultant, stockholder, partner or in any other comparable
capacity, in the conduct or management of, or own any stock or any other equity
investment in or debt of, any business which is competitive with any business
conducted by the Corporation.
For the purpose of this Agreement, a business shall be considered to be
competitive with the business of the Corporation only if such business is
engaged in providing services similar to (i) any service currently provided by
the Corporation or provided by the Corporation during the Employment Period,
other than services provided solely by the Corporation's Consulting Group; (ii)
any service which in the ordinary course of business during the Non-Competition
Period evolves from or results from enhancements to the services provided by the
Corporation as of the Effective Date or during the Non-Competition; or (iii) any
future service of the Corporation as to which the Executive materially and
substantially participated in the design or enhancement.
(b) Non-Solicitation of Employees. During the Non-Competition Period,
------------------------------
the Executive will not (for the Executive's own benefit or for the benefit of
any person or entity other than the Corporation) solicit, or assist any person
or entity other than the Corporation to solicit, any officer, director,
executive or employee of the Corporation or its affiliates to leave his or her
employment.
(c) Reasonableness. The Executive acknowledges that (i) the markets
---------------
served by the Corporation are national and international and are not dependent
on the geographic location of executive personnel or the businesses by which
they are employed, (ii) the length of the Non-Competition Period is related to
the length of the Employment Period and the Corporation's agreement to provide
severance benefits as set forth in Sections 6 or 7, above, that, under certain
circumstances, will provide additional compensation to Executive upon the
termination of the Executive's employment; and (iii) the above covenants are
reasonable on their face, and the parties expressly agree that such restrictions
have been designed to be reasonable and no greater than is required for the
protection of the Corporation.
(d) Investments. Nothing in this Agreement shall be deemed to
------------
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other
8
<PAGE>
entity which is competitive with the Corporation, provided that such investments
--------
(i) are passive investments and constitute five percent (5%) or less of the
outstanding equity securities of such an entity the equity securities of which
are traded on a national securities exchange or other public market, or (ii) are
approved by the Corporation.
10. Waiver. The waiver of the breach of any term or provision of this
------
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement. Failure by the Executive or the
Corporation to insist upon strict compliance with any provision of this
Agreement or to assert any right the Executive or the Corporation may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for "good reason," shall not be deemed to be a waiver of
such provision or right or of any other provision or rights under this
Agreement.
11. Enforcement. The Executive agrees that the Corporation's remedies at
------------
law for any breach or threat of breach by him of Sections 3, 4, 5, or 9 hereof
will be inadequate, and that the Corporation shall be entitled to an injunction
or injunctions to prevent breaches of Sections 3, 4, 5, or 9 hereof and to
enforce specifically the terms and provisions thereof, in addition to any other
remedy to which the Corporation may be entitled at law or equity. If the
Corporation sues to enforce Sections 3, 4, 5, or 9 hereof and fails to prevail
in such proceeding, the court shall award to the Executive his reasonable fees
for his attorneys, the reasonable expenses of his witnesses, and any other
reasonable expenses incurred in connection with the proceeding to the extent
that the court determines that the Executive has prevailed in such proceeding.
12. Arbitration. Any dispute or claim other than those referred to in
-----------
Section 11, arising out of or relating to this Agreement or otherwise relating
to the employment relationship between the Executive and the Corporation, shall
be submitted to Arbitration, in Fairfax County, Virginia, before a single
arbitrator, in accordance with the rules of the American Arbitration Association
as the exclusive remedy for such claim or dispute. The Executive and the
Corporation agree that such arbitration will be confidential and no details,
descriptions, settlements or other facts concerning such arbitration shall be
disclosed or released to any third party without the specific written consent of
the other party, unless required by law or court order or in connection with
enforcement of any decision in such arbitration. Any damages awarded in such
arbitration shall be limited to the contract measure of damages, and shall not
include punitive damages. In any proceeding, whether commenced by the Executive
or by the Corporation, the arbitrator shall award to the Executive his
reasonable fees for his attorneys, the reasonable expenses of his witnesses, and
any other reasonable expenses incurred in connection with the arbitration to the
extent that the arbitrator determines that the Executive has prevailed in such
proceeding.
13. Full Settlement. The Corporation's obligation to make any payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Corporation may have against
the Executive or others. In no event shall the Executive be obligated to seek
9
<PAGE>
other employment or take other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and such
amounts shall not be reduced whether or not the Executive obtains other
employment.
14. Severability. Should any provision of this Agreement be determined to
-------------
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
15. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
instrument.
16. Assignment. The Executive's rights and obligations under this
-----------
Agreement shall not be assignable by the Executive. The Corporation's rights
and obligations under this Agreement shall not be assignable by the Corporation
except as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of the Corporation in a transaction in which
the successor entity remains obligated under, or by operation of law or
otherwise assumes, the Corporation's obligations under this Agreement. In the
event of any such assignment by the Corporation, all rights of the Corporation
hereunder shall inure to the benefit of the assignee.
17. Notices. Any notice required or permitted under this Agreement shall
--------
be deemed to have been effectively made or given if in writing and personally
delivered or sent by registered or certified U.S. mail, UPS or FedEx, properly
addressed in a sealed envelope, with delivery charges prepaid. Unless otherwise
changed by notice, notice shall be properly addressed to Executive if addressed
to:
James J. Maiwurm
9419 Brian Jac Lane
Great Falls, VA 22066
and properly addressed to the Corporation if addressed to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attn: General Counsel
18. Miscellaneous. This Agreement constitutes the entire agreement, and
--------------
terminates and supersedes all prior agreements, of the parties hereto relating
to the subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein, except
that nothing contained in this Agreement shall invalidate or supersede
10
<PAGE>
the terms of any previously or subsequently granted stock options or other
equity-based compensation arrangements (including without limitation the
provisions thereof relating to post-termination exercisability) to the extent
that such stock options or arrangements provide more favorable terms to the
Executive. The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the Commonwealth of Virginia. The
headings contained herein are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
______________________________________________
James J. Maiwurm, Executive
ICF KAISER INTERNATIONAL, INC.
By____________________________________________
Hazel R. O'Leary
Chair, Compensation and Human Resources Committee,
Board of Directors
11
<PAGE>
SCHEDULE 5
----------
Inventions Owned by the Executive
NONE
12
<PAGE>
ATTACHMENT A
------------
Title: Chief Executive Officer
Overview:
. This Attachment A describes the annual incentive bonus plan in which the named
executive will participate from 6/1/99 through 5/31/00.
. The executive's performance will be assessed against the following objectives
as described in this Attachment A:
- Cost Savings
- EBITDA Improvement
- Completion of Recapitalization
COST SAVINGS
- ------------
Goal: $19 million in total Company cost savings achieved between 3/31/99 and
11/30/99
Measurement:
Reduction in the annualized run rate of the Company's costs, exclusive of the
costs associated with the discontinued operations of the EFM and Consulting
Groups, as set forth in the financial statements of the Company as filed with
the Securities and Exchange Commission and prepared in accordance with GAAP on a
consistent basis, as compared to the annualized run rate of such costs for the
quarter ended March 31, 1999.
Cost savings will be measured on three Measurement Dates as indicated below, and
will be based on costs for the month ending on each of the three Measurement
Dates. For purposes of measuring cost reductions, costs will be categorized as
either direct (those incurred directly and solely for the benefit of a project)
or indirect (those incurred for the general operations of the Company).
Direct Costs:
To reflect the fact that direct costs may increase as the business begins to
prosper, direct cost reductions will be measured as follows:
Changes in direct subcontract and materials will be excluded from measurement.
Changes in direct labor and fringe benefits will be measured based on the change
in the relationship of such costs to service revenue.
13
<PAGE>
Example of Direct Cost Savings Calculation:
Annualized Rate
Thru March 31, 1999 at Measurement Date
-------------------- --------------------
Service revenue $27,877 $111,000
Direct labor and fringe 17,837 66,600
Direct labor and fringe costs
as a % of service revenue 64% 60%
Improvement in gross margins 4%
Actual annual labor and fringe $ 66,600
--------
Savings credit $ 2,664
========
Indirect Costs:
The measurement of indirect cost savings will be calculated from costs for the
month ending on the Measurement Date, excluding any costs incurred prior to the
Measurement Dates set forth below that were incurred to effect future cost
reductions, such as severance, lease buyouts, litigation defense costs and
settlements, employee retention incentives, and any other nonrecurring costs
incurred outside the ordinary course of business for a non-troubled company
(collectively, "Restructuring Costs").
Total annualized indirect costs as of the March 31, 1999 financial statements
was $68,468 (none of which were Restructuring Costs).
Example of Indirect Cost Savings Calculation:
Indirect cost benchmark - March 31, 1999 $68,468
Total indirect costs incurred during
measurement period $ 5,000
Less: Restructuring Costs (500)
-------
Adjusted indirect costs incurred during
measurement period $ 4,500
-------
Annualized $54,000
-------
Savings from indirect costs $14,468
=======
Thus, under the foregoing two examples, "Cost Savings" (in thousands) for the
month would equal $17,102, which is the sum of $2,664 (annualized direct cost
savings) and $14,468 (annualized indirect cost savings).
Following each Measurement Date the executive shall submit to the Compensation
and Human Resources Committee (the "Compensation Committee") a report showing
the computation of
14
<PAGE>
Operating Cost savings in accordance with this Attachment A and the amount of
bonus, if any, due with respect to the period ending on the Measurement Date.
Target Cost Savings Bonus: $93,750
Performance Measurement and Payout:
. Performance is measured on the three Measurement Dates shown below:
. At each Measurement Date, the actual bonus earned will be calculated by
multiplying (i) the target bonus amount, by (ii) the percentage (but not
more than 100%) that actual cost savings achieved for the month ending on
the Measurement Date bears to total target cost savings (i.e., $19 million),
by (iii) the appropriate timing incentive for the Measurement Date as
specified in the table below. This amount will be reduced by the amount of
any cost savings bonus earned at an earlier Measurement Date.
Measurement Date Timing Incentive
---------------- ----------------
7/31/99 100%
9/30/99 95%
11/30/99 85%
. Incentive earned will be paid within 10 days after review of the computation
of cost savings as of each Measurement Date by the Compensation Committee.
EBITDA IMPROVEMENT
- ------------------
Goal: Annual run rate of $6 million of EBITDA (excluding Kaiser-Hill)
Target Incentive: $93,750
Performance Measurement and Payout:
. Performance will be measured by comparing the Company's actual EBITDA annual
run rate for the five months ending May 31, 2000 (excluding Kaiser-Hill), as
reported in the Company's financial statements, to the EBITDA target of $6
million (excluding Kaiser-Hill).
. A minimum of 50% of the goal must be achieved to qualify for payment. If
less than 50% of the goal is achieved, no EBITDA improvement incentive will
be paid.
15
<PAGE>
. The target incentive will be multiplied by the actual percentage (but not
more than 100%) of EBITDA achieved as follows:
Percentage Earned = Actual EBITDA
-------------
$6 million
. Up to 100% of target incentive can be earned.
. Following May 31, 2000, the executive shall submit to the Compensation
Committee a report showing the computation of the amount of bonus, if any,
due hereunder. Incentive earned will be paid within 10 days after review of
the computation by the Compensation Committee.
RECAPITALIZATION
- ----------------
Goal: Four performance objective targets to be accomplished by 12/31/99 based
upon planning, management, negotiating, obtaining acceptance of and implementing
a recapitalization plan approved by the Board of Directors:
Noteholder Acceptance of Plan
Shareholder Acceptance of Plan
Close New Credit Facility
Close Recapitalization Plan
Target Incentive:
Noteholder Acceptance of Plan $60,000
Shareholder Acceptance of Plan $40,000
Close New Credit Facility $40,000
Close Recapitalization Plan $60,000
Performance Measurement and Payout:
. Once a performance objective target is met, payout will occur within 30 days.
A performance objective target must be met by 12/31/99 to qualify for
payment.
16
<PAGE>
EXHIBIT 10(qq)
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of the 1st day of June, 1999, by and between
ICF Kaiser International, Inc., a Delaware corporation (the "Corporation"), and
S. Robert Cochran, Jr., a resident of the Commonwealth of Virginia (the
"Executive").
WHEREAS, the Executive is currently an employee of the Corporation; and
WHEREAS, the Corporation and the Executive wish to revise and document
the terms of the employment relationship;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, the
Corporation and the Executive agree as follows:
1. Employment; Duties.
------------------
(a) Employment and Employment Period. The Corporation shall
employ the Executive to serve as President, North America and Executive Vice
President of ICF Kaiser International, Inc., as set forth below, for a
continuous period of 2 years commencing June 1, 1999 (the "Employment Period").
The Employment Period may be extended by mutual agreement of the parties.
(b) Offices and Duties. The Executive shall serve as
------------------
President, North America and Executive Vice President of ICF Kaiser
International, Inc. The Executive shall report to the President and Chief
Executive Officer of the Corporation and shall be a member of all senior
management groups of the Corporation. The Executive's offices shall be located
at the Corporation's offices in Richmond, Virginia or Fairfax, Virginia, as
mutually agreed upon by the parties.
(c) Devotion to Interests of the Corporation. Except as
----------------------------------------
expressly authorized by the Corporation's Board of Directors (the "Board") or
the Compensation and Human Resources Committee of the Board (the "Compensation
Committee"), until the effective date of notice of termination of the
Executive's employment by either the Executive or the Corporation, the Executive
will not, without the prior written consent of the Company, directly or
indirectly engage in any other business activities or pursuits, except
activities in connection with (i) any professional, charitable or civic
activities (other than as an officer or board member), (ii) personal
investments, and (iii) serving as an executor, trustee or in another similar
fiduciary capacity for a non-commercial entity; provided, however, that any such
activities do not materially interfere with the performance of his
responsibilities and obligations pursuant to this Agreement. The Executive shall
use his best efforts to promote the interests and welfare of the Corporation.
<PAGE>
2. Compensation and Fringe Benefits.
---------------------------------
(a) Base Compensation. The Corporation shall pay the Executive a base
-----------------
salary at the rate of $260,000 per year through June 1, 2000, in installments in
accordance with the Corporation's regular practice for compensating executive
personnel. The amount of the Executive's base compensation shall be subject to
adjustment as recommended by the Compensation Committee.
(b) Annual Incentive Bonus. The Executive is entitled to an annual
----------------------
incentive bonus in an amount not to exceed $130,000 (representing a bonus
opportunity equal to 50% of the Executive's initial annual base salary that is
contingent on satisfaction of operational objectives) payable at the time and
contingent upon the extent to which the Corporation achieves specified
objectives set forth at Attachment A. In subsequent years, Executive shall be
entitled to a bonus opportunity as set by the Compensation Committee in its
discretion.
(c) Retention Bonus. The Executive shall be entitled to a retention
---------------
bonus in the amount of $50,000, payable promptly following execution of this
Agreement. The Executive will be entitled to a second retention bonus in the
amount of $25,000, payable on May 1, 2000, provided that the Executive is
employed with the Corporation on May 1, 2000.
(d) Fringe Benefits. The Executive shall also be entitled to such
---------------
fringe benefits as are generally made available by the Corporation to executive
personnel. Such benefits shall include participation in the Corporation's
defined contribution retirement plan, 401(k) Plan, and health, term life and
disability insurance programs. The Executive also will be reimbursed for
reasonable expenses incurred in connection with travel and entertainment related
to the Corporation's business and affairs and will be paid by the Corporation in
a manner consistent with past practice and as amended by any subsequent changes
of corporate policy.
3. Trade Secrets. The Executive shall not use or disclose any of the
-------------
Corporation's trade secrets or other confidential information. The term "trade
secrets or other confidential information" includes, by way of example, matters
of a technical nature, such as scientific, trade and engineering secrets,
"know-how", formulae, secret processes or machines, inventions, computer
programs (including documentation of such programs) and research projects, and
matters of a business nature, such as proprietary information about costs,
profits, markets, sales, lists of customers, plans for future development, and
other information of a similar nature that is designated as confidential or
generally maintained as confidential or proprietary by the Corporation. After
termination of the Executive's employment, the Executive shall not use or
disclose trade secrets or other confidential information unless such information
becomes a part of the public domain other than through a breach of the
Corporation's policies or is disclosed to the Executive by a third party who is
entitled to receive and disclose such information.
4. Return of Documents and Property. Upon the effective date of notice
--------------------------------
of the Executive's or the Corporation's election to terminate the Executive's
employment, or at any time upon the request of the Corporation, the Executive
(or his heirs or personal representatives) shall deliver to the Corporation (a)
all documents and materials containing trade secrets or other
2
<PAGE>
confidential information relating to the Corporation's business and affairs, and
(b) all documents, materials and other property belonging to the Corporation,
which in either case are in the possession or under the control of the Executive
(or his heirs or personal representatives).
5. Discoveries and Works. All discoveries and works made or conceived
---------------------
by the Executive during his employment by the Corporation, jointly or with
others, that relate to the Corporation's activities shall be owned by the
Corporation. The term "discoveries and works" includes, by way of example,
inventions, computer programs (including documentation of such programs),
technical improvements, processes, drawings and works of authorship. The
Executive shall (a) promptly notify, make full disclosure to, and execute and
deliver any documents requested by, the Corporation to evidence or better assure
title to such discoveries and works in the Corporation, (b) assist the
Corporation in obtaining or maintaining for itself at its own expense United
States and foreign patents, copyrights, trade secret protection or other
protection of any and all such discoveries and works, and (c) promptly execute,
whether during his employment by the Corporation or thereafter, all applications
or other endorsements necessary or appropriate to maintain patents and other
rights for the Corporation and to protect its title thereto. Any discoveries and
works which, within six months after the termination of the Executive's
employment by the Corporation, are made, disclosed, reduced to a tangible or
written form or description, or are reduced to practice by the Executive and
which pertain to the business carried on or products or services being sold or
developed by the Corporation at the time of such termination shall, as between
the Executive and the Corporation, be presumed to have been made during the
Executive's employment by the Corporation. Set forth on Schedule 5 attached
hereto is a list of inventions, patented or unpatented, including a brief
description thereof, which are owned by the Executive, which the Executive
conceived or made prior to his employment by the Corporation and which are
excluded from this Agreement.
6. Termination.
-----------
(a) Upon 30 days' prior written notice the Corporation may
terminate the Executive's employment, with or without "cause," as defined in
Section 6(f) below. Upon 30 days' prior written notice the Executive may
terminate his employment, with or without "good reason," as defined in Section
6(e) below. Upon any termination of the Executive's employment for any reason,
the Corporation shall:
(i) pay to the Executive any unpaid salary through the date of
termination;
(ii) pay to the Executive any unpaid bonus payments earned
through the date of termination under the terms of
applicable bonus arrangements; and
(iii) provide to or for the benefit of the Executive the
benefits, if any, otherwise expressly provided under this
Section 6, Section 7 or Section 8, as applicable.
3
<PAGE>
Any payments under this Section 6, Section 7 or Section 8 that are to be made in
connection with the termination of Executive's employment will be paid in cash
(with deduction of such amount as may be required to be withheld under
applicable law and regulations) within ten business days of Executive's
termination of employment. All other compensation and employment benefit
arrangements provided for in this Agreement shall cease upon such termination of
employment except to the extent required by law or otherwise expressly provided
by such arrangement. The Executive hereby agrees that he shall not under any
circumstances be entitled to benefits under the Corporation's Senior Executive
Officer's Severance Plan as in effect on the date hereof notwithstanding
anything to the contrary herein or under the terms of such plan, and hereby
releases any claims for benefits under such plan.
(b) In the event the Corporation terminates the Executive's
employment without "cause" or the Executive terminates his employment for "good
reason," then, in addition to the benefits provided for under Sections 6(a)(i)
and 6(a)(ii) and subject to the provisions of Section 8, the Corporation shall
pay to the Executive a severance payment equal to two times the Executive's
annual base salary. In addition, all unvested stock options and any other
equity-based compensation arrangements will vest in full on the effective date
of such termination and all vested stock options shall be exercisable for the
shorter of one (1) year from the date of such termination and until they expire
in accordance with their original maximum term.
(c) In the event the Corporation terminates the Executive's
employment for "cause," then, in addition to the benefits provided for under
Sections 6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-
based compensation arrangements shall be terminated and all vested stock options
shall be exercisable for the shorter of thirty (30) days from the date of such
termination and until they expire in accordance with their original maximum
term.
(d) In the event the Executive terminates his employment without
"good reason," then, in addition to the benefits provided for under Sections
6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-based
compensation arrangements shall be terminated and all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(e) For purposes of this Agreement, the Executive shall be considered
to have "good reason" to terminate his employment if without his express written
consent (i) the responsibilities of the Executive are substantially reduced
(except in connection with the termination of his employment voluntarily by the
Executive, by the Corporation for "cause," or under the circumstances described
in Section 8 hereof), (ii) Executive's annual base salary is reduced, or (iii)
the Executive's offices are relocated anywhere other than within a fifty (50)
mile radius of Richmond or Fairfax, Virginia.
(f) For purposes of this Agreement, the Corporation shall have
"cause" to terminate the Executive's employment hereunder upon (i) the
continued, willful and deliberate failure of the Executive to perform his
duties, in a manner substantially consistent with the
4
<PAGE>
manner prescribed by the Board or the Chief Executive Officer of the Corporation
(other than any such failure resulting from his incapacity due to physical or
mental illness), (ii) the engaging by the Executive in misconduct materially and
demonstrably injurious to the Corporation, (iii) the conviction of the Executive
of commission of a felony, whether or not such felony was committed in
connection with the Corporation's business, or (iv) the circumstances described
in Section 8 hereof, in which case the provisions of Section 8 shall govern the
rights and obligations of the parties.
7. Change in Control.
-----------------
(a) All unvested stock options or any other equity-based compensation
arrangements theretofore granted to Executive shall vest in full on the date of
a "Change in Control" (as defined in Section 7(d) below).
(b) In the event that the Corporation terminates the Executive's
employment with the Corporation without "cause" within twelve months after a
"Change in Control" (as defined in Section 7(d) below), or if the Executive
terminates his employment with the Corporation for "good reason" within twelve
months after a "Change in Control" (as defined in Section 7(d) below), then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), the
Corporation shall pay to the Executive a severance payment equal to two times
the Executive's annual base salary. In addition, all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(c) If the Executive terminates his employment with the Corporation
without "good reason" within twelve months after a Change in Control, then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all
vested stock options shall be exercisable for the shorter of one (1) year from
the date of such termination and until they expire in accordance with their
original maximum term.
(d) For purposes of this Agreement, "Change in Control" shall mean an
occurrence of any of the following events:
(i) an acquisition (other than directly from the Corporation)
of any voting securities of the Corporation (the "Voting
Securities") by any "person or group" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934) other than an employee benefit plan of the
Corporation, immediately after which such person or group
has "Beneficial Ownership" (within the meaning of Rule 13d-
3 under the Exchange Act) of more than thirty-five percent
(35%) of the combined voting power of the Corporation's
then outstanding Voting Securities;
(ii) approval by the stockholders of (1) a merger, consolidation
or reorganization involving the Corporation, unless the
company resulting from such merger, consolidation or
reorganization (the
5
<PAGE>
"Surviving Corporation") shall adopt or assume this
Agreement and either (A) the stockholders of the
Corporation immediately before such merger, consolidation
or reorganization own, directly or indirectly immediately
following such merger, consolidation or reorganization, at
least fifty percent (50%) of the combined voting power of
the Surviving Corporation in substantially the same
proportion as their ownership immediately before such
merger, consolidation or reorganization, or (B) at least a
majority of the members of the Board of Directors of the
Surviving Corporation were directors of the Corporation
immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization,
(2) a complete liquidation or dissolution of the
Corporation, or (3) a sale or transfer of all or
substantially all of the assets of the Corporation or of
assets that during the current or either of the prior two
fiscal years accounted for more than 50% of the Company's
revenues or income (in each case, other than to a wholly-
owned Subsidiary), provided, however,that the disposition
-------- -------
of assets in connection with the sale of the Environment
and Facilities Management (EFM) Group or the Consulting
Group shall not be included in determining whether there
has been a Change in Control;
(iii) if for any reason a majority of the Board is not comprised
of "Continuing Directors," where a "Continuing Director" of
the Corporation as of any date means a member of the Board
who (1) was a member of the Board on April 19, 1999 or (2)
was nominated for election or elected to the Board with the
affirmative vote of at least two-thirds of the directors
who were Continuing Directors at the time of such
nomination or election; provided, however, that no
-------- -------
individual initially elected or nominated as a director of
the Corporation as a result of an actual or threatened
election contest with respect to directors or any other
actual or threatened solicitation of proxies or consents by
or on behalf of any person other than the Board shall be
deemed to be a Continuing Director; or
(iv) such other events as the Board or a duly authorized
committee of the Board from time to time may specify.
(e) In the event that, as a result of payments to or for the benefit
of Executive under this Agreement or otherwise in connection with a Change in
Control, any state, local or federal taxing authority imposes any taxes on the
Executive that would not be imposed but for the occurrence of a Change in
Control, including any excise tax under Section 4999 of the Internal Revenue
Code and any successor or comparable provision, then, in addition to the
benefits provided for under Sections 6(a)(i) and 6(a)(ii) and under Sections
7(a), 7(b) and 7(c),
6
<PAGE>
the Corporation (including any successor to the Corporation) shall pay to the
Executive at the time any such tax becomes payable an amount equal to the amount
of any such tax imposed on the Executive (the amount of any such payment, the
"Parachute Tax Reimbursement"). In addition, the Corporation (including any
successor to the Corporation) shall "gross up" such Parachute Tax Reimbursement
by paying to the Executive at the time any such tax becomes payable an
additional amount equal to the aggregate amount of any additional taxes (whether
income taxes, excise taxes, special taxes, employment taxes or otherwise) that
are payable by the Executive as a result of the Parachute Tax Reimbursement
being payable to the Executive and/or as a result of the additional amounts
payable to the Executive pursuant to this sentence, such that after payment of
such additional taxes the Executive shall have been paid on an after-tax basis
an amount equal to the Parachute Tax Reimbursement.
8. Disability; Death.
-----------------
(a) If, prior to the expiration or termination of the Employment
Period, the Executive shall be unable to perform his duties by reason of
disability or impairment of health for at least six consecutive calendar months,
the Corporation shall have the right to terminate the Executive's employment on
account of disability by giving written notice to the Executive to that effect,
but only if at the time such notice is given such disability or impairment is
still continuing. In the event of a dispute as to whether the Executive is
disabled within the meaning of this Section 8(a), either party may from time to
time request a medical examination of the Executive by a doctor appointed by the
Chief of Staff of a hospital selected by mutual agreement of the parties, or as
the parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive has
become disabled and the date when such disability arose. The cost of any such
medical examinations shall be borne by the Corporation. If the Corporation
terminates the Executive's employment on account of disability, then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all
unvested stock options and any other equity-based compensation arrangements
shall be terminated and all vested stock options shall be exercisable for the
shorter of one (1) year from the date of such termination and until they expire
in accordance with their original maximum term.
(b) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, then, in addition to the benefits provided for
under Sections 6(a)(i) and 6(a)(ii), the Employment Period shall terminate
without further notice. In such an event, all unvested stock options and any
other equity-based compensation arrangements shall be terminated and all vested
stock options shall be exercisable for the shorter of one (1) year from the date
of Executive's death and until they expire in accordance with their original
maximum term.
(c) Nothing contained in this Section 8 shall impair or otherwise
affect any rights and interests of the Executive under any insurance
arrangements, death benefit plan or other compensation plan or arrangement of
the Corporation which may be adopted by the Board.
7
<PAGE>
9. Non-Competition/Non-Solicitation.
--------------------------------
(a) Non-Competition. The Executive agrees that for a period
---------------
commencing on the Effective Date and ending (i) on the date of termination of
the Executive's employment (x) by the Corporation for reasons that do not
constitute "cause" as defined in Section 6, above, or (y) by the Executive for
"good reason" as defined in Section 6(b), above, or (ii) one year following
termination of the Executive's employment (x) by the Corporation for "cause" or
(y) by the Executive for reasons that do not constitute "good reason", provided
--------
that the Corporation is not in material breach of this Agreement (the "Non-
Competition Period"), the Executive will not, except as otherwise provided
herein, engage or participate, directly or indirectly, as principal, agent,
employee, employer, consultant, stockholder, partner or in any comparable
capacity, in the conduct or management of, or own any stock or any other equity
investment in or debt of, any business which is competitive with any business
conducted by the Corporation.
For the purpose of this Agreement, a business shall be considered to be
competitive with the business of the Corporation only if such business is
engaged in providing services similar to (i) any service currently provided by
the Corporation or provided by the Corporation during the Employment Period
other than services provided solely by the Corporation's Consulting Group; (ii)
any service which in the ordinary course of business during the Non-Competition
Period evolves from or results from enhancements to the services provided by the
Corporation as of the Effective Date or during the Non-Competition; or (iii) any
future service of the Corporation as to which the Executive materially and
substantially participated in the design or enhancement.
(b) Non-Solicitation of Employees. During the Non-Competition Period,
-----------------------------
the Executive will not (for the Executive's own benefit or for the benefit of
any person or entity other than the Corporation) solicit, or assist any person
or entity other than the Corporation to solicit, any officer, director,
executive or employee of the Corporation or its affiliates to leave his or her
employment.
(c) Reasonableness. The Executive acknowledges that (i) the markets
--------------
served by the Corporation are national and international and are not dependent
on the geographic location of executive personnel or the businesses by which
they are employed, (ii) the length of the Non-Competition Period is related to
the length of the Employment Period and the Corporation's agreement to provide
severance benefits as set forth in Sections 6 or 7, above, that, under certain
circumstances, will provide additional compensation to Executive upon the
termination of the Executive's employment; and (iii) the above covenants are
reasonable on their face, and the parties expressly agree that such restrictions
have been designed to be reasonable and no greater than is required for the
protection of the Corporation.
(d) Investments. Nothing in this Agreement shall be deemed to
-----------
prohibit Executive from owning equity or debt investments in any corporation,
partnership or other entity which is competitive with the Corporation, provided
--------
that such investments (i) are passive investments and constitute five percent
(5%) or less of the outstanding equity
8
<PAGE>
securities of such an entity the equity securities of which are traded on a
national securities exchange or other public market, or (ii) are approved by the
Corporation.
10. Waiver. The waiver of the breach of any term or provision of this
------
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement. Failure by the Executive or the Corporation
to insist upon strict compliance with any provision of this Agreement or to
assert any right the Executive or the Corporation may have hereunder, including,
without limitation, the right of the Executive to terminate employment for "good
reason," shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
11. Enforcement. The Executive agrees that the Corporation's remedies at
-----------
law for any breach or threat of breach by him of Sections 3, 4, 5, or 9 hereof
will be inadequate, and that the Corporation shall be entitled to an injunction
or injunctions to prevent breaches of Sections 3, 4, 5, or 9 hereof and to
enforce specifically the terms and provisions thereof, in addition to any other
remedy to which the Corporation may be entitled at law or equity. If the
Corporation sues to enforce Sections 3, 4, 5, or 9 hereof and fails to prevail
in such proceeding, the court shall award to the Executive his reasonable fees
for his attorneys, the reasonable expenses of his witnesses, and any other
reasonable expenses incurred in connection with the proceeding to the extent
that the court determines that the Executive has prevailed in such proceeding.
12. Arbitration. Any dispute or claim other than those referred to in
-----------
Section 11 , arising out of or relating to this Agreement or otherwise relating
to the employment relationship between the Executive and the Corporation, shall
be submitted to Arbitration, in Fairfax County, Virginia, before a single
arbitrator, in accordance with the rules of the American Arbitration Association
as the exclusive remedy for such claim or dispute. The Executive and the
Corporation agree that such arbitration will be confidential and no details,
descriptions, settlements or other facts concerning such arbitration shall be
disclosed or released to any third party without the specific written consent of
the other party, unless required by law or court order or in connection with
enforcement of any decision in such arbitration. Any damages awarded in such
arbitration shall be limited to the contract measure of damages, and shall not
include punitive damages. In any proceeding, whether commenced by the Executive
or by the Corporation, the arbitrator shall award to the Executive his
reasonable fees for his attorneys, the reasonable expenses of his witnesses, and
any other reasonable expenses incurred in connection with the arbitration to the
extent that the arbitrator determines that the Executive has prevailed in such
proceeding.
13. Full Settlement. The Corporation's obligation to make any payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Corporation may have against
the Executive or others. In no event shall the Executive be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and such
amounts shall not be reduced whether or not the Executive obtains other
employment.
9
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14. Severability. Should any provision of this Agreement be determined to
------------
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
15. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
instrument.
16. Assignment. The Executive's rights and obligations under this
----------
Agreement shall not be assignable by the Executive. The Corporation's rights and
obligations under this Agreement shall not be assignable by the Corporation
except as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of the Corporation in a transaction in which
the successor entity remains obligated under, or by operation of law or
otherwise assumes, the Corporation's obligations under this Agreement. In the
event of any such assignment by the Corporation, all rights of the Corporation
hereunder shall inure to the benefit of the assignee.
17. Notices. Any notice required or permitted under this Agreement shall
-------
be deemed to have been effectively made or given if in writing and personally
delivered or sent by registered or certified U.S. mail, UPS or FedEx, properly
addressed in a sealed envelope, with delivery charges prepaid. Unless otherwise
changed by notice, notice shall be properly addressed to Executive if addressed
to:
S. Robert Cochran, Jr.
5400 McAlpine Circle
Apt. 1117
Glen Allen, VA 23060
and properly addressed to the Corporation if addressed to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attn: General Counsel
18. Miscellaneous. This Agreement constitutes the entire agreement, and
-------------
terminates and supersedes all prior agreements, of the parties hereto relating
to the subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein, except
that nothing contained in this Agreement shall invalidate or supersede the terms
of any previously or subsequently granted stock options or other equity-based
compensation arrangements (including without limitation the provisions thereof
relating to post-
10
<PAGE>
termination exercisability) to the extent that such stock options or
arrangements provide more favorable terms to the Executive. The validity,
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the Commonwealth of Virginia. The headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
___________________________________________________
S. Robert Cochran, Jr., Executive
ICF KAISER INTERNATIONAL, INC.
By_________________________________________________
Hazel R. O'Leary
Chair, Compensation and Human Resources Committee,
Board of Directors
11
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SCHEDULE 5
----------
Inventions Owned by the Executive
NONE
12
<PAGE>
ATTACHMENT A
------------
Title: President, North America and Executive Vice President
Overview:
. This Attachment A describes the annual incentive bonus plan in which the
named executive will participate from 6/1/99 through 5/31/00.
. The executive's performance will be assessed against the following
objectives as described in this Attachment A:
- Cost Savings
- EBITDA Improvement
COST SAVINGS
- ------------
Goal: $19 million in total Company cost savings, including $16 million in North
America operations cost savings, achieved between 3/31/99 and 11/30/99
Measurement:
Reduction in the annualized run rate of the Company's costs, exclusive of the
costs associated with the discontinued operations of the EFM and Consulting
Groups, as set forth in the financial statements of the Company as filed with
the Securities and Exchange Commission and prepared in accordance with GAAP on a
consistent basis, as compared to the annualized run rate of such costs for the
quarter ended March 31, 1999.
Cost savings will be measured on three Measurement Dates as indicated below, and
will be based on costs for the month ending on each of the three Measurement
Dates. For purposes of measuring cost reductions, costs will be categorized as
either direct (those incurred directly and solely for the benefit of a project)
or indirect (those incurred for the general operations of the Company).
Direct Costs:
To reflect the fact that direct costs may increase as the business begins to
prosper, direct cost reductions will be measured as follows:
Changes in direct subcontract and materials will be excluded from measurement.
Changes in direct labor and fringe benefits will be measured based on the change
in the relationship of such costs to service revenue.
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Example of Direct Cost Savings Calculation:
Annualized Rate
Thru March 31, 1999 at Measurement Date
------------------- -------------------
Service revenue $27,877 $111,000
Direct labor and fringe 17,837 66,600
Direct labor and fringe costs
as a % of service revenue 64% 60%
Improvement in gross margins 4%
Actual annual labor and fringe $ 66,600
--------
Savings credit $ 2,664
========
Indirect Costs:
The measurement of indirect cost savings will be calculated from costs for the
month ending on the Measurement Date, excluding any costs incurred prior to the
Measurement Dates set forth below that were incurred to effect future cost
reductions, such as severance, lease buyouts, litigation defense costs and
settlements, employee retention incentives, and any other nonrecurring costs
incurred outside the ordinary course of business for a non-troubled company
(collectively, "Restructuring Costs").
Total annualized indirect costs as of the March 31, 1999 financial statements
was $68,468 (none of which were Restructuring Costs).
Example of Indirect Cost Savings Calculation:
Indirect cost benchmark - March 31, 1999 $68,468
Total indirect costs incurred during
measurement period $5,000
Less: Restructuring Costs (500)
------
Adjusted indirect costs incurred during
measurement period $4,500
======
Annualized $54,000
-------
Savings from indirect costs $14,468
=======
Thus, under the foregoing two examples, "Cost Savings" (in thousands) for the
month would equal $17,102, which is the sum of $2,664 (annualized direct cost
savings) and $14,468 (annualized indirect cost savings).
Following each Measurement Date the executive shall submit to the Compensation
and Human Resources Committee (the "Compensation Committee") a report showing
the computation of
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Operating Cost savings in accordance with this Attachment A and the amount of
bonus, if any, due with respect to the period ending on the Measurement Date.
Target Cost Savings Bonus:
Total Company: $13,000
North America Operations: $52,000
Performance Measurement and Payout:
. Performance is measured on the three Measurement Dates shown below:
. At each Measurement Date, the actual bonus earned will be calculated by
multiplying (i) the target bonus amounts for total Company and North
America operations, by (ii) the percentage (but not more than 100%) that
actual cost savings achieved for the month ending on the Measurement Date
bears to total target cost savings (i.e., $19 million and $16 million,
respectively), by (iii) the appropriate timing incentive for the
Measurement Date as specified in the table below. This amount will be
reduced by the amount of any cost savings bonus earned at an earlier
Measurement Date.
Measurement Date Timing Incentive
7/31/99 100%
9/30/99 95%
11/30/99 85%
. Incentive earned will be paid within 10 days after review of the
computation of cost savings as of each Measurement Date by the Compensation
Committee.
Ebitda Improvement
Goal: Annual run rate of $6 million of EBITDA (excluding Kaiser-Hill)
Target Incentive: $65,000
Performance Measurement and Payout:
. Performance will be measured by comparing the Company's actual EBITDA
annual run rate for the five months ending May 31, 2000 (excluding
Kaiser-Hill), as reported in the Company's financial statements, to the
EBITDA target of $6 million (excluding Kaiser-Hill).
. A minimum of 50% of the goal must be achieved to qualify for payment. If
less than 50% of the goal is achieved, no EBITDA improvement incentive will
be paid.
15
<PAGE>
. The target incentive will be multiplied by the actual percentage (but not
more than 100%) of EBITDA achieved as follows:
Percentage Earned = Actual EBITDA
-------------
$6 million
. Up to 100% of target incentive can be earned.
. Following May 31, 2000, the executive shall submit to the Compensation
Committee a report showing the computation of the amount of bonus, if any,
due hereunder. Incentive earned will be paid within 10 days after review of
the computation by the Compensation Committee.
16
<PAGE>
EXHIBIT 10(rr)
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT is made as of the 1st day of June, 1999, by and between ICF
Kaiser International, Inc., a Delaware corporation (the "Corporation"), and
Timothy P. O'Connor, a resident of the Commonwealth of Virginia (the
"Executive").
WHEREAS, the Executive is currently an employee of the Corporation; and
WHEREAS, the Corporation and the Executive wish to revise and document the
terms of the employment relationship;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, and intending to be legally bound hereby, the Corporation and the
Executive agree as follows:
1. Employment; Duties.
------------------
(a) Employment and Employment Period. The Corporation shall employ
--------------------------------
the Executive to serve as Chief Financial Officer and Executive Vice President
of ICF Kaiser International, Inc., as set forth below, for a continuous period
until December 31, 2000 (the "Employment Period"). The Employment Period may be
extended by mutual agreement of the parties.
(b) Offices and Duties. Executive shall serve as Chief Financial
------------------
Officer and Executive Vice President of ICF Kaiser International, Inc. The
Executive shall report to the President and Chief Executive Officer of the
Corporation and shall be a member of all senior management groups of the
Corporation. The Executive's offices shall be located at the Corporation's
headquarters building in Fairfax, Virginia.
(c) Devotion to Interests of the Corporation. Except as expressly
----------------------------------------
authorized by the Corporation's Board of Directors (the "Board") or the
Compensation and Human Resources Committee of the Board (the "Compensation
Committee"), until the effective date of notice of termination of the
Executive's employment by either the Executive or the Corporation, the Executive
will not, without the prior written consent of the Company, directly or
indirectly engage in any other business activities or pursuits, except
activities in connection with (i) any professional, charitable or civic
activities (other than as an officer or board member), (ii) personal
investments, and (iii) serving as an executor, trustee or in another similar
fiduciary capacity for a non-commercial entity; provided, however, that any such
activities do not materially interfere with the performance of his
responsibilities and obligations pursuant to this Agreement. The Executive
shall use his best efforts to promote the interests and welfare of the
Corporation.
<PAGE>
2. Compensation and Fringe Benefits.
---------------------------------
(a) Base Compensation. The Corporation shall pay the Executive a base
-----------------
salary at the rate of $260,000 per year through June 1, 2000, in installments in
accordance with the Corporation's regular practice for compensating executive
personnel. The amount of the Executive's base compensation shall be subject to
adjustment as recommended by the Compensation Committee.
(b) Annual Incentive Bonus. The Executive is entitled to an annual
----------------------
incentive bonus in an amount not to exceed $330,000 (representing a bonus
opportunity equal to 50% of the Executive's initial annual base salary that is
contingent on satisfaction of operational objectives and a special bonus
opportunity of $200,000 that is contingent on satisfaction of recapitalization
objectives) payable at the time and contingent upon the extent to which the
Corporation achieves specified objectives set forth at Attachment A. In
subsequent years, Executive shall be entitled to a bonus opportunity as set by
the Compensation Committee in its discretion.
(c) Retention Bonus. The Executive shall be entitled to a retention
---------------
bonus in the amount of $75,000, payable promptly following execution of this
Agreement. The Executive will be entitled to a second retention bonus in the
amount of $55,000, payable on May 1, 2000, provided that the Executive is
employed with the Corporation on May 1, 2000.
(d) Fringe Benefits. The Executive shall also be entitled to such
---------------
fringe benefits as are generally made available by the Corporation to executive
personnel. Such benefits shall include participation in the Corporation's
defined contribution retirement plan, 401(k) Plan, and health, term life and
disability insurance programs. The Executive also will be reimbursed for
reasonable expenses incurred in connection with travel and entertainment related
to the Corporation's business and affairs and will be paid by the Corporation in
a manner consistent with past practice and as amended by any subsequent changes
of corporate policy.
3. Trade Secrets. The Executive shall not use or disclose any of the
-------------
Corporation's trade secrets or other confidential information. The term "trade
secrets or other confidential information" includes, by way of example, matters
of a technical nature, such as scientific, trade and engineering secrets, "know-
how", formulae, secret processes or machines, inventions, computer programs
(including documentation of such programs) and research projects, and matters of
a business nature, such as proprietary information about costs, profits,
markets, sales, lists of customers, plans for future development, and other
information of a similar nature that is designated as confidential or generally
maintained as confidential or proprietary by the Corporation. After termination
of the Executive's employment, the Executive shall not use or disclose trade
secrets or other confidential information unless such information becomes a part
of the public domain other than through a breach of the Corporation's policies
or is disclosed to the Executive by a third party who is entitled to receive and
disclose such information.
2
<PAGE>
4. Return of Documents and Property. Upon the effective date of notice of
--------------------------------
the Executive's or the Corporation's election to terminate the Executive's
employment, or at any time upon the request of the Corporation, the Executive
(or his heirs or personal representatives) shall deliver to the Corporation (a)
all documents and materials containing trade secrets or other confidential
information relating to the Corporation's business and affairs, and (b) all
documents, materials and other property belonging to the Corporation, which in
either case are in the possession or under the control of the Executive (or his
heirs or personal representatives).
5. Discoveries and Works. All discoveries and works made or conceived by
---------------------
the Executive during his employment by the Corporation, jointly or with others,
that relate to the Corporation's activities shall be owned by the Corporation.
The term "discoveries and works" includes, by way of example, inventions,
computer programs (including documentation of such programs), technical
improvements, processes, drawings and works of authorship. The Executive shall
(a) promptly notify, make full disclosure to, and execute and deliver any
documents requested by, the Corporation to evidence or better assure title to
such discoveries and works in the Corporation, (b) assist the Corporation in
obtaining or maintaining for itself at its own expense United States and foreign
patents, copyrights, trade secret protection or other protection of any and all
such discoveries and works, and (c) promptly execute, whether during his
employment by the Corporation or thereafter, all applications or other
endorsements necessary or appropriate to maintain patents and other rights for
the Corporation and to protect its title thereto. Any discoveries and works
which, within six months after the termination of the Executive's employment by
the Corporation, are made, disclosed, reduced to a tangible or written form or
description, or are reduced to practice by the Executive and which pertain to
the business carried on or products or services being sold or developed by the
Corporation at the time of such termination shall, as between the Executive and
the Corporation, be presumed to have been made during the Executive's employment
by the Corporation. Set forth on Schedule 5 attached hereto is a list of
inventions, patented or unpatented, including a brief description thereof, which
are owned by the Executive, which the Executive conceived or made prior to his
employment by the Corporation and which are excluded from this Agreement.
6. Termination.
-----------
(a) Upon 30 days' prior written notice the Corporation may terminate
the Executive's employment, with or without "cause," as defined in Section 6(f)
below. Upon 30 days' prior written notice the Executive may terminate his
employment, with or without "good reason," as defined in Section 6(e) below.
Upon any termination of the Executive's employment for any reason, the
Corporation shall:
(i) pay to the Executive any unpaid salary through the date of
termination;
(ii) pay to the Executive any unpaid bonus payments earned
through the date of termination under the terms of
applicable bonus arrangements; and
3
<PAGE>
(iii) provide to or for the benefit of the Executive the
benefits, if any, otherwise expressly provided under this
Section 6, Section 7 or Section 8, as applicable.
Any payments under this Section 6, Section 7 or Section 8 that are to be made in
connection with the termination of Executive's employment will be paid in cash
(with deduction of such amount as may be required to be withheld under
applicable law and regulations) within ten business days of Executive's
termination of employment. All other compensation and employment benefit
arrangements provided for in this Agreement shall cease upon such termination
of employment except to the extent required by law or otherwise expressly
provided by such arrangement. The Executive hereby agrees that he shall not
under any circumstances be entitled to benefits under the Corporation's Senior
Executive Officer's Severance Plan as in effect on the date hereof
notwithstanding anything to the contrary herein or under the terms of such plan,
and hereby releases any claims for benefits under such plan.
(b) In the event the Corporation terminates the Executive's
employment without "cause" or the Executive terminates his employment for "good
reason," then, in addition to the benefits provided for under Sections 6(a)(i)
and 6(a)(ii) and subject to the provisions of Section 8, the Corporation shall
pay to the Executive a severance payment equal to two times the Executive's
annual base salary. In addition, all unvested stock options and any other
equity-based compensation arrangements will vest in full on the effective date
of such termination and all vested stock options shall be exercisable for the
shorter of one (1) year from the date of such termination and until they expire
in accordance with their original maximum term.
(c) In the event the Corporation terminates the Executive's
employment for "cause," then, in addition to the benefits provided for under
Sections 6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-
based compensation arrangements shall be terminated and all vested stock options
shall be exercisable for the shorter of thirty (30) days from the date of such
termination and until they expire in accordance with their original maximum
term.
(d) In the event the Executive terminates his employment without
"good reason," then, in addition to the benefits provided for under Sections
6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-based
compensation arrangements shall be terminated and all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(e) For purposes of this Agreement, the Executive shall be considered
to have "good reason" to terminate his employment if without his express written
consent (i) the responsibilities of the Executive are substantially reduced or
altered (except in connection with the termination of his employment voluntarily
by the Executive, by the Corporation for "cause," or under the circumstances
described in Section 8 hereof), (ii) Executive's annual base salary is reduced,
or (iii) the Executive's offices are relocated anywhere other than within a
fifty (50) mile radius of his office in Fairfax, Virginia.
4
<PAGE>
(f) For purposes of this Agreement, the Corporation shall have
"cause" to terminate the Executive's employment hereunder upon (i) the
continued, willful and deliberate failure of the Executive to perform his
duties, in a manner substantially consistent with the manner prescribed by the
Board or the Chief Executive Officer of the Corporation (other than any such
failure resulting from his incapacity due to physical or mental illness), (ii)
the engaging by the Executive in misconduct materially and demonstrably
injurious to the Corporation, (iii) the conviction of the Executive of
commission of a felony, whether or not such felony was committed in connection
with the Corporation's business, or (iv) the circumstances described in Section
8 hereof, in which case the provisions of Section 8 shall govern the rights and
obligations of the parties.
7. Change in Control.
-----------------
(a) All unvested stock options or any other equity-based compensation
arrangements theretofore granted to Executive shall vest in full on the date of
a "Change in Control" (as defined in Section 7(d) below).
(b) In the event that the Corporation terminates the Executive's
employment with the Corporation without "cause" within twelve months after a
"Change in Control" (as defined in Section 7(d) below), or if the Executive
terminates his employment with the Corporation for "good reason" within twelve
months after a "Change in Control" (as defined in Section 7(d) below), then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), the
Corporation shall pay to the Executive a severance payment equal to two times
the Executive's annual base salary. In addition, all vested stock options shall
be exercisable for the shorter of one (1) year from the date of such termination
and until they expire in accordance with their original maximum term.
(c) If the Executive terminates his employment with the Corporation
without "good reason" within twelve months after a Change in Control, then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all
vested stock options shall be exercisable for the shorter of one (1) year from
the date of such termination and until they expire in accordance with their
original maximum term.
(d) For purposes of this Agreement, "Change in Control" shall mean an
occurrence of any of the following events:
(i) an acquisition (other than directly from the Corporation)
of any voting securities of the Corporation (the "Voting
Securities") by any "person or group" (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934) other than an employee benefit plan of the
Corporation, immediately after which such person or group
has "Beneficial Ownership" (within the meaning of Rule
13d-3 under the Exchange Act) of more than thirty-five
percent (35%) of the combined voting power of the
Corporation's then outstanding Voting Securities;
5
<PAGE>
(ii) approval by the stockholders of (1) a merger,
consolidation or reorganization involving the Corporation,
unless the company resulting from such merger,
consolidation or reorganization (the "Surviving
Corporation") shall adopt or assume this Agreement and
either (A) the stockholders of the Corporation immediately
before such merger, consolidation or reorganization own,
directly or indirectly immediately following such merger,
consolidation or reorganization, at least fifty percent
(50%) of the combined voting power of the Surviving
Corporation in substantially the same proportion as their
ownership immediately before such merger, consolidation or
reorganization, or (B) at least a majority of the members
of the Board of Directors of the Surviving Corporation
were directors of the Corporation immediately prior to the
execution of the agreement providing for such merger,
consolidation or reorganization, (2) a complete
liquidation or dissolution of the Corporation, or (3) a
sale or transfer of all or substantially all of the assets
of the Corporation or of assets that during the current or
either of the prior two fiscal years accounted for more
than 50% of the Company's revenues or income (in each
case, other than to a wholly-owned Subsidiary), provided,
--------
however, that the disposition of assets in connection with
-------
the sale of the Environment and Facilities Management
(EFM) Group or the Consulting Group shall not be included
in determining whether there has been a Change in Control;
(iii) if for any reason a majority of the Board is not comprised
of "Continuing Directors," where a "Continuing Director"
of the Corporation as of any date means a member of the
Board who (1) was a member of the Board on April 19, 1999
or (2) was nominated for election or elected to the Board
with the affirmative vote of at least two-thirds of the
directors who were Continuing Directors at the time of
such nomination or election; provided, however, that no
-------- -------
individual initially elected or nominated as a director of
the Corporation as a result of an actual or threatened
election contest with respect to directors or any other
actual or threatened solicitation of proxies or consents
by or on behalf of any person other than the Board shall
be deemed to be a Continuing Director; or
(iv) such other events as the Board or a duly authorized
committee of the Board from time to time may specify.
(e) In the event that, as a result of payments to or for the benefit
of Executive under this Agreement or otherwise in connection with a Change in
Control, any state, local or federal taxing authority imposes any taxes on the
Executive that would not be imposed but for
6
<PAGE>
the occurrence of a Change in Control, including any excise tax under Section
4999 of the Internal Revenue Code and any successor or comparable provision,
then, in addition to the benefits provided for under Sections 6(a)(i) and
6(a)(ii) and under Sections 7(a), 7(b) and 7(c), the Corporation (including any
successor to the Corporation) shall pay to the Executive at the time any such
tax becomes payable an amount equal to the amount of any such tax imposed on the
Executive (the amount of any such payment, the "Parachute Tax Reimbursement").
In addition, the Corporation (including any successor to the Corporation) shall
"gross up" such Parachute Tax Reimbursement by paying to the Executive at the
time any such tax becomes payable an additional amount equal to the aggregate
amount of any additional taxes (whether income taxes, excise taxes, special
taxes, employment taxes or otherwise) that are payable by the Executive as a
result of the Parachute Tax Reimbursement being payable to the Executive and/or
as a result of the additional amounts payable to the Executive pursuant to this
sentence, such that after payment of such additional taxes the Executive shall
have been paid on an after-tax basis an amount equal to the Parachute Tax
Reimbursement.
8. Disability; Death.
-----------------
(a) If, prior to the expiration or termination of the Employment
Period, the Executive shall be unable to perform his duties by reason of
disability or impairment of health for at least six consecutive calendar months,
the Corporation shall have the right to terminate the Executive's employment on
account of disability by giving written notice to the Executive to that effect,
but only if at the time such notice is given such disability or impairment is
still continuing. In the event of a dispute as to whether the Executive is
disabled within the meaning of this Section 8(a), either party may from time to
time request a medical examination of the Executive by a doctor appointed by the
Chief of Staff of a hospital selected by mutual agreement of the parties, or as
the parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive has
become disabled and the date when such disability arose. The cost of any such
medical examinations shall be borne by the Corporation. If the Corporation
terminates the Executive's employment on account of disability, then, in
addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all
unvested stock options and any other equity-based compensation arrangements
shall be terminated and all vested stock options shall be exercisable for the
shorter of one (1) year from the date of such termination and until they expire
in accordance with their original maximum term.
(b) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, then, in addition to the benefits provided for
under Sections 6(a)(i) and 6(a)(ii), the Employment Period shall terminate
without further notice. In such an event, all unvested stock options and any
other equity-based compensation arrangements shall be terminated and all vested
stock options shall be exercisable for the shorter of one (1) year from the date
of Executive's death and until they expire in accordance with their original
maximum term.
7
<PAGE>
(c) Nothing contained in this Section 8 shall impair or otherwise
affect any rights and interests of the Executive under any insurance
arrangements, death benefit plan or other compensation plan or arrangement of
the Corporation which may be adopted by the Board.
9. Non-Competition/Non-Solicitation.
--------------------------------
(a) Non-Competition. The Executive agrees that for a period
----------------
commencing on the Effective Date and ending (i) on the date of termination of
the Executive's employment (x) by the Corporation for reasons that do not
constitute "cause" as defined in Section 6, above, or (y) by the Executive for
"good reason" as defined in Section 6(b), above, or (ii) one year following
termination of the Executive's employment (x) by the Corporation for "cause" or
(y) by the Executive for reasons that do not constitute "good reason", provided
--------
that the Corporation is not in material breach of this Agreement (the "Non-
Competition Period"), the Executive will not, except as otherwise provided
herein, engage or participate, directly or indirectly, as principal, agent,
employee, employer, consultant, stockholder, partner or in any comparable
capacity, in the conduct or management of, or own any stock or any other equity
investment in or debt of, any business which is competitive with any business
conducted by the Corporation. Notwithstanding the foregoing, this provision
shall not prohibit the Executive from providing advice to one or more
competitive business(es) as a consultant, provided, however, that such
-------- -------
consulting services do not entail Executive advising one or more competitive
business(es) on substantially a full-time basis.
For the purpose of this Agreement, a business shall be considered to be
competitive with the business of the Corporation only if such business is
engaged in providing services similar to (i) any service currently provided by
the Corporation or provided by the Corporation during the Employment Period
other than services provided solely by the Corporation's Consulting Group; (ii)
any service which in the ordinary course of business during the Non-Competition
Period evolves from or results from enhancements to the services provided by the
Corporation as of the Effective Date or during the Non-Competition; or (iii) any
future service of the Corporation as to which the Executive materially and
substantially participated in the design or enhancement.
(b) Non-Solicitation of Employees. During the Non-Competition Period,
------------------------------
the Executive will not (for the Executive's own benefit or for the benefit of
any person or entity other than the Corporation) solicit, or assist any person
or entity other than the Corporation to solicit, any officer, director,
executive or employee of the Corporation or its affiliates to leave his or her
employment.
(c) Reasonableness. The Executive acknowledges that (i) the markets
---------------
served by the Corporation are national and international and are not dependent
on the geographic location of executive personnel or the businesses by which
they are employed, (ii) the length of the Non-Competition Period is related to
the length of the Employment Period and the Corporation's agreement to provide
severance benefits as set forth in Sections 6 or 7, above, that, under certain
circumstances, will provide additional compensation to Executive upon the
termination of the Executive's employment; and (iii) the above covenants
8
<PAGE>
are reasonable on their face, and the parties expressly agree that such
restrictions have been designed to be reasonable and no greater than is required
for the protection of the Corporation.
(d) Investments. Nothing in this Agreement shall be deemed to
------------
prohibit Executive from owning equity or debt investments in any corporation,
partnership or other entity which is competitive with the Corporation, provided
--------
that such investments (i) are passive investments and constitute five percent
(5%) or less of the outstanding equity securities of such an entity the equity
securities of which are traded on a national securities exchange or other public
market, or (ii) are approved by the Corporation.
10. Waiver. The waiver of the breach of any term or provision of this
------
Agreement shall not operate as or be construed to be a waiver of any other or
subsequent breach of this Agreement. Failure by the Executive or the
Corporation to insist upon strict compliance with any provision of this
Agreement or to assert any right the Executive or the Corporation may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for "good reason," shall not be deemed to be a waiver of
such provision or right or of any other provision or rights under this
Agreement.
11. Enforcement. The Executive agrees that the Corporation's remedies at
-----------
law for any breach or threat of breach by him of Sections 3, 4, 5, or 9 hereof
will be inadequate, and that the Corporation shall be entitled to an injunction
or injunctions to prevent breaches of Sections 3, 4, 5, or 9 hereof and to
enforce specifically the terms and provisions thereof, in addition to any other
remedy to which the Corporation may be entitled at law or equity. If the
Corporation sues to enforce Sections 3, 4, 5, or 9 hereof and fails to prevail
in such proceeding, the court shall award to the Executive his reasonable fees
for his attorneys, the reasonable expenses of his witnesses, and any other
reasonable expenses incurred in connection with the proceeding to the extent
that the court determines that the Executive has prevailed in such proceeding.
12. Arbitration. Any dispute or claim other than those referred to in
-----------
Section 11, arising out of or relating to this Agreement or otherwise relating
to the employment relationship between the Executive and the Corporation, shall
be submitted to Arbitration, in Fairfax County, Virginia, before a single
arbitrator, in accordance with the rules of the American Arbitration Association
as the exclusive remedy for such claim or dispute. The Executive and the
Corporation agree that such arbitration will be confidential and no details,
descriptions, settlements or other facts concerning such arbitration shall be
disclosed or released to any third party without the specific written consent of
the other party, unless required by law or court order or in connection with
enforcement of any decision in such arbitration. Any damages awarded in such
arbitration shall be limited to the contract measure of damages, and shall not
include punitive damages. In any proceeding, whether commenced by the Executive
or by the Corporation, the arbitrator shall award to the Executive his
reasonable fees for his attorneys, the reasonable expenses of his witnesses, and
any other reasonable expenses incurred in connection with the arbitration to the
extent that the arbitrator determines that the Executive has prevailed in such
proceeding.
9
<PAGE>
13. Full Settlement. The Corporation's obligation to make any payments
---------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Corporation may have against
the Executive or others. In no event shall the Executive be obligated to seek
other employment or take other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and such
amounts shall not be reduced whether or not the Executive obtains other
employment.
14. Severability. Should any provision of this Agreement be determined to
------------
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
15. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
instrument.
16. Assignment. The Executive's rights and obligations under this
----------
Agreement shall not be assignable by the Executive. The Corporation's rights
and obligations under this Agreement shall not be assignable by the Corporation
except as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of the Corporation in a transaction in which
the successor entity remains obligated under, or by operation of law or
otherwise assumes, the Corporation's obligations under this Agreement. In the
event of any such assignment by the Corporation, all rights of the Corporation
hereunder shall inure to the benefit of the assignee.
17. Notices. Any notice required or permitted under this Agreement shall
-------
be deemed to have been effectively made or given if in writing and personally
delivered or sent by registered or certified U.S. mail, UPS or FedEx, properly
addressed in a sealed envelope, with delivery charges prepaid. Unless otherwise
changed by notice, notice shall be properly addressed to Executive if addressed
to:
Timothy P. O'Connor
3202 K Arrowhead Circle
Fairfax, VA 22031
and properly addressed to the Corporation if addressed to:
ICF Kaiser International, Inc.
9300 Lee Highway
Fairfax, Virginia 22031-1207
Attn: General Counsel
10
<PAGE>
18. Miscellaneous. This Agreement constitutes the entire agreement, and
-------------
terminates and supersedes all prior agreements, of the parties hereto relating
to the subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein, except
that nothing contained in this Agreement shall invalidate or supersede the terms
of any previously or subsequently granted stock options or other equity-based
compensation arrangements (including without limitation the provisions thereof
relating to post-termination exercisability) to the extent that such stock
options or arrangements provide more favorable terms to the Executive. The
validity, interpretation, performance and enforcement of this Agreement shall be
governed by the laws of the Commonwealth of Virginia. The headings contained
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
______________________________________________
Timothy P. O'Connor, Executive
ICF KAISER INTERNATIONAL, INC.
By____________________________________________
Hazel R. O'Leary
Chair, Compensation and Human Resources Committee,
Board of Directors
11
<PAGE>
SCHEDULE 5
----------
Inventions Owned by the Executive
NONE
12
<PAGE>
ATTACHMENT A
------------
Title: Chief Financial Officer
Overview:
. This Attachment A describes the annual incentive bonus plan in which the
named executive will participate from 6/1/99 through 5/31/00.
. The executive's performance will be assessed against the following objectives
as described in this Attachment A:
- Cost Savings
- EBITDA Improvement
- Completion of Recapitalization
COST SAVINGS
- ------------
Goal: $19 million in total Company cost savings achieved between 3/31/99 and
11/30/99
Measurement:
Reduction in the annualized run rate of the Company's costs, exclusive of the
costs associated with the discontinued operations of the EFM and Consulting
Groups, as set forth in the financial statements of the Company as filed with
the Securities and Exchange Commission and prepared in accordance with GAAP on a
consistent basis, as compared to the annualized run rate of such costs for the
quarter ended March 31, 1999.
Cost savings will be measured on three Measurement Dates as indicated below, and
will be based on costs for the month ending on each of the three Measurement
Dates. For purposes of measuring cost reductions, costs will be categorized as
either direct (those incurred directly and solely for the benefit of a project)
or indirect (those incurred for the general operations of the Company).
Direct Costs:
To reflect the fact that direct costs may increase as the business begins to
prosper, direct cost reductions will be measured as follows:
Changes in direct subcontract and materials will be excluded from measurement.
Changes in direct labor and fringe benefits will be measured based on the change
in the relationship of such costs to service revenue.
13
<PAGE>
Example of Direct Cost Savings Calculation:
<TABLE>
<CAPTION>
Annualized Rate
Thru March 31, 1999 at Measurement Date
------------------- -------------------
<S> <C> <C>
Service revenue 27,877 $111,000
Direct labor and fringe 17,837 66,600
Direct labor and fringe costs
as a % of service revenue 64% 60%
Improvement in gross margins 4%
Actual annual labor and fringe $ 66,600
--------
Savings credit $ 2,664
========
</TABLE>
Indirect Costs:
The measurement of indirect cost savings will be calculated from costs for the
month ending on the Measurement Date, excluding any costs incurred prior to the
Measurement Dates set forth below that were incurred to effect future cost
reductions, such as severance, lease buyouts, litigation defense costs and
settlements, employee retention incentives, and any other nonrecurring costs
incurred outside the ordinary course of business for a non-troubled company
(collectively, "Restructuring Costs").
Total annualized indirect costs as of the March 31, 1999 financial statements
was $68,468 (none of which were Restructuring Costs).
<TABLE>
<S> <C> <C>
Example of Indirect Cost Savings Calculation:
Indirect cost benchmark - March 31, 1999 $68,468
Total indirect costs incurred during
measurement period $ 5,000
Less: Restructuring Costs (500)
-------
Adjusted indirect costs incurred during
measurement period $ 4,500
-------
Annualized $54,000
-------
Savings from indirect costs $14,468
=======
</TABLE>
Thus, under the foregoing two examples, "Cost Savings" (in thousands) for the
month would equal $17,102, which is the sum of $2,664 (annualized direct cost
savings) and $14,468 (annualized indirect cost savings).
Following each Measurement Date the executive shall submit to the Compensation
and Human Resources Committee (the "Compensation Committee") a report showing
the computation of
14
<PAGE>
Operating Cost savings in accordance with this Attachment A and the amount of
bonus, if any, due with respect to the period ending on the Measurement Date.
Target Cost Savings Bonus: $65,000
Performance Measurement and Payout:
. Performance is measured on the three Measurement Dates shown below:
. At each Measurement Date, the actual bonus earned will be calculated by
multiplying (i) the target bonus amount, by (ii) the percentage (but not more
than 100%) that actual cost savings achieved for the month ending on the
Measurement Date bears to total target cost savings (i.e., $19 million), by
(iii) the appropriate timing incentive for the Measurement Date as specified
in the table below. This amount will be reduced by the amount of any cost
savings bonus earned at an earlier Measurement Date.
<TABLE>
<CAPTION>
Measurement Date Timing Incentive
---------------- ----------------
<S> <C>
7/31/99 100%
9/30/99 95%
11/30/99 85%
</TABLE>
. Incentive earned will be paid within 10 days after review of the computation
of cost savings as of each Measurement Date by the Compensation Committee.
EBITDA IMPROVEMENT
- ------------------
Goal: Annual run rate of $6 million of EBITDA (excluding Kaiser-Hill)
Target Incentive: $65,000
Performance Measurement and Payout:
. Performance will be measured by comparing the Company's actual EBITDA annual
run rate for the five months ending May 31, 2000 (excluding Kaiser-Hill), as
reported in the Company's financial statements, to the EBITDA target of $6
million (excluding Kaiser-Hill).
. A minimum of 50% of the goal must be achieved to qualify for payment. If less
than 50% of the goal is achieved, no EBITDA improvement incentive will be
paid.
15
<PAGE>
. The target incentive will be multiplied by the actual percentage (but not
more than 100%) of EBITDA achieved as follows:
Percentage Earned = Actual EBITDA
-------------
$6 million
. Up to 100% of target incentive can be earned.
. Following May 31, 2000, the executive shall submit to the Compensation
Committee a report showing the computation of the amount of bonus, if any,
due hereunder. Incentive earned will be paid within 10 days after review of
the computation by the Compensation Committee.
RECAPITALIZATION
- ----------------
Goal: Four performance objective targets to be accomplished by 12/31/99 based
upon planning, management, negotiating, obtaining acceptance of and implementing
a recapitalization plan approved by the Board of Directors:
Noteholder Acceptance of Plan
Shareholder Acceptance of Plan
Close New Credit Facility
Close Recapitalization Plan
Target Incentive:
Noteholder Acceptance of Plan $60,000
Shareholder Acceptance of Plan $40,000
Close New Credit Facility $40,000
Close Recapitalization Plan $60,000
Performance Measurement and Payout:
. Once a performance objective target is met, payout will occur within 30 days.
. A performance objective target must be met by 12/31/99 to qualify for
payment.
16
<PAGE>
EXHIBIT 21
ICF KAISER INTERNATIONAL, INC.
9300 Lee Highway, Fairfax, Virginia 22031
(703) 934-3600
ICF Kaiser International, Inc.?s consolidated subsidiaries are listed
below. Consolidated subsidiaries which are less than wholly owned are indicated
by the ownership percentage figure in parentheses following the name of the
consolidated subsidiary.
<TABLE>
<CAPTION>
JURISDICTION
CONSOLIDATED SUBSIDIARY OF FORMATION
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
I. Cygna Group, Inc. Delaware
II. Liability Risk Management, Inc. California
I. EDA,Incorporated Maryland
I. HBG Hawaii, Inc. Delaware
I. HBG International, Inc. 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 Kaiser Engineers, Inc. Ohio
III. Henry J. Kaiser Company (Canada) Ltd. Canada
III. ICF Kaiser Engineers & Builders, Inc. Delaware
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. (33 1/3%) Pennsylvania
III. ICF Kaiser Overseas Engineering, Inc. Delaware
III. Kaiser Engineers Limited United Kingdom
IV. Kaiser Engineers Technical Services Limited (80%) Cyprus
III. Kaiser Engineers and Constructors, Inc. Nevada
IV. ICF Kaiser Engenharia e Participacoes Ltda. (99.9%) Brazil
V. ICF Kaiser Construcoes e Engenharia Ltda (99.989%) Brazil
IV. ICF Pty. Ltd. (50%) Australia
IV. Kaiser Engineers Limited (0.02%) U.K.
IV. Kaiser Engenharia S.A. (50%) Portugal
V. ICF Kaiser Construcoes e Engenharia Ltda (0.01%) Brazil
IV. Kaiser Engineers (NZ) Ltd (1%) New Zealand
IV. Kaiser Engineers Pty. Ltd. (50%) Australia
V. KWA Kenwalt (50%) Australia
V. ICF Kaiser Aluterv KFT Hungary
V. ICF Kaiser Engineers Asia Pacific Pty Ltd Australia
V. ICF Kaiser Engineers (Hong Kong) Ltd Hong Kong
V. ICF Kaiser Engineers (Singapore) Pte Ltd Singapore
V. Kaiser Engineers (NZ) Limited (99%) New Zealand
III. Kaiser Engineers International, Inc. Nevada
IV. ICF Pty. Ltd. (50%) Australia
IV. ICF Kaiser Engenharia e Participacoes Ltda.(0.1%) Brazil
IV. ICF Kaiser Panama S.A. Panama
</TABLE>
Page 1 of 2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
IV. Kaiser Engenharia S.A. (50%) Portugal
IV. Kaiser Engineers Pty. Ltd. (50%) Australia
III. Kaiser Engineers Limited (99.98%) U.K.
IV. Kaiser Engineers Technical Services Limited (80%) Cyprus
IV. Kaiser Engineers (UK) Limited (50%) U.K.
III. Kaiser Engineers (UK) Limited (50%) U.K.
IV. Kaiser Engineers Technical Services Limited (20%) Cyprus
III. KE Services Corporation Delaware
III. Kaiser Engenharia e Constructoes Limitada Brazil
II. International Waste Energy Systems, Inc. Delaware
II. KE Livermore, Inc. Delaware
I. ICF Kaiser Engineers Massachusetts, Inc. Delaware
I. ICF Kaiser Engineers Pacific, Inc. Nevada
I. ICF Kaiser Europe, Inc. Delaware
I. ICF Kaiser / Georgia Wilson, Inc. Delaware
I. ICF Kaiser Government Programs, Inc. Delaware
II. Kaiser-Hill Company, LLC (50%) Colorado
III. Kaiser-Hill Funding Company, L.L.C. (98%) Delaware
II. Kaiser-Hill Funding Company, L.L.C. (1%) Delaware
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
II. ICF Kaiser DPI Holding Co., Inc. Delaware
II. ICF Kaiser Engineers Eastern Europe, Inc. Delaware
III. ICF Kaiser Netherlands B.V. (10%) Netherlands
II. ICF Kaiser Hunters Branch Leasing, Inc. Delaware
II. ICF Kaiser Idaho Programs, Inc. Delaware
II. ICF Kaiser Netherlands B.V. (90%) Netherlands
II. ICF Leasing Corporation, Inc. Delaware
I. ICF Kaiser Servicios Ambientales, S.A. de C.V. (66 2/3%) Mexico
I. ICF Kaiser Technology Holdings, Inc. Delaware
II. ICF Kaiser Advanced Technology, Inc. Idaho
III. ICF Kaiser Advanced Technology of New Mexico, Inc. New Mexico
I. ICF R G.P. No. 1, Inc. Delaware
I. Monument Select Insurance Company Vermont
I. Phase Linear Systems Incorporated Delaware
I. Tudor Engineering Company Delaware
</TABLE>
Page 2 of 2
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of ICF Kaiser International, Inc. and its subsidiaries of
our report dated April 15, 1999 relating to the consolidated financial
statements and financial statement schedule appearing in ICF Kaiser
International, Inc. and subsidiaries' Annual Report on Form 10-K for the year
ended December 31, 1998. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Registration Statement.
McLean, Virginia
July 9, 1999
