FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-7567
URS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-1381538
---------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
100 California Street, Suite 500
San Francisco, California 94111-4529
------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 415-774-2700
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
-- --
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 5, 1998
- ----------------------------------- ---------------------------
Common stock, $.01 par value 14,995,866
<PAGE>
URS CORPORATION AND SUBSIDIARIES
This Form 10-Q for the second quarter ended April 30, 1998 contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed here. Factors that
might cause such a difference include, but are not limited to, those discussed
elsewhere in this Form 10-Q and those incorporated by reference from the
Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1997
and Form S-4/A Registration Statement (File No. 333-37531), filed with the
Securities and Exchange Commission on October 10, 1997.
PART I. FINANCIAL INFORMATION:
In the opinion of management, the information furnished reflects all
adjustments, consisting only of normal recurring adjustments, which are
necessary for a fair statement of the interim financial information.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended October 31,
1997. The results of operations for the three and six month periods ended April
30, 1998 are not necessarily indicative of the operating results for the full
year.
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
April 30, 1998 and October 31, 1997.......................3
Consolidated Statements of Operations
Three and six months ended April 30,
1998 and 1997............................................4
Consolidated Statements of Cash Flows
Six months ended April 30, 1998 and 1997..................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...............................................6
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a
Vote of Security Holders..................................9
Item 6. Exhibits and Reports on Form 8-K...........................10
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<CAPTION>
April 30, October 31,
ASSETS 1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 33,875 $ 22,134
Accounts receivable, less allowance for doubtful accounts
of $2,899 and $1,488 159,409 80,251
Costs and accrued earnings in excess of
billings on contracts in process, less
allowances for losses of $8,523 and $1,838 58,087 37,741
Deferred income taxes 954 3,843
Prepaid expenses and other assets 3,422 2,885
--------- ---------
Total current assets 255,747 146,854
Property and equipment at cost, net 30,486 17,848
Goodwill, net 119,209 42,485
Deferred income taxes 4,034 --
Other assets 8,239 2,904
--------- ---------
$ 417,715 $ 210,091
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt, current portion $ 20,069 $ 4,775
Accounts payable 30,955 20,198
Accrued salaries and wages 23,732 17,769
Accrued expenses and other 28,263 17,863
Billings in excess of costs and accrued earnings on
contracts in process 36,119 23,013
--------- ---------
Total current liabilities 139,138 83,618
Long-term debt 103,589 41,448
Deferred compensation and other 25,772 7,874
--------- ---------
Total liabilities 268,499 132,940
--------- ---------
Stockholders' equity:
Common shares, par value $.01; authorized 20,000 shares;
issued 14,964 and 10,741 shares 149 107
Treasury stock (287) (287)
Additional paid-in capital 113,996 51,085
Retained earnings since February 21, 1990, date of
quasi-reorganization 35,358 26,246
--------- ---------
Total stockholders' equity 149,216 77,151
--------- ---------
$ 417,715 $ 210,091
========= =========
</TABLE>
3
<PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended Six months ended
April 30, April 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
(unaudited) (unaudited)
Revenues $195,182 $ 99,759 $381,338 $195,301
-------- -------- -------- --------
Expenses:
Direct operating 116,356 59,071 231,587 116,075
Indirect, general and
administrative 67,410 35,230 128,757 68,687
Interest expense, net 2,273 1,381 4,282 2,816
-------- -------- -------- --------
186,039 95,682 364,626 187,578
-------- -------- -------- --------
Income before taxes 9,143 4,077 16,712 7,723
Income tax expense 4,200 1,620 7,600 3,070
-------- -------- -------- --------
Net income $ 4,943 $ 2,457 $ 9,112 $ 4,653
======== ======== ======== ========
Net income per share:
Basic $ .33 $ .24 $ .61 $ .46
======== ======== ======== ========
Diluted $ .31 $ .24 $ .58 $ .46
======== ======== ======== ========
4
<PAGE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
April 30,
--------------------
1998 1997
--------- ---------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,112 $ 4,653
--------- ---------
Adjustment to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 7,339 4,152
Allowance for doubtful accounts and losses 329 (1,350)
Changes in current assets and liabilities:
Accounts receivable and costs and accrued earnings
in excess of billings on contracts in process 11,845 (7,899)
Prepaid expenses and other assets (104) (1,087)
Accounts payable, accrued salaries and wages
and accrued expenses (16,171) (2,546)
Billings in excess of costs and accrued earnings on
contracts in process 687 599
Deferred taxes (177) 103
Other, net 1,287 (859)
--------- ---------
Total adjustments 5,035 (8,887)
--------- ---------
Net cash (used) provided by operating activities 14,147 (4,234)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisition, net of cash acquired (36,937) --
Capital expenditures (3,122) (1,737)
--------- ---------
Net cash (used) by investing activities (40,059) (1,737)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 110,000 --
Principal payments on long-term debt (73,356) (11,065)
Proceeds from sale of common shares 755 444
Proceeds from exercise of stock options 254 152
Proceeds from exercise of warrants -- 3,895
--------- ---------
Net cash (used) provided by financing activities 37,653 (6,574)
--------- ---------
Net increase in cash 11,741 (12,545)
Cash at beginning of period 22,134 22,370
--------- ---------
Cash at end of period $ 33,875 $ 9,825
========= =========
SUPPLEMENTAL INFORMATION:
Interest paid $ 4,587 $ 2,993
========= =========
Taxes paid $ 8,496 $ 4,450
========= =========
Equipment subject to capital lease obligations $ 1,128 $ 1,556
========= =========
Noncash purchase allocation adjustment $ 13,600 $ 3,000
========= =========
Retirement of debt, related parties $ -- $ 3,028
========= =========
Issuance of common stock in business acquisition $ 61,936 $ --
========= =========
5
<PAGE>
URS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company reports the results of its operations on a fiscal year which
ends on October 31. This Management Discussion and Analysis (MD&A) should be
read in conjunction with the MD&A and the footnotes to the Consolidated
Financial Statements included in the Annual Report on Form 10-K for the fiscal
year ended October 31, 1997 which was previously filed with the Securities and
Exchange Commission.
Reclassifications
Certain reclassifications have been made to the 1997 financial statements
to conform to the 1998 presentation with no effect on net income as previously
reported.
Income Per Common Share
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share, effective
November 1, 1997. SFAS 128 requires the presentation of basic and diluted income
per common share. Basic income per common share is computed by dividing net
income available to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted income per common share is computed
giving effect to all dilutive potential common shares that were outstanding
during the period. Dilutive potential common shares consist of the incremental
common shares issuable upon the exercise of stock options and warrants for all
periods. All prior period income per common share amounts have been restated to
comply with SFAS 128.
In accordance with the disclosure requirements of SFAS 128, a
reconciliation of the numerator and denominator of basic and diluted income per
common share is provided as follows (in thousands, except per share amounts):
Three Months Ended April 30,
----------------------------
1998 1997
------- -------
Numerator - Basic
Net Income $ 4,943 $ 2,457
======= =======
Denominator - Basic
Weighted average common stock outstanding 14,907 10,226
======= =======
Basic income per share $ .33 $ .24
======= =======
Numerator - Diluted
Net Income $ 4,943 $ 2,457
======= =======
Denominator - Diluted
Weighted average common stock outstanding 14,907 10,226
Effect of dilutive securities:
Stock options 816 541
------- -------
15,723 10,767
======= =======
Diluted income per share $ .31 $ .24
======= =======
6
<PAGE>
Six Months Ended April 30,
--------------------------
1998 1997
----- -----
Numerator - Basic
Net Income $ 9,112 $ 4,653
======= =======
Denominator - Basic
Weighted average common stock outstanding 14,870 9,430
======= =======
Basic income per share $ .61 $ .49
======= =======
Numerator - Diluted
Net Income $ 9,112 $ 4,653
======= =======
Denominator - Diluted
Weighted average common stock outstanding 14,870 9,430
Effect of dilutive securities:
Stock options 808 497
------- -------
15,678 9,927
======= =======
Diluted income per share $ .58 $ .46
======= =======
Stock options to purchase 394,000 shares of common stock at prices ranging
from $9.13 to $31.25 per share were outstanding at April 30, 1997, but were not
included in the computation of diluted income per share because the exercise
price was greater than the average market value of the common shares.
Convertible subordinated debt was not included in the computation of diluted
income per share because it would be anti-dilutive.
Stock options to purchase 210,000 shares of common stock at prices ranging
from $15.06 to $31.25 per share were outstanding at April 30, 1998, but were not
included in the computation of diluted income per share because the exercise
price was greater than the average market value of the common shares.
Convertible subordinated debt was not included in the computation of diluted
income per share because it would be anti-dilutive.
Acquisition
On November 14, 1997, the Company acquired Woodward-Clyde Group, Inc., a
Denver, Colorado, engineering services firm ("W-C"), for
approximately $110,000,000.
The purchase was partially financed by a $110,000,000 term loan payable
over six years beginning April 1998. The loan bears interest based on rate
indexes selected by the Company, with variable spreads over the selected index
based on loan maturity and the Company's financial performance. At April 30,
1998, the interest rate on this loan was based on the London Interbank Offered
Rate ("LIBOR") of 5.625%, plus a spread of 1.500%.
7
<PAGE>
The acquisition has been accounted for by the purchase method of
accounting and the excess of the fair value of the net assets acquired over the
purchase price has been allocated to goodwill. The excess purchase price over
net assets acquired resulting from the acquisition will be amortized on a
straight-line basis over thirty years. The operating results of W-C are included
in the Company's results of operations from November 1, 1997.
The purchase price consisted of: (in thousands)
Cash paid $ 16,866
Term debt 31,198
Common Stock 61,936
---------
$ 110,000
=========
Purchase price
(net of prepaid loan fees of $4.0 million) $ 106,000
Fair value of assets acquired (40,194)
----------
Excess purchase price over net assets acquired $ 65,806
=========
The following unaudited pro forma summary presents the consolidated
results of operations as if the W-C acquisition had occurred at the beginning of
the periods presented and does not purport to indicate what would have occurred
had the acquisition been made as of those dates or of results which may occur in
the future.
Three Months Ended Six Months Ended
April 30, 1997 April 30, 1997
-------------- --------------
(in thousands, except per share amounts)
Revenues $179,072 $345,523
=======
Net income $ 4,124 $ 6,444
======= =======
Net income per share $ .38 $ .61
======= =======
8
<PAGE>
Results of Operations
Second quarter ended April 30, 1998 vs. April 30, 1997.
The Company's revenues were $195,182,00 for the quarter ended April 30,
1998, an increase of $95,423,000, or 96%, over the amount reported for the same
period last year. The growth in revenue is primarily attributable to the
acquisition of W-C, the results of which are included commencing November 1,
1997, and to a minor extent due to an increase in demand for the Company's
on-going services on both infrastructure and environmental projects.
Direct operating expenses for the quarter ended April 30, 1998, which
consist of direct labor and other direct expenses, including subcontractor
costs, increased $57,285,000, a 97% increase over the amount reported for the
same period last year. This increase is primarily due to the addition of the
direct operating expenses of W-C.
Indirect, general and administrative expenses for the quarter ended April
30, 1998 increased $32,180,000, or 91%, over the amount reported for the same
period last year as a result of the W-C acquisition as well as an increase in
business activity.
The Company earned $9,143,000 before income taxes for the quarter ended
April 30, 1998 compared to $4,077,000 for the same period last year. The
Company's effective income tax rate for the quarters ended April 30, 1998 and
1997 was approximately 46% and 40%, respectively. The increase in the effective
income tax rate for the quarter ended April 30, 1998, is due to operating in
countries outside the United States with higher tax rates.
The Company reported net income of $4,943,000, or $.31 per share, for the
second quarter ended April 30, 1998, compared with $2,457,000, or $.24 per
share, for the same period last year.
9
<PAGE>
Six months ended April 30, 1998 vs. April 30, 1997
The Company's revenues were $381,338,000 for the six months ended April
30, 1998, an increase of $186,037,000, or 95%, over the amount reported for the
same period last year. The growth in revenues is primarily attributable to the
W-C acquisition and, to a lesser extent, all areas of the Company's business
including infrastructure projects involving transportation systems,
institutional and commercial facilities and environmental projects.
Direct operating expenses for the six months ended April 30, 1998, which
consist of direct labor and other direct expenses including subcontractor costs,
increased $115,512,000, or 100%, over the amount reported in the same period
last year. This increase is attributable to the W-C acquisition, as well as the
overall increase in the Company's business as compared to the same period last
year. Indirect, general and administrative expenses were $128,757,000 for the
six months ended April 30, 1998, an increase of $60,070,000, or 87%, over the
amount reported for the same period last year. The increase in indirect, general
and administrative expenses is due to the addition of the W-C overhead and, to a
lesser extent, an increase in business activity.
The Company earned $16,712,000 before income taxes for the six months
ended April 30, 1998 compared to $7,723,000 for the same period last year. The
Company's effective income tax rate for the six months ended April 30, 1998 and
1997 was approximately 45% and 40% respectively. The increase in the effective
income tax rate for the six months ended April 30, 1998 is due to operating in
countries outside the United States with higher tax rates.
The Company reported net income of $9,112,000 or $.58 per share, for the
six months ended April 30, 1998, compared with $4,653,000, or $.46 per share for
the same period last year.
The Company's backlog at April 30, 1998 was $681,707,000, as compared to
$470,400,000 at October 31, 1997. This increase is due to the W-C acquisition.
10
<PAGE>
Liquidity and Capital Resources
At April 30, 1998, the Company had working capital of $116,609,000, an
increase of $53,373,000 from October 31, 1997, due primarily to the W-C
acquisition.
The Company's current revolving line of credit is $40,000,000, of which,
after issuance of letters of credit aggregating $3,000,000, $37,000,000 was
available at April 30, 1998. The Company had no borrowings on its revolving line
of credit during the six months ended April 30, 1998.
The Company's credit agreement requires compliance with certain financial
and other covenants. The Company was in compliance with such covenants at April
30, 1998.
The Company believes that its existing financial resources, together with
its planned cash flow from operations and its unused bank line of credit, will
provide sufficient capital to fund its operations and capital expenditure needs
for the foreseeable future.
11
<PAGE>
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's regularly scheduled annual stockholders meeting, held on
March 24, 1998, the stockholders (i) ratified the selection of Coopers & Lybrand
L.L.P. as the Company's independent auditors for the 1998 fiscal year, with
stockholders holding 13,677,297 shares voting in favor, stockholders holding
18,458 shares voting against, stockholders holding 39,419 shares abstaining from
voting, and 1,066,100 broker non-votes, (ii) approved the amendment to the URS
Corporation Employee Stock Purchase Plan, with stockholders holding 12,182,253
shares voting in favor, stockholders holding 119,749 shares voting against,
stockholders holding 28,718 shares abstaining from voting and 2,470,554 broker
non-votes, (iii) approved the amendment to the URS Corporation 1991 Stock
Incentive Plan, with stockholders holding 9,607,348 shares voting in favor,
stockholders holding 2,681,149 shares voting against, stockholders holding
42,230 shares abstaining from voting and 2,470,547 broker non-votes, and (iv)
elected each of the following nominees as directors of the Company by the
following vote:
For Withheld
Richard C. Blum 13,690,153 45,022
Robert L. Costello 13,671,666 63,509
Armen Der Marderosian 13,693,675 41,500
Admiral S. Robert Foley, Jr., USN (Ret.) 13,693,660 41,515
Robert D. Glynn, Jr. 13,693,675 41,500
Senator J. Bennett Johnston 13,693,530 41,645
Martin M. Koffel 13,671,732 63,443
Richard B. Madden 13,693,639 41,536
Jean-Yves Perez 13,607,097 128,078
Richard Q. Praeger 13,693,256 41,919
Irwin L. Rosenstein 13,680,028 55,147
Frank S. Waller 13,626,515 108,660
William D. Walsh 13,693,465 41,710
No stockholders abstained from voting in this election of directors and
there were 1,006,099 broker non-votes.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-K:
Exhibit Number Exhibit
-------------- -------
10.1 Employment Agreement dated November 1, 1997 between
Woodward-Clyde Group, Inc. and Jean- Yves Perez.
FILED HEREWITH.
10.2 Employment Agreement dated March 17, 1998 between
Woodward-Clyde Group, Inc. and Robert K. Wilson.
FILED HEREWITH.
27 Financial Data Schedule (electronic format only).
99.1 1991 Stock Incentive Plan, as amended effective
December 18, 1997, filed as Appendix A to the
Company's definitive proxy statement for its 1998
Annual Meeting of Stockholders, filed with the
Securities and Exchange Commission on February 17,
1998 and incorporated herein by reference.
99.2 Employee Stock Purchase Plan, as amended effective
December 18, 1997, filed as Appendix B to the
Company's definitive proxy statement for its 1998
Annual Meeting of Stockholders, filed with the
Securities and Exchange Commission on February 17,
1998 and incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended April
30, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated June 12, 1998
URS CORPORATION
/s/ Kent Ainsworth
- --------------------------------
Kent P. Ainsworth
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of November
1, 1997 by and between JEAN-YVES PEREZ (the "Employee") and WOODWARD-CLYDE
GROUP, INC., a Delaware corporation (the "Company").
1. TERM OF EMPLOYMENT.
(a) Basic Rule. The Company agrees to employ the Employee, and the
Employee agrees to remain in employment with the Company, from the date hereof
until the date when the Employee's employment terminates pursuant to Subsection
(b), (c), (d), (e) or (f) below.
(b) Termination by Company Not for Cause. The Company may terminate the
Employee's employment at any time without Cause (as defined below) and for any
reason or no reason whatsoever by giving the Employee notice in writing.
(c) Termination by Company for Cause. The Company may terminate the
Employee's employment for Cause by giving the Employee notice in writing. For
all purposes under this Agreement, "Cause" shall mean:
(i) A substantial failure or omission of the Employee to
perform his duties hereunder, other than as a result of death of Employee or
Disability of Employee (as defined below).
(ii) An act by the Employee involving material injury to the
Company or to URS Corporation (or any parent, subsidiary or affiliated
corporation or related entity of either of them), willful or gross misconduct,
fraud or dishonesty;
(iii) The Employee's conviction of, or plea of "guilty" or "no
contest" to, a felony; or
(iv) The Employee's disobedience of orders and directives of
the Chief Executive Officer of URS Corporation or his designee (as determined
under Section 2(a)).
(d) Resignation by Employee. The Employee may terminate his employment
by giving the Company notice in writing.
(e) Death of Employee. The Employee's employment shall terminate
automatically in the event of his death.
(f) Disability. The Company may terminate the Employee's employment due
to Disability. For all purposes under this Agreement, "Disability" shall mean
either:
(i) Employee has qualified for long-term disability benefits
under a plan, program or arrangement maintained by the Company or a parent,
subsidiary or affiliated
1.
<PAGE>
corporation or related entity of the Company; or
(ii) The inability of the Employee to perform the normal
duties of his position under this Agreement for a continuous period of 60
calendar days or any incapacity, however caused, that, in the good faith opinion
of the Chief Executive Officer of URS Corporation or his designee, is likely to
prevent Employee from performing his normal duties under this Agreement for more
than 90 calendar days in any twelve consecutive month period (taking into
account, in the case of such an inability or incapacity which is a physical or
mental impairment that substantially limits one or more of the major life
activities of Employee, reasonable accommodations that would not impose an undue
hardship on the Company, as the terms "reasonable accommodation" and "undue
hardship" are defined in the Americans With Disabilities Act of 1990, as
amended).
(g) Rights Upon Termination. Except as expressly provided in Sections 6
and 7, upon the termination of the Employee's employment pursuant to this
Section 1, the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 3, 4 and 5 for the period preceding the
effective date of the termination. Neither the preceding sentence nor any other
provisions of this Agreement shall be construed to give rise to any right,
entitlement or vesting as to any compensation or benefit under any employee
benefit plan or program referred to in Section 4 that has not been paid as of
the time of employment termination. By way of example and not by way of
limitation, except as may be specifically required by the written terms and
conditions thereof without regard to this Agreement, Employee shall not have any
right to, shall not be vested in, and shall not be entitled to any full or
partial incentive or bonus compensation or any other amount whatsoever under any
nonqualified management incentive or bonus compensation plan or arrangement if
Employee's employment shall have terminated before amounts are actually paid
thereunder, whether for the period under such plan or arrangement during which
Employee's employment ceases or any other period. The payments under this
Agreement shall fully discharge all responsibilities of the Company to the
Employee.
(h) Employment by Affiliate. The employment of the Employee shall not
be considered to have terminated employment for purposes of this Agreement if
the Employee is employed by a parent, subsidiary or affiliated corporation or
related entity of the Company.
(i) Termination of Agreement. This Agreement shall terminate when all
obligations of the parties hereunder have been satisfied.
2. DUTIES AND SCOPE OF EMPLOYMENT.
(a) Position. The Company agrees to employ the Employee in an executive
position for the term of his employment under this Agreement. The Employee shall
report as directed by the Chief Executive Officer of URS Corporation or such
officers and agents of the Company or its parent, subsidiary and affiliated
corporations and related entities as such Chief Executive Officer may direct and
shall serve in such positions on behalf of the Company and such corporations and
entities and perform such duties consistent with an executive position at
2.
<PAGE>
such locations as may be required by such Chief Executive officer or designee.
It is anticipated that the Employee's duties will require him to travel
frequently and extensively. The Employee's principal office (greater Denver,
Colorado area) may be changed from time to time with the approval of the
Employee, provided the Company reimburses reasonable relocation expenses of
Employee in accordance with generally applicable policies of the Company.
(b) Obligations. During the term of his employment under this
Agreement, the Employee shall devote his full business efforts and time to the
Company and its parent, subsidiaries and affiliated corporations and related
entities and shall not render services to any other person or entity without the
prior written consent of the Chief Executive Officer of URS Corporation. The
foregoing, however, shall not preclude the Employee from engaging in appropriate
civic, charitable or religious activities.
(c) Other Agreements. Employee shall from time to time execute and
deliver to Company and its parent, subsidiary and affiliated corporations and
related entities such agreements, documents and instruments as the Company may
reasonably require, including, without limitation, confidentiality, trade
secret, invention assignment and other agreements.
(d) Resignation from Other Positions. Immediately upon request by the
Company, before or after the termination of the employment of Employee, he shall
resign from any position he holds as director, officer, trustee, nominee, agent
for service of process, attorney-in-fact or similar position with respect to the
Company or a parent, subsidiary or affiliated corporation or related entity of
the Company, and shall execute, verify, acknowledge, swear to and deliver any
documents and instruments reasonably requested by the Company or required to
reflect such resignation.
3. BASE COMPENSATION.
During the term of his employment under this Agreement, the
Company agrees to pay the Employee as compensation for his services a base
salary at an annual rate of no less than $310,000. Such salary shall be payable
in accordance with the Company's standard payroll procedures. (The annual
compensation specified in this Section 3, together with any increases in such
compensation that the Company may grant from time to time, is referred to in
this Agreement as "Base Compensation.")
4. EMPLOYMENT BENEFITS, STOCK OPTIONS, AND INCENTIVE
COMPENSATION, AND OTHER COMPENSATION PLANS AND PROGRAMS.
(a) Eligibility to Participate. During the term of his employment under
this Agreement, the Employee shall be eligible to participate in the employee
benefit plans, stock option and other equity-based incentive and compensation
plans, and other executive incentive and compensation programs maintained with
respect to employees of the Company, subject in each case to (i) the generally
applicable terms and conditions of the plan or program in question and to the
determinations of the Board of Directors of URS Corporation or any committee or
other person administering such plan or program, (ii) determinations by the
Company, any such
3.
<PAGE>
corporation or entity, or any such board, committee or person as to whether and
to what extent Employee shall so participate or cease to participate, and (iii)
amendment, modification or termination of any such plan or program in the sole
and absolute discretion of the Company or its parent, subsidiary or affiliated
corporation or related entity maintaining such plan.
(b) Incentive Compensation. Subject to the provisions of Section 4(a),
Employee shall have a 50% Target Award Percentage under the Company's Incentive
Compensation Plan if and to the extent in effect from time-to-time.
5. BUSINESS EXPENSES.
In accordance with the Company's generally applicable
policies, (i) during the term of his employment under this Agreement, the
Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with his duties
hereunder, and (ii) the Company shall reimburse the Employee for such expenses
upon presentation of an itemized account and appropriate supporting
documentation.
6. CHANGE IN CONTROL.
(a) Definition. For all purposes under this Agreement, "Change in
Control" shall mean that, after the date of this Agreement, any "person" (as
such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended), other than a person that immediately before the acquisition
or aggregation of securities referred to immediately hereinafter, directly or
indirectly controls, is controlled by, or is under common control with URS
Corporation, through the acquisition or aggregation of securities, becomes the
beneficial owner, directly or indirectly, of securities of URS Corporation or
the Company representing 51 percent or more of the combined voting power of the
then outstanding securities ordinarily (and apart from rights accruing under
special circumstances) having the right to vote at elections of directors (the
"Base Capital Stock"); except that any change in the relative beneficial
ownership of URS Corporation's securities by any person resulting solely from a
reduction in the aggregate number of outstanding shares of Base Capital Stock,
and any decrease thereafter in such person's ownership of securities, shall be
disregarded until such person increases in any manner, directly or indirectly,
such person's beneficial ownership of any securities of URS Corporation.
(b) Good Reason. For all purposes under this Agreement, "Good Reason"
shall mean that either (i) the Employee has incurred a reduction in his Base
Compensation or (ii) the Company has breached its obligations under Section 2(a)
and, at the time of such breach, the Employee is in compliance with his
obligations thereunder and under the other provisions of this Agreement.
(c) Change in Control Payment. If, during the term of this Agreement
and within one year after the occurrence of a Change in Control with respect to
URS Corporation, the Employee voluntarily resigns his employment for Good Reason
or the Company terminates the Employee's employment for any reason other than
Cause or Disability, then the Employee shall be entitled to receive a severance
payment from the Company (the "Change in Control
4.
<PAGE>
Payment") and in addition shall be entitled to Severance Benefits in accordance
with Subdivision (ii) of Section 7(a). No Change in Control Payment shall be
made in case of termination of employment of Employee by reason of resignation
of Employee other than for Good Reason, death of Employee, or any other
circumstance not specifically and expressly described in the immediately
preceding sentence. The Change in Control Payment shall be made in a lump sum
not more than five business days following the date of the employment
termination and shall be in an amount determined under Subsection (d) below;
provided, however, in no event shall the Company be required to make the Change
in Control Payment unless and until Employee executes and delivers to the
Company a release in the form of Exhibit A and seven (7) days have elapsed
following such execution and delivery without revocation of such release by
Employee. The Change in Control Payment shall be in lieu of (i) any further
payments to the Employee under Section 3, (ii) any further accrual of benefits
under Sections 4 and 6 with respect to periods subsequent to the date of the
employment termination and (iii) any entitlement to a Severance Payment (as
defined in Subdivision (i) of Section 7(a) below).
(d) Amount. Subject to the provisions of Sections 8(a) and 8(b), the
amount of the Change in Control Payment shall be equal to two hundred (200)
percent of the Employee's annual rate of Base Compensation, as in effect on the
date of the employment termination.
7. INVOLUNTARY TERMINATION WITHOUT CAUSE.
(a) Severance. In the event that, during the term of this Agreement,
the Company terminates the Employee's employment for any reason other than Cause
or Disability or the Employee voluntarily resigns his employment for Good Reason
within ten (10) weeks of the effective date of a reduction of his Base
Compensation or the Company's material breach of its obligations under Section
2(a), as the case may be, and Section 6 does not apply, then:
(i) The Company shall pay an amount ("Severance Payment") in
installments (or a lump sum if the Company so elects), as provided below, equal
in the aggregate to either one hundred percent (100%) or one hundred-twenty
percent (120%) of Employee's annual rate of Base Compensation as in effect on
the date of employment termination plus any accrued and unpaid vacation at the
time of such termination. If the date of employment termination occurs in the
first half of the Company's fiscal year, the Severance Payment shall be 100% of
Employee's annual rate of Base Compensation, as in effect on the date of
employment termination. If the date of employment termination occurs in the
second half of the Company's fiscal year, the Severance Payment shall be 120% of
Employee's annual rate of Base Compensation as in effect on the date of
employment termination. The Severance Payment shall be made in installments at
the same rate (or one hundred-twenty percent (120%) of the rate, as the case may
be) and in accordance with the same schedule as Base Compensation would have
been paid had employment continued until the Severance Payment has been made in
full; provided, however, at its election the Company may at any time pay any
remainder of the Severance Payment in a lump sum.
(ii) For the period of one (1) year following such
termination, the Company shall (i) reimburse Employee for dental and health
insurance premiums required to be
5.
<PAGE>
paid by Employee for such one (1) year period to obtain COBRA continuation
coverage within the meaning of Section 4980B(f) (2) of the Internal Revenue Code
of 1986, as amended (the "Code"), provided Employee elects such continuation
coverage, and (ii) cause group long-term disability insurance coverage and basic
term life insurance coverage with a death benefit as then provided to Employee
by the Company, if any, to be continued for such one (1) year period (or, if
such coverage cannot be continued or can only be continued at a cost to the
Company greater than the Company would have incurred absent such termination,
then, at the Company's election, the Company may either provide such long-term
disability or term life insurance as may be available at no greater cost than
one hundred fifty percent (150%) of what the Company would have incurred absent
such termination or pay to Employee one hundred fifty percent (150%) of the
amount of premiums the Company would have incurred to continue such coverage
absent such termination) (payments and benefits under this Subdivision (ii),
collectively "Severance Benefits").
(iii) There shall be credited toward payment and provision of
the Severance Payment and Severance Benefits any other payments or benefits paid
or provided to Employee by or on behalf of the Company or its parent or
subsidiaries as a result of any such termination of employment (other than
payment of vacation accrued as of such termination, and provided that mere
acceleration of exercisability of stock options or of the time of payment or
provision of other payments or benefits that are payable or required to be
provided to Employee without regard to termination of employment shall not be
considered to result from such termination). The first installment of the
Severance Payment shall be made not later than thirty (30) days after such
termination, and Severance Benefits shall be provided monthly commencing after
the expiration of one (1) month following such termination; provided, however,
in no event shall the Company be required to make or provide any Severance
Payment or Severance Benefit unless and until Employee executes and delivers to
the Company a release in the form of Exhibit A and seven (7) days have elapsed
following such execution and delivery without revocation of such release by
Employee (except that pending either such execution and delivery of such a
release by Employee or failure of Employee to do so within such thirty (30)
period, the Company will advance for the account of Employee premiums required
to be paid during such thirty (30) day period if necessary to avoid lapse with
respect to Employee within such period of a group dental, health or disability
policy to which Severance Benefits relate, which advance shall be repaid by
Employee on expiration of such thirty (30) day period in case Employee fails to
so execute and deliver such a release).
(b) Termination of Severance Benefits. All Severance Benefits shall be
discontinued completely as of the date when the Employee returns to employment
or self-employment, whether full- or part-time, with an entity that offers any
group insurance coverage to its employees or independent contractors, regardless
of whether such coverage is equivalent to the insurance coverage contemplated by
the Severance Benefits.
8. LIMITATION ON PAYMENTS.
(a) Basic Rule. Any other provision of this Agreement notwithstanding,
the Company shall not be required to make any payment to, or for the benefit of,
the Employee
6.
<PAGE>
(under this Agreement or otherwise) that would be nondeductible by the Company
by reason of section 280G of the Code or that would subject the Employee to the
excise tax described in section 4999 of the Code, and any payment or benefit
that would be nondeductible by reason of section 162(m) of the Code shall to the
extent be deferred and paid or provided in the next taxable year when it can be
paid or provided without limitation by section 162(m) of the Code. All
calculations required by this Section 8 shall be performed by the independent
auditors retained by URS Corporation most recently prior to the Change in
Control (the "Auditors"), based on information supplied by the Company and the
Employee, and shall be binding on the Company and the Employee. All fees and
expenses of the Auditors shall be paid by the Company.
(b) Reductions. If the amount of the aggregate payments to the
Employee must be reduced under this Section 8, then the Employee shall direct in
which order the payments are to be reduced, but no change in the timing of any
payment shall be made without the Company's consent except as provided above
with respect to the limitation of section 162(m) of the Code. As a result of
uncertainty in the application of sections 162(m), 280G and 4999 of the Code at
the time of an initial determination by the Auditors hereunder, it is possible
that a payment will have been made by the Company that should not have been made
(an "Overpayment") or that an additional payment that will not have been made by
the Company could have been made (an "Underpayment"). In the event that the
Auditors, based upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Employee that the Auditors believe has a high
probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee that he
shall repay to the Company, together with interest at the applicable federal
rate specified in section 7872(f) (2) of the Code; provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent that
such payment would not reduce the amount that is nondeductible under section
162(m) or 280G of the Code or is subject to an excise tax under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to, or for the benefit of, the Employee, together with interest at the
applicable federal rate specified in section 7872(f)(2) of the Code.
9. NONDISCLOSURE.
During the term of this Agreement and thereafter, the Employee
shall not, without the prior written consent of the Board, disclose or use for
any purpose (except in the course of his employment under this Agreement and in
furtherance of the business of the Company) confidential information or
proprietary data of the Company or URS Corporation, or any parent, subsidiary or
affiliated corporation or related entity of either of them, except as required
by applicable law or legal process, in which case promptly and before disclosure
the Employee shall give notice to the Company of any such requirement or
process; provided, however, that confidential information shall not include any
information available from another source on a nonconfidential basis, known
generally to the public, or ascertainable from public or published information
(other than as a result of unauthorized disclosure by the Employee). The
Employee
7.
<PAGE>
agrees to deliver to the Company at the termination of his employment, or at any
other time the Company may request, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) relating to the business of the
Company and URS Corporation or any parent, subsidiary or affiliated corporation
or related entity of either of them, which he may then possess or have under his
control.
10. MISCELLANEOUS PROVISIONS.
(a) Successors. Subject to Subsection (i) below and provided that
Employee may not delegate his duties hereunder without the consent of the Board
of Directors of the Company, this Agreement and all rights hereunder shall inure
to the benefit of, and be enforceable by, the parties' successors, assigns,
personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.
(b) Notice. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered mail, return receipt
requested and postage prepaid. In the case of the Employee, mailed notices shall
be addressed to him at the home address which he most recently communicated to
the Company in writing for income tax withholding purposes or by notice given
pursuant to this Subsection (a). In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary, with a copy to URS Corporation,
addressed to its corporate headquarters as reflected in its most recent Report
on Form 10-Q or Form 10-K filed with the U.S. Securities and Exchange
Commission, directed to the attention of its Secretary.
(c) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(d) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. Effective as of the date hereof, this
Agreement supersedes all prior employment agreements and severance agreements
between the parties, their parents, subsidiaries and affiliates, and their
respective predecessors.
(e) Withholding. All payments made under this Agreement shall be
subject to reduction to reflect taxes required to be withheld by law. Employee
hereby declares under penalty of perjury that his Social Security Number is
###-##-####. The Company shall also be entitled to withhold from or offset
against any payments under this Agreement any amounts owed by Employee (whether
or not liquidated) to the Company or URS Corporation or any parent, subsidiary
or affiliated corporation or related entity or either of them.
8.
<PAGE>
(f) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal laws of the
State of California, without regard to where Employee has his residence or
principal office or where he performs his duties hereunder.
(g) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(h) Arbitration. Except as otherwise provided in Section 6, and except
for any action by the Company seeking injunctive relief against Employee, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, or Employee's employment with the Company or the terms and conditions
or termination thereof, or any action or omission of any kind whatsoever in the
course of or connected in any way with any relations between the Company and
Employee, shall be finally settled by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The arbitration shall be administered by the San
Francisco, California regional office of such Association and shall be conducted
at the San Francisco, California offices of such Association or at such other
location in San Francisco, California as such Association may designate. All
fees and expenses of the arbitrator and such Association shall be borne as
designated by the arbitrator.
(i) No Assignment. The rights of any person to payments or benefits
under this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor's
process, and any action in violation of this Subsection (i) shall be void.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
/s/ Jean-Yves Perez
-----------------------------------
JEAN-YVES PEREZ
Date: March 18, 1998
-----------------------------
WOODWARD-CLYDE GROUP, INC.
/s/ Kent P. Ainsworth
-----------------------------------
KENT P. AINSWORTH, VICE PRESIDENT
Date: March 16, 1998
-----------------------------
9.
<PAGE>
EXHIBIT A
GENERAL RELEASE
This General Release ("Release") is executed and delivered by Jean-Yves
Perez ("Employee") to and for the benefit of URS Corporation, a Delaware
corporation, and any parent, subsidiary or affiliated corporation or related
entity of URS Corporation, including without limitation Woodward-Clyde Group,
Inc. and any parent, subsidiary or affiliated corporation or related entity of
Woodward-Clyde Group, Inc. (collectively, the "Company").
In consideration of certain benefits which Employee will receive
following termination of employment pursuant to the terms of the Employment
Agreement entered into as of November 1, 1997 between the Employee and the
Company (the "Agreement"), the sufficiency of which Employee hereby
acknowledges, Employee hereby agrees not to sue and fully, finally, completely
and generally releases, absolves and discharges Company, its predecessors,
successors, subsidiaries, parents, related companies and business concerns,
affiliates, partners, trustees, directors, officers, agents, attorneys,
servants, representatives and employees, past and present, and each of them
(hereinafter collectively referred to as "Releasees") from any and all claims,
demands, liens, agreements, contracts, covenants, actions, suits, causes of
action, grievances, arbitrations, unfair labor practice charges, wages, vacation
payments, severance payments, obligations, commissions, overtime payments,
workers compensation claims, debts, profit sharing or bonus claims, expenses,
damages, judgments, orders and/or liabilities of whatever kind or nature in law,
equity or otherwise, whether known or unknown to Employee which Employee now
owns or holds or has at any time owned or held as against Releasees, or any of
them through the date Employee executes this Release ("Claims"), including
specifically but not exclusively and without limiting the generality of the
foregoing, any and all Claims arising out of or in any way connected to
Employee's employment with or separation of employment from Company including
any Claims based on contract, tort, wrongful discharge, fraud, breach of
fiduciary duty, attorneys' fees and costs, discrimination in employment, any and
all acts or omissions in contravention of any federal or state laws or statutes
(including, but not limited to, federal or state securities laws, any deceptive
trades practices act or any similar act in any other state and the Racketeer
Influenced and Corrupt Organizations Act), and any right to recovery based on
state or federal age, sex, pregnancy, race, color, national origin, marital
status, religion, veteran status, disability, sexual orientation, medical
condition, union affiliation or other anti-discrimination laws, including,
without limitation, Title VII, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the National Labor Relations Act, the
California Fair Employment and Housing Act, and any similar act in effect in any
jurisdiction applicable to Employee or the Company, all as amended, whether such
claim be based upon an action filed by Employee or by a governmental agency.
During the time Employee is entitled to any Severance Payment or
Severance Benefits, as defined and provided in Sections 6 and 7 of the
Agreement, Employee agrees (i) to assist, as reasonably requested by Company, in
the transition of Employee's responsibilities and (ii) not to solicit any
employee of Company to terminate or cease employment with Company. Without
1.
<PAGE>
superseding any other agreements, including the Agreement, and obligations
Employee has with respect thereto, (i) Employee agrees not to divulge any
information that might be of a confidential or proprietary nature relative to
Company, and (ii) Employee agrees to keep confidential all information contained
in this Release (except to the extent (A) Company consents in writing to
disclosure, (B) Employee is required by process of law to make such disclosure
and Employee promptly notifies Company of receipt by Employee of such process,
or (C) such information previously shall have become publicly available other
than by breach hereof on the part of Employee).
Employee acknowledges and agrees that neither anything in this Release
nor the offer, execution, delivery, or acceptance thereof shall be construed as
an admission by Company of any kind, and this Release shall not be admissible as
evidence in any proceeding except to enforce this Release.
It is the intention of Employee in executing this instrument that it
shall be effective as a bar to each and every claim, demand, grievance and cause
of action hereinabove specified. In furtherance of this intention, Employee
hereby expressly consents that this Release shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to unknown and unsuspected claims, demands and causes of action, if
any, as well as those relating to any other claims, demands and causes of action
hereinabove specified, and elects to assume all risks for claims that now exist
in Employee's favor, known or unknown, that are released under this Release.
Employee acknowledges Employee may hereafter discover facts different from, or
in addition to, those Employee now knows or believes to be true with respect to
the claims, demands, liens, agreements, contracts, covenants, actions, suits,
causes of action, wages, obligations, debts, expenses, damages, judgments,
orders and liabilities herein released, and agrees the release herein shall be
and remain in effect in all respects as a complete and general release as to all
matters released herein, notwithstanding any such different or additional facts.
If any provision of this Release or application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Release which can be given effect without the invalid provision or application.
To this end, the provisions of this Release are severable.
Employee represents and warrants that Employee has not heretofore
assigned or transferred or purported to assign or transfer to any person, firm
or corporation any claim, demand, right, damage, liability, debt, account,
action, cause of action, or any other matter herein released.
NOTICE TO EMPLOYEE
The law requires that Employee be advised and Company hereby advises
Employee in writing to consult with an attorney and discuss this Release before
executing it. Employee acknowledges Company has provided to Employee at least 21
calendar days within which to review and consider this Release before signing
it.
2.
<PAGE>
Should Employee decide not to use the full 21 days, then Employee
knowingly and voluntarily waives any claims that Employee was not in fact given
that period of time or did not use the entire 21 days to consult an attorney
and/or consider this Release. Employee acknowledges that Employee may revoke
this Release for up to seven calendar days following Employee's execution of
this Release and that it shall not become effective or enforceable until the
revocation period has expired. Employee further acknowledges and agrees that
such revocation must be in writing addressed to Company as follows:
_____________________, and received by Company as so addressed not later than
midnight on the seventh day following execution of this Release by Employee. If
Employee so revokes this Release, the Release shall not be effective or
enforceable and Employee will not receive the monies and benefits described
above. If Employee does not revoke this Release in the time frame specified
above, the Release shall become effective at 12:00:01 A.M. on the eighth day
after it is signed by Employee.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A
GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
I have read and understood the foregoing General Release, have been
advised to and have had the opportunity to discuss it with anyone I desire,
including an attorney of my own choice, and I accept and agree to its terms,
acknowledge receipt of a copy of the same and the sufficiency of the monies and
benefits described above, and hereby execute this Release voluntarily and with
full understanding of its consequences.
Dated:_________________________ ______________________________________
Employee
3.
Woodward-Clyde Group, Inc.
Stanford Place 3 Suite 1000 4582 South Ulster street
Denver, CO 80237
March 17, 1998
Mr. Robert K. Wilson
30 La Noria
Orinda, CA 94563
Dear Bob:
This letter (the "Agreement") sets forth the terms and conditions under which
Woodward-Clyde Group, Inc. (the "Company") agrees to employ you, and is entered
into as of November 17, 1997 (the "Effective Date").
1. Employment by the Company.
1.1 Subject to terms set forth in this Agreement, the Company agrees to
employ you in an executive position and you hereby accept such employment
effective as of the Effective Date. The term of your employment with the Company
will be from the Effective Date through December 31, 1998. From the Effective
Date through December 31, 1998 during the term of your employment with the
Company, you will devote your best efforts and substantially all of your
business time and attention (except for vacation periods and reasonable periods
of illness or other incapacities permitted by the Company's general employment
policies) to the business of the Company. The Company may change your principal
office of employment from time to time, but only with your prior approval, and
provided that the Company will reimburse you for your reasonable relocation
expenses in accordance with generally applicable policies of the Company.
1.2 Your employment by the Company shall also be governed by the
general employment policies and practices of the Company, including those
relating to protection of confidential information and assignment of inventions,
except that when the terms of this Agreement differ from or are in conflict with
the Company's general employment policies or practices, this Agreement shall
control.
2. Compensation.
2.1 Salary. From the Effective Date through December 31, 1998, you
shall receive for services to be rendered under this Agreement an annualized
base salary of $225,000. Salary shall be paid in accordance with Company's
normal payroll practices for executives.
2.2 Incentive Compensation. Subject to the provisions of Section 2.3
below, you shall have a 40% Target Award Percentage under the Company's
Incentive Compensation Plan
1.
<PAGE>
with respect to the period from November 1, 1997 through October 31, 1998. You
shall have no Target Award Percentage for the period from November 1, 1998
through December 31, 1998.
2.3 Standard Company Benefits. During the term of your employment, you
shall be entitled to all rights and benefits for which you are eligible under
the terms and conditions of the standard Company benefits and compensation
practices which may be in effect from time to time and provided by the Company
to its executive employees generally.
3. Nondisclosure. During the term of this Agreement and thereafter, you
agree that you will not, without the prior written consent of the Board of
Directors of the Company, disclose or use for any purpose (except in the course
of your employment under this Agreement and in furtherance of the business of
the Company) confidential information or proprietary data of the Company or URS
Corporation, or any parent, subsidiary or affiliated corporation or related
entity of either of them, except as required by applicable law or legal process,
in which case promptly and before disclosure you will give notice to the Company
of any such requirement or process; provided, however, that confidential
information shall not include any information available from another source on a
nonconfidential basis, known generally to the public, or ascertainable from
public or published information (other than as a result of unauthorized
disclosure by you). You agree to deliver to the Company at the termination of
your employment, or at any other time the Company may request, all memoranda,
notes, plans, records, reports and other documents (and copies thereof) relating
to the business of the Company and URS Corporation or any parent, subsidiary or
affiliated corporation or related entity of either of them, which you may then
possess or have under your control.
4. Termination of Employment.
4.1 Termination Without Cause or for Good Reason.
(a) The Company shall have the right to terminate your
employment with the Company at any time without Cause (as defined below), and
you shall have the right to terminate your employment with the Company for Good
Reason (as defined below).
(b) If your employment is terminated by the Company without
Cause (as defined below) or by you for Good Reason (as defined below) and not on
account of Disability (as defined below) or death before December 31, 1998, the
Company shall pay you in a lump sum an amount equivalent to your base salary for
one (1) year from the date of termination plus any accrued but unused vacation
time computed at the base salary rate and in accordance with Company policies
which include vacation time accrual limits. In addition, the Company shall
reimburse you for health insurance premiums required to be paid by you for one
(1) year to obtain COBRA continuation coverage within the meaning of Section
4980B(f)(2) of the Internal Revenue Code of 1986, as amended (the "Code"),
provided you elect such continuation coverage; provided, however, that in no
event shall the Company be required to make or provide any such payment or
benefit unless and until you have executed and delivered to the Company a
release in the form of Exhibit A to this
2.
<PAGE>
Agreement and seven (7) days have elapsed following such execution and delivery
without your revocation of such release.
(c) "Good Reason" shall mean that either (i) you have incurred
a reduction in your base salary or (ii) the Company has breached its obligations
under Section 1.1, and, at the time of such breach, you are in compliance with
your obligations under Section 1.1 and under the other provisions of this
Agreement.
4.2 Termination for Cause.
(a) The Company shall have the right to terminate your
employment with the Company at any time for Cause (as defined below).
(b) "Cause" for termination shall mean: (i) your substantial
failure or omission to perform your duties hereunder, other than as a result of
your death or Disability (as defined below); (ii) your act involving material
injury to the Company or to URS Corporation (or any parent, subsidiary or
affiliated corporation or related entity of either of them), willful or gross
misconduct, fraud or dishonesty; (iii) your conviction of, or plea of "guilty"
or "no contest" to, a felony; or (iv) your disobedience of orders and directives
of the Chief Executive Officer of URS Corporation or his designee.
(c) If your employment is terminated at any time for Cause,
you will be entitled only to compensation and benefits for the period preceding
the effective date of the termination.
4.3 Termination on Account of Death or Disability.
(a) Your employment will terminate automatically in the event
of your death, and in such event you will be entitled only to compensation and
benefits for the period preceding the date of your death; provided, however,
that death benefits under Company plans or programs in which you participated
prior to your death will be provided in accordance with their terms.
(b) The Company may terminate your employment due to
Disability. For purposes of this Agreement, Disability shall mean either: (i)
you have qualified for long-term disability benefits under a plan, program or
arrangement maintained by the Company or a parent, subsidiary or affiliated
corporation or related entity of the Company; or (ii) you are unable to perform
the normal duties assigned to you under this Agreement for a continuous period
of 60 calendar days or any incapacity, however caused, that, in the good faith
opinion of the Chief Executive Officer of URS Corporation or his designee, is
likely to prevent you from performing the normal duties assigned to you under
this Agreement for more than 90 calendar days in any twelve consecutive month
period (taking into account, in the case of such an inability or incapacity
which is a physical or mental impairment that substantially limits one or more
of your major life activities,
3.
<PAGE>
reasonable accommodation that would not impose an undue hardship on the Company,
as the terms "reasonable accommodation" and "undue hardship" are defined in the
Americans With Disabilities Act of 1990, as amended). In the event of such a
termination on account of Disability, you will be entitled only to compensation
and benefits for the period preceding the effective date of termination;
provided, however, that disability benefits under Company plans or programs in
which you participated prior to termination will be provided in accordance with
their terms.
4.4 Voluntary or Mutual Termination.
(a) You may voluntarily terminate your employment with the
Company at any time without Good Reason, and in such event you will be entitled
only to compensation and benefits for the period preceding the date of such
termination.
(b) You and the Company may mutually agree in writing to the
termination of your employment at any time, and in such event you will be
entitled to such compensation and benefits as may be mutually agreed with the
Company at that time.
4.5 Termination Upon Expiration of Agreement. If your employment is
terminated as of the expiration of this Agreement on December 31, 1998, whether
by you or the Company, the Company will pay you in a lump sum an amount
equivalent to your base salary for one (1) year from the date of termination
plus any accrued but unused vacation time computed at the base salary rate and
in accordance with Company policies which include vacation time accrual limits.
In addition, the Company shall reimburse you for health insurance premiums
required to be paid by you for one (1) year to obtain COBRA continuation
coverage within the meaning of the Code, provided you elect such continuation
coverage; provided, however, that in no event shall the Company be required to
make or provide any such payment or benefit unless and until you have executed
and delivered to the Company a release in the form of Exhibit A to this
Agreement and seven (7) days have elapsed following such execution and delivery
without your revocation of such release.
5. General Provisions.
5.1 Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy) or the third day after mailing by first class
mail, to the Company at its primary office location and to you at your address
as listed on the Company payroll.
5.2 Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision, which shall remain fully effective.
5.3 Waiver. If either party should waive any breach of any provisions
of this Agreement, such party shall not thereby be deemed to have waived any
preceding or succeeding
4.
<PAGE>
breach of the same or any other provision of this Agreement.
5.4 Complete Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
you or the Company with respect to the subject matter hereof. As of the
Effective Date, this Agreement supersedes all prior employment agreements and
severance agreements between the parties and their predecessors, including,
without limitation, the Change-in-Control Agreement effective April 17, 1997
between you and the Company.
5.5 Arbitration. Except for any action by the Company seeking
injunctive relief against you, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, or your employment with the
Company or the terms and conditions or termination thereof, or any action or
omission of any kind whatsoever in the course of or connected in any way with
any relations between the Company and you, shall be finally settled by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The arbitration shall
be administered by the San Francisco, California regional office of such
Association and shall be conducted at the San Francisco, California offices of
such Association or at such other location in San Francisco, California as such
Association may designate. All fees and expenses of the arbitrator and such
Association shall be borne as designated by the arbitrator.
5.6 Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by you and the Company, and our
respective successors, assigns, heirs, executors and administrators, except that
you may not assign any of your duties hereunder and may not assign any of your
rights hereunder without the written consent of the Company, which shall not be
withheld unreasonably.
5.7 Choice of Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California.
5.
<PAGE>
5.8 Withholding. All payments pursuant to this Agreement shall be
subject to all applicable tax withholding.
If you are in agreement with the foregoing, please so indicate in the
space provided below. Please execute both of the copies of this Agreement that
have been provided and return one of them to me; the other is for your records.
Woodward-Clyde Group, Inc.
By: /s/ Kent P. Ainsworth
----------------------------------------------
Kent P. Ainsworth
Vice President
/s/ Robert K. Wilson
- -------------------------------------------------------
Robert K. Wilson
Date: March 17, 1998
-------------------------------------------
6.
<PAGE>
EXHIBIT A
General Release
This General Release ("Release") is executed and delivered by Robert K.
Wilson ("Employee") to and for the benefit of URS Corporation, a Delaware
corporation, and any parent, subsidiary or affiliated corporation or related
entity of URS Corporation, including without limitation Woodward-Clyde Group,
Inc. and any parent, subsidiary or affiliated corporation or related entity of
Woodward-Clyde Group, Inc. (collectively, the "Company").
In consideration of certain benefits which Employee will receive
following termination of employment pursuant to the terms of the Agreement
entered into as of November 17, 1997 between the Employee and the Company (the
"Agreement"), the sufficiency of which Employee hereby acknowledges, Employee
hereby agrees not to sue and fully, finally, completely and generally releases,
absolves and discharges Company, its predecessors, successors, subsidiaries,
parents, related companies and business concerns, affiliates, partners,
trustees, directors, officers, agents, attorneys, servants, representatives and
employees, past and present, and each of them (hereinafter collectively referred
to as "Releasees") from any and all claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, grievances,
arbitrations, unfair labor practice charges, wages, vacation payments, severance
payments, obligations, commissions, overtime payments, workers compensation
claims, debts, profit sharing or bonus claims, expenses, damages, judgments,
orders and/or liabilities of whatever kind or nature in law, equity or
otherwise, whether known or unknown to Employee which Employee now owns or holds
or has at any time owned or held as against Releasees, or any of them through
the date Employee executes this Release ("Claims"), including specifically but
not exclusively and without limiting the generality of the foregoing, any and
all Claims arising out of or in any way connected to Employee's employment with
or separation of employment from Company including any Claims based on contract,
tort, wrongful discharge, fraud, breach of fiduciary duty, attorneys' fees and
costs, discrimination in employment, any and all acts or omissions in
contravention of any federal or state laws or statutes (including, but not
limited to, federal or state securities laws, any deceptive trades practices act
or any similar act in any other state and the Racketeer Influenced and Corrupt
Organizations Act), and any right to recovery based on state or federal age,
sex, pregnancy, race, color, national origin, marital status, religion, veteran
status, disability, sexual orientation, medical condition, union affiliation or
other anti-discrimination laws, including, without limitation, Title VII, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
National Labor Relations Act, the California Fair Employment and Housing Act,
and any similar act in effect in any jurisdiction applicable to Employee or the
Company, all as amended, whether such claim be based upon an action filed by
Employee or by a governmental agency.
For a period of one (1) year following the date of termination of
employment, Employee agrees (i) to assist, as reasonably requested by Company,
in the transition of Employee's responsibilities and (ii) not to solicit any
employee of Company to terminate or cease employment with Company. Without
superseding any other agreements, including the Agreement, and obligations
Employee has with respect thereto, (i) Employee agrees not to divulge any
information
1.
<PAGE>
that might be of a confidential or proprietary nature relative to Company, and
(ii) Employee agrees to keep confidential all information contained in this
Release (except to the extent (A) Company consents in writing to disclosure, (B)
Employee is required by process of law to make such disclosure and Employee
promptly notifies Company of receipt by Employee of such process, or (C) such
information previously shall have become publicly available other than by breach
hereof on the part of Employee).
Employee acknowledges and agrees that neither anything in this Release
nor the offer, execution, delivery, or acceptance thereof shall be construed as
an admission by Company of any kind, and this Release shall not be admissible as
evidence in any proceeding except to enforce this Release.
It is the intention of Employee in executing this instrument that it
shall be effective as a bar to each and every claim, demand, grievance and cause
of action hereinabove specified. In furtherance of this intention, Employee
hereby expressly consents that this Release shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to unknown and unsuspected claims, demands and causes of action, if
any, as well as those relating to any other claims, demands and causes of action
hereinabove specified, and elects to assume all risks for claims that now exist
in Employee's favor, known or unknown, that are released under this Release.
Employee acknowledges Employee may hereafter discover facts different from, or
in addition to, those Employee now knows or believes to be true with respect to
the claims, demands, liens, agreements, contracts, covenants, actions, suits,
causes of action, wages, obligations, debts, expenses, damages, judgments,
orders and liabilities herein released, and agrees the release herein shall be
and remain in effect in all respects as a complete and general release as to all
matters released herein, notwithstanding any such different or additional facts.
If any provision of this Release or application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Release which can be given effect without the invalid provision or application.
To this end, the provisions of this Release are severable.
Employee represents and warrants that Employee has not heretofore
assigned or transferred or purported to assign or transfer to any person, firm
or corporation any claim, demand, right, damage, liability, debt, account,
action, cause of action, or any other matter herein released.
NOTICE TO EMPLOYEE
The law requires that Employee be advised and Company hereby advises
Employee in writing to consult with an attorney and discuss this Release before
executing it. Employee acknowledges Company has provided to Employee at least 21
calendar days within which to review and consider this Release before signing
it.
Should Employee decide not to use the full 21 days, then Employee
knowingly and voluntarily waives any claims that Employee was not in fact given
that period of time or did not use the entire 21 days to consult an attorney
and/or consider this Release. Employee acknowledges that Employee may revoke
this Release for up to seven calendar days following Employee's execution
2.
<PAGE>
of this Release and that it shall not become effective or enforceable until the
revocation period has expired. Employee further acknowledges and agrees that
such revocation must be in writing addressed to Company as follows:
_____________________, and received by Company as so addressed not later than
midnight on the seventh day following execution of this Release by Employee. If
Employee so revokes this Release, the Release shall not be effective or
enforceable and Employee will not receive the monies and benefits described
above. If Employee does not revoke this Release in the time frame specified
above, the Release shall become effective at 12:00:01 A.M. on the eighth day
after it is signed by Employee.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A
GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
I have read and understood the foregoing General Release, have been
advised to and have had the opportunity to discuss it with anyone I desire,
including an attorney of my own choice, and I accept and agree to its terms,
acknowledge receipt of a copy of the same and the sufficiency of the monies and
benefits described above, and hereby execute this Release voluntarily and with
full understanding of its consequences.
Dated: __________________________ ___________________________________
Employee
2.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 33,875
<SECURITIES> 0
<RECEIVABLES> 228,918
<ALLOWANCES> (11,422)
<INVENTORY> 0
<CURRENT-ASSETS> 255,747
<PP&E> 82,945
<DEPRECIATION> (52,459)
<TOTAL-ASSETS> 417,715
<CURRENT-LIABILITIES> 139,138
<BONDS> 123,658
0
0
<COMMON> 149
<OTHER-SE> 149,067
<TOTAL-LIABILITY-AND-EQUITY> 417,715
<SALES> 0
<TOTAL-REVENUES> 195,182
<CGS> 0
<TOTAL-COSTS> 116,356
<OTHER-EXPENSES> 67,380
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 2,273
<INCOME-PRETAX> 9,143
<INCOME-TAX> 4,200
<INCOME-CONTINUING> 4,943
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,943
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.31
</TABLE>
