FORM 10-Q
UNITED STATES
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 July 31, 1999
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 September 3,1999
- ---------------------------- -------------------------------
Common stock, $.01 par value 15,652,906
<PAGE>
URS CORPORATION AND SUBSIDIARIES
This Form 10-Q for the third quarter ended July 31, 1999 contains
forward-looking statements within the meaning of the securities laws that
involve risks and uncertainties. The Company believes that its expectations are
reasonable and are based on reasonable assumptions. However, risks and
uncertainties relating to future events that could cause actual results to
differ materially from the Company's expectations include the Company's ability
to successfully integrate Dames & Moore Group ("Dames & Moore") and the Company
following the acquisition of Dames & Moore in June 1999, the impact on the
Company and its financial condition of the substantial indebtedness incurred in
connection with the Dames & Moore acquisition, the Company's dependency on
government programs and contracts, competitive practices in the industry,
possible changes in legislation or governmental regulation or policies,
contracting risks, the Company's ability to attract and retain qualified
professionals, exposure to potential liability from legal proceedings, and other
factors discussed more fully below in Management's Discussion and Analysis of
Financial Condition and Results of Operations, in the Company's 1998 Form 10-K,
in the Company's Form 10-Q for the quarter ended April 30, 1999, in the
Company's registration statement on Form S-4, as amended, initially filed with
the Securities and Exchange Commission on August 4, 1999 (registration no.
333-84521) and in other publicly available reports filed with the Securities and
Exchange Commission from time to time. The Company does not intend, and assumes
no obligation, to update any forward-looking statements.
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
July 31, 1999 and October 31, 1998............................4
Consolidated Statements of Operations
Three and nine months ended July 31,
1999 and 1998................................................5
Consolidated Statements of Cash Flows
Nine months ended July 31, 1999 and 1998......................6
Notes to consolidated financial statements.....................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................................15
2
<PAGE>
PART II. OTHER INFORMATION:
Item 3. Submission of Matters to a Vote of
Security Holders.............................................20
Item 4. Other Information.............................................21
Item 5. Exhibits and Reports on Form 8-K..............................21
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(unaudited)
<CAPTION>
July 31, October 31,
ASSETS 1999 1998
----------- -----------
<S> <C> <C>
Current assets:
Cash $ 19,738 $ 36,529
Accounts receivable, less allowance for doubtful accounts
of $15,268 and $7,206 445,586 161,742
Costs and accrued earnings in excess of
billings on contracts in process, less
allowance for losses of $14,620 and $6,896 186,837 77,881
Prepaid expenses and other assets 28,023 10,033
----------- -----------
Total current assets 680,184 286,185
Property and equipment at cost, net 93,004 29,517
Goodwill, net 466,616 129,748
Other assets 67,132 6,254
----------- -----------
$ 1,306,936 $ 451,704
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt, current portion $ 14,602 $ 16,400
Notes payable 13,191 1,943
Accounts payable 97,175 37,236
Accrued salaries and wages 73,482 34,797
Accrued expenses and other 63,160 29,385
Billings in excess of costs and accrued earnings on
contracts in process 31,267 35,455
----------- -----------
Total current liabilities 292,877 155,216
Long-term debt 667,498 94,957
Deferred income taxes 12,514 5,377
Deferred compensation and other 42,242 29,794
----------- -----------
Total liabilities 1,015,131 285,344
----------- -----------
Mandatory Redeemable Series A and C Preferred Stock 100,000 --
----------- -----------
Stockholders' equity:
Common shares, par value $.01; authorized 20,000 shares;
issued 15,653 and 15,206 shares 157 152
Treasury stock (287) (287)
Additional paid-in capital 121,125 117,842
Foreign currency translation adjustment 430 --
Retained earnings since February 21, 1990, date of
quasi-reorganization 70,380 48,653
----------- -----------
Total stockholders' equity 191,805 166,360
----------- -----------
$ 1,306,936 $ 451,704
=========== ===========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
4
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
<CAPTION>
Three months ended Nine months ended
July 31, July 31,
--------------------------- ---------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $428,482 $207,484 $849,758 $588,822
-------- -------- -------- --------
Expenses:
Direct operating 255,531 130,262 500,889 361,849
Indirect, general and administrative 143,386 62,951 292,123 191,708
Interest expense, net 10,781 2,582 15,495 6,864
-------- -------- -------- --------
409,698 195,795 808,507 560,421
-------- -------- -------- --------
Income before taxes 18,784 11,689 41,251 28,401
Income tax expense 8,400 5,300 18,200 12,900
Preferred stock dividend 1,333 -- 1,333 --
-------- -------- -------- --------
Net income available for common stockholders $ 9,051 $ 6,389 $ 21,718 $ 15,501
======== ======== ======== ========
Other comprehensive income:
Foreign currency translation adjustment 360 -- 430 --
-------- -------- -------- --------
Comprehensive income $ 9,411 $ 6,389 $ 22,148 $ 15,501
======== ======== ======== ========
Net income per share:
Basic $ .58 $ .43 $ 1.41 $ 1.04
======== ======== ======== ========
Diluted $ .53 $ .40 $ 1.30 $ .98
======== ======== ======== ========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
5
<PAGE>
<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<CAPTION>
Nine Months Ended
July 31,
--------------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 21,718 $ 15,501
--------- ---------
Adjustment to reconcile net income to net cash
provided (used)by operating activities:
Depreciation and amortization
Preferred stock dividend 16,320 11,045
Allowance for doubtful accounts and losses 1,333 --
Changes in current assets and liabilities, net of 3,992 (109)
effects of purchases of businesses:
Accounts receivable and costs and accrued
earnings in excess of billings on contracts in process (42,006) (3,104)
Prepaid expenses and other assets (5,650) 197
Accounts payable, accrued salaries and wages
and accrued expenses (42,779) (9,709)
Billings in excess of costs and accrued
earnings on contracts in process (5,739) 810
Deferred income taxes 12,618 250
Other, net (14,927) 503
--------- ---------
Total adjustments (76,838) (117)
--------- ---------
Net cash provided (used) by operating activities (55,120) 15,384
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisition, net of cash acquired (316,167) (36,937)
Capital expenditures (10,191) (7,747)
--------- ---------
Net cash (used) by investing activities (326,358) (44,684)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit 15,000 --
Proceeds from issuance of debt 854,739 110,000
Payments on merger fees (18,738) (4,000)
Principal payments on long-term debt (589,597) (73,977)
Proceeds from sale of common shares 2,693 755
Proceeds from exercise of stock options 2,090 887
Proceeds from issuance of preferred stock 100,000 --
Payments on financing fees related to issuance of
preferred stock (1,500) --
--------- ---------
Net cash provided by financing activities 364,687 33,665
--------- ---------
Net (decrease) increase in cash (16,791) 4,365
Cash at beginning of period 36,529 22,134
--------- ---------
Cash at end of period $ 19,738 $ 26,499
========= =========
SUPPLEMENTAL INFORMATION:
Interest paid $ 12,180 $ 7,482
========= =========
Taxes paid $ 15,633 $ 11,565
========= =========
Equipment subject to capital lease obligations $ 11,651 $ 2,176
========= =========
Noncash purchase allocation adjustment $ -- $ 11,600
========= =========
Issuance of common stock in business acquisition $ -- $ 61,936
========= =========
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
6
<PAGE>
URS CORPORATION AND SUBSIDIARIES
Note 1. Accounting Policies
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, 1998.
The results of operations for the three and nine month periods ended July 31,
1999 are not necessarily indicative of the operating results for the full year.
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 conversion of
preferred stock. Diluted income per share is computed by dividing net income
available to common stockholders plus the preferred stock dividend by the
weighted-average dilutive potential common shares that were outstanding during
the period.
Reporting Comprehensive Income
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 130
"Reporting of Comprehensive Income", effective January 31, 1999. SFAS No. 130
established standards for the reporting and display of comprehensive income and
its components. Other comprehensive income of the Company consists of foreign
currency translation adjustments.
Note 2. Acquisitions
In June 1999, the Company acquired publicly-held Dames & Moore for an
aggregate purchase price of $316.2 million. 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 have been allocated to goodwill. The
goodwill resulting from the Dames & Moore acquisition is being amortized on a
straight-line basis over forty years. The operating results of Dames & Moore are
included in the Company's results of operations from June 1999, the date of
purchase.
The total purchase price paid was provided through the issuance by the
Company of (1) $100 million of Series A and Series C Preferred Stock to RCBA
Strategic Partners, L.P., (2) $200 million of senior subordinated increasing
rate notes pursuant to a bridge financing facility provided by
7
<PAGE>
Morgan Stanley Senior Funding, Inc. (the "Bridge Facility"), and (3) borrowings
of up to $450 million of the $550 million available under a senior secured
credit facility between the Company, certain guarantors, including the Company,
and Wells Fargo Bank, National Association, as administrative agent (the "Senior
Secured Credit Facility"). The Senior Secured Credit Facility includes three
term loan facilities in the aggregate amount of $450 million and a revolving
credit facility in the amount of $100 million. The term loan facilities consist
of a $250 million tranche ("Term Loan A"), a $100 million tranche ("Term Loan
B") and another $100 million tranche ("Term Loan C"). Term Loan A matures six
years from the funding date; Term Loan B matures seven years from the funding
date; Term Loan C matures eight years from the funding date; and the revolving
credit facility matures six years from the funding date.
The revolving credit facility will be used for the Company's working
capital requirements and for general corporate purposes.
The term loans each bear interest, at the Company's option, at a rate
per annum equal to either (1) the Base Rate or (2) LIBOR, in each case plus an
applicable margin. The revolving credit facility bears interest, at the
Company's option, at a rate per annum equal to either (a) the Base Rate, (b)
LIBOR or (c) the Adjusted Sterling Rate, in each case plus an applicable margin.
The applicable margin adjusts according to a performance pricing grid based on a
ratio of Funded Debt to Earnings before Interest, Taxes, Depreciation and
Amortization. The "Base Rate" is defined as the higher of (1) Wells Fargo Bank,
National Association's Prime Rate and (2) the Federal Funds Rate plus 0.50%.
"LIBOR" is defined as the offered quotation that first class banks in the London
interbank market offer to Wells Fargo Bank, National Association for dollar
deposits, as adjusted for reserve requirements. The "Adjusted Sterling Rate" is
defined as the rate per annum displayed by Reuters at which Sterling is offered
to Wells Fargo Bank, National Association in the London interbank market as
determined by the British Bankers' Association.
The following unaudited pro forma summary presents the consolidated
results of operations as if the Dames & Moore 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.
Nine Months Ended Twelve Months Ended
July 31, 1999 October 31, 1998
---------- ----------
(in thousands, except per share amounts)
Revenues $1,520,937 $1,895,184
========== ==========
Net income $ 17,571 $ 11,071
========== ==========
Net income per share $ 1.00 $ .70
========== ==========
On February 1, 1999 the Company acquired privately-held Thorburn Colquhoun
Holding plc, for an aggregate purchase price of $13.6 million including
assumption of its debt. The Company has accounted for the acquisition using 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 operating
results of Thorburn Colquhoun Holding, plc are included in the Company's results
of operations from the date of purchase. Pro forma operating results for the
nine months ended July 31, 1999 and the twelve months ended October 31, 1998, as
if the acquisition had been made on November 1, 1997, are not presented because
they would not be materially different from the Company's reported results.
8
<PAGE>
Note 3. Commitments and Contingencies
The Company in the ordinary course of business is a defendant in
various lawsuits involving claims typically filed against the engineering and
consulting professions, primarily alleging professional errors or omissions.
Management makes estimates and assumptions that affect the reported amount of
liability and the disclosure of contingent liabilities. As claims develop, it is
possible that the ultimate results of these claims may differ from management's
estimates. In the opinion of management, based upon information it presently
possesses, the resolution of these claims will not have a material adverse
effect on the Company's consolidated financial position or results of
operations.
Note 4. Supplemental Guarantor Information
In June 1999, the Company completed a private placement of $200 million
principal amount of its Senior Subordinated Notes due 2009 (the "Notes"). The
Notes are fully and unconditionally guaranteed on a joint and several basis by
certain of the Company's wholly-owned subsidiaries. The Company is a holding
company with no operating assets or operations other than its investments in its
subsidiaries. Substantially all of the Company's income and cash flow is
generated by its subsidiaries. As a result, funds necessary to meet the
Company's debt service obligations are provided in large part by distributions
or advances from its subsidiaries. Under certain circumstances, contractual and
legal restrictions, as well as the financial condition and operating
requirements of the Company's subsidiaries, could limit the Company's ability to
obtain cash from its subsidiaries for the purpose of meeting its debt service
obligations, including the payment of principal and interest on the Notes.
The following information sets forth the condensed consolidating
balance sheets of the Company as of October 31, 1998 and July 31, 1999, and the
condensed consolidating statements of operations and cash flows for the nine
months ended July 31, 1999 and 1998. Investments in subsidiaries are accounted
for on the equity method; accordingly, entries necessary to consolidate the
Company and all of its subsidiaries are reflected in the eliminations column.
Separate complete financial statements of the Company and its subsidiaries that
guarantee the Notes would not provide additional material information that would
be useful in assessing the financial composition of such subsidiaries.
9
<PAGE>
<TABLE>
URS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
(In thousands)
(unaudited)
<CAPTION>
October 31, 1998
------------------------------------------------------------
Parent and Subsidiary
Subsidiary Non
Guarantors Guarantors Eliminations Consolidated
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 33,487 $ 3,042 $ -- $ 36,529
Accounts receivable, net 150,190 11,552 -- 161,742
Costs and accrued earnings in excess of billings on
contracts in process, net 73,557 4,324 -- 77,881
Accounts receivable, intercompany 35,260 9,812 (45,072) --
Prepaid expenses and other assets 9,802 231 -- 10,033
--------- --------- --------- ---------
Total current assets 302,296 28,961 (45,072) 286,185
--------- --------- --------- ---------
Property and equipment, net 26,488 3,041 (12) 29,517
Goodwill, net 129,748 (12) 12 129,748
Investment in unconsolidated subsidiaries 101,251 -- (101,251) --
Other assets 6,127 127 -- 6,254
--------- --------- --------- ---------
263,614 3,156 (101,251) 165,519
--------- --------- --------- ---------
Total assets $ 565,910 $ 32,117 $(146,323) $ 451,704
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt $ 17,423 $ 920 $ -- $ 18,343
Accounts payable 35,606 1,630 -- 37,236
Intercompany payable 23,950 26,713 (50,663) --
Billings in excess of costs and accrued earnings on
contracts in process 34,438 1,017 -- 35,455
Accruals 59,331 4,851 -- 64,182
--------- --------- --------- ---------
Total current liabilities 170,748 35,131 (50,663) 155,216
Long-term debt 94,956 1 -- 94,957
Other 34,877 294 -- 35,171
--------- --------- --------- ---------
Total liabilities 300,581 35,426 (50,663) 285,344
Total stockholders' equity 265,329 (3,309) (95,660) 166,360
--------- --------- --------- ---------
Total liabilities and stockholders' equity $ 565,910 $ 32,117 $(146,323) $ 451,704
========= ========= ========= =========
</TABLE>
10
<PAGE>
<TABLE>
URS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
(In thousands)
(unaudited)
<CAPTION>
July 31, 1999
------------------------------------------------------------
Parent and Subsidiary
Subsidiary Non
Guarantors Guarantors Eliminations Consolidated
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 5,230 $ 14,508 $ -- $ 19,738
Accounts receivable, net 386,769 58,817 -- 445,586
Costs and accrued earnings in excess of billings on
contracts in process, net 165,538 21,299 -- 186,837
Accounts receivable, intercompany 69,579 (59,947) (9,632) --
Prepaid expenses and other assets 24,940 3,083 -- 28,023
---------- ---------- ---------- ----------
Total current assets 652,056 37,760 (9,632) 680,184
Property and equipment, net 80,913 12,091 -- 93,004
Goodwill, net 466,616 -- -- 466,616
Investment in unconsolidated subsidiaries 252,026 -- (252,026) --
Other assets 67,132 102,499 (102,499) 67,132
---------- ---------- ---------- ----------
Total assets $1,518,743 $ 152,350 $ (364,157) $1,306,936
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt $ 20,622 $ 7,171 $ -- $ 27,793
Accounts payable 80,605 16,570 -- 97,175
Intercompany payable 5,127 (22,330) 17,203 --
Billings in excess of costs and accrued earnings on
contracts in process 26,890 4,377 -- 31,267
Accruals 131,176 5,466 -- 136,642
---------- ---------- ---------- ----------
Total current liabilities 264,420 11,254 17,203 292,877
Long-term debt 666,913 585 -- 667,498
Intercompany payable 61,134 104,178 (165,312) --
Other 53,113 1,643 -- 54,756
---------- ---------- ---------- ----------
Total liabilities 1,045,580 117,660 (148,109) 1,015,131
Mandatory Redeemable Series A and C Preferred Stock 100,000 -- -- 100,000
---------- ---------- ---------- ----------
Total stockholders' equity 373,163 34,690 (216,048) 191,805
---------- ---------- ---------- ----------
Total liabilities and stockholders' equity $1,518,743 $ 152,350 $ (364,157) $1,306,936
========== ========== ========== ==========
</TABLE>
11
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<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(In thousands)
(unaudited)
<CAPTION>
Nine Months Ended July 31, 1999
----------------------------------------------------------------
Parent and Subsidiary
Subsidiary Non
Guarantors Guarantors Eliminations Consolidated
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues $765,048 $ 87,267 $ (2,557) $849,758
-------- -------- -------- --------
Expenses:
Direct operating 451,066 52,380 (2,557) 500,889
Indirect, general and administrative 262,911 29,212 -- 292,123
-------- -------- -------- --------
Operating income 51,071 5,675 -- 56,746
Interest expense, net 13,945 1,550 -- 15,495
-------- -------- -------- --------
Income before taxes 37,126 4,125 -- 41,251
Income tax expense 16,380 1,820 -- 18,200
Preferred stock dividend 1,333 -- -- 1,333
-------- -------- -------- --------
Net income $ 19,413 $ 2,305 $ -- $ 21,718
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended July 31, 1998
----------------------------------------------------------------
Parent and Subsidiary
Subsidiary Non
Guarantors Guarantors Eliminations Consolidated
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues $554,940 $ 35,400 $ (1,518) $588,822
-------- -------- -------- --------
Expenses:
Direct operating 341,527 21,840 (1,518) 361,849
Indirect, general and administrative 180,205 11,503 -- 191,708
-------- -------- -------- --------
Operating income 33,208 2,057 -- 35,265
Interest expense, net 6,452 412 -- 6,864
-------- -------- -------- --------
Income before taxes 26,756 1,645 -- 28,401
Income tax expense 12,160 740 -- 12,900
-------- -------- -------- --------
Net income $ 14,596 $ 905 $ -- $ 15,501
======== ======== ======== ========
</TABLE>
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<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
(In thousands)
(unaudited)
<CAPTION>
Nine Months Ended July 31, 1998
-----------------------------------------------------
Parent and Subsidiary
Subsidiary Non
Guarantors Guarantors Eliminations Consolidated
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 14,596 $ 905 $ -- $ 15,501
--------- --------- --------- ---------
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization 10,382 663 -- 11,045
Allowance for doubtful accounts and losses (53) (56) -- (109)
Changes in current assets and liabilities, net of effects of purchases
of businesses:
Accounts receivable and costs and accrued earnings in excess
of billings on contracts in process (2,005) 266 (1,365) (3,104)
Prepaid expenses and other assets (1,013) 1,096 114 197
Accounts payable, accrued salaries and wages and accrued
expenses (9,612) 278 (375) (9,709)
Billings in excess of costs and accrued earnings on contracts in
process (411) 1,221 -- 810
Deferred income taxes (1,499) 1,749 -- 250
Other, net 2,335 (93) (1,739) 503
--------- --------- --------- ---------
Total adjustments (1,876) 5,124 (3,365) (117)
--------- --------- --------- ---------
Net cash provided (used) by operating activities 12,720 6,029 (3,365) 15,384
--------- --------- --------- ---------
Cash flows from investing activities:
Business acquisition, net of cash acquired (36,937) -- -- (36,937)
Capital expenditures (7,199) (548) -- (7,747)
--------- --------- --------- ---------
Net cash (used) by investing activities (44,136) (548) -- (44,684)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt 110,000 -- -- 110,000
Principal payments on long-term debt (77,309) (33) 3,365 (73,977)
Payments on merger fees (4,000) -- -- (4,000)
Proceeds from sale of common shares 755 -- -- 755
Proceeds from exercise of stock options 887 -- -- 887
--------- --------- --------- ---------
Net cash provided (used) by financing activities 30,333 (33) 3,365 33,665
--------- --------- --------- ---------
Net increase in cash (1,083) 5,448 -- 4,365
Cash at beginning of period 21,495 639 -- 22,134
--------- --------- --------- ---------
Cash at end of period $ 20,412 $ 6,087 $ -- $ 26,499
========= ========= ========= =========
</TABLE>
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<TABLE>
URS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW
(In thousands)
(unaudited)
<CAPTION>
Nine Months Ended July 31, 1999
--------------------------------------------------
Parent and Subsidiary
Subsidiary Non
Guarantors Guarantors Eliminations Consolidated
---------- ---------- -------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 19,413 $ 2,305 $ -- $ 21,718
--------- --------- --------- ---------
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization 14,688 1632 -- 16,320
Preferred stock dividend 1,333 -- -- 1,333
Allowance for doubtful accounts and losses 3,992 -- -- 3,992
Changes in current assets and liabilities, net of effects of purchases of
businesses:
Accounts receivable and costs and accrued earnings in excess
of billings on contracts in process (31,870) 10,014 (20,150) (42,006)
Prepaid expenses and other assets 10,305 (2,836) (13,119) (5,650)
Accounts payable, accrued salaries and wages and accrued
expenses (81,817) (2,288) 41,326 (42,779)
Billings in excess of costs and accrued earnings on contracts in process (447) (3,554) (1,738) (5,739)
Deferred income taxes and other, net (4,367) 8,377 (6,319) (2,309)
--------- --------- --------- ---------
Total adjustments (88,183) 11,345 -- (76,838)
--------- --------- --------- ---------
Net cash (used) provided by operating activities (68,770) 13,650 -- (55,120)
--------- --------- --------- ---------
Cash flows from investing activities:
Business acquisition, net of cash acquired (316,167) -- -- (316,167)
Capital expenditures (7,708) (2,483) -- (10,191)
--------- --------- --------- ---------
Net cash (used) by investing activities (323,875) (2,483) -- (326,358)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt 854,440 299 -- 854,739
Principal payments on long-term debt (589,597) -- -- (589,597)
Payments on merger fees (18,738) -- -- (18,738)
Proceeds from issuance of preferred stock 15,000 -- -- 15,000
Payments on financing fees related to issuance of preferred stock 100,000 -- -- 100,000
Proceeds from sale of common shares (1,500) -- -- (1,500)
Proceeds from exercise of stock options 2,693 -- -- 2,693
2,090 -- -- 2,090
--------- --------- --------- ---------
Net cash provided by financing activities 364,388 299 -- 364,687
--------- --------- --------- ---------
Net increase in cash (28,257) 11,466 -- (16,791)
Cash at beginning of period 33,487 3,042 -- 36,529
--------- --------- --------- ---------
Cash at end of period $ 5,230 $ 14,508 $ -- $ 19,738
========= ========= ========= =========
</TABLE>
14
<PAGE>
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, 1998 which was previously filed with the Securities and
Exchange Commission.
Results of Operations
Third quarter ended July 31, 1999 vs. July 31, 1998.
The Company's revenues were $428,482,000 for the third quarter ended July
31, 1999, an increase of $220,998,000, or 107%, over the amount reported for the
same period last year. The growth in revenue is primarily attributable to the
acquisition of Dames & Moore, the results of which are included commencing June
1999, and to a lesser extent due to an increase in demand for the Company's
on-going services on infrastructure projects.
Direct operating expenses for the quarter ended July 31, 1999, which
consist of direct labor and other direct expenses, including subcontractor
costs, increased $125,269,000, a 96% 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 Dames & Moore.
Indirect, general and administrative expenses for the quarter ended July
31, 1999 increased $80,435,000, or 128%, over the amount reported for the same
period last year as a result of the Dames & Moore acquisition.
The Company earned $18,784,000 before income taxes for the third quarter
ended July 31, 1999 compared to $11,689,000 for the same period last year. The
Company's effective income tax rate for the quarters ended July 31, 1999 and
1998 was approximately 45%.
The Company reported net income available for common stockholders of
$9,051,000, or $.53 per share for the third quarter ended July 31, 1999,
compared with $6,389,000 or $.40 per share for the same period last year.
Nine months ended July 31, 1999 vs. July 31, 1998.
The Company's revenues were $849,758,000 for the nine months ended July
31, 1999, an increase of $260,936,000, or 44%, over the amount reported for the
same period last year. The growth in revenues is primarilly attributable to the
Dames & Moore acquisition.
Direct operating expenses for the nine months ended July 31, 1999, which
consist of direct labor and other direct expenses including subcontractor costs,
increased $139,040,000, or 38%, over the amount reported in the same period last
year. This increase is primarily attributable to the Dames & Moore acquisition
as well as an overall increase in the Company's business as compared to the same
period last year. Indirect, general and administrative expenses were
$292,123,000 for the nine months ended July 31, 1999, an increase of
$100,415,000, or 52%, over the amount reported for the same period last year.
The increase in indirect, general and administrative expenses is due primarily
to the addition of the Dames & Moore overhead.
The Company earned $41,251,000 before income taxes for the nine
15
<PAGE>
months ended July 31, 1999 compared to $28,401,000 for the same period last
year. The Company's effective income tax rates for the nine months ended July
31, 1999 and 1998 was approximately 44% and 45%, respectively.
The Company reported net income available for common stockholders of
$21,718,000 or $1.30 per share, for the nine months ended July 31, 1999,
compared with $15,501,000, or $.98 per share for the same period last year.
The Company's backlog at July 31, 1999 was $1,266,000,000 compared
to $675,000,000 at October 31, 1998.
Liquidity and Capital Resources
At July 31, 1999, the Company had working capital of $387,307,000, an
increase of $256,338,000 from October 31, 1998, due primarily to the Dames &
Moore acquisition.
The Company's current revolving line of credit is $100,000,000, of which
after issuance of letters of credit aggregating $40,000,000, and $15,000,000 in
borrowings on its revolving line of credit during the nine months ended July 31,
1999, $45,000,000 was available at July 31, 1999.
The Company has incurred substantial indebtedness in connection with the
Dames & Moore acquisition. The Company has outstanding debt of $701 million,
including approximately $473.5 million of senior indebtedness.
The Company's credit agreement required compliance with certain financial
and other covenants. The Company was in compliance with such covenants at July
31, 1999.
The Company's liquidity and capital measurements are set forth below:
As of
July 31,1999
------------
Working capital $387,307,000
Working capital ratio 2.3 to 1
Average days to convert billed
accounts receivable to cash 77
Percentage of debt to equity 240%
The Company's cash and cash equivalents amounted to $19,738,000 at July
31, 1999, a decrease of $16,791,000 from October 31, 1998. During the nine month
period ended July 31, 1999, the Company's accounts receivable increased due to
the installation of a new accounting system. This caused a delay in billings
which resulted in a corresponding decrease in cash. In addition, during the nine
month period ended July 31, 1999, cash was used to fund working capital required
to support the expansion of the Company's business and to pay expenses
associated with the Dames & Moore acquisition.
During the first nine months of fiscal year 1999, the Company's cash flow
used by operating activities totaled $55,120,000. The Company's domestic
operations used substantially all of the operating cash flow.
The Company's primary sources of liquidity are cash flow from
16
<PAGE>
operations and borrowings under the Senior Secured Credit Facility. The
Company's primary uses of cash are to satisfy its working capital needs, and pay
interest and principal obligations on its outstanding indebtedness.
The Company's operating cash flow and working capital requirements have
grown substantially due to its growth. As a professional services organization,
the Company is not capital intensive. Capital expenditures, historically, have
been for computer-aided design and general purpose computer equipment to
accommodate the Company's growth. Capital expenditures during fiscal years 1998,
1997, and 1996 were $12,200,000, $5,100,000, and $3,000,000, respectively. The
Company does not expect to have any significant capital outlays resulting from
the Dames & Moore acquisition.
The Company believes that its existing financial resources including the
Senior Secured Credit Facility, together with its planned cash flow from
operations, will provide sufficient capital to fund its combined operations,
capital expenditure needs, and to pay interest and principal obligations on its
outstanding indebtedness. There can be no assurance that the Company will
generate sufficient cash flow from operations; that currently anticipated
revenue growth and cost savings will be realized, or that future borrowings
available under the Senior Secured Credit Facility will be in amounts sufficient
to pay its outstanding indebtedness or to fund other liquidity needs.
YEAR 2000 ISSUES
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. Any programs that have time- sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in the computer shutting down or performing incorrect computations.
As a result, before December 31, 1999, computer systems and software used by
many companies may need to be upgraded to comply with such "Year 2000"
requirements.
The Company has developed and implemented a plan to achieve Year 2000
readiness. The Company has hired some external consultants and dedicated some of
its internal resources to ensure Year 2000 compliance. The Company is
implementing its Year 2000 compliance program in the following phases:
o identification and assessment of business areas affected by Year 2000
requirements
o program implementation and
o identification of risks and development of contingency and business
continuity plans to mitigate the effects of any Year 2000 failures.
Year 2000 issues which may affect the Company fall into two basic
categories, business disruption issues and client deliverable issues.
Business Disruption Issues. In some situations, a Year 2000 problem
could interfere with the operation of the Company's business. For example, a
Year 2000 problem could adversely affect the Company's ability to interface with
third parties, such as receiving payments from clients or supplies from vendors
on a timely basis, the reliability of its internal information management
systems, such as accounting systems, or the
17
<PAGE>
physical operation of its systems which have embedded technology, such as
elevator and telephone systems, security systems and other physical office
infrastructure. These business disruption issues could arise from internal Year
2000 problems in software that the Company uses or from external Year 2000
problems that third parties encounter.
The Company's Year 2000 compliance program addresses the following
issues:
o Third Party Interfaces. The Company is discussing with its clients and
vendors the potential effect that the Year 2000 issue will have on
their systems. Possible effects include delayed payments from clients
due to Year 2000 problems affecting their accounting and payables
systems. As the Company assesses these issues, it expects to develop
contingency plans for payment delays and other Year 2000 problems. The
contingency plans may include, for example, holding additional cash
reserves.
o Internal Information Systems. The Company has completed an inventory of
its internal hardware and software. The Company is currently performing
a Year 2000 readiness assessment and impact analysis for these systems.
The Company has addressed or is addressing Year 2000 issues for many of
its critical internal information systems. The Company also anticipates
that in the near future its upgraded company-wide accounting and
financial reporting system and its payroll and human resources system
will be Year 2000 compliant.
o Embedded Technology Systems. The Company is currently examining
infrastructure issues on an office-by-office basis. As the Company
renegotiates its office leases or enter into new leases, it is
incorporating language designed to protect it against potential
business interruption arising from Year 2000 problems. The Company
expects to develop contingency plans to address any embedded technology
issues it identifies.
Client Deliverables. The Company has undertaken a limited number of
projects that include the specification of computer-based components as part of
the work that it delivers to clients. Only a few of the Company's projects
involve the actual development of software and hardware. The Company is
implementing a plan of action related to such client deliverables. The plan
includes developing an inventory of affected projects and contacting affected
clients and offering assistance with their Year 2000 compliance issues. However,
because the Company generally has not manufactured or designed the hardware or
software, it anticipates that the responsibility for any Year 2000 problems
associated with these deliverables ultimately will rest with the hardware or
software manufacturer. To address Year 2000 issues, the Company also has drafted
contract clauses and distributed them to all officers with contracting authority
for inclusion in its future client contracts.
Costs. The Company has not incurred substantial incremental costs in
connection with its Year 2000 compliance programs. The Company has, however,
devoted internal resources and hired some external resources to assist with the
implementation and monitoring of its Year 2000 compliance programs. These
related costs are not significant.
Risks and Contingencies. The Company does not anticipate that the costs
of its Year 2000 compliance program or risks that could result from the Year
2000 problem will be material. However, because the Company has
18
<PAGE>
no control over third parties' products or services, it cannot assure you of
third-party Year 2000 compliance. Problems arising from the Year 2000 issues
that the Company's clients and vendors encounter could have a material adverse
effect on its business. In addition, if the Company's plans to address the Year
2000 issue are not successfully or timely implemented, the Company may need to
devote more resources to the process and may incur additional costs that could
have a material adverse effect on its business.
The costs of the Company's Year 2000 compliance programs and the
timetable on which the Company plans to complete them are based on its best
estimates and reflect assumptions regarding the availability and cost of
personnel trained in this area, the compliance plans of third parties and
similar uncertainties. The Company cannot assure you that these estimates will
be achieved. Actual results could differ materially from those the Company
anticipates because of the complexity and pervasiveness of the Year 2000 issue
and in particular, its uncertainty regarding the compliance programs of third
parties.
The Company is in the process of determining contingency plans,
including the identification of its most reasonable likely worst case scenarios.
The Company does not yet have any contingency plans in place in the event that
it does not complete all of its Year 2000 remediation or if its major customers
or vendors are not Year 2000 compliant. The Company will base any future
contingency plans on its best estimates of numerous factors and assumptions
about future events, many of which are beyond its control. The Company cannot
assure you that these factors and assumptions will be sufficiently comprehensive
or accurate. Additionally, the Company cannot assure you that any contingency
plans would be successful or adequate to meet the Company's needs without
materially impacting its financial condition or results of operations.
The Company will also depend on third parties to resolve the Year 2000
issue. The Company is unable to project with complete certainty that those third
parties will successfully resolve their Year 2000 problems. If the Company's
plan to address the Year 2000 issue is not successfully or timely implemented,
it may need to devote more resources to the process and additional costs may be
incurred, which could have a material adverse effect on its business, financial
condition and results of operations. No one can accurately predict the severity,
duration or financial consequences of the year 2000 related failures.
19
<PAGE>
PART II
OTHER INFORMATION
ITEM 3. CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
On June 9, 1999, the Company issued $200 million of senior subordinated
increasing rate notes pursuant to a bridge financing facility provided by Morgan
Stanley Senior Funding, Inc. (the "Bridge Facility"). The proceeds of this
issuance were used in connection with the Dames & Moore acquisition. The Company
paid a placement fee of $5,100,000 to Morgan Stanley Senior Funding, Inc. in
connection with this placement. This issuance was effected as a private
placement in reliance on Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), and Regulation D thereunder as the transaction did not
involve a public offering and the notes were issued to an accredited investor.
On June 9, 1999, the Company issued 46,082.95 shares of its Series A
Preferred Stock and 450,000 shares of its Series C Preferred Stock to RCBA
Strategic Partners, L.P. for aggregate consideration of $100 million. The
proceeds of this issuance were used in connection with the Dames & Moore
acquisition. The Company paid a transaction fee of $1,500,000 to RCBA Strategic
Partners in connection with this placement. This issuance was effected as a
private placement in reliance on Section 4(2) of the Securities Act and
Regulation D thereunder as the transaction did not involve a public offering and
the notes were issued to an accredited investor.
On June 23, 1999, the Company issued $200 million of 12-1/4% senior
subordinated notes due 2009 to certain institutional investors pursuant to an
Indenture dated June 23, 1999, by and between the Company, certain specified
wholly-owned subsidiaries of the Company as guarantors and Firstar Bank of
Minnesota, N.A. as trustee, and a Placement Agreement dated June 18, 1999,
between the Company, such guarantors and Morgan Stanley & Co. Incorporated as
placement agent. The proceeds of this issuance were used to pay off the notes
issued under the Bridge Facility. The Company paid a placement fee of $5,500,000
to Morgan Stanley & Co. Incorporated in connection with this placement. This
issuance was effected as a private placement in reliance on Section 4(2) of the
Securities Act and Rule 144A thereunder as the transaction did not involve a
public offering and the notes were issued to qualified institutional buyers.
20
<PAGE>
ITEM 4. OTHER INFORMATION
On September 10, 1999, the Company mailed to its
stockholders of record on September 7, 1999, a notice of a special meeting of
stockholders to be held on October 12, 1999, for the following purposes:
1. to consider approval of an amendment to the Company's Certificate of
Incorporation to increase the authorized number of shares of common
stock from 20,000,000 shares to 50,000,000 shares and to increase the
authorized number of shares of preferred stock from 1,000,000 shares to
3,000,000 shares;
2. to consider approval of an amendment to and restatement of the
Company's Employee Stock Purchase Plan;
3. to consider approval of the Company's 1999 Equity Incentive Plan; and
4. to consider approval of the issuance of Series B Exchangeable
Convertible Preferred Stock to RCBA Strategic Partners, L.P. ("RCBA
Strategic Partners") in exchange for the Series A and Series C
Preferred Stock issued to RCBA Strategic Partners in connection with
the acquisition of Dames & Moore.
ITEM 5. EXHIBITS AND REPORTS OF 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
Exhibit 3(ii) Bylaws, as amended through May 5, 1999 FILED HEREWITH
Exhibit 2.1 Agreement and Plan of Merger, dated May 5, 1999, by and
among Dames & Moore Group, URS Corporation and Demeter
Acquisition Corporation (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K, dated May 7, 1999,
and incorporated herein by reference)
Exhibit 4.1 Credit Agreement, dated as of June 9, 1999, among URS
Corporation, the lenders names therein, Wells Fargo
Bank, N.A., as Co-Lead Arranger and Administrative
Agent, and Morgan Stanley Senior Funding, Inc. as Co-
Lead Arranger and Syndication Agent (filed as Exhibit
2.2 to the Company's Current Report on Form 8-K, dated
June 11, 1999, and incorporated herein by reference)
Exhibit 4.2 Note Purchase Agreement, dated as of June 9, 1999,
between Morgan Stanley Senior Funding, Inc. and URS
Corporation (filed as Exhibit 2.3 to the Company's
Current Report on Form 8-K, dated June 11, 1999, and
incorporated herein by reference)
21
<PAGE>
Exhibit 4.3 Securities Purchase Agreement, dated 5.as of May 5,
1999, between RCBA Strategic Partners, L.P. and URS
Corporation (filed as Exhibit 2.4 to the Company's
Current Report on Form 8-K, dated June 11, 1999, and
incorporated herein by reference)
Exhibit 4.4 Indenture, dated as of June 23, 1999, by and between
Firststar Bank of Minnesota, N.A., URS Corporation and
the Subsidiary Guarantors defined therein relating to
the Company's 12- 1/4% Senior Subordinated Notes due
2009 (filed as Exhibit 2.5 to the Company's Current
Report on Form 8-K, dated July 1, 1999, and incorporated
herein by reference)
Exhibit 4.5 Registration Rights Agreement, dated June 23, 1999, by
and between Morgan Stanley & Co. Incorporated, URS
Corporation and the Guarantors listed therein (filed as
Exhibit 2.6 to the Company's Current Report on Form 8-K,
dated July 1, 1999, and incorporated herein by
reference)
Exhibit 4.6 Placement Agreement, dated June 18, 1999, by and between
Morgan Stanley & Co. Incorporated, URS Corporation and
the Guarantors named therein (filed as Exhibit 2.7 to
the Company's Current Report on Form 8-K, dated July 1,
1999, and incorporated herein by reference)
Exhibit 4.7 Form of URS Corporation 12-1/4% Senior Subordinated Note
due 2009 (included in Exhibit 4.4, filed as Exhibit 2.5
to the Company's Current Report on Form 8-K, dated July
1, 1999, and incorporated herein by reference)
Exhibit 4.8 Form of URS Corporation 12-1/4% Senior Subordinated
Exchange Note due 2009 (included in Exhibit 4.4, filed
as Exhibit 2.5 to the Company's Current Report on Form
8-K, dated July 1, 1999, and incorporated herein by
reference)
Exhibit 4.9 Certificate of Designation of Series A Preferred Stock
of URS Corporation (included as an exhibit to Exhibit
4.3, filed as Exhibit 2.4 to the Company's Current
Report on Form 8-K, dated June 11, 1999, and
incorporated herein by reference)
Exhibit 4.10 Certificate of Designation of Series B Preferred Stock
of URS Corporation (included as an exhibit to Exhibit
4.3, filed as Exhibit 2.4 to the Company's Current
Report on Form 8-K, dated June 11, 1999, and
incorporated herein by reference)
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<PAGE>
Exhibit 4.11 Certificate of Designation of Series C Preferred Stock
of URS Corporation (included as an exhibit to Exhibit
4.3, filed as Exhibit 2.4 to the Company's Current
Report on Form 8-K, dated June 11, 1999, and
incorporated herein by reference)
Exhibit 10.1 URS Corporation Supplemental Executive Retirement
Agreement, dated as of July 13, 1999, between Martin M.
Koffel and URS Corporation. FILED HEREWITH
Exhibit 10.2 URS Corporation 1991 Stock Incentive Plan Nonstatutory
Stock Option Agreement, dated as of March 23, 1999,
between URS Corporation and Martin M. Koffel. FILED
HEREWITH
Exhibit 27 Financial Data Schedule (electronic format only)
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K during the quarter
ended July 31, 1999:
o Form 8-K dated May 7, 1999 to report that the Company had signed a
definitive agreement to acquire Dames & Moore
o Form 8-K dated June 8, 1999 to report unaudited pro forma combined
financial information of the Company and Dames & Moore
o Form 8-K dated June 11, 1999 to report completion of the tender
offer for Dames & Moore and financial statements of the acquired
business
o Form 8-K/A dated June 22, 1999 to report updated unaudited pro forma
combined financial information of the Company and Dames & Moore to
reflect the interest rate on the Company's 12-1/4% Senior
Subordinated Notes due 2009 as priced effective June 18, 1999
o Form 8-K dated July 1, 1999 to report consummation of the merger of
a wholly-owned subsidiary of the Company with and into Dames &
Moore, with Dames & Moore surviving as a wholly-owned subsidiary of
the Company, and the sources of funds used for the acquisition
Subsequent to July 31, 1999, the Company also filed a Form 8-K/A dated
August 4, 1999 to file financial statements of Dames & Moore
23
<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 September 14, 1999
URS CORPORATION
/s/ Kent Ainsworth
- ----------------------------------------
Kent P. Ainsworth
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
24
BY-LAWS
OF
URS CORPORATION
(as amended through May 5, 1999)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of San Mateo, State of California, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1977, shall be held on the first of March if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 11:00 a.m., or at such other
date and time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting, at which they shall elect by a
plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than fifty days before the date of the
meeting.
<PAGE>
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning twenty percent
(20%) in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given to less than ten nor more than fifty days before the date
of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express
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<PAGE>
provision of the statutes or of the certificate of incorporation, a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than five nor more than fifteen. The first board shall
consist of ten directors. Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of directors
or by the stockholders at the annual meeting. The directors shall be elected at
the annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
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<PAGE>
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 6. Special meetings of the board may be called by the chairman
or the president, and shall be called by the secretary at the written requests
of any two directors. Notice of the time and place of all special meetings of
the board shall be given orally or in writing, by telephone, facsimile,
telegraph or electronic mail, during normal business hours, at least forty-eight
(48) hours before the meeting, or sent in writing to each director by first
class mail, postage prepaid, at least three (3) days before the meeting. Notice
of any special meeting may be waived in writing at any time before or after the
meeting, and will be waived by any director by attendance at the meeting, except
when the director attends the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business at the meeting
on the basis that the meeting is not lawfully called or convened.
Section 7. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board, may participate in a meeting of the board, or
committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting pursuant to this
subsection shall constitute presence in person at such meeting.
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COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
Section 11. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail,
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addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given in the manner specified in
Section 6 of Article III of these by-laws.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a senior vice president, one or more
additional vice presidents, a secretary and a treasurer. The board of directors
may also choose one or more assistant secretaries and assistant treasurers, and
a chairman of the board. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors may appoint such other officers as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the board.
Section 3. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE CHAIRMAN OF THE BOARD
Section 4. The chairman of the board, if there shall be such an
officer, shall, if present, preside at all meetings of the board of directors,
and exercise and perform such other powers and duties as may from time to time
be assigned to him by the board of directors or prescribed by the by-laws.
THE PRESIDENT
Section 5. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, if there is no Chairman; and shall have general and active management
of the business of the corporation and shall see that all orders and resolutions
of the board of the directors are carried into effect.
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Section 6. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer of the corporation.
THE VICE-PRESIDENTS
Section 7. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated (e.g.,
anyone designated "senior vice president" would be the first to so act), or in
the absence of any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors, the president, or the by-laws may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the fixing by his
signature.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURER
Section 10. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
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Section 11. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Section 1. The corporation shall indemnify any officer,
director or employee who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer or employee of the corporation, or is or was serving at the
request of the corporation as a director, officer or employee of another
corporation or partnership, joint venture, trust or other enterprise; such
indemnification shall cover expenses (including attorney's fees), judgments,
fines and amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good faith and
in a manner he reasonable believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. The corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer or employee of the corporation, or is or was serving at the request of
the corporation as a director, officer or employee of the corporation, or is or
was serving at the request of the corporation as a director, officer or employee
of another corporation, partnership, joint venture, trust or other enterprise;
such indemnification shall cover expenses (including attorney's fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit, if he acted in good faith in any manner he reasonably
believed
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to be in or not opposed to the best interests of the corporation, provided,
however, that no indemnification shall be made in respect of any claim, issue or
manner as to which such person shall have been adjudged to have been liable for
negligence or misconduct in the performance of his duties to the corporation,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
Section 3. To the extent that a director, officer or employee
of the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (1) and (2) above, or
in defense of any claim, issue or manner therein, he shall be indemnified
against expenses, including attorney's fees, actually and reasonably incurred by
him in connection therewith.
Section 4. Any indemnification under subsections (1) and (2)
above (unless ordered by a court) shall be made by the corporation only as
authorized in a specific case by a determination that indemnification of the
director, officer or employee is proper in circumstances because he had met the
applicable standard of conduct set forth in subsections (1) and (2). Such
determination shall be made (i) by the board of directors by a majority vote of
a quorum consisting of directors who are not parties to such action, suit or
proceeding, (ii) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion or (iii) by the stockholders.
Section 5. Expenses incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding, unless the board of
directors, or the appropriate officer of the corporation acting pursuant to
delegated authority of the board of directors, determines in the specific case
that the applicable standard of conduct set forth in subsections (1) and (2) has
not been met, but only upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this article.
Section 6. The indemnification provided in this section shall
not be deemed exclusive of any rights to which those seeking indemnification may
be entitled under any other by-law, agreement, vote of stockholders or
disinterested directors or otherwise both as to action in his official capacity
and to action in another capacity while holding such office, and the
indemnification shall continue as to a person who has ceased to be a director,
officer or employee, and it shall inure to the benefit of the heirs, executors
and administrators of such a person.
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ARTICLE VII
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman of the board, or the president or a vice-president and the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by him in the
corporation. Certificates may be issued for partly paid shares, but the total
consideration to be paid and the amount already paid shall be specified in the
face on back of any such certificate. If the corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Where a certificate is countersigned (i) by a
transfer agent other than the corporation or its employee, or, (ii) by a
registrar other than the corporation or its employee, any other signature on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
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TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than fifty days prior to any other action. A
determination of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
shares or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
Section 7. The president or any vice-president and the
secretary or assistant secretary of this corporation are authorized to vote,
represent and exercise on behalf of this corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this corporation. The authority herein granted to said officers to vote or
represent on behalf of this corporation any and all shares held by this
corporation in any other corporation or corporations may be exercised either by
such officers in person or by any person authorized so to do by proxy or power
of attorney duly executed by said officers.
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ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interests
of the corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present an annual
report of the affairs of the corporation to the stockholders of the corporation
prior to each annual meeting of stockholders.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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ARTICLE IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed
or new by-laws may be adopted by stockholders holding more than 50% of the stock
of the corporation entitled to vote, or by the board of directors, when such
power is conferred upon the board of directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting.
URS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (the "Agreement") is
entered into this 13th day of July, 1999 (the "Effective Date") between MARTIN
M. KOFFEL ("Executive") and URS CORPORATION (the "Company"). This Agreement is
intended to provide Executive with a supplemental retirement benefit in addition
to the benefit that Executive will be eligible to receive following the
termination of his employment with the Company under the URS Corporation 401(k)
Retirement Plan. This Agreement is not intended to meet the qualification
requirements under Section 401 of the Code. Certain capitalized terms used in
this Agreement are defined in Article 8.
The Company and Executive hereby agree as follows:
ARTICLE 1
SCOPE OF AND CONSIDERATION FOR THIS AGREEMENT
1.1 Executive is currently employed by the Company.
1.2 The Company and Executive wish to set forth the supplemental
retirement benefit that Executive or his Beneficiary will be eligible to receive
following his termination of employment with the Company.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the Company
and Executive's continued employment with the Company.
1.4 This Agreement shall supersede any other agreement with the Company
relating to supplemental executive retirement benefits to be received by
Executive upon his termination of employment with the Company. This Agreement is
not intended to supersede any other agreement into which Executive and the
Company have entered including, but not limited to, employment agreements, stock
option agreements, and deferred compensation agreements.
ARTICLE 2
AMOUNT OF BENEFIT
Executive shall be eligible to receive a benefit under this Agreement
following his termination of employment with the Company (the "Benefit"). The
Benefit shall be an annual amount, payable for the life of the Executive with a
guarantee of payments for at least ten (10) years, equal to (a) a percentage of
Executive's Final Average Compensation, which percentage shall be determined
based on Executive's age at his termination of employment as set forth in the
following table (with interpolation of percentages for ages between those whole
years specified based on the number of complete weeks beyond a specified whole
year divided by 52), reduced
1.
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by (b) the annual Social Security benefit to which Executive is entitled at the
time of earliest eligibility:
Executive's Age at Termination of Employment Applicable Percentage
65 or older 50%
64 40%
63 30%
62 20%
61 or younger 10%
If Executive's employment with the Company is terminated (a) by the Company or
Executive for any reason within thirteen (13) months following a Change in
Control or (b) by the Company for any reason following the occurrence of a
Potential Change in Control and within six (6) months prior to the occurrence of
a Change in Control, Executive's Benefit shall be calculated as if Executive's
age at termination of employment were his actual age plus an additional three
(3) years. If Executive terminates employment with the Company after attaining
age sixty-five (65), the Benefit shall be the greater of (a) the Benefit
computed as of the date of Executive's termination of employment with the
Company or (b) the Actuarial Equivalent (to reflect later commencement) of the
Benefit computed as if it commenced as of the first day of the month coinciding
with or next following the date of Executive's sixty-fifth (65th) birthday.
ARTICLE 3
TIMING OF BENEFIT PAYMENT
Payment of the Benefit shall commence on the first day of the month
following the month in which occurs the Executive's termination of employment
with the Company; provided, however, that Executive may, upon executing this
Agreement or thereafter, elect such later date upon which Executive's Benefit
payments shall commence following termination of his employment. Such election
of a Benefit payment commencement date shall be irrevocable; provided, however,
that Executive may change his election of a Benefit payment commencement date if
the election to change the Benefit payment commencement date is made at least
one (1) year prior to the date that Benefit payments actually commence to
Executive. If Executive elects a change in the commencement date of Benefit
payments and such election is made less than one (1) year prior to the date that
Benefit payments actually commence to Executive, then such election change shall
not be effective until one (1) year from the date the election change is made,
and Benefit payments scheduled to be made during such 1-year period shall be
paid on schedule. If Executive does not elect a Benefit commencement date prior
to his termination of employment with the Company, he shall be deemed to have
elected to begin receiving Benefit payments on the first day of the month
following the month in which his employment with the Company terminates.
2.
<PAGE>
ARTICLE 4
FORM OF BENEFIT PAYMENT
4.1 Executive shall, upon executing this Agreement or thereafter, elect
the form in which his Benefit shall be distributed. Such election of a
distribution form shall be irrevocable; provided, however, that Executive may
change his election of a distribution form if such election is made no later
than one (1) year prior to the date that Benefit payments actually commence to
Executive. If Executive elects a change in the distribution form of his Benefit
and such election is made less than one (1) year prior to the date that Benefit
payments actually commence to Executive, then such election change shall be
ineffective, and the Benefit shall be distributed according to Executive's
immediately prior election. If Executive does not elect a distribution form
prior to becoming eligible to receive a Benefit under this Agreement, he shall
be deemed to have elected the normal form of Benefit pursuant to Section 4.2(a).
4.2 Executive may elect a distribution form for his Benefit from among
the following forms:
(a) The normal form of Benefit is a life annuity with a ten
(10) year term certain. This form of Benefit shall be paid in equal monthly
installments for the longer of the life of Executive or ten (10) years.
(b) The following optional forms of Benefit shall each be
calculated to be the Actuarial Equivalent of the normal form of Benefit:
(i) A joint and survivor annuity shall be paid in
equal monthly installments for the life of Executive, and after Executive's
death, a fifty percent (50%) continuation of such installments shall be paid to
Executive's Beneficiary for the life of such Beneficiary.
(ii) A single lump sum payment to Executive.
ARTICLE 5
DEATH OF EXECUTIVE
5.1 If Executive should die prior to the commencement of Benefit
payments, Executive's Beneficiary shall be entitled to receive a death benefit
in the form of an annuity for the life of such Beneficiary. Such life annuity
shall be payable in equal monthly installments, the Actuarial Equivalent value
of which shall be equal to the value of the lump sum Benefit, if any, Executive
would have received pursuant to Section 4.2(b)(ii) above if he had terminated
his employment with the Company on the day before his death and had received
such Benefit on such day; provided, however, that if the Beneficiary is the
Executive's estate, such death benefit shall be paid in the form of a single
lump sum. The foregoing death benefit shall be paid, or commence to be paid,
within thirty (30) days following Executive's death.
5.2 If Executive should die after commencing to receive Benefit
payments in the form of a life annuity with a ten (10) year term certain,
Executive's Beneficiary shall be entitled to
3.
<PAGE>
receive a death benefit equal to the value of the remaining ten (10) year term
certain payments. Such Benefit will be paid in monthly installments for the
remainder of the ten (10) year life term; provided, however, that if the
Beneficiary is the Executive's estate, the Actuarial Equivalent of the Benefit
shall be paid in the form of a single lump sum. The foregoing death benefit
shall be paid, or commence to be paid, within thirty (30) days following
Executive's death.
ARTICLE 6
POST-RETIREMENT HEALTH INSURANCE COVERAGE
Following the later of (i) Executive's termination of employment or
(ii) the expiration of any extended period of Company-paid health insurance
coverage provided for in Executive's employment agreement with the Company,
Executive shall be entitled, at his expense but at the Company's group rates, to
continue participation in the health insurance programs maintained by the
Company. During Executive's life, such coverage shall be extended to Executive
and his dependents who qualify as such under the terms of the Company's health
insurance programs. Following Executive's death, such coverage shall continue to
be available to Executive's surviving spouse, at her expense but at the
Company's group rates, for her lifetime. To the extent that the Company finds it
impossible to cover Executive or his surviving spouse or dependents under its
health insurance programs, the Company shall arrange for Executive or his
surviving spouse, at their expense but at a rate equivalent to the Company's
group rates, to be provided with an individual policy providing substantially
the same level of coverage as the Company's health insurance programs.
ARTICLE 7
FUNDING
Benefits payable under this Agreement shall be "unfunded," as that term
is used in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(a)(6) of ERISA with
respect to unfunded plans maintained primarily for the purpose of providing
deferred compensation to a select group of management or highly compensated
employees, and the Company shall administer this Agreement in a manner that will
ensure that benefits are unfunded and that Executive will not be considered to
have received a taxable economic benefit prior to the time at which benefits are
actually payable hereunder. Accordingly, the Company shall not be required to
segregate or earmark any of its assets for the benefit of Executive or his
spouse or other Beneficiary, and each such person shall have only a contractual
right against the Company for benefits hereunder. The rights and interests of
Executive under this Agreement shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge or encumbrance by
Executive or any person claiming under or through Executive, nor shall they be
subject to the debts, contracts, liabilities or torts of Executive or anyone
else prior to payment. Notwithstanding the foregoing, the Company, in its sole
discretion, may establish a grantor ("rabbi") trust for the purpose of providing
benefits under this Agreement; provided, however, that the establishment of such
a trust will not render this Agreement other than "unfunded" as that term is
used in Sections 201(2), 301(a)(3), 401(a)(1), and 402(a)(6) of ERISA, and
provided, further, however, that in the event of a Change in Control and not
later than thirty (30) days thereafter, the Company shall deposit in such a
rabbi trust, the form of which is attached hereto as Exhibit A and whose assets
shall be used exclusively and irrevocably to provide benefits to Executive
(subject, however, to
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the claims of the general creditors of the Company) pursuant to this Agreement,
an amount of cash or marketable securities (other than securities issued by the
Company or any of its affiliates, or by any person who becomes an affiliate of
the Company as a result of a Change in Control or any of such person's
affiliates) equal in value to the lump sum payment that would be payable to
Executive if, on the effective date of such Change in Control, he were to
terminate employment with the Company having attained age 65.
ARTICLE 8
DEFINITIONS
For purposes of this Agreement, the following terms are defined as
follows:
8.1 "Actuarial Equivalent" shall mean a form of Benefit (including a
lump sum payment) differing in time or manner of payment from the normal form of
Benefit set forth in Section 4.2(a) but having the same present value when
computed using the following actuarial assumptions:
Mortality Table: the table specified in Section
417(e)(3)(A)(ii)(I) of the Code.
Interest Rate: the annual rate of interest on 30-year Treasury
securities for the month preceding the date Benefit payments
commence.
However, for purposes of clause (b) of the final sentence of Article 2, only the
Interest Rate (and not the Mortality Table) shall apply.
8.2 "Board" shall mean the Board of Directors of URS Corporation or of
a successor to URS Corporation, as described in Section 11.9.
8.3 "Beneficiary" shall mean the beneficiary designated by Executive to
receive benefits under this Agreement after Executive's death. If Executive
designates no Beneficiary, or if the designated Beneficiary does not survive
Executive, the Beneficiary shall be Executive's surviving spouse or, if none,
Executive's estate.
8.4 "Change in Control" shall mean the occurrence of any of the
following events after the Effective Date:
(a) A change in control required to be reported pursuant to
Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act;
(b) A change in the composition of the Board, as a result of
which fewer than two-thirds of the directors are directors who either (i) had
been directors of the Company twenty-four (24) months prior to such change or
(ii) were elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the directors who had been directors of the
Company twenty-four (24) months prior to such change and who were still in
office at the time of the election or nomination (the directors described in the
foregoing clauses (i) and (ii) hereinafter referred to as "Incumbent
Directors"); or
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(c) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) by the acquisition or aggregation of securities is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's 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:
(i) the beneficial ownership by a person of twenty
percent (20%) or more, but less than a majority, of the Base Capital Stock in
the ordinary course of such person's business and not with the purpose or effect
of changing or influencing the control of the Company, and otherwise in a
situation where the person is eligible to file a short-form statement on
Schedule 13G under Rule 13d-1 under the Exchange Act with respect to such
beneficial ownership, shall be disregarded;
(ii) any change in the relative beneficial ownership
of the Company'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 the Company; and
(iii) the beneficial ownership by Richard C. Blum &
Associates, Inc. ("RCBA") or any person "affiliated" (within the meaning of the
Exchange Act) with RCBA (collectively, the "RCBA Group") of (w) shares of the
Company's Series B Preferred Stock (x) additional shares of Series B Preferred
Stock issued in payment of dividends on the Series B Preferred Stock, (y)
additional shares of the Company's Common Stock issued upon the conversion of
the Series B Preferred Stock in accordance with its terms, and (z) shares of
other securities of the Company issued in exchange for the Series B Preferred
Stock in accordance with its terms (collectively, the "RCBA Preferred Investment
Shares"), shall be disregarded unless and until the RCBA Group becomes the
beneficial owner, directly or indirectly, of securities of the Company
(including the RCBA Preferred Investment Shares) representing more than fifty
percent (50%) of the Base Capital Stock; provided that the beneficial ownership
of all or a portion of the RCBA Preferred Investment Shares by a third person
who acquires such shares through purchase, assignment or other transfer from
RCBA or another member of the RCBA Group, and the beneficial ownership by a
third person not affiliated with the RCBA Group as of the date of this Agreement
who acquires control of RCBA or the RCBA Group, shall not be disregarded.
8.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
8.6 "Compensation" shall mean the sum of all cash salary compensation
received by Executive from the Company for his service as an employee plus the
target (not actual) bonus compensation established for Executive. Such target
bonus compensation shall count as Compensation under this Agreement as of the
first day of each of the Company's fiscal years, or of any longer period, with
respect to which such target bonus has been established, and shall be deemed to
accrue ratably during each month of such year or longer period.
6.
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8.7 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
8.8 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
8.9 "Final Average Compensation" shall mean the average annual
Compensation of Executive during the thirty-six (36) consecutive months during
the final one hundred twenty (120) months of Executive's employment with the
Company in which such average Compensation was highest.
8.10 "Potential Change in Control" shall mean the occurrence of any of
the following after the Effective Date:
(a) an event described in Section 8.4(c), but substituting
"ten percent (10%)" for "twenty percent (20%)," without the approval of a
majority of the Incumbent Directors;
(b) the institution by any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) of a tender offer to acquire ten
percent (10%) or more of the combined voting power of the Company's Base Capital
Stock without the approval of a majority of the Incumbent Directors prior to or
within twenty (20) business days following such offer; or
(c) a public announcement or receipt by the Board of a
proposal of any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) or group of persons to merge into, combine with or acquire all or
substantially all of the assets or business of the Company without the approval
of a majority of the Incumbent Directors within twenty (20) business days
following such public announcement or receipt.
ARTICLE 9
ADMINISTRATION AND OPERATION OF THE AGREEMENT
The Company shall have the authority to control and manage the
operation and administration of this Agreement. The Company has the sole
discretion to make such rules, regulations, and interpretations of this
Agreement and to make such computations and shall take such other actions to
administer this Agreement as it may deem appropriate in its sole discretion.
Such rules, regulations, interpretations, computations, and other actions shall
be conclusive and binding upon all persons. The Company may engage the services
of such persons or organizations to render advice or perform services with
respect to its responsibilities under this Agreement as it shall determine to be
necessary or appropriate. Such persons or organizations may include (without
limitation) actuaries, attorneys, accountants and consultants.
ARTICLE 10
CLAIMS, INQUIRIES AND APPEALS
10.1 Applications for Benefits and Inquiries. Applications for benefits
shall be in writing, signed and submitted to the Company at its primary office
location.
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10.2 Claims Procedure. The Company and Executive agree that all
disputes regarding benefits under this Agreement shall be resolved in accordance
with a reasonable claims procedure complying with 29 CFR ss.2560.503-1, as such
regulations of the United States Department of Labor may from time to time be
amended. For purposes of such a procedure, any denied claim shall be subject to
review by the Compensation Committee of the Board.
10.3 Exhaustion of Remedies. No legal action for benefits under this
Agreement may be brought until Executive or other claimant has pursued a
resolution of the benefits claim in accordance with Section 10.2.
ARTICLE 11
GENERAL PROVISIONS
11.1 Employment Status. This Agreement does not constitute a contract
of employment or impose upon Executive any obligation to remain as an employee,
nor does it impose on the Company any obligation (i) to retain Executive as an
employee, (ii) to change the status of Executive as an at-will employee, or
(iii) to change the Company's policies regarding termination of employment.
11.2 Notices. Any notices provided hereunder must be in writing, and
such notices or any other written communication shall be deemed effective upon
the earlier of personal delivery (including personal delivery by facsimile) or
the third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive under
the terms of this Agreement shall be delivered to Executive either in person or
at the address as listed in the Company's payroll records.
11.3 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
11.4 Waiver. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
11.5 Complete Agreement. This Agreement constitutes the entire
agreement between Executive and the Company and is the complete, final, and
exclusive embodiment of their agreement with regard to this subject matter,
wholly superseding all written and oral agreements with respect to supplemental
executive retirement benefits. It is entered into without reliance on any
promise or representation other than those expressly contained herein.
11.6 Amendment Or Termination Of Agreement. This Agreement may be
changed or terminated only upon the mutual written consent of the Company and
Executive. The written
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consent of the Company to a change or termination of this Agreement must be
signed by an executive officer of the Company after such change or termination
has been approved by the Board.
11.7 Counterparts. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
11.8 Headings. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof or to affect the meaning thereof.
11.9 Successors And Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and his Beneficiary, and
the Company, and any surviving entity resulting from a Change in Control and
upon any other person who is a successor by merger, acquisition, consolidation
or otherwise to the business formerly carried on by the Company, and their
respective successors, assigns, heirs, executors and administrators, without
regard to whether or not such person actively assumes any rights or duties
hereunder.
11.10 Non-Alienation. No benefit under this Agreement may be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered or
charged, and any attempt to do so will be void.
11.11 Legal Construction. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of California, without regard to such state's conflict of laws rules,
to the extent that such laws are not preempted by ERISA.
11.12 Non-Publication. The parties mutually agree not to disclose
publicly the terms of this Agreement except to their respective advisors (e.g.,
attorneys, accountants) or to the extent that disclosure is mandated by
applicable law.
11.13 Other Documents. In the event of a conflict between the text of this
Agreement and any summary, description or other information regarding this
Agreement, the text of this Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
Effective Date written above.
URS CORPORATION MARTIN M. KOFFEL
BY: /s/ KENT P. AINSWORTH /s/ MARTIN M. KOFFEL
---------------------------------- ------------------------------
KENT P. AINSWORTH
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
9.
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EXHIBIT A
TRUST UNDER URS CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This AGREEMENT made this ____ of ________________ by and between URS
CORPORATION (the "Company") and ___________________ (the "Trustee").
WHEREAS, the Company and Martin M. Koffel ("Executive") have entered
into a Supplemental Executive Retirement Agreement effective July 13, 1999 (the
"Agreement");
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Agreement with respect to Executive and his beneficiaries;
WHEREAS, Company wishes to establish a trust (hereinafter called the
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Executive and his beneficiaries in
such manner and at such times as specified in the Agreement;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Agreement as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Agreement;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee in trust [insert amount
deposited], which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of Executive, his beneficiaries, and general creditors of
the Company as herein set forth. Executive and his beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Agreement and this Trust Agreement shall
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be mere unsecured contractual rights of Executive and his beneficiaries against
Company. Any assets held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with Trustee
to augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor Executive or his
beneficiaries shall have any right to compel such additional deposits.
Notwithstanding the foregoing, in accordance with Article 7 of the Agreement,
Company, in the event of a Change in Control (as defined in the Agreement) and
not later than thirty (30) days thereafter, shall deposit into the Trust an
amount of cash or marketable securities (other than securities issued by the
Company or any of its affiliates, or by any person who becomes an affiliate of
the Company as a result of a Change in Control or any of such person's
affiliates) equal in value to the lump sum payment that would be payable to
Executive under the Agreement if, on the effective date of such Change in
Control, he were to terminate employment with the Company having attained age
65, and Trustee, in accordance with Section 8(e) hereof, shall enforce such
obligation.
SECTION 2. PAYMENTS TO EXECUTIVE AND HIS BENEFICIARIES
(a) Company shall deliver to Trustee a copy of the Agreement and a
schedule (the "Payment Schedule") that indicates the amounts payable in respect
of Executive (and his beneficiaries) and provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Agreement), and the time of commencement for payment of such amounts. Except as
provided in (c) below, Trustee shall make payments to the Executive and his
beneficiaries in accordance with the Agreement and such Payment Schedule.
Trustee shall make provision for the reporting and withholding of any federal,
state or local taxes that may be required to be withheld with respect to the
payment of benefits pursuant to the terms of the Agreement and shall pay amounts
withheld to the appropriate taxing authorities or determine that such amounts
have been reported, withheld and paid by Company.
(b) The entitlement of Executive or his beneficiaries to benefits under
the Agreement shall be determined solely under the terms of the Agreement, and
any claim for such benefits shall be considered and reviewed by Trustee based on
Trustee's reasonable interpretation of the Agreement.
(c) Company may make payment of benefits directly to Executive or his
beneficiaries as they become due under the terms of the Agreement. Company shall
notify Trustee of its decision to make payment of benefits directly prior to the
time amounts are payable to Executive or his beneficiaries. In addition, if the
principal of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Agreement, Company
shall make the balance of each such payment as it falls due. Trustee shall
notify Company where principal and earnings are not sufficient.
2.
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SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Executive and his
beneficiaries if Company is Insolvent. Company shall be considered "Insolvent"
for purposes of this Trust Agreement if (i) Company is unable to pay its debts
as they become due, or (ii) Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section l(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set forth
below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in writing
to Trustee that Company has become Insolvent, Trustee shall determine whether
Company is Insolvent and, pending such determination, Trustee shall discontinue
payment of benefits to Executive or his beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to be a
creditor alleging that Company is Insolvent, Trustee shall have no duty to
inquire whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Executive or his beneficiaries
and shall hold the assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any way diminish any rights
of Executive or his beneficiaries to pursue their rights as general creditors of
Company with respect to benefits due under the Agreement or otherwise.
(4) Trustee shall resume the payment of benefits to Executive
or his beneficiaries in accordance with Section 2 of this Trust Agreement only
after Trustee has determined that Company is not Insolvent (or is no longer
Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(a) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Executive or his beneficiaries under the terms of the Agreement for the period
of such discontinuance, less the aggregate amount of any payments made to
Executive or his beneficiaries by Company in lieu of the payments provided for
hereunder during any such period of discontinuance.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, Company shall have no right or
power to direct Trustee to return to Company or to divert to others any of the
Trust assets before all payment of
3.
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benefits have been made to Executive and his beneficiaries pursuant to the terms
of the Agreement.
SECTION 5. INVESTMENT AUTHORITY.
(a) In General. With respect to any and all money or other property
received by Trustee from Company, Trustee is authorized to act as an absolute
owner of the assets of the Trust and, not in limitation of, but in amplification
of, the foregoing:
(1) To invest and reinvest the assets of the Trust, without
distinction between principal and income;
(2) To retain and manage any property at any time received by
it, including any real, personal and mixed property and any tangible or
intangible property of any kind and wherever located, whether or not such
property is unproductive of income;
(3) To sell for cash or on credit, to grant options, convert,
redeem, exchange for other securities or other property, or otherwise to dispose
of any securities or other property at any time held;
(4) To exchange, mortgage, or lease any such property and to
convey, transfer, or dispose of any such property on such terms and conditions
as Trustee deems appropriate;
(5) To hold cash uninvested for any reasonable period of time
without liability for interest, pending investment thereof or the payment of
expenses or benefits therewith;
(6) To collect and receive any and all money and other
property of whatever kind or nature due or owing or belonging to the Trust and
to give full discharge thereto; and to extend the time of payment of any
obligation at any time owing to the Trust, as long as such extension is for a
reasonable period and continues at reasonable interest;
(7) To pay, contest, or settle any claim by or against the
Trust by compromise, arbitration or otherwise; and to release, in whole or in
part, any claim belonging to the Trust to the extent that the claim is
uncollectible;
(8) To prosecute or defend actions, claims or proceedings for
the protection of Trust assets and of Trustee in the performance of its duties;
(9) To register Trust property in Trustee's own name, in the
name of a nominee or in bearer form, provided Trustee's records and accounts
show that such property belongs to the Trust;
(10) To deposit Trust assets in any commercial, savings or
savings and loan accounts, common funds, mutual funds or certificates of
deposits with any bank or similar financial institution, and to keep such
portion of the Trust assets in cash or cash balances as Trustee may, from time
to time, deem to be in the best interests of the Trust, without liability for
interest thereon;
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(11) To employ in the management of the assets of the Trust,
accountants, attorneys, actuaries and any other persons, firms, or corporations
as Trustee may designate, and to pay from the assets of the Trust the reasonable
expenses and compensation of such parties;
(12) To consult with legal counsel (who may or may not also be
counsel to Company) concerning any question that may arise with reference to its
duties under the Trust or the Agreement;
(13) To have all the rights, powers, privileges and
responsibilities of an owner of securities, including (without limiting the
foregoing) the power to vote or refrain from voting, to give general or limited
proxies, to pay calls, assessments, and other sums; to assent to or oppose
corporate sales or other acts; to participate in or oppose any voting trusts,
pooling agreements, foreclosures, reorganizations, consolidations, mergers and
liquidations and, in connection therewith, to give warranties and
indemnifications and to deposit securities with and transfer title to any
protective or other committee; to exchange, exercise or sell stock subscription
or conversion rights; and, subject to any limitations elsewhere in the Trust
relative to investments by Trustee, to accept and retain as an investment
hereunder any securities received through the exercise of any of the foregoing
powers;
(14) To continue to exercise any powers and discretion herein
granted for a reasonable time after the termination of the Trust; and
(15) To do all other acts Trustee may deem necessary or proper
to carry out any of the foregoing powers, or otherwise for the protection of the
assets of the Trust.
Notwithstanding the foregoing, Trustee shall not (i) maintain the indicia of
ownership of any Trust assets outside the jurisdiction of the district courts of
the United States or (ii) invest in securities (including stock or rights to
acquire stock) or obligations issued by Company or its affiliates, other than a
de minimis amount held in common investment vehicles in which Trustee invests.
(b) Custodian. If Trustee is not a bank or trust company, Trustee may
appoint a bank or trust company to act as custodian (the "Custodian") for
securities and any other Trust assets. Any such appointment shall terminate when
a bank or trust company begins to serve as Trustee hereunder. The Custodian may
be appointed to keep the deposited property, to collect and receive the income
and principal, and to hold, invest, disburse or otherwise dispose of the
property or its proceeds (specifically including selling and purchasing
securities, and delivering securities sold and receiving securities purchased)
upon the order of Trustee.
SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as
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shall be agreed upon in writing between Company and Trustee. Within sixty (60)
days following the close of each calendar year and within thirty (30) days after
the removal or resignation of Trustee, Trustee shall deliver to Company a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Agreement or this Trust and is given in
writing by Company. In the event of a dispute between Company and a party,
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) In the event that the Company fails to deposit assets in the Trust
within thirty (30) days following a Change in Control (as defined in the
Agreement) in accordance with the final sentence of Article 7 of the Agreement,
Trustee shall take all appropriate action, including the commencement of a legal
action against the Company, to enforce such obligation; provided, however, that
Trustee shall not be required to take any such action unless the assets of the
Trust are, at the time in question, sufficient to pay all costs that Trustee
expects to incur in taking such action.
(f) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of
6.
<PAGE>
the policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(g) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective thirty (30) days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Except as provided in paragraph (c) of this section, Trustee may be
removed by Company on thirty (30) days' notice or upon shorter notice accepted
by Trustee.
(c) Upon a Change in Control, as defined in the Agreement, Trustee may
not be removed by Company for one (1) year.
(d) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within sixty (60) days after receipt of
notice of resignation, removal or transfer, unless Company extends the time
limit.
(e) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed prior to a Change in Control, as
defined in the Agreement, Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer.
7.
<PAGE>
(b) If Trustee resigns or is removed following a Change in Control, as
defined in the Agreement, Trustee may appoint any third party such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or removal.
The appointment of a successor Trustee shall be effective when accepted in
writing by the new Trustee. The new Trustee shall have all the rights and powers
of the former Trustee, including ownership rights in Trust assets. The former
Trustee shall execute any instrument necessary or reasonably requested by the
successor Trustee to evidence the transfer.
(c) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Agreement or shall make the Trust
revocable.
(b) The Trust shall not terminate until the date on which Executive and
his beneficiaries are no longer entitled to benefits pursuant to the terms of
the Agreement. Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of Executive or his beneficiaries entitled to
payment of benefits pursuant to the terms of the Agreement, Company may
terminate this Trust prior to the time that all benefit payments under the
Agreement have been made. All assets in the Trust at termination shall be
returned to Company.
(d) Sections 10, 11(b), and this 12(d) of this Trust Agreement may not
be amended by Company for one (1) year following a Change in Control, as defined
in the Agreement.
SECTION 13. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Executive and his beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of California.
8.
<PAGE>
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be _________________.
COMPANY: TRUSTEE:
URS CORPORATION [________________________________]
By: ___________________________________ By: _______________________________
Name: _________________________________ Name: _____________________________
Title: ________________________________ Title: ____________________________
9.
URS CORPORATION 1991 STOCK INCENTIVE PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
This NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement"), entered
into as of March 23, 1999, between URS CORPORATION, a Delaware corporation (the
"Company"), and MARTIN M. KOFFEL (the "Optionee"),
WITNESSETH
WHEREAS, the Company's Board of Directors has established the URS
Corporation 1991 Stock Incentive Plan in order to provide selected employees and
consultants of the Company and its Subsidiaries with an opportunity to acquire
Common Shares of the Company; and
WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the Nonstatutory Stock
Option described in this Agreement to the Optionee as an inducement to enter
into or remain in the service of the Company and as an incentive for
extraordinary efforts during such service.
NOW, THEREFORE, it is agreed as follows:
I. GRANT OF OPTION.
A. Option. On the terms and conditions stated below, the Company hereby grants
to the Optionee the option to purchase Three Hundred Thousand (300,000) Common
Shares for the sum of fifteen dollars and seventy-five cents ($15.75) per Common
Share, which is agreed to be 100% of the fair market value thereof (as defined
in the Plan) as of the Date of Grant. This option is not intended to be an
Incentive Stock Option.
B. Stock Plan. This option is granted pursuant to the Plan, a copy of which the
Optionee acknowledges having received, read and understood. The provisions of
the Plan are incorporated into this Agreement by this reference.
II. NO TRANSFER OR ASSIGNMENT OF OPTION.
Except as otherwise provided in this Agreement, this option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to sale under execution, attachment or similar process.
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of this option, or of any right or privilege conferred hereby, contrary to the
provisions hereof, or upon any attempted sale under any execution, attachment or
similar process upon the rights and privileges conferred hereby, this option and
the rights and privileges conferred hereby shall immediately become null and
void.
1.
<PAGE>
III. RIGHT TO EXERCISE.
A. Vesting. Subject to the conditions stated herein, this option shall
become exercisable in installments as follows:
Date Percentage Exercisable
March 23, 2000 20%
March 23, 2001 40%
March 23, 2002 60%
March 23, 2003 80%
March 23, 2004 100%
In addition, this option shall become exercisable in its entirety in the event
that (i) a Change in Control occurs with respect to the Company or (ii) the
Optionee's employment as a Key Employee terminates by reason of his death, Total
and Permanent Disability or retirement at or after age 65.
B. Minimum Number. This option shall not be exercised for less than 100
Common Shares at any one time, except that it may be exercised for all of the
Common Shares then remaining subject to option, if less than 100 Common Shares.
IV. EXERCISE PROCEDURES.
A. Notice of Exercise. The Optionee or the Optionee's representative
may exercise this option by giving written notice to the Secretary of the
Company pursuant to Section XI.D hereof. The notice shall specify the election
to exercise this option and the number of Common Shares for which it is being
exercised. The notice shall be signed by the person or persons exercising this
option. In the event that this option is being exercised by the representative
of the Optionee, the notice shall be accompanied by proof (satisfactory to the
Company) of the representative's right to exercise this option. The Optionee or
the Optionee's representative shall deliver to the Secretary of the Company, at
the time of giving the notice, payment in a form described in Section V hereof
for the full amount of the Purchase Price.
B. Issuance of Shares. After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the Common
Shares as to which this option has been exercised, registered in the name of the
person exercising this option (or in the names of such person and his spouse as
community property or as joint tenants with right of survivorship). The Company
shall cause such certificate or certificates to be delivered to or upon the
order of the person exercising this option.
2.
<PAGE>
V. PAYMENT FOR STOCK.
The entire Purchase Price shall be paid in lawful money of the United
States of America or in one of the forms described in Sections 6.2, 6.3 and 6.4
of the Plan.
VI. TERM AND EXPIRATION.
A. Basic Term. This option shall in any event expire on the date 10
years after the Date of Grant.
B. Termination of Service (Except by Death). If the Optionee's service
as a Key Employee terminates for any reason other than death, then this option
shall expire on the earliest of the following occasions:
1. The expiration date determined pursuant to Subsection (a)
above;
2. The date three months after the termination of the
Optionee's service as a Key Employee for any reason other than retirement from
the Company on or after the date the Optionee attains age 65 or Total and
Permanent Disability;
3. The date 12 months after the termination of the Optionee's
service as a Key Employee because of his Total and Permanent Disability; or
4. The date three years after the Optionee's retirement from
the Company if such retirement occurs on or after the date on which the Optionee
attains age 65.
The Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable before the Optionee's service terminated or became
exercisable as a result of the termination. The balance of this option shall
lapse when the Optionee's service as a Key Employee terminates. In the event
that the Optionee dies after the termination of service but before the
expiration of this option, all or part of this option may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired this option directly from the Optionee by bequest,
beneficiary designation or inheritance, but only to the extent that this option
had become exercisable before the Optionee's service terminated.
C. Death of Optionee. If the Optionee dies as a Key Employee, then this
option shall expire on the earlier of the following dates:
1. The expiration date determined pursuant to Subsection VI.A
above; or
2. The date 12 months after the Optionee's death.
All or part of this option may be exercised at any time before its expiration
under the preceding sentence by the executors or administrators of the
Optionee's estate or by any person who has acquired this option directly from
the Optionee by bequest, beneficiary designation or inheritance, but only to the
extent that this option had become exercisable before the Optionee's
3.
<PAGE>
death or became exercisable as a result of the Optionee's death. The balance of
this option shall lapse when the Optionee dies.
D. Leaves of Absence. For purposes of this Section VI, the Key Employee
relationship shall be deemed to continue during any period when the Optionee is
on military leave, sick leave or other bona fide leave of absence (to be
determined in the sole discretion of the Committee).
VII. LEGALITY OF INITIAL ISSUANCE.
No Common Shares shall be issued upon the exercise of this option
unless and until the Company has determined that:
a. It and the Optionee have taken any actions required to
register the Common Shares under the Securities Act or to perfect an exemption
from the registration requirements thereof;
b. Any applicable listing requirement of any stock exchange on
which Common Shares are listed has been satisfied; and
c. Any other applicable provision of state or federal law has
been satisfied.
VIII. NO REGISTRATION RIGHTS.
The Company may, but shall not be obligated to, register or qualify the
sale of Common Shares under the Securities Act or any other applicable law. The
Company shall not be obligated to take any affirmative action in order to cause
the sale of Common Shares under this Agreement to comply with any law.
IX. RESTRICTIONS ON TRANSFER OF SHARES.
A. Restrictions. Regardless of whether the offering and sale of Common
Shares under the Plan have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the Company may
impose restrictions upon the sale, pledge or other transfer of such Common
Shares (including the placement of appropriate legends on stock certificates)
if, in the judgment of the Company and its counsel, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act,
the securities laws of any state or any other law or with restrictions imposed
by the Company's underwriters.
B. Investment Intent at Exercise. In the event that the sale of Common
Shares under the Plan is not registered under the Securities Act but an
exemption is available which requires an investment representation or other
representation, the Optionee shall represent and agree at the time of exercise
that the Common Shares being acquired upon exercising this option are being
acquired for investment, and not with a view to the sale or distribution
thereof, and shall make such other representations as are deemed necessary or
appropriate by the Company and its counsel.
4.
<PAGE>
C. Legend. In the event that certificates evidencing Common Shares are
acquired under this Agreement in an unregistered transaction, they shall bear
the following restrictive legend (and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable law):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
D. Removal of Legends. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Common Shares
sold under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Common Shares but lacking such legend.
E. Administration. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section IX shall be
conclusive and binding on the Optionee and all other persons.
X. SHARES AND ADJUSTMENTS.
A. General. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spinoff or a similar occurrence,
the Committee shall make appropriate adjustments in one or both of (1) the
number of Common Shares covered by this option or (2) the Exercise Price.
B. Reorganizations. In the event that the Company is a party to a
merger or other reorganization, this option shall be subject to the agreement of
merger or reorganization. Such agreement may provide, without limitation, for
(1) the assumption of this option by the surviving corporation or its parent,
(2) its continuation by the Company, if the Company is a surviving corporation,
(3) the acceleration of its exercisability or (4) payment of a cash settlement
equal to the difference between the amount to be paid for one Common Share under
such agreement and the Exercise Price.
C. Reservation of Rights. Except as provided in this Section X, the
Optionee shall have no rights by reason of (1) any subdivision or consolidation
of shares of stock of any class, (2) the payment of any dividend or (3) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of the
Common Shares subject to this option. The grant of this option shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
5.
<PAGE>
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
XI. MISCELLANEOUS PROVISIONS.
A. Withholding Taxes. In the event that the Company determines that it
is required to withhold foreign, federal, state or local tax as a result of the
exercise of this option, the Optionee, as a condition to the exercise of this
option, shall make arrangements satisfactory to the Company to enable it to
satisfy all withholding requirements. Share withholding shall be available to
the extent provided in Section 11.2 of the Plan. Notwithstanding the foregoing,
the Company shall not be authorized to withhold Common Shares at rates in excess
of the minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes.
B. Rights As a Stockholder. Neither the Optionee nor the Optionee's
representative shall have any rights as a stockholder with respect to any Common
Shares subject to this option until such Common Shares have been issued in the
name of the Optionee or the Optionee's representative.
C. No Employment Rights. Nothing in this Agreement shall be construed
as giving the Optionee the right to be retained as a Key Employee. The Company
reserves the right to terminate the Optionee's service at any time, with or
without cause (subject to any employment agreement between the Optionee and the
Company).
D. Notice. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail
with postage and fees prepaid and addressed to the party entitled to such notice
at the address shown below such party's signature on this Agreement, or at such
other address as such party may designate by 10 days' advance written notice to
the other party to this Agreement.
E. Entire Agreement. This Agreement and the Plan constitute the entire
contract between the parties hereto with regard to the subject matter hereof.
F. Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State.
XII. DEFINITIONS.
"Agreement" shall mean this Nonstatutory Stock Option Agreement.
"Change in Control" shall mean the occurrence of any of the following
events after the Date of Grant:
a. A change in control required to be reported pursuant to
Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act;
6.
<PAGE>
b. A change in the composition of the Board of Directors of
the Company (the "Board"), as a result of which fewer than two-thirds of the
incumbent directors are directors who either (i) had been directors of the
Company 24 months prior to such change or (ii) were elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the
directors who had been directors of the Company 24 months prior to such change
and who were still in office at the time of the election or nomination; or
c. Any "person" (as such term is used in sections 13(d) and
14(d) of the Exchange Act) by the acquisition or aggregation of securities is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's 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:
(i) the beneficial ownership by a person of twenty
percent (20%) or more, but less than a majority, of the Base Capital Stock in
the ordinary course of such person's business and not with the purpose or effect
of changing or influencing the control of the Company, and otherwise in a
situation where the person is eligible to file a short-form statement on
Schedule 13G under Rule 13d-1 under the Exchange Act with respect to such
beneficial ownership, shall be disregarded;
(ii) any change in the relative beneficial ownership
of the Company'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 the Company; and
(iii) the beneficial ownership by Richard C. Blum &
Associates, Inc. ("RCBA") or any person "affiliated" (within the meaning of the
Exchange Act) with RCBA (collectively, the "RCBA Group") of (w) shares of the
Company's Series B Preferred Stock (x) additional shares of Series B Preferred
Stock issued in payment of dividends on the Series B Preferred Stock, (y)
additional shares of the Company's Common Stock issued upon the conversion of
the Series B Preferred Stock in accordance with its terms, and (z) shares of
other securities of the Company issued in exchange for the Series B Preferred
Stock in accordance with its terms (collectively, the "RCBA Preferred Investment
Shares"), shall be disregarded unless and until the RCBA Group becomes the
beneficial owner, directly or indirectly, of securities of the Company
(including the RCBA Preferred Investment Shares) representing more than fifty
percent (50%) of the Base Capital Stock; provided that the beneficial ownership
of all or a portion of the RCBA Preferred Investment Shares by a third person
who acquires such shares through purchase, assignment or other transfer from
RCBA or another member of the RCBA Group, and the beneficial ownership by a
third person not affiliated with the RCBA Group as of the date of this Agreement
who acquires control of RCBA or the RCBA Group, shall not be disregarded.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
7.
<PAGE>
"Committee" shall mean the committee of the Company's Board of
Directors described in Article 2 of the Plan.
"Common Share" shall mean one share of the common stock of the Company,
as adjusted in accordance with Section X (if applicable).
"Date of Grant" shall mean the date on which the Committee resolved to
grant this option, which is also the date as of which this Agreement is entered
into.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall mean the amount for which one Common Share may
be purchased upon exercise of this option, as specified in Section I.A.
"Incentive Stock Option" shall mean an employee incentive stock option
described in section 422(b) of the Code.
"Key Employee" shall mean (i) a key common-law employee of the Company
or of a Subsidiary, as determined by the Committee or (ii) a consultant who
provides services to the Company or a Subsidiary as an independent contractor
and who is not a member of the Company's Board of Directors.
"Plan" shall mean the URS Corporation 1991 Stock Incentive Plan, as in
effect on the Date of Grant.
"Purchase Price" shall mean the Exercise Price multiplied by the number
of Common Shares with respect to which this option is being exercised.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" shall mean any corporation, if the Company and/or one or
more other Subsidiaries own not less than 50% of the total combined voting power
of all classes of outstanding stock of such corporation.
"Total and Permanent Disability" shall mean that the Optionee is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than 12 months.
8.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its officer duly authorized to act on behalf of the
Committee, and the Optionee has personally executed this Agreement.
OPTIONEE URS CORPORATION
/s/ MARTIN M. KOFFEL By /s/ JOSEPH MASTERS
- ----------------------------- ----------------------------------
Martin M. Koffel Joseph Masters
Optionee's Address: Company's Address:
2772 Scott Street 100 California Street, Suite 500
San Francisco, California 94123 San Francisco, California 94111
9.
<TABLE> <S> <C>
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<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> APR-30-1999
<PERIOD-END> JUL-31-1999
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100,000
0
<COMMON> 157
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<TOTAL-LIABILITY-AND-EQUITY> 1,306,936
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