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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _________________TO_________________
COMMISSION FILE NUMBER 0-4643
ROY F. WESTON, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1501990
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1 WESTON WAY
WEST CHESTER, PENNSYLVANIA 19380-1499
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 701-3000
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
SERIES A COMMON STOCK (PAR VALUE $.10 PER SHARE)
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of Series A Common Stock reported
in the NASDAQ National Market System on March 14, 1997, was approximately
$25,230,000. For the purposes of calculation, all executive officers and
directors of the Company and all beneficial owners of more than 10% of the
Company's stock were considered affiliates. As of March 14, 1997, the Registrant
had outstanding 7,547,787 shares of Series A Common Stock ($.10 par value) and
2,105,394 shares of Common Stock ($.10 par value).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's 1996 Annual Report to Shareholders are incorporated by
reference into Part II of this report. Portions of the Company's Proxy Statement
to be filed with the Securities and Exchange Commission for the Annual Meeting
of Shareholders to be held on May 19, 1997, are incorporated by reference into
Part III of this report.
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TABLE OF CONTENTS
PART I
<S> <C> <C>
ITEM 1. BUSINESS 2
ITEM 2. PROPERTIES 11
ITEM 3. LEGAL PROCEEDINGS 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
EXECUTIVE OFFICERS OF THE REGISTRANT 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 13
ITEM 6. SELECTED FINANCIAL DATA 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS 14
ITEM 11. EXECUTIVE COMPENSATION 14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 14
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K 15
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PART I
ITEM 1. BUSINESS
GENERAL
Roy F. Weston, Inc. is a professional services organization that
provides a broad range of consulting, engineering and design, environmental
construction, and facilities, program and business management services to solve
environmental and health and safety problems associated with air, water, and
land pollution; hazardous material and toxic waste treatment and disposal;
workplace hazards; product use; and energy conservation. These services are made
available to governmental and industrial clients through the Company's staff of
professional and support personnel in offices and laboratories worldwide. The
Company assists its clients from the initial identification and definition of a
problem, through the planning, evaluation, and design stages, to the
implementation of cost-effective, technologically feasible, and politically
acceptable solutions. The Company's services include development of
cost-effective technologies and solutions to environmental problems; selection
of sites, obtaining of governmental permits and the preparation of
specifications and designs for constructing remedial systems and facilities;
construction, startup, and operation of facilities; laboratory analysis and
evaluation of samples of hazardous, toxic, and other environmentally significant
materials. The Company's services may be used individually or in combination, as
required, to meet its clients' needs.
Since its incorporation in 1957, the Company has been a pioneer in
providing solutions to environmental, health and safety problems. As
environmental concerns have grown in complexity and become the subject of
heightened public awareness and extensive governmental regulation, the Company's
strategy has been to build an organization with a high level of sophisticated
professional skills and a broad range of scientific, technological, and
management resources. The Company provides a total systems approach that
involves studying its clients' needs and designing cost-effective, customized
solutions that address those needs.
SERVICES
The Company provides its services by combining its professional skills
and technological resources in an integrated systems approach, which uses
technical information and program management capabilities as well as cost
control systems. The services performed by the Company for its clients typically
include one or more of the following: consultation with the client to determine
the nature and scope of a project; on-site collection of samples; on-site
monitoring and measurement of industrial discharges and emissions; analysis of
samples in the Company's laboratories or mobile testing units; identification
and evaluation of a problem and its impact; development and design of a process
for solving a problem; preparation of reports for obtaining regulatory agency
permits; design and preparation of drawings and specifications for constructing
a facility to effect a solution; construction of a facility or implementation of
a cleanup; and operation and maintenance of a facility.
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CONSULTING AND ENGINEERING
The Company's consulting and engineering services involve the
identification and characterization of a client's problems; the evaluation of
alternative solutions; and the selection, design, and development of a
technologically feasible, cost-effective, and politically acceptable solution.
These services use professionals from many different scientific and
technological disciplines to assess the long-term effects and the risks
associated with the ultimate environmental impact of clients' activities and
products. In performing feasibility studies and environmental impact and risk
assessments, the Company's professionals examine the relative effectiveness of
various technological approaches for achieving permanent solutions and ensuring
that additional environmental concerns are not created in the course of solving
the primary problem.
The Company applies its skills to all phases of environmental matters,
including those relating to hazardous and toxic substances; major program
management; sustainable development services; solid waste management; management
of wastewater, groundwater, and air resources; indoor air quality; health and
safety; and energy conservation.
HAZARDOUS AND TOXIC SUBSTANCES. Services relating to hazardous and toxic
substances include the assessment of potentially hazardous waste and toxic
materials; the reduction or elimination of sources of hazardous and toxic
materials; the undertaking of remedial investigation and engineering feasibility
studies; the operation of hazardous waste treatment systems; and consulting to
obtain government environmental permits. The Company provides engineering for
the destruction or detoxification and stabilization of hazardous waste.
MAJOR PROGRAM MANAGEMENT. Major program management involves all phases
of large-scale environmental and health and safety problems of industry and
government. The Company has the ability to accept overall responsibility for
siting, evaluating, designing, implementing, and managing environmental
programs, and to apply its diversified services, as appropriate, in an
integrated systems approach. The Company provides the management systems and the
direct involvement of its most senior management to deal with the complexities
of the underlying environmental problems, as well as the commitment of large
numbers of personnel at geographically dispersed sites for extended time frames.
The Company typically bids for contracts as the prime contractor and forms
subcontractor teams in those instances where subcontractors provide expertise
and staffing that will substantially enhance the Company's ability to obtain and
perform contracts. Subcontractors may include certain competitors of the
Company. Although the Company believes that major program management will be
increasingly used by industry as environmental issues become more challenging,
the primary market for major program management services is the federal
government.
SUSTAINABLE DEVELOPMENT SERVICES. The Company provides advice and
counsel to government and industry to help clients assess and reduce the total
environmental impact of their processes, products, and packaging by looking at
the full product life cycle from raw materials acquisition, through design,
manufacturing, distribution, use and reuse/recycling or disposal. The Company
also provides services to integrate environmental, economic, and social
considerations in its clients' businesses and operations, intended to improve
environmental and financial performance.
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SOLID WASTE MANAGEMENT. Solid waste services include planning, decision
making, and project implementation for recycling, composting, materials
processing, source reduction, waste-to-energy and landfill programs and
facilities. The Company provides total solid waste management services,
including permitting, siting, procurement, design, construction, testing, and
operation of solid waste facilities, as well as expertise in addressing public
awareness and acceptance issues that affect the success of solid waste programs
and facilities.
MANAGEMENT OF WASTEWATER, GROUNDWATER, AND AIR RESOURCES. Wastewater
management services include industrial and municipal feasibility studies,
engineering, economic evaluations, and design and consultation regarding the
operation of wastewater treatment facilities. Wastewater treatment facilities
are required by certain industries for the treatment of polluted water generated
by various manufacturing processes and by municipalities for the treatment of
sewage. The Company provides groundwater and surface water resource management
services, including water quality monitoring and assessment, studies of the
impact of surface and subsurface activities on aquifer systems, development of
water supplies, and development of resource management programs. Air resources
management services include siting and obtaining permits for air pollution
control facilities, sampling and monitoring emissions, regulatory compliance,
and designing and monitoring of facility construction and other systems for the
removal of particulate matter, acid gases, and other pollutants. Regulatory
compliance services include reviews of clients' facilities to determine current
and future degrees of compliance with pollution standards. Site assessment
reviews involve the inspection of a facility to identify the environmental risks
and potential environmental effects of discharges of toxic emissions.
INDOOR AIR QUALITY. The Company integrates many of its engineering
services to define and solve indoor air quality problems, including asbestos,
radon, toxic air pollutants and "sick-building syndrome." Assessment techniques
are aided by state-of-the-art electron and optical microscopy and chemical
analysis. Industrial hygiene professionals work closely with design engineers in
solving indoor air quality problems.
HEALTH AND SAFETY. Health and safety specialists coordinate industrial
hygiene, safety, training, and medical surveillance programs; conduct
inspections; and prescribe protection and compliance procedures to be used when
working with hazardous materials or in hazardous environments.
ENERGY CONSERVATION. The Company conducts major energy conservation
engineering and management projects for industry and government, including
energy audits, coal conversion studies, alternative energy studies, and
cogeneration system studies for energy producers.
CONSTRUCTION AND REMEDIATION
Consistent with the Company's strategy of providing complete solutions
to its clients' problems, the Company provides construction and remediation
services which can implement the solutions designed by its consulting and
engineering group, or designed by others. The Company also provides hazardous
waste cleanup; landfill design and construction; water management systems;
wastewater system construction and operation; decommissioning and demolition of
facilities and process systems; storage tank management; and on-site thermal
treatment systems.
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The Company has designed and constructed a patented mobile
low-temperature thermal desorption system (LT3(R)). The LT3 is designed for
stripping volatile organic compounds (VOCs) from soil. The contaminated soils
are heated to vaporize moisture and VOCs. The resultant clean soil is then
suitable for use as on-site backfill. The Company also has designed and
constructed two high-temperature transportable thermal processing systems, the
"TIS-5" and the "TIS-20." These systems treat contaminated soils by a thermal
process and the clean soil is then suitable for use as on-site backfill. The
TIS-5 is permitted by the U. S. Environmental Protection Agency (EPA) under
applicable Toxic Substance Control Act of 1976 (TSCA) regulations to burn
certain hazardous materials and is operated in accordance with those permit
requirements. Additional operating approvals are occasionally required and
obtained from state and local authorities.
In late February 1997, the LT3 experienced a fire while being used on a
project. No injuries resulted from the fire, but many of the unit's components
were fire damaged and some parts will need to be replaced. The Company
anticipates that it will be several months before the LT3 can be used again.
Transportable thermal incineration technology has come under the same
legislative and regulatory pressures as fixed unit incineration technology. In
May 1994, EPA issued a new policy which required additional studies to be
conducted before thermal incineration technology could be selected as the remedy
at a Superfund site. This policy was applied retroactively to sites where
thermal incineration technologies were already selected. The impact on the
Company's thermal business has been and is expected to continue to be
significant in the United States. The Company has been exploring alternative
uses for its thermal units in the international markets should regulatory and
legislative action prevent their use at domestic remediation sites. During 1994
and 1995, the Company was scheduled to incinerate soils at two remediation
sites, but both contracts were terminated. Although the Company continues to
make the equipment available for appropriate uses, it has substantially reduced
the carrying value of such equipment on its balance sheet at December 31, 1996.
ANALYTICAL LABORATORY SERVICES
The Company offers services for the detection and measurement of
hazardous materials, toxic wastes, and other chemicals and substances found in
air, soil, and water, and in industrial wastes and emissions. Services provided
by the Company include source sampling and characterization of organic
pollutants such as pesticides, herbicides, volatile solvents, dioxins, and PCBs,
and inorganic pollutants such as asbestos, trace metals, and sulfur. The Company
monitors pollutants to assist clients in complying with environmental
regulations and to evaluate the ongoing environmental effects of clients'
activities. The Company uses state-of-the-art computer-assisted equipment, such
as gas chromatograph/mass spectrometers, to measure trace concentrations of
pollutants. A modern microscopy laboratory provides complete optical scanning
microscopic measurements for asbestos analysis. The Company also uses a
sophisticated data management system to track the status and results of
analyses, to perform quality assurance checks, to provide sample management and
to produce data reports.
Analytical services are performed in the Company's two laboratories
located in Lionville, Pennsylvania, and University Park, Illinois. The Company
maintains a sales service center in Stockton, California. The Company is
currently certified or approved by 38 states to provide environmental
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analyses and is also licensed by the Nuclear Regulatory Commission (NRC) to
handle and analyze "mixed wastes" that contain radioactive as well as chemical
and biological materials. Additionally, the Company has a laboratory in Auburn,
Alabama, certified by the American Industrial Hygiene Association (AIHA).
The Company has entered into an agreement to sell the assets of its
Lionville, Pennsylvania and University Park, Illinois laboratories and Stockton,
California sales service center. The transaction is subject to certain
conditions and is expected to be completed by the end of the second quarter of
1997. Upon completion of the sale, the Company expects that laboratory services
required by the Company's clients will be subcontracted, in large part to the
buyer of the laboratories.
CUSTOMERS AND MARKETING
The Company's marketing strategy emphasizes its ability to offer a broad
range of specialized services designed to meet the needs of its clients in a
timely and cost-efficient manner. The Company has the capability to undertake
not only small tasks requiring a few professionals, but also the management,
staffing, design, and implementation of major projects that last for several
years and involve many employees in several geographic locations.
The Company's marketing efforts are directed from offices nationwide to
three client sectors: private industry; public works and local government; and
the federal government. Senior professionals are responsible for directing the
execution of projects, monitoring quality assurance, and integrating the
delivery of the Company's services. They also develop and maintain long-term
working relationships with clients' management. The Company participates in
industrial trade shows and technical conferences concerning environmental and
health and safety issues, and sponsors related technical seminars.
FEDERAL
In the federal sector, the Company performs contracts for the Department
of Defense (DOD), the Environmental Protection Agency (EPA) and the Department
of Energy (DOE), as well as for other federal agencies. The Company develops
comprehensive waste management and remediation programs at many priority sites
throughout the country.
The Company derived 54%, 57%, and 55% of its consolidated gross revenues
from the federal government for the years ended December 31, 1994, 1995, and
1996, respectively. Gross revenue percentages from the DOD, EPA, and DOE for
each of the fiscal years are as follows:
<TABLE>
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PERCENTAGES OF CONSOLIDATED GROSS REVENUES
FOR THE YEARS ENDED DECEMBER 31
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
DOD 19% 24% 21%
EPA 18% 19% 18%
DOE 15% 11% 13%
OTHER 2% 3% 3%
---- --- -----
54% 57% 55%
</TABLE>
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The Company is a major provider of services to the federal government
and thus is subject to audit with respect to costs and fees charged to the
federal government. Revenues associated with federal overhead rates under
government cost reimbursable contracts are adjusted when variances are
determined on at least an annual basis. Provisions for losses on contracts are
recorded when they are identified. As a result of its government contracting
business, the Company is, has been and may in the future be subject to audits
and investigations by government agencies. In addition to potential damage to
the Company's business reputation, the failure by the Company to comply with the
terms of any of its government contracts could also result in the Company's
suspension or debarment from future government contracts for a significant
period of time. The fines and penalties which could result from noncompliance
with appropriate standards and regulations, or the Company's suspension or
debarment, could have a material adverse effect on the Company's business,
particularly in light of the increasing importance to the Company of work for
various government agencies.
INDUSTRIAL
The Company provides a full range of services for industrial clients. In
addition to complying with regulatory requirements, companies are recognizing
that the environmental impact must be considered from the inception of a
product, throughout its use and final disposal. Corporate clients, which range
from small business concerns to Fortune 500 companies, are offered a wide range
of consulting and engineering, analytical, and environmental construction
services. Market segments served include automotive; chemicals and allied
products; waste management; petroleum; forest products; utilities; electronics;
and legal and financial.
PUBLIC WORKS AND LOCAL GOVERNMENT
The Company renders environmental consulting and infrastructure-related
activities to many state and local governments and agencies. A growing number of
cities, regional authorities, and state governments are instituting long-range
programs to update essential facilities. Because these projects require
comprehensive environmental planning and engineering, they will continue to be
an important business component. Typical projects include the design of water
supply and wastewater systems; solid waste management; asbestos management;
computer-based geographic mapping; and landfill design.
COMPETITION
The environmental and health and safety markets are very competitive and
require highly skilled, experienced technical and management personnel, and
sophisticated technological equipment requiring substantial capital investment.
Competition is based on, among other things, reputation, quality of service,
price, expertise, and local presence. In each of its specific service areas, the
Company competes with many engineering and consulting firms that are both larger
and smaller than the Company, although no firm currently dominates any
significant portion of those service areas. Some of these competitors have
greater financial resources than the Company.
PATENTS AND TECHNOLOGY
The Company owns six patents on remediation technologies and has filed
additional patent applications. The Company also claims copyright and trade
secret protection on certain of its
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computer software, publications, and technologies. The company does not believe
that such patents and copyrights are a material factor in its business.
BACKLOG
The Company's net contract backlog (excluding estimated project expenses
that are directly passed through to customers) was $109.7 million and $101.3
million at December 31, 1995 and 1996, respectively. Additionally, the Company
derives revenues from open order contracts and from activities related to
emergency responses. As work assignments are approved and funded, the Company
includes these amounts in the net contract backlog. As is customary in the
industry, contracts are subject to cancellation by the customer, changes in
scope of work, and delays in project startup. The Company anticipates that the
majority of its backlog will be realized in the current fiscal year.
POTENTIAL LIABILITY AND INSURANCE
A substantial portion of the Company's gross revenues is derived from
work involving hazardous materials, toxic wastes, and other pollutants. Such
efforts frequently entail significant risks of liability to the Company for
environmental damage, personal injury, and fines and costs imposed by regulatory
agencies. A substantial number of the Company's contracts require
indemnification of a client for performance claims, damages or losses incurred
during the performance of the Company's operations.
The Company has been able to insure against most liabilities it incurred
in connection with the conduct of it's business. The Company has obtained
coverage with commercial carriers to insure against pollution liability claims.
Although this insurance covers many of the Company's environmental exposures,
there are instances where project- specific pollution insurance policies are
necessary. The Company will continue to evaluate exposures associated with each
project to determine if additional coverage is necessary. The Company continues
to be partially self-insured through its subsidiary, Cardinal Indemnity Company
of North America (Cardinal), a wholly-owned insurance company. Cardinal provides
professional liability and pollution coverage for deductible amounts of the
commercial insurance coverage.
While the insurance carried by the Company may not be sufficient to
cover all claims that may arise, and while insurance carriers may not continue
to make coverage available to the Company, management believes it has provided
an adequate level of insurance.
The Company has also attempted to contractually protect itself through
agreements with its clients to limit its liability and indemnify the Company,
although the Company has not always been successful in obtaining such
agreements. Most of the Company's contracts with EPA involving Superfund monies
and some state contracts that employ federal Superfund dollars contain
provisions whereby the respective governmental agency agrees to indemnify the
Company for third-party claims to the extent that such claims are not covered by
insurance and appropriated funds are available, although the Company does not
receive any assurance that any such appropriated funds will be made available.
EPA has issued Final Response Action Contractor Indemnification Guidance (the
Indemnification Guidance) applicable to contracts signed on or after October 16,
1986, the terms of which limit EPA's contractor indemnification under certain
Superfund contracts retroactively to 1986, and prospectively, under certain
circumstances.
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The Indemnification Guidance states that future contracts will not provide for
indemnification unless EPA is unable to obtain responsible, competitive
proposals without such an indemnification.
The Company has also developed and implemented improvements to its
quality assurance and health and safety programs. These programs establish
certain minimum requirements for all project work and provide guidance for the
development of quality assurance plans and health and safety plans on all
projects. The objective of the quality assurance program is to provide assurance
that project performance is of appropriate quality for the project requirements.
The objective of the health and safety program is to protect project personnel
from exposure to hazardous substances and situations. The scope of both programs
includes the establishment of policy and procedures, staff training and
operational review and audit.
The Company and its employees are subject to various state, local, and
federal licenses, laws and regulations, and believes that it is in substantial
compliance with those requirements.
PERSONNEL
As of December 31, 1996, the Company had approximately 2,250 employees,
many of whom had advanced degrees in a variety of technical disciplines. Of
these, 63 employees held doctorates, 402 held master's degrees, 130 were
registered professional engineers, and 20 were diplomates of the American
Academy of Environmental Engineers. The Company's ability to remain competitive
will depend on its ability to attract and retain qualified personnel.
REGULATION
Demand for the Company's services is principally driven by laws and
regulations, the reauthorization, modification or elimination of which could
significantly affect the Company's business. The reauthorization of several
major federal environmental laws that have a significant impact on the work of
the Company remains on the agenda of Congress. These include the statutes that:
- Protect the chemical, physical and biological integrity of water in
the United States (the Clean Water Act of 1977 and associated laws);
- Regulate the handling of hazardous waste and mandate state oversight
of solid waste (the Resource Conservation and Recovery Act of 1976);
and,
- Regulate the identification, remediation and accountability for
hazardous waste sites (the Superfund Amendments and Reauthorization
Act of 1986).
In addition, administrative regulations mandated by the 1990 amendments
to the Clean Air Act are likely to play a significant role in the Company's
services to its industrial clients in the areas of emission and ambient air
monitoring, air quality modeling and permitting, and assistance with compliance
certification.
The principal federal laws that affect the Company's business are:
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THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY
ACT OF 1980 (CERCLA OR SUPERFUND) AND SUPERFUND AMENDMENTS AND REAUTHORIZATION
ACT (SARA) OF 1986: CERCLA addresses past waste disposal practices by providing
means for identifying and remediating hazardous waste sites. The law authorizes
EPA to compel responsible parties to remediate abandoned sites. Where initial
enforcement actions would result in lengthy delays, or where responsible parties
cannot readily be identified, CERCLA authorizes funds for cleanups. Congress
enacted SARA in 1986 to amend CERCLA and reauthorize Superfund. SARA strengthens
EPA's authority to conduct short- and long-term enforcement, and expands state
involvement in the cleanup process. SARA also expands EPA's commitment to
research and development, training, health assessments and public participation.
Sites considered to be most in need of remediation are ranked on EPA's National
Priorities List (NPL). By January 1997, some 1,259 federal and nonfederal sites
were listed or proposed for the NPL, and some 11,200 other hazardous waste sites
remained on the CERCLA inventory of potential trouble spots.
THE CLEAN WATER ACT (CWA): Amended in February 1987, the CWA authorized
$18 billion in federal revolving loan funds through 1994 for construction grants
and startup money to build wastewater treatment plants. Additional funds were
appropriated for fiscal years 1995 and 1996. The Company believes that the CWA
is accelerating the market for the municipal wastewater treatment plant design
and construction services provided by the Company. Controls imposed by the CWA
on toxic effluents also are stimulating industrial expenditures.
THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (RCRA): RCRA controls
the present and future management of newly generated hazardous wastes by
mandating that private industry -- generators, transporters and disposers --
monitor and regulate their disposal of such wastes. As a result of the growing
emphasis on the minimization of industrial process wastes, the increasing
shortage of hazardous waste management facilities, and the considerable costs
associated with disposal, RCRA will continue to be a key regulatory program.
THE CLEAN AIR ACT (CAA) AND CLEAN AIR ACT AMENDMENTS (CAAA): The CAAA of
1990 charged EPA with promulgating more than 400 regulations and developing
guidelines and procedures in the ensuing 10 years. The sweeping provisions of
the CAAA are designed to diminish three major threats to the environment: acid
rain, urban air pollution, and air toxic emissions. The revisions also establish
a national permit program and a stronger enforcement program to make the CAA
easier to monitor and ensure compliance. The CAA and the CAAA should continue to
increase the Company's activities in emission and ambient air monitoring, air
quality modeling and permitting assistance to its industrial clients. Compliance
certification, including the development and implementation of data management
and reporting systems, should expand the Company's services to industry.
The Company may be pursuing business opportunities related to the
restoration and development of environmentally impaired properties, sometimes
referred to as "Brownfields". To the extent it does so as an investor or lender,
it, and other companies in this arena, may be affected by the "Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996".
This federal law, and similar state laws, may limit to some degree the Company's
potential liability under CERCLA, and RCRA (and State counterparts) should it
ultimately need to take title to or obtain an ownership interest in the property
in connection with efforts to recover on its loan or investment.
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The Company believes that in addition to services required by CERCLA,
RCRA, CWA, and CAA, other federal laws will affect demand for the Company's
services in the private and public sectors. These include the Safe Drinking
Water Act, the National Environmental Policy Act, the Nuclear Waste Policy Act,
the Toxic Substances Control Act, the Occupational Safety and Health Act, the
Intermodal Surface Transportation and Efficiency Act, the Federal Facilities
Compliance Act and the Energy Policy Act.
ITEM 2. PROPERTIES
The Company's principal offices are located on a 53-acre tract in West
Whiteland Township, Chester County, Pennsylvania, in the suburbs of
Philadelphia, and include five major buildings providing a total of
approximately 150,000 square feet of space.
The Company also leases an aggregate of approximately 600,000 square
feet of office and laboratory space in offices located in 24 states and the
District of Columbia. Aggregate lease payments in 1996 were $18.3 million, of
which $6.6 million were subject to direct reimbursement from projects. These
leases for office and laboratory facilities are generally for 5 years or less.
ITEM 3. LEGAL PROCEEDINGS
ATLANTIC RICHFIELD CO. (ARCO) VS. TORGER L. OAAS; MONTANA POLE AND
TREATING CO.; BANK OF MONTANA; RIEDEL ENVIRONMENTAL SERVICES, INC.; ROY F.
WESTON, INC.; AND BURLINGTON NORTHERN RAILROAD, U.S. DISTRICT COURT FOR THE
DISTRICT OF MONTANA, C.A. NO. CV-90-75-BU-PGH.
In October 1991, ARCO filed a Complaint in the Montana District Court
against the Company and others alleging that the Company, which worked at the
Montana Pole and Treating site for EPA under the Technical Assistance Team (TAT)
contract in 1985, negligently performed its oversight and other duties and
caused additional environmental damage at the site.
In November 1995, the Company and all other parties to the litigation
reached agreement on the terms of a Consent Decree resolving, among other
things, all claims asserted against the Company in the litigation. There was no
finding of liability against the Company. The Consent Decree was approved by the
Court and made final on July 16, 1996. The Consent Decree resolved all claims
asserted against the Company without cost or obligation of the Company. EPA has
honored its indemnification obligation under the TAT contract as to the
Company's cost to defend.
The Company is subject to certain claims and lawsuits in connection with
work performed in the ordinary course of its business. In the opinion of
management, such claims and lawsuits currently pending are either adequately
covered by insurance or will not result in a material adverse effect on the
financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
11
<PAGE> 13
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
Company's executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
<S> <C> <C>
William J. Marrazzo 47 President and Chief Executive Officer, and Director
Peter J. Marks 55 Executive Vice President and Chief Operating Officer
M. Christine Murphy 48 Executive Vice President and Chief Financial Officer
Patrick G. McCann 43 Executive Vice President of Strategic Development
W. Dennis Moran 57 Vice President and President, Weston International
</TABLE>
Officers are elected annually and hold office until their successors are
elected and qualified.
WILLIAM J. MARRAZZO, 47, PRESIDENT AND CHIEF EXECUTIVE OFFICER. Mr. Marrazzo has
been the President of the Company since September 1990 and the Chief Executive
Officer since October 1991. Mr. Marrazzo is also Chairman of the Board of Weston
International Holdings, Inc., a wholly-owned subsidiary of the Company. He
served as Chief Operating Officer from 1989 to 1991 and as Executive Vice
President from 1989 to 1990. Mr. Marrazzo joined the Company in 1988 as a Vice
President and a Division Manager. From 1980 to 1988, he was the Commissioner of
the Water Department for the City of Philadelphia, with an accountability for
its complete management. Financially independent from the City of Philadelphia,
the Water Department is one of the nation's largest water and wastewater
utilities. Mr. Marrazzo has been a Director of the Company since 1988.
PETER J. MARKS, 55, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER. Mr.
Marks has been in his current position since November 1994, having served
previously as Manager of the Environmental and Health Sciences Division since
1989, and has been a Vice President since 1979. Mr. Marks is also a Director of
Weston International Holdings, Inc., a wholly-owned subsidiary of the Company.
Mr. Marks was a Director of the Company from 1994 to 1996.
M. CHRISTINE MURPHY, CPA, 48, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER. Ms. Murphy joined the Company in September 1990. She has been the
Executive Vice President, Quality Assurance and Finance since 1990 and Chief
Financial Officer since November 1991. She is also Chairman and President of
Cardinal Indemnity Company of North America; Chairman and President of Roy F.
Weston (Delaware), Inc. and Roy F. Weston (IPR), Inc., wholly-owned subsidiaries
of the Company; and a Director of Weston International Holdings, Inc., a
wholly-owned subsidiary of the Company. From 1985 to 1989, Ms. Murphy served as
the Revenue Commissioner for the City and School District of Philadelphia. Prior
to that time, she was a partner with Arthur Young & Co., a predecessor of Ernst
& Young. Ms. Murphy was a Director of the Company from 1990 to 1996. Ms. Murphy
is a Director of CoreStates Bank, N.A., a wholly-owned subsidiary of CoreStates
Financial Corp.
PATRICK G. MCCANN, 43, EXECUTIVE VICE PRESIDENT. Mr. McCann joined the Company
in October 1996 as Executive Vice President, Strategic Development. From 1985 to
1996, Mr. McCann was with
12
<PAGE> 14
Chemical Waste Management, an environmental services company based in Oak Brook,
IL. From 1995 to 1996 he was President of Advanced Environmental Technical
Services, a Chemical Waste Management affiliate. From 1993 to 1995 Mr. McCann
was President of the Technical Services Division of Chemical Waste Management.
From 1991 to 1993 he was a Vice President of Chemical Waste Management.
W. DENNIS MORAN, P.E., 57, VICE PRESIDENT AND PRESIDENT OF WESTON INTERNATIONAL.
Mr. Moran joined the Company in September 1996 as a Vice President, and as
President and Director of Weston International Holdings, Inc., a wholly-owned
subsidiary of the Company. From 1994 to 1996 Mr. Moran was Managing Director of
Stellwagen Associates, a management consulting firm. From 1970 to 1994 he was
with Camp Dresser & McKee Inc., an environmental engineering firm, serving as
Senior Vice President-Finance from 1978 to 1984 and as President and Chief
Executive Officer of Camp Dresser & McKee International Inc. from 1984 to 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to this item is incorporated by reference
herein from the information in the Company's 1996 Annual Report to Shareholders
in Note 7 to the Consolidated Financial Statements on page 21 and under the
heading "Stockholder Information" on page 32.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to this item is incorporated by reference
herein from the information in the Company's 1996 Annual Report to Shareholders
on page 10.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information with respect to this item is incorporated by reference
herein from the information in the Company's 1996 Annual Report to Shareholders
on pages 7 to 10.
13
<PAGE> 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Information with respect to this item is incorporated by reference
herein from the information in the Company's 1996 Annual Report to Shareholders
on pages 11 to 29.
(b) Selected Quarterly Financial Data (Unaudited) are set forth in Note
16 to the Consolidated Financial Statements contained in the Company's 1996
Annual Report to Shareholders on page 29 and are incorporated by reference
herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to this item is set forth in the Company's
definitive Proxy Statement (the "Proxy Statement") to be filed with the
Securities and Exchange Commission for the Annual Meeting of Shareholders to be
held on May 19, 1997, under the headings "Nominees for Election as Directors"
and "Compliance with Section 16(a) of the Exchange Act" and is incorporated
herein by reference. Information regarding the Company's executive officers is
included in Part I on page 12 herein.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is set forth in the Proxy
Statement under the heading "Executive Management Compensation" and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to the ownership of securities of the Company
by certain persons is set forth in the Proxy Statement under the heading
"Principal Shareholders" and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to transactions with management and others is
set forth in the Proxy Statement under the headings "Compensation Committee
Interlocks and Insider Participation," "Insurance and Supplemental Retirement
Benefits," and "Other Matters" and is incorporated herein by reference.
14
<PAGE> 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Consolidated Financial Statements:
The information appearing in the Company's 1996 Annual Report to
Shareholders as described in Item 8 is incorporated herein by reference.
2. Financial Statement Schedule:
- Report of Independent Accountants
- Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.
With the exception of the consolidated financial statements and the
independent accountants' report thereon listed in the above index, the
information referred to in Items 5, 6, and 7, and the supplementary
quarterly financial information referred to in Item 8, all of which are
included in the 1996 Annual Report to Shareholders of Roy F. Weston,
Inc. and incorporated by reference into this Annual Report on Form 10-K,
the 1996 Annual Report to Shareholders is not to be deemed "filed" as
part of this report.
3. Exhibits:
The following exhibits are filed herewith unless otherwise indicated:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C> <C>
3.1 Articles of Incorporation of the Company. Incorporated by
reference to Exhibit 3(a) to the Company's Registration
Statement on Form S-1 (Registration No. 33-20834) ("No.
33-20834").
3.2 Amended By-Laws of the Company.
4.1 Indenture between the Company and Mellon Bank, N.A. relating
to the 7% Convertible Subordinated Debentures due April 15,
2002. Incorporated by reference to Exhibit 4 to the Company's
Registration Statement on Form S-1 (Registration No. 33-13020)
("No. 33-13020").
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C> <C>
4.2 Agreement of Resignation/Appointment and Acceptance between
Mellon Bank, N.A., Security Pacific National Trust Company,
and the Company relating to the 7% Convertible Subordinated
Debentures due April 15, 2002. Incorporated by reference to
Exhibit 4.2 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1991.
4.3 Trusteeship Transfer Agreement between PNC Bank, N. A., First
Trust of New York, N.A. and the Company dated March 1, 1996,
relating to the 7% Convertible Subordinated Debentures due
April 15, 2002. Incorporated by reference to Exhibit 4.3 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
9.1 Form of Restrictive Stock Transfer Agreement among certain
shareholders of the Company. Incorporated by reference to
Exhibit 9(b) to the Company's Registration Statement on Form
S-1 (Registration No. 33-5914) ("No. 33-5914").
10.1 Form of the Company's Retirement Supplement to Split Dollar
Life Insurance Agreement. Incorporated by reference to Exhibit
10(c) to No. 33-5914.
10.2 Form of the Company's Executive Supplemental Benefit Plan -
Supplemental Retirement Agreement. Incorporated by reference
to Exhibit 10(d) to No. 33-5914.
10.3 The Company's Stock-Based Incentive Compensation Plan.
Incorporated by reference to Appendix A to the Company's Proxy
Statement dated April 9, 1991. Incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992.
10.4 Restricted Stock Agreement dated April 10, 1992, between the
Company and William J. Marrazzo, President and Chief Executive
Officer. Incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
10.5 Credit Agreement dated March 18, 1994 among Roy F. Weston,
Inc. and its subsidiaries, CoreStates Bank, N.A., First
Fidelity Bank, N.A., Mellon Bank, N.A., and PNC Bank, National
Association. Incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
10.6 First Amendment to Credit Agreement dated November 10, 1994.
Incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.7 Second Amendment to Credit Agreement dated November 7, 1996.
10.8 Third Amendment to Credit Agreement dated March 18, 1997.
10.9 The Company's Retirement Income Restoration Plan. Incorporated
by reference to Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
10.10 Severance Agreement between A. Frederick Thompson and the
Company dated March 1, 1996. Incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C> <C>
10.11 Severance Agreement between Steven C. Vorndran and the
Company effective as of August 19, 1996. (This document
contains confidential information and shall not be disclosed
publically, except as may be required by law.)
10.12 Employment Agreement between Roy F. Weston and the Company
made as of July 29, 1996.
10.13 Severance Agreement between William J. Marrazzo and the
Company effective December 3, 1996.
11 Computation of Net Income (Loss) per Share.
13 The Company's 1996 Annual Report to Shareholders.
21 Subsidiaries of the Company.
23 Consent of Independent Accountants.
27 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K. On October 4, 1996 the Company filed a Form 8-K
under Item 5, Other Events, which incorporated by reference the Company's News
Release dated September 26, 1996 concerning its plans to record a restructuring
charge.
Note: Any of the exhibits listed in the foregoing index not included with this
Annual Report on Form 10-K may be obtained without charge by writing to Arnold
P. Borish, Esq., Corporate Secretary, Roy F. Weston, Inc., 1 Weston Way, West
Chester, Pennsylvania 19380-1499.
17
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
Roy F. Weston, Inc.
Our report on the consolidated financial statements of Roy F. Weston,
Inc. and Subsidiaries has been incorporated by reference in this Form 10-K from
page 11 of the 1996 Annual Report to Shareholders of Roy F. Weston, Inc. and
Subsidiaries. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed in the index
on page 15 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 5, 1997
18
<PAGE> 20
ROY F. WESTON, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
AMOUNTS DEDUCTIONS -
BALANCE AT CHARGED TO CHARGED TO WRITE-OFF OF BALANCE
BEGINNING COSTS AND OTHER UNCOLLECTIBLE AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS ACCOUNTS PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1996:
Allowance for
Doubtful Accounts $1,800 $291 $ -- $581 $1,510
YEAR ENDED
DECEMBER 31, 1995:
Allowance for
Doubtful Accounts $1,699 $201 $ -- $100 $1,800
YEAR ENDED
DECEMBER 31, 1994:
Allowance for
Doubtful Accounts $1,630 $570 $ -- $501 $1,699
</TABLE>
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, ROY F. WESTON, INC. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized:
ROY F. WESTON, INC.
By: JOSEPH BORDOGNA
---------------
Joseph Bordogna
Chairman of the Board
Date: March 27, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
JOSEPH BORDOGNA Chairman of the Board March 27, 1997
- ------------------------------------
Joseph Bordogna
WILLIAM J. MARRAZZO President and Chief Executive Officer, March 27, 1997
- ------------------------------------ and Director
William J. Marrazzo (Principal Executive Officer)
PETER J. MARKS Executive Vice President March 27, 1997
- ------------------------------------_____________and Chief Operating Officer
Peter J. Marks (Principal Operating Officer)
M. CHRISTINE MURPHY Executive Vice President and March 27, 1997
- ------------------------------------_____________Chief Financial Officer
M. Christine Murphy (Principal Financial Officer)
WILLIAM G. MECAUGHEY Vice President and March 27, 1997
- ------------------------------------____________ Corporate Controller
William G. Mecaughey (Principal Accounting Officer)
HENRY L. DIAMOND Director March 27, 1997
- ------------------------------------
Henry L. Diamond
WAYNE F. HOSKING, JR. Director March 27, 1997
- ------------------------------------
Wayne F. Hosking, Jr.
ROBERT G. JAHN Director March 27, 1997
- ------------------------------------
Robert G. Jahn
JAMES E. KSANSNAK Director March 27, 1997
- ------------------------------------
James E. Ksansnak
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
<S> <C> <C>
MARVIN O. SCHLANGER Director March 27, 1997
- ------------------------------------
Marvin O. Schlanger
KATHERINE W. SWOYER Director March 27, 1997
- ------------------------------------
Katherine W. Swoyer
THOMAS M. SWOYER, JR. Director March 27, 1997
- ------------------------------------
Thomas M. Swoyer, Jr.
A. FREDERICK THOMPSON Director March 27, 1997
- ------------------------------------
A. Frederick Thompson
ROY F. WESTON Director March 27, 1997
- ------------------------------------
Roy F. Weston
</TABLE>
<PAGE> 1
ROY F. WESTON, INC.
BY-LAWS
ARTICLE I - OFFICES
1. The registered office of the Company shall be at 1
Weston Way, West Chester, Chester County, Pennsylvania.
2. The Company may also have offices at such other places
as the Board of Directors may from time to time appoint
or the business of the Company may require.
ARTICLE II - SEAL
1. The Corporate seal shall have inscribed thereon the name
of the Company, the year of its organization and the
words "Corporate Seal, Pennsylvania".
ARTICLE III - SHAREHOLDERS MEETING
1. Meetings of the shareholders shall be held at the office
of the Company at 1 Weston Way, West Chester, Chester
County, Pennsylvania or at such other place or places,
either within or without the Commonwealth of
Pennsylvania, as may from time to time be selected.
2. The annual meeting of the shareholders shall be held on
the second Monday of the month of May in each year, 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 a Board of
Directors and transact such other business as may
properly be brought before the meeting. If the annual
meeting shall not be called and held within six months
after the designated time, any shareholder may call such
meeting.
1
<PAGE> 2
3. The presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes which
all shareholders are entitled to cast on a particular
matter(s) being considered at a meeting shall constitute
a quorum at all meetings of the shareholders except as
otherwise provided by law, by Articles of Incorporation
or these By-Laws. If, however, such quorum shall not be
present at any meeting of the shareholders, those
entitled to vote thereat shall have power to adjourn the
meeting from time to time, without notice other than
announcement at the meeting, until the requisite number
of shares shall be present. In the case of any meeting
called for the election of directors, adjournment or
adjournments may be taken only from day to day, or for
such longer periods not exceeding fifteen days each, as
the holders of a majority of the shares present in
person or by proxy shall direct, until such directors
have been elected, and those who attend the second of
such adjourned meetings, although less than a quorum,
shall nevertheless constitute a quorum for the purpose
of electing directors.
4. At each meeting of the shareholders every shareholder
having the right to vote shall be entitled to vote in
person or by proxy appointed by an instrument in writing
subscribed by such shareholder and delivered to the
Secretary at the meeting. No unrevoked proxy shall be
valid after eleven months from the date of its
execution, unless a longer time is expressly provided
therein, but in no event shall a proxy, unless coupled
with an interest, be voted on after three years from the
date of its execution. Shareholders shall not have the
right to vote cumulatively in the election of directors.
Upon demand made by a shareholder at any election for
directors before the voting begins, the election shall
be by ballot. No share shall be voted at any meeting
upon which any installment is due and unpaid. The
original share ledger or transfer book, or a duplicate
thereof kept in this Commonwealth, shall be prima facie
evidence of the right of the person named therein to
vote thereon.
5. Written notice of the annual meeting shall be mailed to
each shareholder entitled to vote thereat, at such
address as appears on the books of the Company, at least
ten days prior to the meeting.
6. In advance of any meeting of shareholders, the Board of
Directors may appoint judges of election, who need not
be shareholders, to act at such meeting or any
adjournment thereof. If judges of election be not so
appointed, the chairman of any such meeting may, and on
the request of any shareholder or his proxy shall, make
such appointment at the meeting. The number of judges
shall be one or three. If appointed at a meeting on the
request of one or more shareholders or proxies, the
majority of shares present and entitled to vote shall
determine whether one or three judges are to be
appointed. On request of the chairman
2
<PAGE> 3
of the meeting, or of any shareholder or his proxy, the
judges shall make a report in writing of any challenge
or question or matter determined by them, and execute a
certificate of any fact found by them. No person who is
a candidate for office shall act as a judge.
7. Special meetings of the shareholders may be called at
any time by the Chairman of the Board, or the Board of
Directors, or the holders of not less than one-fifth of
all the shares outstanding and entitled to vote. At any
time, upon written request of any person entitled to
call a special meeting, it shall be the duty of the
Secretary to call a special meeting of the shareholders,
to be held at such time as the Secretary may fix, not
less than ten nor more than sixty days after receipt of
the request.
8. Business transacted at all special meetings shall be
confined to the objects stated in the call and matters
germane thereto.
9. Written notice of a special meeting of shareholders
stating the time and place and object thereof, shall be
mailed, postage prepaid, to each shareholder entitled to
vote thereat at such address as appears on the books of
the Company, at least ten days before such meeting,
unless a greater period of notice is required by statute
in a particular case.
10. The officer or agent having charge of the transfer books
shall make, at least five days before each meeting of
shareholders, a complete list of the shareholders
entitled to vote at the meeting, arranged in
alphabetical order, with the address of and the number
of shares held by each, which list shall be subject to
inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and
kept open at the time and place of the meeting, and
shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share
ledger or transfer book, or a duplicate thereof kept in
this Commonwealth, shall be prima facie evidence as to
who are the shareholders entitled to examine such list
or share ledger or transfer book, or to vote in person
or by proxy, at any meeting or shareholders.
3
<PAGE> 4
ARTICLE IV - DIRECTORS
1. The business of this Company shall be managed by its
Board of Directors, which Board shall consist of at
least eleven (11) members who need not be residents of
the Commonwealth of Pennsylvania or shareholders of the
Company. Subject to the preceding sentence and the
provisions of applicable law, the Board of Directors
shall have the authority to (i) determine the number of
directors to constitute the Board and (ii) if such
number is increased between annual meetings of the
shareholders, fill the vacancy or vacancies thereby
created. Except as otherwise hereinbefore provided with
respect to interim vacancies, directors shall be elected
by plurality vote at the annual meeting of shareholders,
and each director shall be elected for a term extending
until the next following annual meeting of shareholders
and, except in the event of death, resignation or
removal, shall serve until such director's successor
shall be elected and shall qualify.
2. In addition to the powers and authorities by these
By-Laws expressly conferred upon them, the Board may
exercise all such powers of the Company and do all such
lawful acts and things as are not by statute or by the
Articles or by these By-Laws directed or required to be
exercised or done by the shareholders.
3. The meetings of the Board of Directors may be held at
such place within this Commonwealth, or elsewhere, as a
majority of the directors may from time to time appoint,
or as may be designated in the notice calling the
meeting.
4. Each newly-elected Board may meet at such place and time
as shall be fixed by the shareholders at the meeting at
which such directors are elected, and no notice shall be
necessary to the newly elected directors in order to
legally constitute the meeting, or they may meet at such
place an time as may be fixed by the consent in writing
of all the directors.
5. Regular meetings of the Board may be held without notice
at such time and place as shall be determined by the
Board.
6. Special meetings of the Board may be called by the
Chairman of the Board on one day's notice to each
director, either personally or by mail or by telegram;
special meetings shall be called by the President or
Secretary in like manner on like notice on the written
request of two directors.
4
<PAGE> 5
7. A majority of the directors in office shall be necessary
to constitute a quorum for the transaction of business,
and the acts of a majority of the directors present at a
meeting at which a quorum is present shall be the acts
of the Board of Directors. If all the directors shall
severally or collectively consent in writing to any
action to be taken by the Company, such action shall be
as valid corporate action as though it had been
authorized at a meeting of the Board of Directors.
8. The Board of Directors shall have the authority, by
resolution, to fix the compensation of Directors for
their services as Directors.
9. The Board of Directors may elect an Executive Committee
consisting of the Chairman of the Board and such
additional directors as may from time to time be
designated as members thereof by resolution of the Board
of Directors, which Committee shall have, between
meetings of the Board, all of the powers of the Board
except such as may not be lawfully delegated to a
committee.
In addition, the Board of Directors may form other
committees of service of the Board. Each committee
member shall be a member of the Board, and nominated by
the Chairman.
10. One or more directors may participate in a meeting of
the Board or of a committee of the Board by means of
conference telephone or similar communications equipment
by means of which all persons participating in the
meeting can hear each other, and any director so
participating in a meeting shall be deemed to be present
at the meeting for all purposes.
ARTICLE V - OFFICERS
1. The Executive Officers of the Company shall be chosen by
the Board of Directors and shall consist of a Chairman
of the Board, a President, one or more Vice Presidents,
a Secretary and a Treasurer. The Board of Directors may
also choose one or more Vice Chairmen and Vice
Presidents and such other officers and agents as it
deems necessary, who shall hold their offices for such
terms and shall have such authority and shall perform
such duties as from time to time shall be prescribed by
the Board. Any two or more offices may be held by the
same person, except the combination of the Offices of
President and Secretary. It shall not be necessary for
the officers to be directors.
2. The salaries of all officers and agents of the Company
shall be fixed by the Board of Directors.
5
<PAGE> 6
3. The officers of the Company shall hold office for one
year and until their successors are chosen and have
qualified. Any officer elected or appointed by the Board
of Directors may be removed by the Board of Directors
whenever, in their judgement, the best interests of the
Company will be served thereby.
4. The Chairman of the Board shall preside at all meetings
of the shareholders and directors. The Vice Chairman
(or, if more than one, in the order designated by the
Board) shall, in the absence of the Chairman, preside at
all meetings of the shareholders and directors and shall
have such other duties, responsibilities and authority
as are from time to time, assigned to him by the
Chairman.
5. The President shall exercise such responsibilities as
may from time to time be assigned to him by the Chairman
of the Board or the Board of Directors, and shall, in
the absence of the Chairman of the Board and Vice
Chairman, assume the responsibilities and discharge the
duties of the Chairman.
6. The Secretary shall attend all sessions of the Board and
all meetings of the shareholders and act as clerk
thereof, and record all votes of the Company and the
minutes of all its transactions in a book to be kept for
that purpose; and shall perform like duties for all
committees of the Board of Directors when required. He
shall give, or cause to be given, notice of all meetings
of the shareholders and of the Board of Directors, and
shall perform such other duties as may be prescribed by
the Board of Directors or Chairman of the Board, under
whose supervision he shall be. He shall keep in safe
custody the company seal of the Company, and when
authorized by the Board affix the same to any instrument
requiring it. The Board may also choose one or more
Assistant Secretaries.
7. The Treasurer shall direct the financial planning,
procurement, and investment of corporate funds. He shall
have responsibility for the protection and custody of
securities and financial instruments and other assets of
the Company and shall advise management about insurance
coverage, protection against property losses, and
potential liability. He shall analyze financial records
to forecast the future financial position and financing
requirements, and evaluate the need for procurement of
funds and investment of surplus and shall advise
management on investments and loans for short and long
range financial plans. He shall sign or countersign
notes of indebtedness approved by management.
6
<PAGE> 7
8. The Board of Directors shall designate from among the
Executive Officers of the Company the Chief Executive
Officer, the Chief Operations Officer and the Chief
Financial Officer.
9. The Chief Executive Officer shall be the Chairman of the
Board or the President of the Company, shall be
appointed by the Board, and shall have general and
active management of the business of the Company and
shall see that all orders and resolutions of the Board
are carried into effect, subject however to the right of
the directors to delegate any specific powers to any
other officer or officers of the Company. He shall be an
ex-officio member of all committees, and shall have the
general powers and duties of supervision and management
usually vested in the Chief Executive Officer of a
Company.
10. The Chief Operations Officer shall exercise such
responsibilities as may from time to time be assigned to
him by the Chief Executive Officer or the Board of
Directors.
11. The Chief Financial Officer shall exercise such
responsibilities as may from time to time be assigned to
him by the Chief Executive Officer or the Board of
Directors, including the preparation of reports which
outline the Company's financial position in areas of
income, expenses, and earnings, based on past, present
and future operation. He shall direct the preparation of
operating budgets and financial forecasts, determine
depreciation rates to apply to capitalized items,
prepare governmental reports, and arrange for audits of
the Company's accounts. He shall advise management on
desirable operational adjustments due to budgetary
variations. He shall render to the Chief Executive
Officer and the Board of Directors, at the regular
meetings of the Board, or whenever they may require it,
an account of the financial condition of the Company. He
shall prepare all reports to the shareholders and, as
authorized by the Board of Directors, shall direct the
payment of dividends on the stock of the Company.
ARTICLE VI - VACANCIES
1. If the office of any officer or agent, one or more,
becomes vacant for any reason, the Board of Directors
may choose a successor or successors, who shall hold
office for the unexpired term in respect of
7
<PAGE> 8
which such vacancy occurred.
2. Vacancies in the Board of Directors shall be filled by a
majority of the remaining members of the Board though
less than a quorum, and each person so elected shall be
a director until his successor is elected by the
shareholders, who may make such election at the next
annual meeting of the shareholders or at any special
meeting duly called for that purpose and held prior
thereto.
ARTICLE VII - CORPORATE RECORDS
1. There shall be kept at the registered office of the
Company an original or duplicate record of the
proceedings of the shareholders and of the directors,
and the original or a copy of its By-Laws, including all
amendments or alterations thereto to date, certified by
the Secretary of the Company. An original or duplicate
share register shall also be kept at the registered
office, or at the office of a transfer agent or
registrar within the Commonwealth, giving the names of
the shareholders in alphabetical order, and showing
their respective addresses, the number and classes of
shares held by each, the number and date of certificates
issued for the shares, and the number and date of
cancellation of every certificate surrendered for
cancellation.
2. Every shareholder shall have a right to examine, in
person or by agent or attorney, at any reasonable time
or times, for any reasonable purpose, the share
register, books or records of account, and records of
the proceedings of the shareholders and directors, and
make extracts therefrom.
ARTICLE VIII - CAPITAL STOCK
1. The share certificates of the Company shall be numbered
and registered in the share ledger and transfer books of
the Company, as they are issued. They shall be signed,
by facsimile or otherwise, by the Chairman of the Board
or President and the Secretary or Assistant Secretary
and shall bear the corporate seal. In case any officer
who has executed, or whose facsimile signature has been
placed upon, any share certificate shall have ceased to
be such officer, because of death, resignation or
otherwise, before the Certificate is issued, it may be
issued by the Company with the same effect as if the
officer had not ceased to be such at the time of its
issue.
2. Transfers of shares shall be made on the books of the
Company upon
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<PAGE> 9
surrender of the certificates therefor, endorsed by the
person named in the certificate or by attorney, lawfully
constituted in writing. No transfer shall be made
inconsistent with the provisions of Article 8 of the
Uniform Commercial Code, approved the sixth day of
April, One Thousand Nine Hundred Fifty-Three (Act No.
1), and its amendments and supplements.
3. The Board of Directors may fix a time, not more than
seventy days, prior to the date of any meeting of
shareholders, or the date fixed for the payment of any
dividend or distribution, or the date for the allotment
of rights, or the date when any change or conversion or
exchange of shares will be made or go into effect, as a
record date for the determination of the shareholders
entitled to notice of, and to vote at, any such meeting,
or entitled to receive payment of any such dividend or
distributions, or to receive any such allotment of
rights, or to exercise the rights in respect to any such
change, conversion, or exchange of shares. In such case,
only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to notice
of, and to vote at, such meeting, or to receive payment
of such dividend, or to receive such allotment of
rights, or to exercise such rights as the case may be,
notwithstanding any transfer of any shares on the books
of the Company after any record date fixed as aforesaid.
The Board of Directors may close the books of the
Company against transfers of shares during the whole or
any part of such period, and in such case, written or
printed notice thereof shall be mailed at least ten days
before the closing thereof to each shareholder of record
at the address appearing on the records of the Company
or supplied by him to the Company for the purpose of
notice. While the stock transfer books of the Company
are closed, no transfer of shares will be made thereon.
If no record date if fixed for the determination of
shareholders entitled to receive notice of, or vote at,
a shareholders meeting, transfers of shares which are
transferred on the books of the Company within ten days
next preceding the date of such meeting shall not be
entitled to notice of, or vote at, such meeting.
4. Any person claiming a share certificate to be lost or
destroyed shall make an affidavit or affirmation of that
fact and advertise the same in such manner as the Board
of Directors may require, and shall give the Company a
bond of indemnity with sufficient surety to protect the
Company or any person injured by the issue of a new
certificate from any liability or expense which it or
they may incur by reason of the original certificate
remaining outstanding, whereupon a new certificate may
be issued by the same tenor and for the same number of
shares as the one alleged to be lost or destroyed, but
always subject to the
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<PAGE> 10
approval of the Board of Directors.
5. Subject to the provisions of the statutes, the Board of
Directors may declare any pay dividends upon the
outstanding shares of the Company out of its surplus
from time to time and to such extent as they may deem
advisable, in cash, in property, or in shares of the
Company.
6. Before payment of any dividend there may be set aside
out of the net profits of the Company such sums as the
directors, from time to time, in their absolute
discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Company, or
for such other purpose as the directors shall think
conducive to the interest of the Company, and the
directors may abolish any such reserve in the manner in
which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
1. All checks or demands for money and notes of the Company
shall be signed by such officer or officers as the Board
of Directors may from time to time designate.
2. The fiscal year shall begin the 1st day of January each
year.
3. Whenever written notice is required to be given to any
person, it may be given to such person, either
personally or by sending a copy thereof through the
mail, or by telegram, charges prepaid, to his address
appearing on the books of the Company, or supplied by
him to the Company for the purpose of notice. If the
notice is sent by mail or by telegraph, it shall be
deemed to have been given to the person entitled thereto
when deposited in the United States mail or with a
telegraph office for transmission to such person. Such
notice shall specify the place, day, and hour of the
meeting and, in the case of a special meeting, the
general nature of the business to be transacted.
4. Whenever any written notice is required by statute, or
by the Articles or ByLaws of this Company, a waiver
thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the
giving of such notice. Except in the case of a special
meeting, neither the business to be transacted at, nor
the purpose of the meeting need be specified in the
waiver of notice of such meeting. Attendance of a
person, either in person or by proxy, at any meeting
shall constitute a waiver of notice of such meeting,
except where a person attends a meeting for
10
<PAGE> 11
the express purpose of objecting to the transaction of
any business because the meeting was not lawfully called
or convened.
5. The Company shall indemnify its directors, officers,
employees, and agents to the full extent permitted by
Section 410 of the Business Corporation Law.
6. All engineering decisions pertaining to any project or
engineering activities in the State of Washington, or
any other state where the laws require that the Board of
Directors designate a responsible engineer, shall be
made by designated engineer in responsible charge named
in the resolution of the Board of Directors.
ARTICLE X - ANNUAL STATEMENT
1. The Chairman of the Board and Board of Directors shall
present at each annual meeting a full and complete
statement of the business and affairs of the Company for
the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors
shall deem advisable and need not be verified by a
certified public accountant.
ARTICLE XI - AMENDMENTS
1. These By-Laws may be altered, amended, or repealed by
the affirmative vote of a majority of the shares issued
and outstanding and entitled to vote thereat at any
regular or special meeting of the shareholders or by the
affirmative vote of a majority of all of the directors
then in office at any regular or special meeting of the
directors, if notice of the proposed alteration,
amendment, or repeal be contained in the notice of the
meeting.
ARTICLE XII - LIMITATION ON LIABILITY
1. A director shall not be personally liable for monetary
damages for any action taken on or after January 27,
1987, or for the failure to take any action on or after
the date, unless (i) the director has breached or failed
to perform the duties of his office under Section 8363
of the Pennsylvania Directors' Liability Act (Act 145 of
1986, P.L. 1458), relating to standard of care and
justifiable reliance, and (ii) the breach or failure to
perform constitutes self-dealing, willful misconduct or
recklessness. The provisions of this Section 1 of
Article XII shall not apply to (i) the responsibility or
liability of a director pursuant to any
11
<PAGE> 12
criminal statute, or (ii) the liability of a director
for the payment of taxes pursuant to local, state or
federal law. Any repeal or modification of any provision
of this Section 1 of Article XII shall be prospective
only and shall not affect, to the detriment of any
director, any limitation on the personal liability of a
director of the existing at the time of such repeal or
modification.
ARTICLE XIII - INDEMNIFICATION
1. The Company shall indemnify to the extent not prohibited
by applicable law, any person who was or is a party or
is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director,
officer, employee or agent of the Company or is or was
serving at the request of the Company as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise,
including an employee benefit plan, against expenses
(including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonable
incurred by him in connection with such action, suit or
proceeding, whether or not the indemnified liability
arises or arose from any threatened, pending or
completed action by or in the right of the Company. The
Board of Directors may, and on request of any such
person shall be required to, determine in each case
whether the applicable standards in the Pennsylvania
Directors' Liability Act or any other applicable statute
have been met, or such determination shall be made by
independent legal counsel if the Board so directs or if
the Board is not empowered by law to make such
determination. If there has been a change in control of
the Company between (1) the time of the action or
failure to act giving rise to the claim for
indemnification and (2) the time such claim is made at
the option of the person seeking indemnification the
permissibility of indemnification shall be determined by
special legal counsel selected jointly by the Company
and the person seeking indemnification. The fees and
expenses of such counsel shall be paid by the Company.
The obligations of the Company to indemnify a director,
officer, employee or agent under this Article XIII,
including the duty to advance expenses, shall be a
contract between the Company and such person, and no
modification or repeal of any provision of this Article
XIII shall affect, to the detriment of the Director,
officer, employee or agent such obligations of the
Company in connection with a claim based on any act or
failure to act occurring before such modification or
repeal.
2. Expenses incurred by an officer, director, employee or
agent of the
12
<PAGE> 13
Company in defending a civil or criminal action, suit or
proceeding shall be paid by the Company in advance of
the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such
amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Company.
3. The indemnification and advancement of expenses provided
by this Article XIII shall not be deemed exclusive of
any other right to which one indemnified may be entitled
under any agreement, vote of shareholders or otherwise,
both as to action in his official capacity and as to
action in another capacity while holding such office,
and shall inure to the benefit of the heirs, executors
and administrators of any such person.
4. The Board of Directors shall have the power to (a)
authorize the Company to purchase and maintain, at the
Company's expense, insurance on behalf of the Company
and others to the extent that power to do so has been or
may be granted by statute, (b) create any fund of any
nature, whether or not under the control of a trustee,
or otherwise secure any of its indemnification
obligations and (c) give other indemnification to the
extent not prohibited by statute.
13
<PAGE> 1
(Letterhead of CoreStates Bank, N.A.)
November 7, 1996
Roy F. Weston, Inc.
1 Weston Way
West Chester, PA 19380-1499
Attn: Bruce E. Flamm
Vice President & Treasurer
RE: Second Amendment and Waiver to $45,000,000 Credit Agreement with CoreStates
Bank, N.A., as Agent, dated March 18, 1994, as amended ("Credit Agreement")
Gentlemen:
Pursuant to your request, CoreStates Bank, N.A., Mellon Bank, N.A., PNC
Bank, National Association, and First Union National Bank, as Lenders, have
agreed to waive certain covenants and amend the Credit Agreement as more fully
set forth herein.
WAIVER
Lenders hereby waive compliance by Roy F. Weston, Inc. and its
subsidiaries ("Borrowers") with Sections 5.17 and 5.20 of the Credit Agreement
for the period ended September 30, 1996. This waiver is effective only for the
particular covenants specified and for the time period indicated and does not
constitute a waiver of any other default now or hereafter existing.
AMENDMENT
The Credit Agreement is hereby amended to reduce the maximum permitted
aggregate outstanding Line Advances from $25,000,000 to $5,000,000. Accordingly,
Section 2.02 (A) of the Credit Agreement is hereby replaced in its entirety by
the following:
"Each Line Advance made as a LIBOR Loan shall be in an aggregate amount
of $2,000,000 and multiples of $500,000 in excess thereof. Each Line
Advance made as a Base Rate Loan shall be in an aggregate amount of
$1,000,000 and multiples of $250,000 in excess thereof. Within the
limits of the Commitments, the Borrowers may borrow, repay and reborrow
under this Section 2.02 until the Commitment Termination Date,
provided, however, that at no time shall the aggregate outstanding Line
Advances exceed $5,000,000, provided, further, however, that such limit
shall not restrict or impair the right and obligation of the Banks to
make Line Advances pursuant to Section 2.15 below."
<PAGE> 2
Mr. Bruce E. Flamm
Vice President and Treasurer
Roy F. Weston, Inc.
As consideration for the waiver and amendment set forth herein,
Borrowers shall pay to Agent, for the ratable benefit of each Bank according to
each Bank's respective Commitment Percentage, a non-refundable waiver fee of
$37,500 contemporaneously with the execution hereof.
All capitalized terms used herein without further definition shall have
the respective meaning ascribed thereto in the Credit Agreement. Except as
expressly set forth herein, all of the terms, conditions and provisions of the
Credit Agreement remain unchanged and in full force and effect.
This waiver and amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this amendment by signing
any such counterpart.
Intending to be legally bound, the parties hereto have caused this
waiver and amendment to be executed by the respective officers thereunto duly
authorized, as of the date first above written.
(Signatures)
<PAGE> 1
Ex. 10.8
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement ("Amendment") dated as of
March 18, 1997 by and among Roy F. Weston, Inc. ("Weston"); the Subsidiaries of
Weston listed on the signature pages hereto (Weston and such Subsidiaries are
sometimes referred to individually as a "Borrower" and collectively as the
"Borrowers"); CoreStates Bank, N.A. ("CoreStates"), First Union National Bank,
formerly known as First Fidelity Bank, N.A. ("First Union") and PNC Bank,
National Association ("PNC") (CoreStates, First Union and PNC are each sometimes
referred to individually as a "Bank" and collectively as the "Banks" or as the
"Remaining Banks"); and CoreStates Bank, N.A., as agent for the Banks hereunder
(the "Agent").
BACKGROUND
A. Borrowers, Banks, Agent and Mellon Bank, N.A. ("Exiting Bank") are
currently parties to a certain Credit Agreement dated March 18, 1994, as amended
from time to time ("Credit Agreement") whereby Banks and Exiting Bank
established a credit facility under which loans and letters of credit were made
available from time to time for the benefit of Borrowers. All capitalized terms
<PAGE> 2
used herein without further definition shall have the meanings ascribed thereto
in the Credit Agreement.
B. Pursuant to the terms of the Credit Agreement, the Commitments of
the Banks and the Exiting Bank expires on March 18, 1997 with all Loans to be
repaid by March 18, 1998 (unless sooner due pursuant to the terms of the Credit
Agreement).
C. Borrowers have asked Banks to amend the Credit Agreement to, among
other things, extend the Commitment Termination Date and reduce the Total
Commitments of the Banks, which the Banks have agreed to do on the terms and
conditions hereinafter set forth.
D. Exiting Bank's Commitment shall not extend beyond the current
Commitment Termination Date and shall be hereby terminated. Exiting Bank shall
further be released from any and all obligations it has under and with respect
to the Credit Agreement and the other Loan Documents. The Remaining Banks have
agreed to readjust their Commitment Percentages in accordance with the terms
hereof to adjust for Exiting Bank's withdrawal from the Credit Agreement and the
reduction of the Total Commitments, on the terms and conditions hereinafter set
forth.
2
<PAGE> 3
NOW, THEREFORE, intending to be legally bound, the parties promise and
agree as follows:
Section 1. Status of Current Facility. Borrowers and Banks acknowledge
and agree that as of the date hereof there are no outstanding Loans and the
aggregate outstanding face amount of all Letters of Credit is $7,538,791.53.
Section 2. Withdrawal of Exiting Bank.
2.1 The Commitment of Exiting Bank is hereby terminated and
Exiting Bank is hereby released and discharged from any and all obligations and
liabilities under the Credit Agreement and the other Loan Documents (including,
without limitation, all obligations relating to outstanding Letters of Credit).
The term "Banks" as used throughout the Credit Agreement shall hereinafter be
deemed to refer solely to CoreStates, First Union and PNC.
2.2 The Remaining Banks agree that their Commitment
Percentages shall be adjusted as hereinafter set forth with respect to all Loans
hereafter made and all Letters of Credit outstanding on the date hereof or
issued after the date hereof.
3
<PAGE> 4
2.3 The Credit Agreement shall hereinafter be deemed to be
among the parties to this Amendment.
Section 3. Amendments.
3.1 The Credit Agreement is amended by deleting the chart
appearing in Section 2.01 thereof and replacing such chart with the following:
<TABLE>
<CAPTION>
Banks Amount Commitment Percentage
----- ------ ---------------------
<S> <C> <C>
CoreStates $15,000,000 42.858%
First Union $10,000,000 28.571%
PNC $10,000,000 28.571%
----------- ------
TOTAL $35,000,000 100%
</TABLE>
3.2 The Credit Agreement is amended by deleting the definition
of "Commitment Termination Date" contained in Section 1.01 thereof and replacing
such definition in its entirety with the following:
"Commitment Termination Date" means the earlier of (A) March
30, 1997 or (B) the date on which the Commitments are fully
terminated pursuant to Section 2.05(C) or Section 6.02(A)
hereof.
3.3 The Credit Agreement is amended by deleting the definition
of "Total Commitments" contained in Section 1.01
4
<PAGE> 5
thereof and replacing such definition in its entirety with the following:
"Total Commitments" means $35,000,000.00.
3.4 Notwithstanding anything to the contrary contained in
Section 5.16(2) of the Credit Agreement, so long as no Event of Default has
occurred and is continuing or would occur after giving effect thereto, a
Borrower may sell assets of such Borrower or any of its Subsidiaries provided
that (a) the aggregate proceeds (cash and non-cash) of all such sales in any one
fiscal year do not exceed 5% of the total assets of Borrowers and their
Subsidiaries on a Consolidated basis, and (b) the aggregate proceeds (cash and
non-cash) of all such sales from the date of this Amendment to the Maturity Date
do not exceed $10,000,000.00.
3.5 The Credit Agreement is amended by deleting subsection
5.16(6) thereof in its entirety.
Section 4. Miscellaneous.
4.1 Each Borrower represents and warrants to the Banks and
Agent that it has taken all necessary corporate action to authorize the
execution, delivery and performance of this Amendment. This Amendment is, or
when executed by the Borrowers and delivered to the Agent will be, fully
executed and constitute
5
<PAGE> 6
valid and legally binding obligations of the Borrowers, enforceable against each
Borrower in accordance with their respective terms. Each Borrower hereby
ratifies, confirms and restates each of the representations and warranties set
forth in Article IV of the Credit Agreement (other than with respect to Section
4.04) as being true and correct on the date hereof provided that the
representations and warranties contained in Sections 4.01, 4.05, 4.06, 4.08,
4.10, 4.11, 4.13, 4.15 and 4.16 are no longer true and correct because of
certain changes which have occurred since the date of the Credit Agreement. Such
changes are described on the Exhibits attached hereto which correspond to such
Sections of the Credit Agreement.
4.2 The Consolidated balance sheet and statements of income
and cash flows of Weston and its Consolidated Subsidiaries as of December 31,
1995, audited by Coopers & Lybrand, and the footnotes thereto and the unaudited
Consolidated balance sheet and statements of income and cash flows of Weston and
its Consolidated Subsidiaries as of September 30, 1996, copies of all of which
have been furnished to the Banks, show all material liabilities, direct and
contingent, in accordance with GAAP and present fairly in all material respects
the Consolidated financial position, results of operations and cash flows of
Weston and its Consolidated Subsidiaries at such dates and for the
6
<PAGE> 7
period ended on such dates, all in accordance with GAAP (except, in the case of
unaudited statements, year-end adjustments). From the date of the making of the
most recent Loan or the issuance of the most recent Letter of Credit to and
including the date hereof, in the case of representations and warranties made
(or deemed to be made) by Borrowers at the time Loans are made or Letters of
Credit are issued, there has been no material adverse change in Borrowers'
financial positions or in their results of operations or in the business or
assets of Weston and its Consolidated Subsidiaries taken as a whole except as
disclosed by Weston on its 10Q statements for March 31, June 30, September 30
and December 31 1996.
4.3 As a condition to the effectiveness of this Amendment, the
Borrowers shall cause to be delivered to Agent, (for the benefit of Banks) the
following (all to be in form and substance satisfactory to Agent and its
counsel);
(a) this Amendment, fully executed by each of the
Borrowers, Banks and Agent;
(b) Incumbency Certificates for each Borrower; and
(c) an opinion of counsel from counsel to each of the
Borrowers.
4.4 By executing this Amendment, or by making Loans or issuing
Letters of Credit after the date hereof, Banks do not
7
<PAGE> 8
thereby waive a breach of any warranty, representation or covenant made by
Borrowers hereunder, under the Credit Agreement or any agreement, document, or
instrument delivered to Banks or otherwise referred to herein or in the Credit
Agreement, and any claims and rights of Banks resulting from any breach or
misrepresentation by Borrowers are specifically reserved by Banks.
4.5 This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
4.6 This Amendment and the documents, instruments and
agreements executed and delivered pursuant hereto constitute the entire
agreement among the parties relating to the specific subject matter contained in
this Amendment.
4.7 This Amendment shall amend and is incorporated into the
Credit Agreement. In the event of any express incon sistency between the terms
hereof and the terms of the Credit Agreement, the terms hereof shall control.
Except as expressly amended by this Amendment, all of the terms and conditions
of the Credit Agreement remain in full force and effect.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Third Amendment to
Credit Agreement to be executed by their respective duly authorized officers as
of the date first above written.
ROY F. WESTON, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
ROY F. WESTON OF NEW YORK, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
ROY F. WESTON (DELAWARE), INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
9
<PAGE> 10
ROY F. WESTON (IPR), INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
TRANS-THERMAL SYSTEMS, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
ROY F. WESTON OF MISSOURI, INC.
(f/k/a Roy F. Weston of Idaho,
Inc.)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON (A BUSINESS TRUST)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON ENVIRONMENTAL METRICS, INC.
(f/k/a Weston-Gulf Coast, Inc.)
Attest:___________________ By:_______________________________
Name:_____________________________
10
<PAGE> 11
Title:____________________________
WESTON INTERNATIONAL HOLDINGS, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON INTERNATIONAL INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:_____________________________
PNC BANK NATIONAL ASSOCIATION
By:_______________________________
Name:_____________________________
Title:____________________________
FIRST UNION NATIONAL BANK
By:_______________________________
Name:_____________________________
Title:____________________________
CORESTATES BANK, N.A.,
(individually and as Agent)
By:_______________________________
11
<PAGE> 12
Name:_____________________________
Title:____________________________
<PAGE> 1
EXHIBIT 10.11
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
ROY F. WESTON, INC.
Severance Agreement
Severamce Agreement ("Agreement") made effective as of August 19, 1996
between Roy F. Weston Inc., a Pennsylvania corporation, ("Weston") and Steven
C. Vorndran ("Vorndran").
Backgroud
Vorndran is currently Weston's Executive Vice President.
Weston and Vorndran have a written agreement with respect to Vorndran's
employment ("Full-Time Employment Agreement") dated as of March 13, 1989, which
is attached herto as Exhibit A.
Weston and vorndran have entered into (i) six separate Non-Qualified
Stock Option Agreements covering grants made on each of May 2, 1990, March 31,
1992, February 8, 1993, February 14, 1994, February 13, 1995 and February 26,
1996, respectively, attached herto as Exhibits B-1 through B-6 and (ii) a
Supplemental Retirement Agreement dated as of July 1, 1995, attached herto as
Exhibit C. The agreements referred to in the preceding sentence are
collectively referred to as the "Benefit Agreements".
Weston and Vorndran agree that it would serve the best interests of
each to provide Vorndran with certain additional benefits in consideration of
Vorndran's agreement to terminate his employment with Weston.
<PAGE> 2
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Resignation Date. Effective as of August 19, 1996, Vorndran has
----------------
resigned from his position as Weston's Executive Vice President, his position
as an officer and director with any "Weston affiliate" (as defined in Section
3(b)) and from his employment with Weston.
2. Severance Benefits and Payment Conditions. In consideration of
-----------------------------------------
Vorndran's resignation and Vorndran's agreements and undertakings under Section
3 hereof, Vorndran shall receive the severance benefits set forth herein
provided Vorndran satisfies each of the requirements of Section 3
hereof. Vorndran's entitlements under the Benefit Agreements and any employee
benefit plan, including Weston's vacation plan, applicable to a class of Weston
employees which includes Vorndran shall be as provided for therein without
regard to this Agreement, except as expressly provided under Section 2 or 3
hereof. The severance benefits under this Agreement are as set forth below:
(a) Salary Continuation. Weston shall pay Vorndran $16,667 per
-------------------
month for a period fo nine months, commencing September 1, 1996 and ending May
31, 1997. Weston shall make the payments under this subsection on its reqular
payroll payment dates for
2
<PAGE> 3
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
employees. If Vorndran dies before the last payment, the remaining payments
shall be paid to his estate.
(b) Automobile. Weston shall permit Vorndran to use the
----------
automobile which it currently has under lease for his use and shall pay
Vorndran's expenses associated therewith that it currently pays until February
19, 1997.
(c) Salary-At-Risk. Weston shall pay Vorndran the amount he
--------------
earned under its Salary-At-Risk Program for the calendar quarter ended
September 30, 1996. Weston shall make the payment on or about the date Weston
makes Salary-At-Risk payments to participating employees.
(d) Supplemental Retirement Agreement. The annual amount
---------------------------------
payable under the Supplemental Retirement Agreement commencing at age 65 shall
be $10,000 per year. For purposes of the supplemental Retirement Agreement,
Vorndran's termination shall be treated as an involuntary termination of
employment under Section 6 of the Supplemental Retirement Agreement for a
reason which is not a forfeiture condition under Section 9 of the Supplemental
Retirement Agreement; provided, however, that Vorndran's right to receive
payments under the Supplemental Retirement Agreement shall remain conditioned
on
3
<PAGE> 4
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
Vorndran's compliance with the provisions of Section 9 of the Supplemental
Retirement Agreement.
(e) Medical Benefits. Weston shall provide medical, dental
----------------
and prescription plan benefits for Vorndran on the same basis with respect
to cost sharing and benefits as in effect for active employees for a period of
six months commencing August 20, 1996 and ending February 19, 1997, or until he
sooner elects that such coverages cease. After such six-month period, Vorndran
may elect continuation coverage completely at his own expense as provided by
law.
3. Vorndran's Agreements and Undertakings.
---------------------------------------
(a) Cooperation Requirement. During the severance period
-----------------------
(9/1/96 through 5/31/97) at Weston's reasonable request, Vorndran shall provide
Weston such information pertaining to his employment with Weston as he may have
and assist Weston to transfer his duties to such successor or successors as
Weston may designate. Weston shall reimburse Vorndran for all reasonable
expenses he incurs in fulfilling his obligations under the preceding sentence.
(b) Non-Competition Requirement. Vorndran shall not,
---------------------------
without Weston's prior written approval, either directly or indirectly, for his
own account or for the a period of two years from and after August 20, 1996:
4
<PAGE> 5
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
(i) engage in any act or solicitation which undermines
or jeopardizes Weston in its provision of services to its clients;
(ii) engage in any act which undermines or jeopardizes
any business relationship, discussion, negotiation or proposal between Weston
and its clients or prospective clients, which relationship, discussion,
negotiation or proposal began or was made on or before August 19, 1996 and was
known to Vorndran;
(iii) use or disclose any confidential or proprietary
information or trade secrets of Weston. (Notwithstanding the two year period
described in the introductory sentence of this paragraph 3(b), the prohibition
in this paragraph 3(b)(iii) shall not be limited in time.);
(iv) solicit, recruit or otherwise induce any Weston
employee to leave the employment of Weston;
(v) solicit or otherwise induce any person or entity
which has an existing business relationship with Weston (which is known to
Vorndran) to alter the terms of the relationship adversely to Weston or to
terminate the relationship;
(vi) solicit or otherwise induce any person or entity
with which Weston has a prospective business relationship (which is known to
Vorndran) not to enter into the relationship, or to alter the terms of the
prospective business relationship adversely to Weston;
5
<PAGE> 6
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
(vii) compete with Weston, or assist or render
services to any person or entity on matters which compete with Weston, with
respect to (A) services or goods of the type which are provided or planned to
be provided by Weston and of which Vorndran learned or learns as a result of
his employment or other affiliation with AsiaStar, or (B) services or goods of
the type which Weston provided to any client during the period of Vorndran's
employment by Weston.
For purposes of this Section: "Weston" shall mean Weston and any Weston
affiliate; "Weston affiliate" shall mean any business in which Weston owns
directly or indirectly at least 50% of the equity interests or at least 50% of
the profit interests; and "AsiaStar" shall mean the entity known as AsiaStar
Infrastructure Development Group (Malaysia) Sdn. Bhd., its principals and
affiliates. This Section supersedes the non-competition covenant of Section 8
of the Full-Time Employment Agreement.
If Vorndran violates any provision of this paragraph 3(b), Weston's
obligation to make payments or provide benefits under Section 2, other than
payments under the Supplemental Retirement Agreement, shall terminate and
Weston shall have all of the rights and remedies provided for in Section 12(b)
hereof as well as restitution of payments made and the cost of benefits
provided under this Agreement, net of any moneys he would have been entitled to
pursuant to his employment agreement and the Supplemental Retirement Agreement.
6
<PAGE> 7
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
Weston agrees that if Vorndran is offered a position with AsiaStar, it
shall not be a violation of any provision of this agreement for Vorndran to
accept such position and perform all duties assigned to him by AsiaStar or that
AsiaStar requires him to perform, provided that in the performance of those
duties Vorndran does not engage in any act prohibited in paragraphs 3(b)(i)
through (vii) above.
(c) Confidentially Requirements. Except as hereafter provided,
---------------------------
Vorndran and Weston shall keep the circumstances of Vorndran's employment
and employment termination and the terms of this Agreement, including,
without limitation, the salary continuation and other benefits
provided hereunder, confidential and shall not disclose them to anyone.
Vorndran may disclose (i) the terms of this Agreement to his spouse or to his
attorney or accountant to the extent necessary to determine his tax liability
or other legal obligations and (ii) the terms of Section 3(b) hereof to a
prospective employer, partner or joint venturer. Weston may disclose the terms
of this Agreement to its attorneys and accountants to the extent necessary to
determine its tax liability or other legal obligations or as may be necessary
to comply with applicable law.
(d) Release. Vorndran shall deliver an effective release to Weston
-------
in the form attached hereto as Exhibit D.
7
<PAGE> 8
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
4. Acceleration Election. Weston may, at its option, at any time
---------------------
or from time to time, in its absolute and sole discretion, accelerate the time
and the manner of making any one or more payments required by this Agreement.
5. Non-Alienation. None of the rights or payments contemplated
--------------
under this Agreement may be sold, given away, assigned, transferred, pledged,
mortgaged, alienated, hypothecated or in any way encumbered or disposed of by
Vorndran, or any executor, administrator, heir, legatee, distributee, relative
or any other person or entity, whether or not in being, claiming under Vorndran
by virtue of this Agreement, and none of the rights or benefits contemplated by
this Agreement shall be subject to execution, attachment or similar process.
Any sale, gift, assignment, transfer, pledge, mortgage, alienation,
hypothecation or encumbrance, or other disposition of this Agreement or of such
rights or benefits contrary to the forgoing provisions, or the levy or any
attachment or similar process thereon, shall be null and void and
without effect.
6. Taxes. Weston shall withhold from payments to Vorndran and
-----
remit to the appropriate government agencies such payroll taxes and income
withholding as Weston determines is or may be necessary under applicable law
with respect to amounts paid under this Agreement.
7. General Obligation. The rights and benefits of Vorndran
------------------
hereunder shall be solely those of an unsecured creditor of Weston.
8
<PAGE> 9
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
8. Waiver of Breach. Weston's failure to insist upon strict
----------------
compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition, nor shall Weston's waiver
or relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other
time or times.
9. Modificiation. This Agreement shall not be modified or amended
-------------
except by written instrument duly executed by Weston and Vorndran.
10. Severability. If any clause, sentence, paragraph, section, or part
------------
of this Agreement shall be held by any court of competent jurisdiction to be
invalid, such judgment shall not affect, impair or invalidate any of the other
parts hereof.
11. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and either hand-delivered to the
addressee or sent by registered or certified mail, if to Vorndran, to
Vorndran's address as shown on Weston's books, and if to Weston, addressed to
both the Chairman of Weston's Board of Directors and Weston's Chief Executive
Officer at Weston's principal business office located at One Weston Way, West
Chester, Pennsylvania 19380-1499 or such other address as Weston or Vorndran
may designate in writing.
9
<PAGE> 10
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
12. Arbitration.
-----------
(a) General. Except as provided in Section 12(b) below, any
-------
controversy or claim arising out of or relating to this Agreement or the breach
thereof shall be settled by arbitration in the City of Philadelphia in
accordance with the rules of the American Arbitration Association then in
effect. The decision of the arbitrator shall be final and binding upon the
parties, and judgment upon the decision rendered in such arbitration may be
entered in any court having jurisdiction.
(b) Non-Competition Requirements. Weston may enforce its rights
----------------------------
under Section 3(b) hereof without regard to Section 12(a), above. Weston shall
be entitled to obtain from any court of competent jurisdiction preliminary and
permanent injunctive relief against Vorndran, in addition to damages and an
equitable accounting of all profits or benefits arising from such violation,
which rights shall be cumulative and in addition to any other rights or
remedies to which Weston may be entitled.
13. Binding Agreement. This Agreement shall inure to the benefit of
-----------------
and be binding upon Weston and its successors, whether by merger,
consolidation, stock purchase, acquisition of substantially all of Weston's
business assets, or otherwise and upon Vorndran, his heirs and legal
representatives. This Agreement shall not be assignable by Vorndran and shall
be assignable by Weston only to a person or entity which may become a successor
in interest to Weston and which is bound hereby.
10
<PAGE> 11
THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION AND SHALL NOT BE DISCLOSED
PUBLICLY, EXCEPT AS MAY BE REQUIRED BY LAW [ NOTE: FOREGOING LEGEND NOT ON
ORIGINAL OF THIS DOCUMENT]
14. Captions. The captions of the various provisions shall not be
--------
deemed a part of this Agreement and shall not be construed in any way to limit
the contents hereof but are inserted herein only for reference and for
convenience of the parties.
15. Governing State Law. This Agreement may be executed at different
-------------------
times in different places, but all questions concerning the construction or
validity hereof, or relating to performance hereunder, shall be determined in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, Weston has caused this Agreement to be executed by
its duly authorized officers, and Vorndran has hereunto set his hand and seal
as of the day and year first above written.
ROY F. WESTON, INC.
BY: /s/ /s/
--------------------- ------------------
President Steven C. Vorndran
Attest: /s/ /s/
------------------- ------------------
Witness
(Corporate Seal)
11
<PAGE> 1
Ex.10.12
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 29th day of July, 1996 between ROY F. WESTON,
INC., (the "Company"), a Pennsylvania corporation with offices at Weston Way,
West Chester, Pennsylvania, and ROY F. WESTON ("Weston"), of Dunwoody Village,
Ch. 121, Newtown Square, Pennsylvania 19073.
WHEREAS, Weston and the Company desire to set forth all terms and
conditions upon which Weston shall continue to be employed by the Company
hereinafter; and
WHEREAS, Weston and the Company desire to replace and supersede all
prior existing agreements between the parties, written and oral;
NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND, in consideration of the
mutual covenants contained herein and other good and valuable consideration the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. (a) EMPLOYMENT: TERM.
The Company agrees to and hereby does continue Weston in its
employ, and Weston agrees to and hereby does continue in the
employ of the Company, as Chairman Emeritus, with the duties
set forth below, subject to the supervision and direction of
the Board of Directors. Such employment shall continue until
terminated by death or disability as provided herein or by
mutual written agreement of the parties. It is the intent of
this Agreement to continue the terms of Weston's current
employment contract, except as modified in certain respects,
all as expressly set forth herein or in the minutes of the
Special Meeting of the Company's Board of Directors held on
July 29, 1996.
(b) DUTIES.
Weston shall serve as Chairman Emeritus of the Company. In
this capacity, Weston shall perform only such duties and
assignments as may from time to time be specifically
prescribed to him by the Board of Directors of the Company.
(c) COMPENSATION.
(i) During the term of Weston's employment as
described in Paragraph 1(a) hereof, he will be
compensated at a base annual rate of not less than 55
percent of the midpoint for the Salary Grade,
Chairman of the Board and CEO, currently designated
Salary Grade 40, plus $18,000 per year payable on a
basis mutually agreeable to the parties, but in no
event less frequently than monthly. If there is no
salary grade for Chairman and CEO combined, the
applicable salary grade shall be the higher of the
two grades.
<PAGE> 2
(ii) The following shall apply to the terms of
employment: The midpoint salary base shall be
computed in accordance with standard Company practice
for determining job value and setting salary scales,
and shall be kept current to account for changes in
responsibility, performance and adjustments in the
cost of living. In addition, Weston shall be entitled
to participate in all of the Company's benefit
programs generally available to executive employees
of the Company or in comparable programs to the
extent available to persons of Weston's attained age.
During these terms Weston may be awarded additional
compensation by the Company above that specified in
paragraph 1(c)(i), at the discretion of the Company's
Board of Directors.
(iii) The Company will continue to pay the above
salary to Weston's spouse, Mrs. Madeleen Weston
(hereafter "his spouse") for her life, should Weston
predecease her. The amount payable to Madeleen Weston
under the preceding sentence shall be at the salary
rate payable to Mr. Weston at the time of his death.
(d) BOARD POSITION.
The Board of Directors shall use its best efforts to nominate
Weston and cause him to be elected to the Board of Directors,
subject to any legal requirements and absent any disability as
defined in paragraph 10 hereof. In the event Mr. Weston is not
elected to the Board he will become an ex-officio member of
the Board subject to any legal requirements and absent any
disability as defined in paragraph 10 hereof. In all events,
he will continue as Chairman Emeritus during his employment.
Any fees or compensation for serving on the Company's Board of
Directors ("Director's Fees") which would otherwise be payable
to Weston in his role as a member or ex-officio member of the
Board of Directors in any calendar year shall be offset
against the $18,000 additional compensation amount paid during
that year to Weston under paragraph 1(c)(i) above. If the
total amount of any Director's Fees which would otherwise be
payable to Weston in any calendar year exceeds $18,000 he
shall be paid, in addition to the amount payable under
paragraph 1(c)(i) above, the incremental amount by which such
fees exceed $18,000. If the amount of Director's Fees which
would otherwise be payable to Weston in any calendar year is
less than $18,000, Weston shall not be paid such Director's
Fees, but shall be paid the full $18,000 in accordance with
paragraph 1(c)(i).
-2-
<PAGE> 3
2. ADDITIONAL COMPENSATION; FRINGE BENEFITS.
(a) For the benefit and privilege of all full time employees,
the Company has established various policies with regard to
vacation with pay and paid holidays. Weston shall be entitled
to the benefit of these policies as they presently exist or as
they may be modified by the Company from time to time.
(b) During the term of Weston's employment by the Company, as
defined in Paragraph 1 hereof, and after termination of said
employment and until Weston's death, the Company shall pay
necessary insurance premiums for Weston's $500,000 life
insurance policy.
(c) During the term of Weston's employment by the Company, as
defined in Paragraph 1 hereof, and after termination of said
employment and until Weston's death and until the death of his
spouse, the Company shall include Weston and his spouse in the
hospitalization, surgical, major medical and other health
insurance programs maintained by the Company. Such programs
(or separate policies provided by the Company) will include
reasonable coverage in excess of and supplementing Medicare
coverage. The Company will pay all health insurance premiums
under all such programs and policies (other than Medicare) for
the benefit of Weston and his spouse.
(d) The Company shall continue to provide Weston with a
membership to Overbrook Golf Club, and shall pay all
reasonable expenses associated therewith, until his death,
disability, or termination of this Agreement by mutual written
consent of the parties.
(e) The Company shall continue to pay all reasonable business
expenses incurred by Weston, consistent with Company policy.
(f) The Company shall continue to provide Weston with his
current office space and secretarial and other executive
support until his death, disability, or termination of this
Agreement by mutual written consent of the parties.
3. COMPANY AUTOMOBILE. The Company will continue to provide
Weston with the use of an automobile until his death,
disability, or termination of this Agreement by mutual written
consent of the parties. The automobile shall be a Cadillac
Seville or a comparable model and shall be less than three (3)
years old.
4. EXCLUSIVE SERVICE. During his employment hereunder, Weston
will not engage in any other employment and/or assignment
which conflicts with or impairs his obligations as an employee
of the Company or any subsidiary thereof.
5. DOCUMENTS COMPANY PROPERTY. All memoranda, notes, records,
reports and other documents made, compiled or authored or
co-authored by Weston, or made available to him during his
employment with the Company, concerning any process,
apparatus, method,
-3-
<PAGE> 4
information system, list of clients or product used, developed
or considered by the Company, or any client of the Company,
shall be the Company's confidential property, and shall be
delivered to the Company upon termination of employment or at
any other time requested by the Company, and shall not be
furnished to any person, firm or corporation other than the
Company.
6. CONFIDENTIAL INFORMATION. Weston shall not disclose to others,
or use for his own benefit or the benefit of others, or cause
or induce others to do the same, any proprietary, confidential
or secret information or documents of the Company, including,
but not limited to, any customer lists, records, intellectual
property and business plans of the Company, other than in the
performance of his duties hereunder or unless authorized by
the Company in writing. Any unpublished information and client
reports are considered by the Company secret and confidential.
7. NON-COMPETITION. During the period of his employment by the
Company hereunder, and for a period of three years after the
termination thereof, Weston will not, directly or indirectly,
for his own benefit, or for or with any person, firm or
corporation whatsoever other than the Company, engage in
rendering services in any business in which the Company may be
then engaged.
8. INVENTIONS, METHODS AND PROCESSES. All inventions, methods, or
processes relating to the Company's business created,
conceived or otherwise prepared by Weston while employed by
the Company, shall be assigned to the Company, and shall be
the sole and exclusive property of the Company. Any such
invention or discovery disclosed by Weston within one year
following the termination of such employment by the Company
shall be deemed to fall within this provision, unless proved
to have been conceived and made following such termination.
Upon request of the Company, whether during or after such
employment by the Company, Weston promptly shall execute any
and all applications, assignments or other instruments which
the Company shall deem necessary or advisable in order to
apply for and obtain a copyright, patent, or trademark in the
United States and throughout the world, and will assign to the
Company all right, title and interest in and to such
copyrights, patents, and/or trademarks. The Company shall bear
the cost of preparation and filing of all such applications,
assignments and instruments in the appropriate governmental
offices in the United States and any foreign country. If such
services are performed by Weston at the request of the Company
after termination of such employment, the Company shall pay
reasonable compensation for such post-employment services.
9. FIDELITY BOND. Weston shall furnish the Company, at the
Company's expense, as from time to time it may request, a
fidelity bond or bonds with such limits as it may designate.
-4-
<PAGE> 5
10. DISABILITY.
(a) In the event of Weston's disability, or upon mutual
agreement between Weston and the Company, the salary payments
under Paragraph 1(c) of this Agreement may be terminated by
either party upon thirty (30) days' prior written notice.
Thereafter, the payments in Paragraph 1(c), including the
additional eighteen thousand ($18,000) dollars per year, shall
be continued as disability payments for the first twelve (12)
months of said disability. At the end of the twelve (12) month
period, if Weston is disabled as defined herein, the payments
beginning with the thirteenth (13th) month will be reduced to
41.25 percent of the midpoint of the Salary Grade for the
position of Chairman of the Board and CEO (currently SG 40)
then in effect, plus $7,425 (41.25% of $18,000). If at the end
of twenty four (24) months, Weston is still disabled as
defined herein, all subsequent payments shall be reduced to
27.5 percent of the midpoint of the Salary Grade for the
position of Chairman of the Board and CEO (currently SG 40)
then in effect, plus $4,950 (27.5% of $18,000), and will
continue throughout the balance of the disability for an
additional period not to exceed seventy two (72) months. If
there is no salary grade for Chairman and CEO combined, the
applicable salary grade shall be the higher of the two grades.
The Company's payments in the event of Weston's disability
will be offset by any disability insurance he may receive
directly from any insurance company or companies for which
premiums are paid by the Company.
(b) Weston shall be deemed to be "disabled" for purposes of
this Agreement if the Company determines, on the basis of
medical evidence satisfactory to the Company in its sole
discretion, that Weston is disabled, mentally or physically,
so as to be prevented from continuing to render services to
the Company on the basis for which payments are being made in
accordance with Paragraph 1(c) of this Agreement. Following
any such determination of disability by the Company, certain
medical evidence will be required by the Company at least
semi-annually in order to enable the Company to determine
whether Weston remains disabled. Less frequent medical
evidence may be required at the Company's reasonable
discretion. In the event that a dispute arises between Weston
and the Company concerning disability as defined herein, the
dispute shall be settled by a physician approved by both
Weston and the Company. In the event that Weston and the
Company cannot agree on a physician, a physician selected by
Weston and a physician selected by the Company shall appoint a
physician who will make the determination concerning whether
or not Weston is disabled for purposes of this Agreement. Both
Weston and the Company agree to be bound by the determination
of said physician.
11. REMEDIES AND BREACH. It is agreed that, money damages for
breach of this Agreement being difficult to determine, the
Company shall be entitled to an injunction upon any such
breach by Weston, to be issued by any competent court of
equity, enjoining and restraining Weston and each and every
person concerned therein, from any further or continued
violation of this Agreement.
12. MERGER. The Company will not consolidate or merge into or with
any other corporation, or transfer all or substantially all of
its assets of business to another corporation or firm, unless
-5-
<PAGE> 6
such other entity (the "Successor Corporation") shall assume
this Agreement. Upon such assumption, Weston and the Successor
Corporation shall become obligated to perform the terms and
conditions hereof, and the term "Company" as used in this
Agreement shall be deemed to refer to such Successor
Corporation. However, although Weston shall be employed by the
Successor Corporation, he need not be designated as the
Chairman Emeritus of the Successor Corporation but shall be of
the Successor Corporation's subsidiary or division which
conducts the Company's business if any, and his duties shall
be prescribed by the Board of Directors of the Successor
Corporation, subject to paragraph 1(b) hereof.
13. RIGHT OF FIRST REFUSAL. Weston agrees that in the event Weston
determines to sell or otherwise transfer all or substantially
all of his shares of the capital stock (the "Shares") of the
Company to any third party (other than to or in trust for the
benefit of his spouse; his issue or the spouses of his issue
or his grandchildren) Weston will first offer (for a period of
thirty (30) days) such Shares to the Company at a price and
under terms and conditions no less favorable to the Company
than Weston may have received in any offer from any third
party to buy such Shares. If there is no offer from a third
party to purchase the Shares, the Company and Weston may
independently agree upon appropriate terms and conditions for
the Company's purchase of the Shares. However, under no
circumstances will Weston participate in any determination by
the Company of whether or not it will purchase the Shares or
the price it will pay therefor. The provisions of this
paragraph will be binding on Weston's transferees, and on
Weston's heirs, executors and legal representatives, for a
period of one year following Weston's death. This Right of
First Refusal will expire on July 29, 1998.
14. HEADQUARTERS. If the Company moves its headquarters from West
Chester, Pennsylvania, during the period of Weston's
employment under this Agreement, the Company will reimburse
Weston for reasonable travel and living expenses incurred in
connection therewith and Weston will not be required to change
his residence.
15. SCOPE OF AGREEMENT. This Agreement constitutes the entire
understanding between the parties with reference to the
subject matter hereof. This Agreement specifically modifies
and replaces all prior written or oral agreements between the
parties with respect to the subject matter hereof, including
but not limited to the 1973 agreement, the August 19, 1985
agreement, and the August 6, 1991 and February, 1992
amendments thereto. This Agreement may only be modified in
writing, executed by both parties.
16. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
17. GOVERNMENT CONTROLS. To the extent that the compensation
provided to be paid to Weston hereunder represents an
increased salary or wage which may not lawfully be paid to him
at the time and in the manner provided for herein by reason of
any statute, ordinance, executive order, rule or regulation of
any governmental body or agency thereof, such increased amount
of compensation shall be paid to Weston only as, and to the
extent permitted by such applicable law. In that event,
however, Weston's compensation shall be increased to the
amount set forth
-6-
<PAGE> 7
herein as quickly as permitted by law. The failure of the
Company to pay compensation in the amounts and at the time
provided herein which, if paid would violate any such
applicable law, rule, ordinance, etc., shall not be deemed a
breach by the Company of any obligation hereunder, and this
Agreement shall be deemed to have been modified to require
payment only of such legal amount as may be paid without
violation of law.
18. EFFECTIVE DATE. This Agreement shall become effective having
been approved by the Company's Board of Directors, when
executed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
(CORPORATE SEAL) ROY F. WESTON, INC.
Attest:
_________________________ By__________________________________________
_____________________________(SEAL)
Roy F. Weston
-7-
<PAGE> 1
Ex.10.13
ROY F. WESTON, INC.
SEVERANCE AGREEMENT
Severance Agreement ("Agreement") made effective December 3, 1996
between Roy F. Weston, Inc., a Pennsylvania corporation ("Weston") and William
J. Marrazzo ("Marrazzo").
BACKGROUND
Marrazzo is currently Weston's President and Chief Executive Officer
and a member of Weston's Board of Directors.
Weston and Marrazzo have a written agreement with respect to Marrazzo's
employment ("Full Time Employment Agreement") dated as of December 1, 1988,
which is attached hereto as Exhibit A.
Weston and Marrazzo have entered into (i) six separate Non-Qualified
Stock Option Agreements covering grants made on each of May 2, 1990, March 31,
1992, February 8, 1993, February 14, 1994, February 13, 1995, and February 26,
1996, respectively, attached hereto as Exhibits B-1 through B-6, (ii) a
Restricted Stock Award Agreement dated as of April 10, 1992 attached hereto as
Exhibit C, and (iii) two separate Supplemental Retirement Agreements dated as of
December 31, 1988 and December 31, 1990, respectively, attached hereto as
Exhibits D-1 and D-2. The agreements referred to in the preceding sentence are
collectively referred to as the "Benefit Agreements".
Weston acknowledges and recognizes that it would serve Weston's best
interests to provide Marrazzo with certain additional benefits in the event that
Marrazzo's employment with Weston terminates under certain circumstances.
<PAGE> 2
Marrazzo desires to receive the benefits on the terms and conditions
provided in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Scope of Agreement. This Agreement shall become effective
if (i) Weston terminates Marrazzo's employment for reasons other than "cause"
(as defined in Section 2) or (ii) Marrazzo resigns by reason of a "good-reason
resignation" (as defined in Section 3). This Agreement shall not apply if (i)
Marrazzo's employment with Weston terminates as a result of Marrazzo's death or
disability, (ii) Marrazzo voluntarily terminates his employment for other than a
"good-reason resignation" or (iii) Weston terminates Marrazzo's employment for
"cause".
2. TERMINATION FOR CAUSE. For purposes of this Agreement,
"cause" shall mean that Marrazzo committed or engaged in an intentional act of
(i) fraud, embezzlement or theft in connection with his duties or in the course
of his employment with Weston, (ii) wrongful damage to Weston's property, (iii)
wrongful disclosure of Weston's secret processes or confidential information, or
(iv) any other kind which is materially harmful to Weston. No act, or failure to
act, shall be deemed "intentional" if it was due primarily to an error in
judgment or negligence, but shall be deemed "intentional" only if done, or
omitted to be done, by Marrazzo not in good faith and without reasonable belief
that his act or omission was in Weston's best interests.
2
<PAGE> 3
3. Good-Reason Resignation. For purposes of this Agreement,
Marrazzo's employment shall be deemed to have been terminated by reason of a
"good-reason resignation" if Marrazzo elects in good faith to discontinue his
employment with Weston because his responsibilities, duties or authority have
changed materially from their level on the date hereof, which change
substantially reduces the rank or level, responsibility or scope of Marrazzo's
position with Weston (or its successor in the case of a merger, consolidation,
acquisition or transfer of substantially all of its business assets) below that
which he has on the date hereof as Weston's President and Chief Executive
Officer. If Marrazzo elects to terminate his employment under this Section 3,
his written notice under Section 4 shall include the specific matter or matters
which Marrazzo asserts constitute reason for a "good-reason resignation".
4. Employment Termination Date. Marrazzo's status as a Weston
employee shall terminate on the effective date the party initiating the
termination specifies in writing to the other ("Employment Termination Date"),
which date shall be at least 30 days after delivery of such notice. As of the
Employment Termination Date, Marrazzo shall resign as a member of Weston's Board
of Directors, each committee thereof and the Board of Directors of each Weston
subsidiary.
5. Severance Benefits and Payment Conditions.
(a) Benefits. If Weston terminates Marrazzo's
employment for reasons other than "cause" or Marrazzo resigns by reason of a
"good-reason resignation", Marrazzo shall receive the severance benefits set
forth herein in place of those provided for in Section 7 of the Full-Time
Employment Agreement, provided Marrazzo satisfies
3
<PAGE> 4
each of the requirements of subsections (b), (c) and (d) hereof. Marrazzo's
entitlements under the Benefit Agreements and any employee benefit plan,
including Weston's vacation plan, applicable to a class of Weston employees
which includes Marrazzo shall be as provided for therein without regard to this
Agreement, except as expressly provided in this Section. The severance benefits
under this Agreement are as set forth below:
(i) Weston shall pay Marrazzo the greater of
$23,350 per month or his monthly base salary for 16 months. For purposes of this
subsection, Marrazzo's monthly base salary shall be one-twelfth of the annual
base salary at the rate in effect on the Employment Termination Date. Weston
shall make the payments under this subsection beginning with the first calendar
month after the Employment Termination Date in accordance with its regular pay
policies for employees. If Marrazzo dies before the last monthly payment, the
remaining payments shall be paid to his estate.
4
<PAGE> 5
(ii) Weston shall pay Marrazzo the amount he
earned under its Salary-At-Risk Program for the portion of the calendar quarter
to and including his Employment Termination Date. Weston shall make the payment
on or about the date Weston makes Salary- At-Risk payments to participating
employees.
(iii) For purposes of the Restricted Stock
Award Agreement dated as of April 10, 1992 attached hereto as Exhibit C, (A) the
installment which would vest on April 10, 1997 shall be deemed vested if this
Agreement becomes effective before that date and (B) a "good-reason resignation"
shall be treated as an involuntary termination which is not for "cause" (as
defined in the Restricted Stock Award Agreement).
(iv) The annual amount payable under
subsection 6(f) of the Supplemental Retirement Agreement dated as of December
31, 1988 attached hereto as Exhibit D-1 shall be the greater of $42,000
(regardless of Marrazzo's length of active service with Weston) or the amount
otherwise payable under subsection 6(f) thereof.
(v) For purposes of the Supplemental
Retirement Agreement dated as of December 31, 1990 attached hereto as Exhibit
D-2, a "good-reason resignation" shall be treated as an involuntary termination
which is not for "cause" (as defined in the Supplemental Retirement Agreement).
(vi) Weston shall provide medical, dental
and prescription plan benefits for Marrazzo on the same basis as in effect for
active employees for 16 months or until he sooner elects that such coverages
cease. After such 16-month period, Marrazzo may elect continuation coverage
completely at his own expense as provided by law.
5
<PAGE> 6
(vii) Weston shall provide Marrazzo
outplacement services at Weston's expense at the level in effect on the
Employment Termination Date for executive employees.
(viii) Weston shall pay Marrazzo an
automobile allowance at the level in effect on the Employment Termination Date
for six months, beginning with the first calendar month after the Employment
Termination Date.
(b) Cooperation Requirement. Marrazzo shall provide
Weston such information pertaining to his employment with Weston as he may have
and assist Weston to transfer his duties to such successor or successors as
Weston may designate. Weston shall reimburse Marrazzo for all reasonable
expenses he incurs in fulfilling his obligations under the preceding sentence.
(c) Non-Competition Requirement. Weston's obligation
to make payments or provide benefits hereunder, including all payments under the
Benefit Agreements, shall terminate and Weston shall have all of the rights and
remedies provided for in Section 10 of the Full-Time Employment Agreement as
well as restitution of payments made or the cost of benefits provided hereunder
if Marrazzo, without Weston's prior written approval, either directly or
indirectly, for his own account or for the account of another person or entity,
for a period of two years from and after the Employment Termination Date:
(i) acquires or holds a significant
financial interest in any competitor of Weston or any "Weston affiliate" (as
defined below);
6
<PAGE> 7
(ii) competes with Weston or any "Weston
affiliate" in soliciting any business from any person or entity that was at any
time during the two years immediately preceding the Employment Termination Date
a client of Weston or any "Weston affiliate" or potential client as to whom
Weston or any "Weston affiliate" had rendered a significant volume of service or
had a significant amount of direct business contact for the purpose of
soliciting future business; or
(iii) renders services to any competitor of
Weston or any "Weston affiliate", if such services are similar in nature (in
whole or in part) to services Marrazzo rendered to Weston or any "Weston
affiliate" at any time during the two years immediately preceding the Employment
Termination Date.
For purposes of this Section, the term "Weston affiliate" shall mean any
business in which Weston owns directly or indirectly at least 50% of the equity
interests or 50% of the profit interests. This Section supersedes the
non-competition covenant of Section 8 of the Full Time Employment Agreement,
except as provided under Section 10 thereof. This Section replaces the
non-competition provisions of Section 13 of the Supplemental Retirement
Agreements until two years from the Employment Termination Date, at which time
such provisions become effective for a period of one additional year with
respect to benefits provided under the Supplemental Retirement Agreements as
modified by this Agreement.
(d) Release. Marrazzo shall deliver an
executed release to Weston in the form attached as Exhibit E on or before the
Employment Termination Date.
7
<PAGE> 8
6. Acceleration Election. Weston may, at its option, at any
time or from time to time, in its absolute and sole discretion, accelerate the
time and the manner of making any one or more payments required by this
Agreement.
7. Non-Alienation. None of the rights or payments contemplated
under this Agreement may be sold, given away, assigned, transferred, pledged,
mortgaged, alienated, hypothecated or in any way encumbered or disposed of by
Marrazzo, or any executor, administrator, heir, legatee, distributee, relative
or any other person or entity, whether or not in being, claiming under Marrazzo
by virtue of this Agreement, and none of the rights or benefits contemplated by
this Agreement shall be subject to execution, attachment or similar process. Any
sale, gift, assignment, transfer, pledge, mortgage, alienation, hypothecation or
encumbrance, or other disposition of this Agreement or of such rights or
benefits contrary to the foregoing provisions, or the levy or any attachment or
similar process thereon, shall be null and void and without effect.
8. Taxes. Weston shall withhold from payments to Marrazzo and
remit to the appropriate government agencies such payroll taxes and income
withholding as Weston determines is or may be necessary under applicable law
with respect to amounts paid under this Agreement.
9. General Obligation. The rights and benefits of Marrazzo
hereunder shall be solely those of an unsecured creditor of Weston.
10. Waiver of Breach. Weston's failure to insist upon strict
compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition, nor shall Weston's waiver
or relinquishment of any right or power
8
<PAGE> 9
hereunder at any one or more times be deemed a waiver or relinquishment of such
right or power at any other time or times.
11. Modification. This Agreement shall not be modified or
amended except by written instrument duly executed by Weston and Marrazzo.
12. Severability. If any clause, sentence, paragraph, section,
or part of this Agreement shall be held by any court of competent jurisdiction
to be invalid, such judgment shall not affect, impair or invalidate any of the
other parts hereof.
13. Notices. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and either hand-delivered
to the addressee or sent by registered or certified mail, if to Marrazzo, to
Marrazzo's address as shown on Weston's books, and if to Weston, addressed to
the Chairman of Weston's Board of Directors at Weston's principal business
office
9
<PAGE> 10
located at One Weston Way, West Chester, Pennsylvania 19380-1499 or such other
address as Weston or Marrazzo may designate in writing.
14. Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in the City of Philadelphia in accordance with the rules of the American
Arbitration Association then in effect. The decision of the arbitrator shall be
final and binding upon the parties, and judgment upon the decision rendered in
such arbitration may be entered in any court having jurisdiction.
15. Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon Weston and its successors, whether by merger,
consolidation, stock purchase, acquisition of substantially all of Weston's
business assets, or otherwise, and upon Marrazzo, his heirs and legal
representatives. This Agreement shall not be assignable by Marrazzo and shall be
assignable by Weston only to a person or entity which becomes a successor in
interest to Weston and which is bound hereby.
16. Captions. The captions of the various provisions shall not
be deemed a part of this Agreement and shall not be construed in any way to
limit the contents hereof but are inserted herein only for reference and for
convenience of the parties.
10
<PAGE> 11
17. Governing State Law. This Agreement may be executed at
different times in different places, but all questions concerning the
construction or validity hereof, or relating to performance hereunder, shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, Weston has caused this Agreement to be executed by
its duly authorized officers, and Marrazzo has hereunto set his hand and seal as
of the day and year first above written.
ATTEST: ROY F. WESTON, INC.
By:
- ------------------- --------------------------- Secretary
(SEAL)
----------------------------
William J. Marrazzo
11
<PAGE> 12
EXHIBIT E
CROSS RELEASE
Roy F. Weston, Inc. ("Weston") and William J. Marrazzo ("Marrazzo")
entered into a Severance Agreement made effective December 3, 1996. To satisfy
the requirement of subsection 5(d) of the Severance Agreement, Marrazzo and
Weston hereby grant the other the Releases set forth below:
---------------------------------
1. Release by Weston. Weston, on behalf of itself and its subsidiaries,
irrevocably and unconditionally releases and forever discharges Marrazzo, his
heirs, administrators and legal representatives from any and all manner of
actions, causes, matters, suits, debts, dues, accounts, bonds, covenants,
agreements, judgments, claims, controversies, guarantees, warranties, damages,
labilities, or demands of any nature whatsoever in law or equity, whether or not
known to it, which it has ever had, now has, or hereafter can, shall or may
have, for, upon, or by reason of any matter, action, omission to act,
transaction, practice, conduct, thing or cause of any kind whatsoever from the
beginning of the world to the date it executes this Release. Such remise,
release and discharge of Marrazzo includes, without limitation, any and all
claims under any and all federal or state statutes or the common law and extends
without limitation to any and all acts, practices or conduct by Marrazzo whether
or not it has knowledge of such acts, omissions, practices, conduct or the
effects thereof, or if any such effects exist or may in the future exist as a
result of any acts, omissions, practices, or conduct that occurred prior to the
date it executes this Release.
<PAGE> 13
2. Limitation on Weston's Release. Notwithstanding the foregoing, this
Release shall not prevent Weston from enforcing its rights under the Severance
Agreement.
3. Release by Marrazzo. Marrazzo, for himself, his heirs, and personal
and legal representatives, except as provided in Section 4 hereof, does hereby
irrevocably and unconditionally release, remise and forever discharge Weston,
its subsidiaries, affiliates, divisions, officers, directors and employees (the
"Releasees"), and each of them, however denominated, past, present and future,
and their predecessors, successors and assigns, of and from any and all manner
of actions, causes, matters, suits, dues, bonds, judgments, debts, accounts,
covenants, agreements, claims, controversies, guarantees, warranties, damages,
liabilities, or demands of any nature whatsoever in law or equity, whether or
not now known to him which he ever had, now has or hereafter can, shall or may
have, for, upon, or by reason of any matter, action, omission to act,
transaction, practice, conduct, cause or thing of any kind whatsoever from the
beginning of the world to the date hereof. Such release, remise and discharge of
the Releasees includes without limitation any and all claims under any and all
federal and state statutes or common law and extends without limitation, to any
and all acts, practices or conduct by the Releasees, or the effects thereof,
whether or not Marrazzo now has knowledge of such acts, omissions, practices,
conduct or the effects thereof, if any such effects exist or may in the future
exist as a result of any act, omission, practice or conduct that occurred prior
to the date hereof. Except as provided in Section 4, this release shall
specifically include, but not be limited to, the following:
2
<PAGE> 14
(a) any and all claims and matters of any kind which arise or
might arise, or which otherwise relate to Marrazzo's employment with Weston or
Marrazzo's termination of employment pursuant to the Severance Agreement;
(b) any and all claims for wages and benefits (including
without limitation salary, stock, stock options, commissions, bonuses, severance
pay, health and welfare benefits, vacation pay and any other fringe-type
benefit);
(c) any and all claims for wrongful discharge, breach of
contract (whether written or oral, express or implied), and implied covenants of
good faith and fair dealing;
(d) any and all claims for alleged employment discrimination
on the basis of age, race, color, religion, sex, national origin, veteran
status, disability and/or handicap, in violation of any federal, state or local
statute, ordinance, judicial precedent or executive order, including but not
limited to claims for discrimination under the following statutes: Title VII of
the Civil Rights Act of 1964, 42 U.S.C. Section2000e et seq., the Civil Rights
Act of 1866, 42 U.S.C. Section1981, the Age Discrimination in Employment Act, 29
U.S.C. Section621 et seq., the Older Workers Benefit Protection Act, the
Rehabilitation Act of 1972, 29 U.S.C. Section701 et seq., the Americans with
Disabilities Act, 42 U.S.C. Section1201 et seq., and the Pennsylvania Human
Relations Act, 43 P.S. Section951 et seq.;
(e) any and all claims under any federal or state statute
relating to employee benefits;
3
<PAGE> 15
(f) any and all claims in tort, including but not limited to
any claims for fraud, misrepresentation, defamation, interference with contract
or prospective economic advantage, intentional infliction of emotional distress
and/or negligence;
(g) any and all claims for additional commissions,
compensation or damages of any kind; and
(h) any and all claims for attorneys' fees and costs.
4. Limitation on Marrazzo's Release. This Release (a) shall not prevent
Marrazzo from enforcing his rights under the Severance Agreement in accordance
with the terms thereof, (b) shall have no applicability to Weston's obligations
under the Benefit Agreements (as defined in the Severance Agreement) or benefits
payable under the terms of any "employee pension benefit plan" within the
meaning of the Employee Retirement Income Security Act of 1974, as amended, and
(c) shall not release Weston from any obligation it might otherwise have to
indemnify Marrazzo and hold him harmless from any claims made against him
arising out of his activities as an officer or director of Weston, to the same
extent as Weston is or may be obligated to indemnify and hold harmless any other
officer or director.
5. Review and Revocation. Marrazzo acknowledges that he has had the
opportunity to review this Release and to consider its terms with his attorneys
and advisors. Marrazzo has twenty-one (21) days from the date of distribution of
this Release to him to review it and seven (7) days after the execution date of
this Release to revoke it. This Release shall not be effective unless and until
Marrazzo executes it and the seven-day period has expired.
4
<PAGE> 16
UNDERSTOOD AND AGREED:
Witness: ------------------------
William J. Marrazzo
By
----------------------------------- Date
Attest: ROY F. WESTON, INC.
By By
--------------------------- ---------------------------- Secretary
(Corporate Seal)
Date
--------------------------
5
<PAGE> 17
STATE OF ____________________ :
: SS:
COUNTY OF ___________________ :
Before me, _________________ , on this day personally appeared William
J. Marrazzo, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed such instrument
for the purposes and consideration therein expressed.
Given under my hand and seal of office this _________ day of
____________________, _______.
___________________________
NOTARY PUBLIC in and for
___________________________
<PAGE> 1
Exhibit 11
ROY F. WESTON, INC. AND SUBSIDIARIES
SCHEDULE OF COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Years Ended December 31
1996 1995 1994
---- ---- ----
(Thousands of Dollars,
Except Share and Per Share Amounts)
<S> <C> <C> <C>
Primary
Net income (loss) $ (16,655) $ 1,514 $ (1,103)
Weighted average shares 9,562,961 9,522,562 9,494,196
Net income (loss) per common share $ (1.74) $ .16 $ (.12)
Fully Diluted
Net income (loss) $ (16,655) $ 1,514 $ (1,103)
Add:
Interest on convertible debentures, net of
applicable income taxes $ 1,026 $ 1,030 $ 1,079
Net income (loss) for fully diluted net income
per share $ (15,629) $ 2,544 $ (24)
Weighted average shares used in calculating
primary net income (loss) per share 9,562,961 9,522,562 9,494,196
Add:
Shares issuable upon conversion of
convertible debentures 945,700 1,079,028 1,182,238
Stock options -- 173 --
Weighted average shares used in calculating
fully diluted net income (loss) per common share 10,508,661 10,601,763 10,676,434
Fully diluted net income (loss) per common share $ (1.49) $ .24 $ --
</TABLE>
20
<PAGE> 1
Ex. 13
ROY F. WESTON, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth for the years indicated the percentage of net
revenues represented by certain elements of the Company's consolidated
statements of operations. The table and subsequent discussion should be read in
conjunction with the Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
For the years ended December 31
1996 1995 1994
- ----------------------------------------------------------------------------
Net Revenues 100.0% 100.0% 100.0%
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses
Direct salaries and other
operating costs 87.9% 84.9% 86.2%
General and administrative expenses 15.2% 13.8% 14.2%
Restructuring charges 8.2% -- --
Impairment of long-lived assets 1.8% -- --
- ----------------------------------------------------------------------------
Income (loss) from operations (13.1)% 1.3% (0.4)%
Other income (expense) 0.2% (0.2)% (0.5)%
- ----------------------------------------------------------------------------
Income (loss) before income taxes (12.9)% 1.1% (0.9)%
Income taxes (3.5)% 0.4% (0.3)%
- ----------------------------------------------------------------------------
Net income (loss) (9.4)% 0.7% (0.6)%
=================================
</TABLE>
The Company incurs a substantial amount of direct project costs, which are
passed through to the Company's clients, resulting principally from the use of
subcontractors on projects. Consequently, the Company measures its operating
performance on the basis of net revenues, which are determined by deducting such
direct project costs from gross revenues. Direct project costs were 33%, 33% and
31% of gross revenues in 1996, 1995 and 1994, respectively.
RESULTS OF OPERATIONS
1996 COMPARED TO 1995
Net revenues decreased 14% to $176,530,000 from $206,273,000 in 1995. Consulting
net revenues, which declined 14% and were lower in all areas of the country
except for a modest increase in the southcentral region, were impacted by a
diminished level of available business. The 28% decline in remediation net
revenues was due to a reduced level of work for the Company's transportable
thermal treatment systems, due, in part, to funding delays and the recognition
of $1,800,000 in 1995 representing completion of a remediation project contract
negotiation. Net revenues from analytical services declined 12% as reduced
sample volumes more than offset a modest improvement in pricing. Net revenues
from federal program management services, which are large government projects
with dedicated work forces, declined 6%. The Company's participation in one
large dedicated contract was not renewed at the end of 1996, which will further
reduce federal program management net revenues in 1997.
The Company had a loss from operations of $23,181,000 in 1996 compared to income
from operations of $2,623,000 in 1995. The 1996 loss includes restructuring
charges of $14,421,000 consisting principally of asset writedowns and other
expenses associated with a plan to withdraw from the analytical laboratory
business, costs to close or reduce the size of certain office facilities and
severance costs associated with reducing the Company's work force. Further, the
Company recorded a charge of $3,146,000 to recognize the impairment in value of
its transportable thermal treatment systems and a minority interest investment
in a bioremediation company. The Company expects to complete the sale of its
analytical laboratory business, which provided approximately 11% of its 1996 net
revenues, in 1997.
7
<PAGE> 2
ROY F. WESTON, INC. AND SUBSIDIARIES
Consulting margins were significantly lower in 1996 as staff and cost reductions
could not fully offset the revenue decline. Consulting personnel utilization was
7% lower than in 1995. Lower net revenues also were the main factor in a large
decline in consulting and remediation project margins. While analytical
laboratory services margins improved somewhat in 1996, they remained negative.
Federal program management results decreased only slightly from 1995.
General and administrative expenses declined $1,532,000, or 5%, in 1996,
although increasing to 15.2% of net revenues from 13.8% in 1995. Expenditures in
1996 included $944,000 relating to severance benefits for two of the Company's
senior officers. The Company expects to realize administrative cost
efficiencies in 1997, particularly through controlling business development
expenditures.
The Company had an effective income tax benefit rate of 27% in 1996 compared to
an effective income tax rate of 36% in 1995. This change in rates, which had the
impact of increasing the Company's 1996 net loss by $2,063,000, or $.22 per
share, was a result of the writedown of certain intangible assets that provided
no tax benefit and an increase in the Company's valuation reserve relating to
deferred state income tax benefits.
The Company had other income of $381,000 in 1996 compared to other expenses of
$258,000 in 1995. The Company realized gains of $273,000 and $376,000 on
redemptions of $3,715,000 and $3,000,000 of its 7% Convertible Subordinated
Debentures in 1996 and 1995, respectively. Investment income increased $352,000
in 1996 due primarily to gains recognized on the sale of certain mutual fund
investments. Interest expense decreased $331,000 from 1995 due primarily to the
repurchase of 7% Convertible Subordinated Debentures and scheduled repayments of
a five-year term loan.
1995 COMPARED TO 1994
Net revenues increased 3% to $206,273,000 from $200,304,000 in 1994. Net
revenues from remediation and consulting projects increased 36% and 4%,
respectively. Partially offsetting these gains was a 19% decline in analytical
services net revenues due to downward pricing pressures, which impacted the
analytical services industry. Net revenues from federal program management
services declined 6%, as federal agencies reduced funding on certain projects.
The Company had income from operations of $2,623,000 in 1995, compared to a
$730,000 loss from operations in 1994. The improved operating results were
primarily due to higher net revenues from remediation projects, partially offset
by significantly lower margins for analytical services. During 1995, the Company
adopted a plan to close one of its laboratory facilities and recorded a
provision of $1,300,000, consisting principally of lease termination costs and
the writedown of leasehold improvements and equipment. Operating results from
consulting projects increased slightly in 1995 as a result of higher personnel
utilization. Margins for consulting work improved in most areas, but declined in
the western United States. Operating results from federal program management
services declined from 1994 in an amount similar to the 1995 revenue shortfall,
principally due to reduced program personnel requirements and utilization.
The smaller of the Company's two transportable thermal treatment systems has
been idle since mid-1994. The system had been committed to a contract that was
canceled in late 1994. The Company recorded net revenues of approximately
$1,800,000 in 1995 and $1,520,000 in 1994 in connection with the settlement of
the termination claim.
8
<PAGE> 3
Overall spending for 1995 general and administrative expenses remained similar
to that of the previous year. The Company increased its spending on quality
assurance and strategic planning, while realizing cost savings from business
process efficiencies.
Other expenses decreased 76% to $258,000 in 1995 from $1,056,000 in 1994. Other
expenses were reduced by gains of $376,000 and $51,000 realized on redemption of
the Company's 7% Convertible Subordinated Debentures in 1995 and 1994,
respectively. Investment income increased $193,000 in 1995 due primarily to
higher interest rates. Interest expense decreased $259,000 from 1994 due
primarily to the repurchase of 7% Convertible Subordinated Debentures and
scheduled repayments of a five-year term loan.
OTHER
The Company had backlog under contract at December 31, 1996 of $101,300,000
compared to $109,700,000 at December 31, 1995, a decline of 8%. Approximately
10% of the backlog at December 31, 1996 was related to the analytical laboratory
business, which the Company expects to sell in 1997. In addition to backlog, the
Company can generate additional revenues from open order contracts and
activities related to emergency responses, which are not included in contract
backlog until approved and funded. Contracts are subject to cancellation by the
customer, changes in the scope of work and delays in project startup. The
maintenance of adequate contract backlog is dependent on continued generation of
new contract bookings. In the year ended December 31, 1996 new contract bookings
were $182,300,000, an 11% decline from new contract bookings in the year ended
December 31, 1995.
Management believes that inflationary increases in its operating costs and
expenses can generally be absorbed by increased rates the Company can bill for
its services. To date, inflationary effects have had little impact on the
Company.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased $3,102,000 in 1996 to $9,878,000 from
$12,980,000 at December 31, 1995. Marketable securities increased $4,803,000 in
1996 to $7,616,000 from $2,813,000 at December 31, 1995.
Operating activities provided cash of $9,629,000 in 1996 and $12,789,000 in
1995. The Company used a portion of its cash flow from operations to liquidate
$6,187,000 and $5,436,000 of short-term and long-term debt in 1996 and 1995,
respectively.
Net cash investments in property and equipment and other assets were $3,440,000
in 1996 and $9,988,000 in 1995. Investments in 1996 consisted primarily of
computers and other equipment. Investments in 1995 included $2,000,000 for a
minority interest in a bioremediation company, building improvements, computers
and other equipment. The Company plans to invest $5,000,000 to $10,000,000 of
capital in 1997. The Company's capital expenditures are financed primarily
through operating cash flow.
The Company has a five-year term loan at a 5.85% interest rate, which had a
principal amout of $2,500,000 at December 31, 1996 and is repayable in quarterly
installments of $500,000 plus interest through January 1, 1998. The Company is
required to make annual redemptions of 10% of its 7% Convertible Subordinated
Debentures in the principal amount of $3,140,000. The 1997 requirement has been
satisfied through repurchases of debentures during 1995 and 1996. The Company's
uncollateralized credit facility of $45,000,000 expires in March 1997. The
Company expects to have a new uncollateralized credit facility in the range of
$15,000,000 to $25,000,000 to provide cash borrowings and letters of credit
through March 1998.
9
<PAGE> 4
ROY F. WESTON, INC. AND SUBSIDIARIES
The Company received $971,000 in 1996 and $1,359,000 in 1995 from shares of
Series A common stock issued through its Employee Stock Purchase Plan. During
1996 and 1995, the Company repurchased 256,700 and 298,400 shares, respectively,
of Series A common stock for $1,199,000 and $1,512,000, respectively. There are
no current plans to issue additional stock other than through the Employee Stock
Purchase Plan and the Stock- Based Incentive Compensation Plan.
FORWARD LOOKING STATEMENTS
From time to time, the Company may publish forward looking statements relating
to such matters as anticipated financial performance, business prospects,
technological developments and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward looking
statements. In order to comply with the terms of the safe harbor, the Company
notes that a number of factors could cause the Company's actual results and
experience to differ materially from anticipated results or other expectations
expressed in the Company's forward looking statements. Risks and uncertainties
that may affect the operations, performance, development and results of the
Company's business include the following:
- - The highly competitive marketplace for the Company's services.
- - Changes in and levels of enforcement of federal, state and local
environmental legislation and regulations.
- - The Company's ability to obtain new contracts from existing as well as new
clients.
- - The Company's ability to execute new projects and those currently in
backlog within reasonable cost estimates.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the years ended December 31
(Thousands of dollars, except per 1996 1995 1994 1993 1992
share amounts)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross revenues $ 263,388 $309,858 $ 290,081 $314,443 $330,157
Net revenues $ 176,530 $206,273 $ 200,304 $214,869 $222,050
Income (loss) from operations $ (23,181)* $ 2,623 $ (730) $ 6,248 $ 14,275
Net income (loss) $ (16,655) $ 1,514 $ (1,103) $ 2,603 $ 7,162
Net income (loss) per
common share $ (1.74) $ .16 $ (.12) $ .28 $ .79
* Includes restructuring and impairment charges aggregating $17,567.
AT DECEMBER 31
- -------------------------------------------------------------------------------------------------------------
Working capital $ 58,956 $ 67,875 $ 74,352 $ 73,289 $ 72,659
Total assets $141,472 $163,406 $156,730 $165,699 $178,956
Short-term debt $ 2,159 $ 2,261 $ 2,431 $ 2,635 $ 6,555
Long-term debt (less current
portion) $ 18,922 $ 24,673 $ 29,843 $ 33,054 $ 42,083
Stockholders' equity $ 66,090 $ 82,901 $ 80,892 $ 81,719 $ 76,785
- -------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
Roy F. Weston, Inc.
We have audited the accompanying consolidated balance sheets of Roy F. Weston,
Inc. and Subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Roy F. Weston,
Inc. and Subsidiaries as of December 31, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 5, 1997
11
<PAGE> 6
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
(Thousands of dollars) 1996 1995
ASSETS
- -------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 9,878 $ 12,980
Marketable securities 7,616 2,813
Accounts receivable, trade, net of allowance for doubtful accounts 65,480 78,374
Unbilled costs and estimated earnings on contracts in process 18,151 17,935
Prepaid and refundable income taxes 2,719 1,369
Deferred income taxes 5,584 3,145
Other 2,438 2,602
- -------------------------------------------------------------------------------------------------------------
Total current assets 111,866 119,218
- -------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Land 215 215
Buildings and improvements 11,350 11,308
Furniture and equipment 55,763 58,348
Leasehold improvements 8,929 7,580
Construction in progress 17 1,842
- -------------------------------------------------------------------------------------------------------------
Total property and equipment 76,274 79,293
Less accumulated depreciation and amortization 64,884 58,777
- -------------------------------------------------------------------------------------------------------------
Property and equipment, net 11,390 20,516
- -------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Goodwill, net of accumulated amortization of $4,014 in 1996 and $1,203 in 1995 1,940 4,751
Deferred income taxes 3,168 1,491
Other 13,108 17,430
- -------------------------------------------------------------------------------------------------------------
Total other assets 18,216 23,672
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $141,472 $163,406
======================
</TABLE>
See notes to consolidated financial statements.
12
<PAGE> 7
<TABLE>
<CAPTION>
December 31
(Thousands of dollars) 1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
<S> <C> <C>
Current maturities of long-term debt $ 2,159 $ 2,261
Accounts payable and accrued expenses 11,869 12,444
Billings on contracts in process in excess of costs and estimated earnings 12,233 15,346
Employee compensation, benefits and payroll taxes 13,326 11,348
Income taxes payable 220 208
Other 13,103 9,736
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 52,910 51,343
- ------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 18,922 24,673
- ------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES 3,550 4,489
- ------------------------------------------------------------------------------------------------------------
CONTINGENCIES
- ------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------
Common stock, $.10 par value, 10,500,000 shares authorized; 3,192,909 shares
issued in 1996; 3,193,059 shares issued in 1995 319 319
Series A common stock, $.10 par value, 20,500,000 shares authorized;
8,319,352 shares issued in 1996; 8,028,082 shares issued in 1995 832 803
Unrealized gain on investments 541 514
Additional paid-in capital 55,130 54,143
Retained earnings 14,274 30,929
- ------------------------------------------------------------------------------------------------------------
71,096 86,708
Less treasury stock at cost, 1,081,275 common shares in 1996 and 1995;
769,805 Series A common shares in 1996 and 513,105 Series A common
shares in 1995 5,006 3,807
- ------------------------------------------------------------------------------------------------------------
Total stockholders' equity 66,090 82,901
- ------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $141,472 $163,406
======================
</TABLE>
13
<PAGE> 8
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended December 31
(Thousands of dollars, except per share amounts) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross revenues $ 263,388 $ 309,858 $ 290,081
Direct project costs 86,858 103,585 89,777
- -----------------------------------------------------------------------------------------------------
Net revenues 176,530 206,273 200,304
- -----------------------------------------------------------------------------------------------------
Expenses
Direct salaries and other operating costs 155,203 175,177 172,587
General and administrative expenses 26,941 28,473 28,447
Restructuring charges 14,421 --
Impairment of long-lived assets 3,146 -- --
- -----------------------------------------------------------------------------------------------------
199,711 203,650 201,034
- -----------------------------------------------------------------------------------------------------
Income (loss) from operations (23,181) 2,623 (730)
- -----------------------------------------------------------------------------------------------------
Other income (expense)
Investment income 1,965 1,613 1,420
Interest expense (1,951) (2,282) (2,541)
Other 367 411 65
- -----------------------------------------------------------------------------------------------------
381 (258) (1,056)
- -----------------------------------------------------------------------------------------------------
Income (loss) before income taxes (22,800) 2,365 (1,786)
Provision (benefit) for income taxes (6,145) 851 (683)
- -----------------------------------------------------------------------------------------------------
Net income (loss) $ (16,655) $ 1,514 $ (1,103)
=========== =========== ===========
Net income (loss) per share $ (1.74) $ .16 $ (.12)
=========== =========== ===========
Weighted average shares outstanding 9,562,961 9,522,562 9,494,196
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
14
<PAGE> 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31
(Thousands of dollars) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $(16,655) $ 1,514 $ (1,103)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 7,833 9,468 10,055
Provision for losses on accounts receivable 291 201 570
Restructuring charges 14,421 1,300 --
Impairment of long-lived assets 3,146 -- --
Other (1,040) 515 1,264
Change in assets and liabilities:
Accounts receivable, trade 12,803 (9,628) (2,082)
Unbilled costs and estimated earnings on contracts in process (216) 2,651 (485)
Other current assets 164 1,024 (160)
Accounts payable and accrued expenses (36) 942 (879)
Billings on contracts in process in excess of costs and estimated earnings (3,113) 6,386 (3,387)
Employee compensation, benefits and payroll taxes 1,488 1,507 (944)
Income taxes (1,338) 300 (747)
Deferred income taxes (4,130) (1,725) 203
Other current liabilities (2,166) 151 (2,829)
Other assets and liabilities (1,823) (1,817) 1,645
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,629 12,789 1,121
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 21,663 18,520 33,344
Payments for purchase of investments (24,539) (8,497) (34,981)
Purchase of property and equipment (3,052) (7,248) (4,432)
Investments in other assets (388) (2,740) (426)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities (6,316) 35 (6,495)
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under long-term debt (6,187) (5,436) (3,648)
Proceeds from issuance of Series A common stock 971 1,359 1,623
Purchase of Series A common treasury stock (1,199) (1,512) (1,297)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used for financing activities (6,415) (5,589) (3,322)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (3,102) 7,235 (8,696)
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Beginning of year 12,980 5,745 14,441
- -----------------------------------------------------------------------------------------------------------------------------
End of year $ 9,878 $ 12,980 $ 5,745
======================================
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 10
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
<TABLE>
<CAPTION>
Series A Unrealized Gain
Common Stock Common Stock (Loss) on
(Thousands of dollars and shares) Shares Amount Shares Amount Investment
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
At January 1, 1994 3,213 $ 321 7,337 $ 734 $ --
Shares issued under employee
stock purchase plan -- -- 329 33 --
Purchase of treasury stock -- -- -- -- --
Other (2) -- 2 -- (90)
Net loss -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
At December 31, 1994 3,211 321 7,668 767 (90)
Shares issued under employee
stock purchase plan -- -- 342 34 --
Purchase of treasury stock -- -- -- -- --
Other (18) (2) 18 2 604
Net income -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
At December 31, 1995 3,193 319 8,028 803 514
Shares issued under employee
stock purchase plan -- -- 291 29 --
Purchase of treasury stock -- -- -- -- --
Other -- -- -- -- 27
Net loss -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
At December 31, 1996 3,193 $ 319 8,319 $ 832 $ 541
================================================================================
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 11
<TABLE>
<CAPTION>
(Thousands of dollars and shares) Treasury Stock
Additional
Paid-in Retained Common Series A
Capital Earnings Shares Common Shares Amount Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
At January 1, 1994 $ 51,144 $ 30,518 (1,081) -- $ (998) $ 81,719
Shares issued under employee
stock purchase plan 1,590 -- -- -- -- 1,623
Purchase of treasury stock -- -- -- (215) (1,297) (1,297)
Other 40 -- -- -- -- (50)
Net loss -- (1,103) -- -- -- (1,103)
- -----------------------------------------------------------------------------------------------------------------------------
At December 31, 1994 52,774 29,415 (1,081) (215) (2,295) 80,892
Shares issued under employee
stock purchase plan 1,325 -- -- -- -- 1,359
Purchase of treasury stock -- -- -- (298) (1,512) (1,512)
Other 44 -- -- -- -- 648
Net income -- 1,514 -- -- -- 1,514
- -----------------------------------------------------------------------------------------------------------------------------
At December 31, 1995 54,143 30,929 (1,081) (513) (3,807) 82,901
Shares issued under employee
stock purchase plan 942 -- -- -- -- 971
Purchase of treasury stock -- -- -- (257) (1,199) (1,199)
Other 45 -- -- -- -- 72
Net loss -- (16,655) -- -- -- (16,655)
- -----------------------------------------------------------------------------------------------------------------------------
At December 31, 1996 $ 55,130 $ 14,274 (1,081) (770) $ (5,006) $ 66,090
==================================================================================
</TABLE>
17
<PAGE> 12
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
The Company provides environmental services to industry, the federal government
and public works and local government markets. Environmental services provided
include consulting, construction and remediation, federal program management and
analytical laboratory services. The Company's services are provided primarily in
the United States, although services in foreign nations are performed.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All material intercompany accounts and transactions have been
eliminated in consolidation. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH EQUIVALENTS AND INVESTMENTS
The Company considers all highly liquid investments with a remaining maturity of
three months or less at the time of purchase to be cash equivalents. Cash and
cash equivalents consist of cash on hand, demand deposit accounts, and
investments in corporate commercial paper and U.S. Government securities.
Marketable securities are stated at fair value. Realized gains and losses are
computed based on specific identification.
Marketable equity and debt securities available for current operations include
investments in corporate commercial paper and U.S. Government debt securities,
and are classified as current assets in the accompanying consolidated balance
sheets. Investments held by the Company's wholly-owned captive insurance
subsidiary include equity and bond mutual funds, and are classified as
noncurrent assets in the accompanying consolidated balance sheets.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is provided primarily
on the straight-line method over the assets' estimated useful lives of 10 to 40
years for buildings and improvements and 3 to 10 years for furniture and
equipment. Leasehold improvements are amortized over the shorter of the lease
period or estimated useful life on the straight-line method. Property and
equipment leased under capital leases are recorded at the lower of fair market
value or the present value of future lease payments. Property and equipment
under these leases are amortized on a straight-line basis, generally over the
assets' estimated useful lives. When property or equipment is sold or retired,
the cost of the asset and related accumulated depreciation are removed from the
balance sheet and any gain or loss is included in results of operations.
GOODWILL
Goodwill arising from the excess of purchase price over the underlying fair
value of net assets of acquired subsidiaries is amortized on the straight-line
method over a 40-year period. The Company annually evaluates whether changes
have occurred that would require revision of the remaining estimated useful life
of goodwill. If such circumstances arise, the Company uses an estimate of the
applicable business' financial contribution to determine whether the goodwill is
recoverable.
LONG-LIVED ASSET IMPAIRMENT
Effective January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." The provisions of Statement No. 121
require the Company to review its long-lived assets for impairment on an
exception basis whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable through future cash flows.
If it is determined that an impairment loss has occurred, the loss is recognized
in the consolidated statement of operations.
18
<PAGE> 13
INCOME TAXES
The Company provides deferred income taxes on all temporary differences between
the income tax and financial reporting bases of its assets and liabilities.
CONTRACT REVENUE RECOGNITION
The Company's principal business is providing professional engineering and
consulting services under cost-plus- fee, time and materials, and fixed-price
contracts. Revenues from contracts are recorded on the percentage-of- completion
method of accounting, determined by relating contract costs incurred to date to
total estimated contract costs at completion. Estimated award fees on certain
long-term federal contracts are included in revenues at the time the amounts can
be reasonably determined. Revenues associated with U.S. Government indirect
rates are adjusted when variances are determined on at least an annual basis.
Provisions for estimated contract losses are recorded when identified.
STOCK-BASED COMPENSATION
The Company has elected not to adopt the provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," but
continues to use Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," to account for its stock-based compensation
programs, including its Stock-Based Incentive Compensation Plan and Employee
Stock Purchase Plan. Under Opinion No. 25, no compensation expense is recognized
for grants of stock options if the exercise price is not less than market value
at the date of grant and employee stock purchase plans that qualify under
Section 423 of the Internal Revenue Code are considered noncompensatory. Pro
forma disclosures required under Statement No. 123 are included in Note 9 to the
consolidated financial statements.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares and Series A common shares outstanding
during the period, including applicable common stock equivalents. The conversion
of subordinated debentures has not been assumed because the result is
anti-dilutive.
NOTE 3 - RESTRUCTURING AND IMPAIRMENT CHARGES
During the third quarter of 1996, the Company adopted plans to withdraw from the
analytical laboratory business, close or reduce the size of certain office
facilities, and reduce the size of its work force. The Company recorded
restructuring charges aggregating $14,421,000, consisting principally of
writedown of assets, severance costs for terminated employees, costs of idle
facilities and estimated loss on disposal of the analytical laboratory business.
At December 31, 1996, the Company had accruals aggregating $5,426,000, included
as other current liabilities in the accompanying consolidated balance sheet, for
costs to be incurred in future periods as a result of the restructuring.
In early 1997, the Company entered into a definitive agreement for the sale of
its analytical laboratory business. The agreement is subject to the satisfaction
of a number of conditions. Closing of the transaction is anticipated by the end
of the second quarter of 1997.
In addition, the Company recorded an impairment charge of $3,146,000 in the
third quarter of 1996 in accordance with Statement of Financial Accounting
Standards No. 121. The impairment charge reduced the carrying value of the
Company's thermal incineration assets and a minority interest in a
bioremediation company to their estimated fair values.
19
<PAGE> 14
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INVESTMENTS
The Company's investments are classified as available-for-sale securities and
recorded at current market value with an offsetting adjustment included in
stockholders' equity.
Investments in debt and equity securities at December 31 consisted of the
following:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- -----------------------------------------------------------
<S> <C> <C>
Fair Value:
Current $ 7,616 $ 2,813
Noncurrent 3,775 5,282
- -----------------------------------------------------------
11,391 8,095
Gross unrealized holding gains (847) (782)
Gross unrealized holding losses 27 3
- -----------------------------------------------------------
Cost basis of investments $ 10,571 $ 7,316
=======================
</TABLE>
Investment activity for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------
<S> <C> <C> <C>
Proceeds from sale
of investments $ 21,663 $ 18,520 $ 33,344
- --------------------------------------------------------------------
Gross realized gains $ 294 $ -- $ 166
- --------------------------------------------------------------------
Gross realized losses $ (15) $ -- $ --
- --------------------------------------------------------------------
Change in unrealized
holding gain (loss) $ 41 $ 915 $ (136)
Deferred income taxes (14) (311) 46
- --------------------------------------------------------------------
Net change in unrealized
holding gain (loss) $ 27 $ 604 $ (90)
======================================
</TABLE>
Realized gains and losses are determined on a specific identification basis and
are included in investment income in the accompanying consolidated statements of
operations.
NOTE 5 - ACCOUNTS RECEIVABLE AND UNBILLED COSTS AND ESTIMATED EARNINGS
Trade accounts receivable at December 31 consisted of the following:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- ---------------------------------------------------------
<S> <C> <C>
Industrial clients $19,880 $28,086
State and municipal governments 15,020 17,683
U.S. Government agencies 31,380 33,004
Retentions 710 1,401
- ---------------------------------------------------------
66,990 80,174
Less allowance for
doubtful accounts 1,510 1,800
- ---------------------------------------------------------
$65,480 $78,374
====================
</TABLE>
Unbilled costs and estimated earnings consisted of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
<S> <C> <C>
Industrial clients $ 3,459 $ 3,485
State and municipal governments 5,215 2,593
U.S. Government agencies 7,852 10,774
Retentions 1,625 1,083
- -------------------------------------------------------------
$18,151 $17,935
====================
</TABLE>
The Company does not believe there is any undue credit risk in connection with
its accounts receivable.
Unbilled costs and estimated earnings can be invoiced upon attaining certain
milestones under fixed-price contracts, completion of federal government
indirect rate audits, final approval of design plans for engineering services,
and completion of construction on certain projects. Billed and unbilled
retentions of $2,335,000 at December 31, 1996 include $794,000, which is
expected to be collected during 1998 and thereafter.
20
<PAGE> 15
NOTE 6 - LINE OF CREDIT AGREEMENT
At December 31, 1996, the Company had a $45,000,000 uncollateralized credit
facility with a group of banks to provide cash borrowings and letters of credit.
The Company expects to have a new uncollateralized credit facility in the range
of $15,000,000 to $25,000,000 available through March 1998.
Under the terms of the existing agreement, as amended, cash borrowings, which
may not exceed $5,000,000, bear interest at the prime rate or, at the Company's
option, other variable rates. The Company is subject to a 1/4% annual charge on
the unused portion of the facility. The agreement requires the Company to
maintain covenants including liquidity, debt to equity, interest coverage,
minimum net worth and fixed charge coverage. At December 31, 1996, the Company
was not in compliance with certain covenants under the line of credit agreement.
A waiver of compliance has been obtained from the lenders.
The Company had no outstanding cash borrowings under the line of credit at
December 31, 1996 and the unused portion of the uncollateralized credit facility
was $37,131,000.
NOTE 7 - LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- ---------------------------------------------------------------
<S> <C> <C>
7% Convertible Subordinated
Debentures due
April 15, 2002 $18,115 $21,830
Bank term loan, payable in
quarterly installments of $500,000
plus interest at 5.85% through
January 1, 1998 2,500 4,500
Capitalized lease obligations 466 604
- ---------------------------------------------------------------
Total debt 21,081 26,934
Less current maturities 2,159 2,261
- ---------------------------------------------------------------
$18,922 $24,673
====================
</TABLE>
The 7% Convertible Subordinated Debentures (the Debentures) are due April 15,
2002, and are convertible into the Company's Series A common stock at a
conversion price of $21.13 per share. The Company has the option to redeem the
Debentures at a redemption price of 100%.
The Company is required to redeem annually 10% of the principal amount of the
Debentures, so as to retire 80% of the Debentures prior to maturity. During 1996
and 1995, the Company repurchased $3,715,000 and $3,000,000 principal amount of
Debentures, respectively, thus satisfying the 1996 and 1997 redemption
requirements. The gains on redemption of $273,000 and $376,000 in 1996 and 1995,
respectively, have been included in other income in the consolidated statements
of operations. The Debentures are uncollateralized and subordinated to all
senior indebtedness. The costs of issuing the Debentures have been deferred and
are being amortized over the life of the debt.
The Debenture Indenture limits the amount of dividends the Company may declare
and limits the funds the Company and its subsidiaries may use to purchase,
redeem or retire the Company's capital stock. The Indenture also provides that
the Company must maintain a minimum tangible net worth or offer to purchase 10%
of the principal amount of the Debentures issued at their principal amount plus
accrued interest.
The fair value of the Debentures based on quoted market price at December 31,
1996 and 1995 was $15,534,000 and $17,547,000, respectively.
The bank term loan requires the Company to maintain covenants including
liquidity, debt to equity, interest coverage and minimum net worth. The Company
was not in compliance with the covenants at December 31, 1996, but received a
waiver of compliance from the lender. The fair value of the bank term loan,
based on rates currently available with similar terms and maturities, at
December 31, 1996 and 1995 was $2,324,000 and $4,277,000, respectively.
21
<PAGE> 16
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Years Ending December 31 (Thousands of dollars)
- -------------------------------------------------------
<S> <C>
1997 $ 2,159
1998 3,038
1999 3,226
2000 3,206
2001 3,172
Thereafter 6,280
- -------------------------------------------------------
$21,081
=======
</TABLE>
NOTE 8 - LEASES
The Company leases certain office facilities and equipment under operating
leases. These leases generally provide for renewal options and the office leases
include escalation clauses based on increases in real estate taxes and operating
expenses. For certain office facilities, the Company obtains reimbursements for
rental expense under long-term U.S. Government projects.
Minimum annual lease commitments under noncancelable leases principally for
office facilities are as follows:
<TABLE>
<CAPTION>
Years ending December 31 (Thousands of dollars)
- -----------------------------------------------------------
<S> <C>
1997 $ 6,302
1998 4,840
1999 4,778
2000 3,485
2001 2,468
Thereafter 16,699
- -----------------------------------------------------------
$ 38,572
========
</TABLE>
The following is a summary of rental expense for the years ended December 31:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
- -----------------------------------------------------------------
<S> <C> <C> <C>
Gross rental expense $ 18,331 $ 18,468 $ 17,588
Reimbursed as direct
project expenses (6,585) (8,214) (6,987)
- -----------------------------------------------------------------
Net rental expense $ 11,746 $ 10,254 $ 10,601
======================================
</TABLE>
NOTE 9 - COMMON STOCK
The Company's common stock and Series A common stock are equivalent except that
each share of common stock has one vote per share and each share of Series A
common stock has one-tenth of one vote per share. Subject to certain
restrictions, shares of common stock are convertible on a one-for-one basis into
Series A common stock.
The Company has a Stock-Based Incentive Compensation Plan (Option Plan) that
provides for the grant to employees of nonqualified stock options and options
designed to qualify as "incentive stock options" under the Internal Revenue
Code. An option gives the participant the right to purchase from the Company a
specified number of shares of Series A common stock for a specified price during
a specified period not exceeding 10 years. A total of 1,075,000 shares of Series
A common stock has been reserved for issuance under the Option Plan pursuant to
the exercise of options. All options must have an exercise price of not less
than fair market value of the underlying shares on the date of grant. Options
granted under the Option Plan have all had a life of 10 years and vest at the
rate of 20% on each of the first five anniversary dates of the grant. Payment by
option holders upon exercise of an option may be made in cash, or by delivering
previously owned shares of common stock, Series A common stock or any
combination thereof.
Option activity under the Option Plan is summarized as follows:
22
<PAGE> 17
<TABLE>
<CAPTION>
Option Price Weighted Average
Number of Shares per Share Price per Share
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at January 1, 1994 539,920 $ 7.75 - $ 14.50 $10.51
Granted 147,400 $ 6.63 $ 6.63
Exercised -- -- --
Canceled (79,300) $ 6.63 - $ 14.50 $10.98
- -----------------------------------------------------------------------------------------------------
Outstanding at December 31, 1994 608,020 $ 6.63 - $ 14.50 $ 9.51
Granted 96,000 $ 4.44 - $ 5.19 $ 5.13
Exercised -- -- --
Canceled (73,300) $ 5.19 - $ 14.50 $ 8.76
- -----------------------------------------------------------------------------------------------------
Outstanding at December 31, 1995 630,720 $ 4.44 - $ 14.50 $ 8.93
Granted 159,600 $ 4.00 - $ 4.75 $ 4.61
Exercised -- -- --
Canceled (134,420) $ 4.75 - $ 14.50 $ 8.85
- -----------------------------------------------------------------------------------------------------
Outstanding at December 31, 1996 655,900 $ 4.00 - $ 14.50 $ 7.89
Exercisable at December 31, 1994 241,360 $ 7.75 - $ 14.50 $ 8.94
Exercisable at December 31, 1995 317,920 $ 6.63 - $ 14.50 $ 9.21
Exercisable at December 31, 1996 346,580 $ 4.44 - $ 14.50 $ 9.05
- -----------------------------------------------------------------------------------------------------
</TABLE>
In addition, a restricted stock award of 20,000 shares was made to an officer
during 1992. At December 31, 1996, there were 304,800 shares available for
further grants under the Option Plan. The weighted average remaining contractual
life of options outstanding at December 31, 1996 was 6.4 years.
The Company also has an Employee Stock Purchase Plan (Purchase Plan), which
provides for the purchase of Series A common stock by eligible employees. The
Purchase Plan is designed to qualify as a noncompensatory employee stock
purchase plan as defined in Section 423 of the Internal Revenue Code. A total of
2,425,000 shares of Series A common stock have been reserved for issuance under
the Purchase Plan. The price per share of Series A common stock is equal to 85%
of the lower of the closing market price of Series A common stock on the first
trading day of each semi-annual purchase period, or the last trading day of such
purchase period. During the years ended December 31, 1996, 1995 and 1994,
respectively, 291,120, 341,603 and 329,500 shares were issued under the Purchase
Plan at prices ranging from $2.87 per share to $5.21 per share. Statement of
Financial Accounting Standards No. 123, which the Company has elected not to
adopt, would require the determination of compensation cost for awards under the
Option Plan and issuances under the Purchase Plan based on their fair value. If
the 1995 and 1996 awards and issuances had been accounted for in accordance
with Statement No. 123, the Company's pro forma net income (loss) and net income
(loss) per share for the years ended December 31 would approximate the amounts
below:
<TABLE>
<CAPTION>
(Thousands of dollars,
except per share amounts) 1996 1995
- ----------------------------------------------------------
<S> <C> <C>
Net income (loss) $(16,834) $1,369
Net income (loss)
per common share $ (1.76) $ .14
- ----------------------------------------------------------
</TABLE>
The impacts of applying Statement No. 123 in the pro forma disclosure are not
indicative of future amounts. Statement No. 123 does not apply to awards and
issuances prior to 1995, and additional awards and issuances in future years are
anticipated.
23
<PAGE> 18
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - EMPLOYEE BENEFIT PLANS
The Company has a defined benefit pension plan (Retirement Plan) covering
substantially all of its employees. The benefits are based on a career average
formula, which provides credit for each year based on that year's compensation
and hours of service. The Company's funding policy is to contribute annually not
less than the minimum required by applicable law and regulation nor more than
the maximum amount that can be deducted for federal income tax purposes.
Retirement Plan assets consist of investments in both fixed income and equity
instruments.
The following table sets forth the Retirement Plan's funded status and amounts
recognized in the Company's financial statements at December 31:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated plan benefits:
Accumulated benefit obligation,
including vested benefits of $27,970
in 1996 and $24,567 in 1995 $(28,998) $(25,965)
- ----------------------------------------------------------------------------
Projected benefit obligation (33,942) (31,053)
Plan assets at fair value 26,209 20,955
- ----------------------------------------------------------------------------
Projected benefit obligation in
excess of plan assets (7,733) (10,098)
Unrecognized net obligation at
transition being recognized
over 21 years 357 389
Unrecognized net loss from
past experience different
from that assumed 2,513 4,828
Unrecognized prior service cost (93) (107)
Additional liability -- (22)
- ----------------------------------------------------------------------------
Accrued pension cost $ (4,956) $ (5,010)
===============================
</TABLE>
Net pension cost for the years ended December 31 includes the following
components:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 2,352 $ 1,754 $ 2,405
Interest cost on projected
obligation 2,421 1,918 1,633
Actual return on plan assets (2,798) (4,041) 559
Net amortization and deferral 1,165 2,441 (1,676)
- ----------------------------------------------------------------------
Net pension cost $ 3,140 $ 2,072 $ 2,921
===================================
</TABLE>
The projected benefit obligation was determined using an assumed rate of
compensation increase of 5% at December 31, 1996 and December 31, 1995 and
weighted average discount rates of 7.50% at December 31, 1996 and 7.25% at
December 31, 1995. The change in the weighted average discount rate had the
effect of decreasing the projected benefit obligation by $1,683,000 at December
31, 1996. The expected long-term rate of return on assets was 9.25% at December
31, 1996 and December 31, 1995.
The Company has an Employees' Savings Plan which provides that the Company will
supplement an employee's contribution (which may not exceed 12% of
compensation). Employees are eligible to participate in the Savings Plan at the
beginning of the quarter after completion of one year of service. The Company
has agreed to contribute to the Savings Plan an amount equal to 50% of the first
6% of an employee's contributions. Company contributions resulted in charges to
earnings of $2,335,000, $2,453,000 and $2,581,000 for the years ended December
31, 1996, 1995 and 1994, respectively.
The Company has two nonqualified supplementary retirement plans. The Pension
Restoration Plan provides additional retirement benefits to those executives
whose compensation exceeds that includable under the Retirement Plan. The
Company's Executive Supplemental Benefit Plan provides certain executive
officers supplemental retirement benefits upon their retirement from the Company
or preretirement death benefits. The amount of these benefits is based upon
years of participation in the plan multiplied by an annual retirement benefit
amount, which is determined by the
24
<PAGE> 19
Company. The Company's Supplemental Split Dollar Life Insurance Plan provides
certain other officers and key employees with a lump sum retirement benefit,
upon retirement from the Company, of $5,000 plus an additional $5,000 for each
year of participation in excess of 10 years, or a preretirement death benefit of
$200,000. The Company has purchased life insurance contracts on the lives of the
participants. The Company owns the contracts and is the beneficiary of contracts
on the lives of the Executive Supplemental Benefit Plan participants. The amount
of coverage is designed to provide sufficient proceeds to recover the costs of
the plan. The cash value of the life insurance contracts, included in other
assets in the accompanying consolidated balance sheets, was $5,013,000 and
$4,345,000 at December 31, 1996 and 1995, respectively. Premiums for the years
ended December 31, 1996, 1995 and 1994 for these plans were $646,000, $682,000
and $674,000, respectively.
The following table sets forth the supplemental plans' funded status and amounts
recognized in the Company's financial statements at December 31:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated plan benefits:
Accumulated benefit obligation,
including vested benefits of
$1,661 in 1996 and $1,248 in 1995 $(2,740) $(2,310)
- ----------------------------------------------------------------------
Projected benefit obligation (2,932) (2,505)
Plan assets at fair value -- --
Projected benefit obligation in
excess of plan assets (2,932) (2,505)
Unrecognized net obligation at
transition being recognized
over 15 years 91 109
Unrecognized net loss from
past experience different from
that assumed 1,123 1,093
Additional liability (1,081) (1,034)
- ----------------------------------------------------------------------
Accrued supplemental
pension liability $(2,799) $(2,337)
============================
</TABLE>
Net supplemental pension cost for the years ended December 31 includes the
following components:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------
<S> <C> <C> <C>
Service cost $105 $ 77 $ 85
Interest cost on projected
obligation 200 179 163
Return on plan assets -- -- --
Amortization 117 81 102
- --------------------------------------------------------
Net supplemental
pension cost $422 $337 $350
========================
</TABLE>
The projected benefit obligation was determined using weighted average discount
rates of 7.50% at December 31, 1996 and 7.25% at December 31, 1995. The change
in the weighted average discount rate had the effect of decreasing the projected
benefit obligation by $79,000 at December 31, 1996.
The Company maintains medical and dental plans for its eligible employees on a
primarily self-funded basis. Claims in excess of specified individual and
aggregate amounts are covered by insurance. Costs and premiums in the financial
statements for the years ended December 31, 1996, 1995 and 1994 for these plans
were $3,363,000, $3,978,000 and $3,998,000, respectively.
The Company provides health care benefits to retirees based on the cost of such
benefits in the year of retirement. The benefits are funded on a cash basis.
25
<PAGE> 20
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The net periodic cost for postretirement health care benefits for the years
ended December 31 includes the following components:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
- ------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 24 $ 51 $152
Interest cost 54 74 122
Amortization of transition
obligation 74 74 74
Amortization of unrecognized
net gain (106) (93) --
- ------------------------------------------------------------
$ 46 $106 $348
===========================
</TABLE>
The amounts recognized in the Company's balance sheets at December 31, were as
follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (645) $ (725)
Active plan participants (131) (336)
(776) (1,061)
Unrecognized net gain (1,048) (828)
Unrecognized net obligation 1,184 1,258
- -------------------------------------------------------------------------
Accrued postretirement benefit liability $ (640) $ (631)
=====================
</TABLE>
The accumulated postretirement benefit obligation was determined using weighted
average discount rates of 7.50% at December 31, 1996 and 7.25% at December 31,
1995. A cost increase of 11% for covered health care benefits was assumed for
1996. The rate was assumed to decrease ratably to 5.5% after 7 years and remain
at that level thereafter. The effect of a one percentage point increase in the
assumed health care cost trend rate for each future year would decrease the
aggregate of service cost and interest cost by approximately 27% and the
accumulated postretirement benefit obligation by approximately 7%.
NOTE 11 - CONTINGENCIES
As collateral for performance on contracts, the Company is contingently liable
at December 31, 1996 in the amount of $7,869,000, under standby letters of
credit.
A substantial portion of the Company's gross revenues is derived from work
involving hazardous materials, toxic wastes and other pollutants. Such efforts
frequently entail significant risks of liability for environmental damage,
personal injury, and fines and costs imposed by regulatory agencies. A
substantial number of the Company's contracts require indemnification of a
client for performance claims, damages or losses unless such injury or damage is
solely the result of the client's negligence or willful acts. The Company has
been able to insure against most liabilities it may incur in this regard.
The Company has obtained coverage with commercial carriers to insure against
pollution liability claims. Although this insurance covers many of the Company's
environmental exposures, there are instances where project-specific pollution
insurance policies are necessary. The Company will continue to evaluate
exposures associated with each project to determine if additional coverage is
necessary. The Company continues to be partially self-insured through its
subsidiary, Cardinal Indemnity Company of North America, a captive insurance
company. Cardinal provides professional liability and pollution coverage for
deductible amounts of the commercial insurance coverage.
While the insurance carried by the Company may not be sufficient to cover all
claims that may arise, and while insurance carriers may not continue to make
coverage available to the Company, management believes it has provided an
adequate level of insurance coverage.
26
<PAGE> 21
Performance of a 1993 remediation contract was subject to several delays and in
1994 the contract was partially terminated for convenience by the client. The
Company submitted a claim for its costs incurred as a result of the delays and
termination. The Company recorded net revenues aggregating approximately
$1,520,000 in the year ended December 31, 1994 as an estimate of the amount to
be received in settlement of its claim and an additional $1,800,000 in the year
ended December 31, 1995 when negotiation of the claim was completed.
The Company is subject to certain claims and lawsuits in connection with work
performed in the ordinary course of its business. In the opinion of management,
such claims and lawsuits will not have a material adverse effect on the
financial position or results of operations of the Company.
NOTE 12 - INCOME TAXES
The components of the provision (benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995 1994
- ------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $(2,061) $ 2,371 $(799)
State 46 204 (133)
- ------------------------------------------------------------------
(2,015) 2,575 (932)
- ------------------------------------------------------------------
Deferred
Federal (4,729) (1,533) 27
State 599 (191) 222
- ------------------------------------------------------------------
(4,130) (1,724) 249
- ------------------------------------------------------------------
$(6,145) $ 851 $(683)
==================================
</TABLE>
Temporary differences that give rise to deferred tax assets and liabilities at
December 31 are as follows:
<TABLE>
<CAPTION>
(Thousands of dollars) 1996 1995
- ----------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Uncollectible accounts $ 603 $ 719
Other accruals 665 922
Pensions 1,957 1,686
Self insurance 2,008 1,726
Depreciation 3,042 914
Facility closure 2,841 579
State tax loss carryforwards 1,193 467
Other 539 616
- ----------------------------------------------------------
$12,848 $ 7,629
- ----------------------------------------------------------
Deferred tax liabilities:
Amortization $ (726) $ (921)
Retainage (435) (842)
Award fees (140) (140)
Other (263) (425)
- ----------------------------------------------------------
(1,564) (2,328)
Valuation allowance (2,532) (665)
- ----------------------------------------------------------
Net deferred income taxes $ 8,752 $ 4,636
=====================
</TABLE>
A valuation allowance has been established for deferred tax assets relating to
state income tax benefits since it is more likely than not that these assets
will not be realized.
27
<PAGE> 22
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The reconciliations of the effective tax rate to that based on the federal
statutory rate for the years ended December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 34.0% 34.0% 34.0%
State income taxes,
net of federal taxes (1.9) 0.4 3.3
Amortization of goodwill (4.2) 2.1 (2.8)
Travel-related meals (0.5) 4.9 (5.9)
Tax exempt interest -- -- 5.8
Other, net (0.4) (5.4) 3.9
- -----------------------------------------------------------
Effective tax rate 27.0% 36.0% 38.3%
===========================
</TABLE>
NOTE 13 - MAJOR CUSTOMER INFORMATION
Gross revenues from contracts with the U.S. Government and its agencies amounted
to $145,207,000, $176,909,000 and $157,529,000 for the years ended December 31,
1996, 1995 and 1994, respectively. Included in these totals are revenues of
$55,488,000, $75,452,000 and $55,967,000 from contracts with the U.S. Department
of Defense; $46,285,000, $60,287,000 and $53,062,000 from contracts with the
U.S. Environmental Protection Agency; and $35,230,000, $34,978,000 and
$44,436,000 from contracts with the U.S. Department of Energy.
NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for income taxes were $101,000, $3,402,000 and $91,000 in the
years ended December 31, 1996, 1995 and 1994, respectively. The Company received
refunds of previously paid income taxes aggregating $759,000 and $1,106,000 in
the years ended December 31, 1996 and 1995, respectively.
Cash payments for interest were $1,859,000, $2,187,000 and $2,500,000 in the
years ended December 31, 1996, 1995 and 1994, respectively.
Capital lease obligations of $334,000, $96,000 and $233,000 were incurred during
the years ended December 31, 1996, 1995 and 1994, respectively, when the Company
entered into leases for office equipment.
NOTE 15 - RELATED PARTY TRANSACTIONS
The Company uses the services of a travel agency that is owned by one of its
directors. Under an agreement entered into in early 1996, the Company pays the
travel agency a monthly fee and receives rebates from the travel agency of the
commissions that are earned from providers of transportation and other
travel-related services. Net payments to the travel agency included in general
and administrative expenses in the accompanying consolidated statement of
operations in 1996 aggregated $286,000.
28
<PAGE> 23
NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial information for 1996 and 1995 is presented in the following
table:
<TABLE>
<CAPTION>
First Second Third Fourth
(Thousands of dollars, except per share data) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Gross revenues $67,586 $66,186 $ 63,482 $66,134
Net revenues $47,089 $46,250 $ 42,276 $40,915
Income (loss) from operations $ (19) $ (973) $(22,780)* $ 591
Net income (loss) $ 17 $ (670) $(16,603) $ 601
Net income (loss) per share $ -- $ (.07) $ (1.73) $ .06
- --------------------------------------------------------------------------------------------------------------------------
1995
Gross revenues $75,601 $76,403 $ 79,737 $78,117
Net revenues $52,724** $52,631 $ 52,618** $48,300
Income (loss) from operations $ 1,120 $ 1,338 $ 1,352 $(1,187)***
Net income (loss) $ 572 $ 962 $ 748 $ (768)
Net income (loss) per share $ .06 $ .10 $ .08 $ (.08)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes a restructuring charge of $14,421 consisting principally of a
writedown of assets and other expenses associated with a plan to withdraw
from the analytical laboratory business, costs to close or reduce the size
of certain office facilities, and severance cost for work force reductions
and an impairment charge of $3,146 to recognize impairment in value of
thermal incineration assets and a minority interest in a bioremediation
company.
** Includes approximately $600 and $1,200 in the first and third quarters,
respectively, representing completion of a remediation contract
negotiation.
*** Includes a $1,300 provision for the closing of a laboratory facility,
consisting principally of lease termination costs and the writedown of
leasehold improvements and equipment.
29
<PAGE> 24
ROY F. WESTON, INC. AND SUBSIDIARIES
BOARD OF DIRECTORS
<TABLE>
<CAPTION>
<S> <C> <C>
JOSEPH BORDOGNA, PH.D. (1, 3, 5) JAMES E. KSANSNAK (2, 4) THOMAS M. SWOYER, JR.
Chairman of the Board Executive Vice President and Roy F. Weston, Inc.
Roy F. Weston, Inc. and Chief Financial Officer
Acting Deputy Director ARAMARK Corporation
National Science Foundation A. FREDERICK THOMPSON, PH.D., P.E.(1)
WILLIAM J. MARRAZZO (1, 5)
HENRY L. DIAMOND, ESQ. (3) President and ROY F. WESTON, P.E., DEE
Partner Chief Executive Officer Chairman Emeritus
Beveridge & Diamond, P.C. Roy F. Weston, Inc. Roy F. Weston, Inc.
WAYNE F. HOSKING, ESQ. MARVIN O. SCHLANGER (2, 3, 4) Committees:
Roy F. Weston, Inc. Executive Vice President and 1 Member, Executive Committee
Chief Operating Officer 2 Member, Audit Committee
ROBERT G. JAHN, PH.D. (2, 4) ARCO Chemical Company 3 Member, Compensation Committee
Professor of Aerospace Sciences 4 Member, Nominating Committee
and Dean Emeritus KATHERINE W. SWOYER (1, 2, 4) 5 Ex officio member of all Committees
School of Engineering and Applied President
Science, Princeton University International Corporate Travel
Services, Inc.
SENIOR MANAGEMENT
PETER J. MARKS JOHN BROOKS Robert B. Biggs, Ph.D., P.G.
Executive Vice President and Vice President and Manager Vice President and Manager
Chief Operating Officer Emerging Business Sector National Technical Resources
Division
PATRICK G. MCCANN JOHN D. DIFILIPPO, P.E.
Executive Vice President Vice President and Manager JOHN W. THORSEN, P.E.
Strategic Development Government Sector Vice President and Manager
Project Management Division
M. CHRISTINE MURPHY, CPA STEPHEN G. LEWIS
Executive Vice President Vice President and Manager ARNOLD P. BORISH, ESQ.
Chief Financial Officer and Strategic Environmental Services Sector Vice President, General Counsel and
Manager, Quality Assurance/ Corporate Secretary
Finance Division KURT S. STIMPSON
Vice President and Manager BRUCE E. FLAMM, CPA
W. DENNIS MORAN Industrial Sector Vice President and Treasurer
Vice President, Roy F. Weston, Inc.
and President, Weston International VISHWA K. VARMA WILLIAM G. MECAUGHEY, CPA
Vice President and Manager Vice President and Controller
Federal Sector
</TABLE>
30
<PAGE> 25
OFFICE LOCATIONS
CORPORATE HEADQUARTERS
Roy F. Weston, Inc.
1 Weston Way
West Chester, PA 19380-1499
Phone: (610) 701-3000
Fax: (610) 701-3186
Website: http://www.rfweston.com
FULL-SERVICE OFFICES
ALABAMA, Auburn
CALIFORNIA, Concord, Sherman Oaks
COLORADO, Denver
CONNECTICUT, Rocky Hill
GEORGIA, Norcross
ILLINOIS, Chicago, Vernon Hills
MARYLAND, Rockville
MASSACHUSETTS, Boston
MICHIGAN, Okemos
NEW HAMPSHIRE, Manchester
NEW JERSEY, Edison
NEW MEXICO, Albuquerque
NEW YORK, Carle Place, New York City, Valhalla
NORTH CAROLINA, Morrisville
OHIO, Cincinnati
OREGON, Portland
PENNSYLVANIA, Philadelphia, West Chester
TENNESSEE, Oak Ridge
TEXAS, Austin, Fort Worth, Houston, San Antonio
WASHINGTON, Richland, Seattle WEST
VIRGINIA, Charleston
PROJECT OFFICES WORLDWIDE
(C) 1997 Roy F. Weston, Inc.
PRINITED ON RECYCED PAPER
96D-0135
31
<PAGE> 26
Roy F. Weston, Inc.
STOCKHOLDER INFORMATION
TRANSFER AGENT AND REGISTRAR
American Stock Transfer
and Trust Company
40 Wall Street
New York, New York 10005
CERTIFIED PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103-2962
ANNUAL MEETING
The annual meeting of stockholders will be held on Monday, May 19, 1997, 11:00
a.m., at WESTON headquarters:
Roy F. Weston, Inc.
1 Weston Way
West Chester, Pennsylvania 19380-1499
COMPANY INFORMATION
News media representatives and others seeking general business information about
the Company may contact:
Corporate Communications
Roy F. Weston, Inc.
1 Weston Way
West Chester, Pennsylvania 19380-1499
Telephone: (610) 701-3182
FINANCIAL INFORMATION
Analysts, investors and others seeking information about WESTON's financial
performance or copies of financial reports, including the SEC Form 10-K, may
contact the Company. As a cost-saving measure, the Company no longer sends
quarterly reports. If you wish to receive quarterly information, please contact
the Company.
Requests should be directed to:
Bruce E. Flamm
Vice President and Treasurer
Roy F. Weston, Inc.
1 Weston Way
West Chester, Pennsylvania 19380-1499
Telephone: (610) 701-4535
COMPANY STOCK
The Company's Series A common stock is traded in the NASDAQ National Market
System under the symbol "WSTNA." There is no established public trading market
for the Company's common stock. The following table sets forth the range of high
and low per share closing prices for the Series A common stock as reported by
NASDAQ:
<TABLE>
<CAPTION>
High Low
- ----------------------------------------------------------
<S> <C> <C>
1995
First Quarter $ 6.00 $4.38
Second Quarter $ 5.51 $4.38
Third Quarter $ 5.88 $4.38
Fourth Quarter $ 6.25 $5.13
- ----------------------------------------------------------
1996
First Quarter $ 5.38 $4.31
Second Quarter $ 5.38 $4.50
Third Quarter $ 4.75 $4.13
Fourth Quarter $ 4.38 $3.38
- ----------------------------------------------------------
</TABLE>
At December 31, 1996, there were 2,637 holders of record of Series A common
stock and 30 holders of common stock. The Company has not paid any cash
dividends since 1978. The Board of Directors intends to retain earnings for the
foreseeable future for the expansion of the Company's business.
<PAGE> 1
Exhibit 21
LIST OF SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
State of Incorporation
----------------------
<S> <C>
Cardinal Indemnity Company of North America Vermont
Roy F. Weston (Delaware), Inc. Delaware
Weston International Holdings, Inc. (d/b/a Weston International) Delaware
Roy F. Weston of New York, Inc. New York
Roy F. Weston (IPR), Inc. Delaware
</TABLE>
21
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Roy F. Weston, Inc. and Subsidiaries on Forms S-8 (File Nos.
33-56755, 33-56757 and 33-60981) of our reports dated February 5, 1997 on our
audits of the consolidated financial statements and financial statement schedule
of Roy F. Weston, Inc. and Subsidiaries as of December 31, 1996 and 1995 and for
the years ended December 31, 1996, 1995, and 1994 which reports are either
included in or incorporated by reference into this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 27, 1997
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of December 31, 1996 and the consolidated statement
of operations for the year ended December 31, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,878
<SECURITIES> 7,616
<RECEIVABLES> 83,631<F1>
<ALLOWANCES> 1,510
<INVENTORY> 0
<CURRENT-ASSETS> 111,866
<PP&E> 76,274
<DEPRECIATION> 64,884
<TOTAL-ASSETS> 141,472
<CURRENT-LIABILITIES> 52,910
<BONDS> 18,922
0
0
<COMMON> 1,151
<OTHER-SE> 64,939
<TOTAL-LIABILITY-AND-EQUITY> 141,472
<SALES> 0
<TOTAL-REVENUES> 263,388
<CGS> 0
<TOTAL-COSTS> 286,569
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 291
<INTEREST-EXPENSE> 1,951
<INCOME-PRETAX> (22,800)
<INCOME-TAX> (6,145)
<INCOME-CONTINUING> (16,655)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,655)
<EPS-PRIMARY> (1.74)
<EPS-DILUTED> 0
<FN>
<F1>Includes 18,151 of unbilled costs and estimated earnings thereon.
</FN>
</TABLE>
