<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Greiner Engineering, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Board of Directors of Greiner Engineering, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Greiner Engineering, Inc. common stock, par value $.50 per share
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
4,704,642 shares of Greiner Engineering, Inc. common stock
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
$13.50 cash plus fair market value 0.298 shares of URS Corporation
common stock, $.01 per share, based on the closing price of URS common
stock on January 22, 1996 per Exchange Act Rule 0-11(4)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$72,612,667
- --------------------------------------------------------------------------------
(5) Total fee paid:
$14,523
- --------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
GREINER ENGINEERING, INC.
909 EAST LAS COLINAS BOULEVARD
SUITE 1900
IRVING, TEXAS 75039
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
GREINER ENGINEERING, INC.
TO BE HELD MARCH 26, 1996
To the Stockholders of Greiner Engineering, Inc.:
NOTICE is hereby given that the Annual Meeting of the Stockholders of
Greiner Engineering, Inc., a Nevada corporation ("Greiner"), will be held at
the Doubletree Hotel at Park West, 1590 LBJ Freeway, Dallas, Texas 75234, at
11:00 a.m. local time on Tuesday, March 26, 1996, for the following purposes:
(1) To consider and vote on a proposal to approve and adopt a merger
pursuant to which, among other things, (a) a wholly-owned subsidiary of URS
Corporation will be merged with and into Greiner (the "Merger"), which will
result in Greiner becoming a wholly-owned subsidiary of URS Corporation
("URS"), and (b) each stockholder of Greiner will receive for each share of
Greiner Common Stock owned as of the Effective Time of the Merger $13.50 in
cash plus 0.298 shares of URS Common Stock. Details of the Merger are set
forth in the accompanying Proxy Statement / Prospectus, which you should read
carefully;
(2) To elect a Board of Directors to hold office until the next annual
meeting and until their successors are elected, if for any reason the Merger is
not consummated; and
(3) To transact such other business as may be properly brought before the
meeting.
The record date for the determination of stockholders entitled to notice of
and to vote at the meeting is February 22, 1996.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
By Order of the Board of Directors
MELISSA K. HOLDER
Corporate Secretary
February 20, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND
RETURN THE ACCOMPANYING PROXY WITHOUT DELAY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IN THE EVENT YOU ATTEND THE MEETING.
<PAGE> 3
PROXY STATEMENT / PROSPECTUS
GENERAL INFORMATION
This Proxy Statement / Prospectus is furnished (1) in connection with the
solicitation by Greiner of proxies to be voted at the Annual Meeting of
Stockholders of Greiner (the "Greiner Meeting") to be held on Tuesday, March
26, 1996 at the Doubletree Hotel at Park West, 1590 LBJ Freeway, Dallas, Texas
75234, at 11:00 a.m., local time, with respect to (a) the Merger of URS
Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of
URS, with and into Greiner pursuant to the terms and conditions of that certain
Agreement and Plan of Merger among Greiner, URS and URS Acquisition Corporation
(the "Merger Agreement"), dated January 10, 1996, and (b) the election of
directors of Greiner to serve if the Merger is not consummated for any reason,
and (2) as the Prospectus of URS covering the issuance of shares of URS common
stock, par value $.01 per share ("URS Common Stock"), to the stockholders of
Greiner pursuant to the Merger. All information herein with respect to URS has
been furnished by URS, and all information herein with respect to Greiner has
been furnished by Greiner. Capitalized terms not otherwise defined herein have
the meanings assigned to such terms in the Merger Agreement.
As a result of the Merger, Greiner will become a wholly-owned subsidiary of
URS. Each share of Greiner common stock, par value $.50 per share ("Greiner
Common Stock"), issued and outstanding immediately prior to the Effective Time
of the Merger (as defined in the Merger Agreement) will be converted into the
right to receive $13.50 in cash plus 0.298 shares of URS Common Stock,
representing an aggregate amount of approximately $64,000,000 and approximately
1,400,000 shares of URS Common Stock. The consideration to be delivered in the
Merger is referred to herein as the "Merger Consideration." The closing of the
Merger will occur promptly after the satisfaction of the conditions precedent
contained in the Merger Agreement. All options outstanding at the Effective
Time of the Merger that were issued under the 1981 Stock Option Plan of Greiner
or under the 1991 Stock Option Plan of Greiner (collectively, the "Greiner
Options") will be cancelled; provided, however, that the holders of Greiner
Options will be entitled to receive a cash payment equal to the excess, if any,
between the value of the per share Merger Consideration, based on the closing
price per share of URS Common Stock as quoted in The Wall Street Journal on the
trading day immediately preceding the Closing Date, over the exercise price of
the option. See "The Merger - The Merger Agreement"; "The Merger - Merger
Consideration;" "The Merger - Effective Time of the Merger."
As a result of the Merger, former stockholders of Greiner will hold
approximately 16% of the issued and outstanding shares of URS Common Stock.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN MATTERS WHICH SHOULD BE
CONSIDERED BY THE STOCKHOLDERS OF GREINER WITH RESPECT TO THE MERGER.
This Proxy Statement / Prospectus and the accompanying form of proxy are
first being mailed to stockholders of Greiner on or about February 23, 1996.
--------------------
NEITHER THE MERGER NOR THE SECURITIES OF URS TO BE ISSUED IN CONNECTION
WITH THE MERGER HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT / PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Proxy Statement / Prospectus is February 20, 1996.
ii
<PAGE> 4
AVAILABLE INFORMATION
URS and Greiner are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by URS and Greiner with the Commission
can be inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission located
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. URS Common Stock and Greiner Common Stock are quoted on the
New York Stock Exchange and the Pacific Stock Exchange. Reports and other
information concerning URS and Greiner can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
URS has filed with the Commission a Registration Statement covering the
shares of URS Common Stock to be issued as a result of the Merger. This Proxy
Statement / Prospectus, which constitutes a part of the Registration Statement
on Form S-4 (the "Registration Statement"), does not contain all of the
information set forth in the Registration Statement, certain items of which are
contained in schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement, including the schedules and
exhibits filed as a part thereof or incorporated by reference therein.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each such statement is qualified
in its entirety by reference to the copy of the applicable document filed as an
exhibit hereto or as otherwise filed with the Commission. The Registration
Statement and the exhibits and schedules thereto may be inspected, without
charge, and copies thereof may be obtained at prescribed rates, at the offices
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
URS hereby undertakes to supply by means of a post-effective amendment all
information concerning the Merger and URS that were not the subject of and
included in the Registration Statement when it became effective.
--------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT / PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY URS OR GREINER. THIS PROXY STATEMENT / PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO
PURCHASE, THE SECURITIES OFFERED BY THIS PROXY STATEMENT / PROSPECTUS, OR A
SOLICITATION OF A PROXY FROM ANY PERSON, IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT / PROSPECTUS NOR ANY DISTRIBUTION
OF THE SECURITIES MADE UNDER THIS PROXY STATEMENT / PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF URS OR GREINER AT ANY TIME SUBSEQUENT TO THE DATE OF THIS PROXY
STATEMENT / PROSPECTUS.
--------------------
URS was incorporated in California in 1951 and reincorporated in Delaware
in 1976. The term "URS" as used herein, includes all subsidiaries and
predecessors of URS, except as the context may otherwise require. Greiner was
incorporated in California in 1954 and reincorporated in Nevada in 1986. The
term "Greiner" as used herein, includes all subsidiaries and predecessors of
Greiner, except as the context may otherwise require.
iii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Greiner Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Recommendation of the Board of Directors of Greiner . . . . . . . . . . . . . . . 5
Selected URS Historical Financial Data . . . . . . . . . . . . . . . . . . . . . . 6
Selected Greiner Historical Financial Data . . . . . . . . . . . . . . . . . . . . 7
Selected Pro Forma Combined Financial Data . . . . . . . . . . . . . . . . . . . . 8
Per Share Data - Historical and Pro Forma . . . . . . . . . . . . . . . . . . . . 9
Market Price Data of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 10
Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THE GREINER STOCKHOLDERS' MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Place, Time, and Date of Greiner Meeting . . . . . . . . . . . . . . . . . . . . . 12
Purpose of the Greiner Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Cost of Soliciting Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conversion and Exchange of Greiner Common Stock Certificates . . . . . . . . . . . 18
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Greiner Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Reasons for the Merger; Recommendation of the Board of Directors of Greiner . . . 20
Directors and Executive Officers after the Merger . . . . . . . . . . . . . . . . 21
Registration and Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . 28
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 30
Financing of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Pro Forma Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 31
Interests of Certain Persons in the Transaction . . . . . . . . . . . . . . . . . 36
</TABLE>
iv
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<TABLE>
<CAPTION>
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<S> <C>
ANNUAL ELECTION OF GREINER BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 37
Nominees for the Greiner Board of Directors . . . . . . . . . . . . . . . . . . . 37
1995 Meetings of the Greiner Board of Directors . . . . . . . . . . . . . . . . . 38
Committees of the Greiner Board of Directors . . . . . . . . . . . . . . . . . . . 38
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Compensation Committee Report on Executive Compensation . . . . . . . . . . . . . 40
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Selected URS Historical Financial Data . . . . . . . . . . . . . . . . . . . . . . 42
URS Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . . . . . . . . . . . . 43
Selected Greiner Historical Financial Data . . . . . . . . . . . . . . . . . . . . 46
Greiner Management's Discussion and Analysis
of Financial Condition and Results of Operations . . . . . . . . . . . . . . 47
INFORMATION CONCERNING URS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Contract Pricing and Terms of Engagement . . . . . . . . . . . . . . . . . . . . . 52
Backlog, Project Designations and Indefinite Delivery Contracts . . . . . . . . . 52
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Description of URS Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . 54
INFORMATION CONCERNING GREINER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Sales and Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 56
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
URS MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Executive Officers of URS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Directors of URS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Directors' Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Principal URS Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
GREINER MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Identification of Executive Officers and Other Key Employees . . . . . . . . . . . 67
Executive Compensation and Other Information . . . . . . . . . . . . . . . . . . . 69
Beneficial Ownership of Greiner Common Stock . . . . . . . . . . . . . . . . . . . 73
Principal Stockholders of Greiner . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
v
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<TABLE>
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<S> <C>
COMPARISON OF RIGHTS OF STOCKHOLDERS OF URS AND GREINER . . . . . . . . . . . . . . . . . 75
Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Stockholder Power to Call Special Stockholders Meetings . . . . . . . . . . . . . 75
Size of Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Classified Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Business Combinations / Reorganizations . . . . . . . . . . . . . . . . . . . . . 77
Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 78
Inspection of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 78
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Limitation of Liability and Indemnification of Directors . . . . . . . . . . . . . 79
AFFILIATES' RESTRICTION ON SALE OF URS COMMON STOCK . . . . . . . . . . . . . . . . . . . 81
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Financial Statements of URS . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Financial Statements of Greiner . . . . . . . . . . . . . . . . . . . F-20
APPENDICES
Appendix A - Fairness Opinion of Houlihan Lokey Howard & Zukin . . . . . . . . . . A-1
Appendix B - Agreement and Plan of Merger among
Greiner Engineering, Inc., URS Corporation and URS Acquisition Corporation . . B-1
</TABLE>
vi
<PAGE> 8
SUMMARY
The following summary of certain information contained elsewhere in this
Proxy Statement/Prospectus does not purport to be complete and is qualified in
its entirety by, and should be read in conjunction with, the more detailed
information appearing elsewhere in this Proxy Statement Prospectus and the
documents incorporated herein by reference and the Appendices attached hereto.
The information contained in the Proxy Statement/Prospectus with respect to URS
and its affiliates has been supplied by URS, and the information with respect
to Greiner and its affiliates has been supplied by Greiner. Certain
capitalized terms which are used but not defined in this summary are defined
elsewhere in this Proxy Statement/Prospectus or in the Merger Agreement.
THE COMPANIES
URS . . . . . . . . . . . . . . URS Corporation, a Delaware corporation, is
a professional services firm specializing
in three major areas: planning; design;
and program and construction management
services for engineering, architectural and
environmental projects. URS serves public
and private sector clients throughout the
United States in two principal markets:
infrastructure projects involving
transportation systems, institutional and
commercial facilities and water resources;
and environmental projects involving
hazardous waste management and pollution
control. The principal executive offices
of URS are located at 100 California
Street, Suite 500, San Francisco,
California 94111-4529, and its telephone
number is (415) 774-2700. See "Information
Concerning URS."
URS Acquisition Corporation ("Acquisition
Corp.") is a newly formed Nevada
corporation and a wholly-owned subsidiary
of URS. The principal executive offices of
Acquisition Corp. are located at 100
California Street, Suite 500, San
Francisco, California 94111-4529, and its
telephone number is (415) 774-2700.
Greiner . . . . . . . . . . . . Greiner Engineering, Inc., a Nevada
corporation, is a professional services
firm operating in the engineering and
architectural design services industry,
which provides a broad range of
engineering, planning, architectural,
environmental analysis, design, surveying,
program management and other services to
public and private sector clients
throughout the United States and abroad.
The principal executive offices of Greiner
are located at 909 East Las Colinas Blvd.,
Suite 1900, Irving, Texas 75039, and its
telephone number is (214) 869-1001. See
"Information Concerning Greiner."
GREINER MEETING
Time and Location . . . . . . . The Annual Meeting of Stockholders of
Greiner will be held on Tuesday, March 26,
1996 at the Doubletree Hotel at Park West,
1590 LBJ Freeway, Dallas, Texas 75234 at
11:00 a.m., local time, for the purpose of
considering and voting on a proposal to
approve and adopt the Merger, and to elect
directors of Greiner to serve if the Merger
is not consummated for any reason. Only
1
<PAGE> 9
holders of record of shares of Greiner
Common Stock at the close of business on
February 22, 1996 will be entitled to vote
at the Greiner Meeting. See "The Greiner
Stockholders' Meeting - Place, Time and
Date of Greiner Meeting;" "The Greiner
Stockholders' Meeting - Purpose of the
Greiner Meeting."
Voting . . . . . . . . . . . . The affirmative vote of the holders of a
majority of the outstanding shares of
Greiner Common Stock is required to approve
the Merger. All of Greiner's directors
have indicated that they will vote their
shares of Greiner Common Stock for the
approval of the Merger at the Greiner
Meeting. The directors and executive
officers of Greiner as a group hold 14.13%
of the outstanding Greiner Common Stock.
Delivery of the proxy solicited hereby or
attendance and voting at the Greiner
Meeting will revoke and supersede any prior
proxy. Participants in the Greiner
Performance Plan will be asked to direct
the Trustees as to how to vote the Greiner
Common Stock allocated to their accounts.
Shares as to which no direction is received
from a plan participant will be voted in
accordance with the recommendation of an
advisor retained by the Trustees. See "The
Greiner Stockholders' Meeting - Vote
Required."
THE MERGER
General Terms . . . . . . . . . On January 10, 1996, URS, Greiner and
Acquisition Corp. entered into the Merger
Agreement, in which the parties set forth
the terms and conditions of the merger of
Acquisition Corp. with and into Greiner. A
copy of the Merger Agreement is included in
this Proxy Statement / Prospectus as
Appendix B. See "The Merger - The Merger
Agreement."
By virtue of the Merger, each of the shares
of Greiner Common Stock issued and
outstanding immediately prior to the
Effective Time of the Merger will
automatically be converted into and
exchanged for the right to receive, in the
aggregate, the Merger Consideration,
consisting of the cash and shares of URS
Common Stock described below. See "The
Merger."
Merger Consideration . . . . . Each holder of Greiner Common Stock will be
entitled to receive, for each outstanding
share of Greiner Common Stock, $13.50 in
cash plus 0.298 shares of URS Common Stock,
for an aggregate amount of approximately
$64,000,000 and approximately 1,400,000
shares of URS Common Stock (the "Merger
Consideration"). No interest will accrue
or be payable with respect to the cash
portion of the Merger Consideration. See
"The Merger - Merger Consideration."
Fractional Shares . . . . . . . No fractional shares of URS Common Stock
will be issued in connection with the
Merger. Fractional shares otherwise
issuable will be settled for cash, without
interest, based on the closing price per
share of URS Common Stock as quoted in The
Wall Street Journal on the trading day
immediately preceding the Closing Date.
2
<PAGE> 10
Options . . . . . . . . . . . All Greiner Options outstanding at the
Effective Time of the Merger will be
cancelled; provided, however, that the
holders of Greiner Options will be entitled
to receive a cash payment equal to the
excess, if any, of the per share Merger
Consideration, based on the closing price
per share of URS Common Stock as quoted in
The Wall Street Journal on the trading day
immediately preceding the Closing Date,
over the exercise price of the option. See
"The Merger - Merger Consideration."
Issuance and Exchange
of Share Certificates . . . . . At the Effective Time of the Merger, each
holder of a certificate that represented
Greiner Common Stock prior to consummation
of the Merger, will be entitled, upon
surrender of the certificate, to receive a
certificate or certificates representing
the number of whole shares of URS Common
Stock to which such holder is entitled
pursuant to the Merger Agreement, plus
$13.50 for each share of Greiner Common
Stock surrendered. The Merger
Consideration will not be delivered until a
stockholder's certificates evidencing
Greiner Common Stock have been surrendered
by the stockholder or his or her nominee.
Greiner stockholders will be furnished
separately a Letter of Transmittal to
facilitate the delivery of Greiner Common
Stock certificates to the Exchange Agent
designated to disburse the Merger
Consideration. PLEASE DO NOT DELIVER YOUR
STOCK CERTIFICATES TO GREINER OR THE
EXCHANGE AGENT UNTIL YOU RECEIVE THE LETTER
OF TRANSMITTAL AND INSTRUCTIONS FROM THE
EXCHANGE AGENT. See "The Merger -
Conversion and Exchange of Greiner Common
Stock Certificates."
Comparison of Rights of
Stockholders of URS
and Greiner . . . . . . . . . The rights of Greiner's stockholders are
currently governed by Nevada law and by
Greiner's Restated Articles of
Incorporation and Bylaws. Upon the
effectiveness of the Merger, Greiner's
stockholders will become stockholders of
URS, a Delaware corporation, and their
rights as URS stockholders will be governed
by Delaware law and by URS's Amended and
Restated Certificate of Incorporation and
Bylaws. See "Comparison of Rights of
Stockholders of URS and Greiner."
Conditions to Merger . . . . . The obligations of URS and Greiner to
consummate the Merger are subject to the
satisfaction of certain conditions set
forth in the Merger Agreement, including
(i) that the conditions to the receipt by
URS of funds from its lenders to finance
the Merger have been satisfied, (ii) the
registration under the Securities Act of
the URS Common Stock to be issued in the
Merger has become effective, (iii) the
Merger has been approved by the requisite
vote of Greiner Stockholders, (iv) there
has been no material adverse change
affecting Greiner or URS and (v) there is
no litigation challenging the Merger. The
waiting period under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976 ("HSR
Act") was terminated on January 4, 1996.
URS has entered into a Secured Credit
Agreement with certain Lenders to obtain
the funds for the cash portion of the
Merger Consideration. The obligation of
the Lenders to provide such funds is
subject to satisfaction of a number of
conditions
3
<PAGE> 11
precedent by each of URS and Greiner,
including that URS and Greiner meet
specified financial tests, that there have
been no material adverse change in the
respective businesses of URS and Greiner,
and that all conditions precedent to the
Merger have been satisfied. See "The
Merger - The Merger Agreement;" and "The
Merger - Financing of the Merger."
Termination, Waiver and
Amendment . . . . . . . . . . . The Merger Agreement may be terminated at
any time prior to the Effective Time by the
written mutual consent of URS and Greiner
or by either party if (i) Greiner
stockholder approval is not obtained, (ii)
a condition precedent to the terminating
party's obligation to consummate the Merger
is not fulfilled or (iii) the other party
breaches a material representation,
warranty, covenant or other agreement
contained in the Merger Agreement. In the
event that either party terminates the
Merger Agreement because of a breach of any
of the foregoing by the other party, and in
the event such breach is the result of
negligence, the damages recoverable by the
non-breaching party shall not exceed the
sum of $500,000; but, provided, further,
that in the event that such breach is the
result of recklessness or willful conduct,
the amount of damages shall not be limited.
See "The Merger-The Merger Agreement."
The Merger Agreement may be amended by the
parties' Boards of Directors prior to
approval of the Merger Agreement by Greiner
stockholders; after Greiner stockholder
approval has been obtained, no amendment
that by law requires the approval of the
Greiner stockholders may be made without
first obtaining such approval. See "The
Merger - The Merger Agreement."
In the event that Greiner or any of its
officers or directors enter into any
negotiations or discussions for any reason
which shall constitute a breach of the
no-shop provision of the Merger Agreement,
Greiner has agreed to immediately reimburse
URS for all expenses and costs incurred by
URS in connection with the Merger. In the
event that Greiner or any of its officers
or directors enters into any letter of
intent, agreement or understanding with any
party other than URS relating to the sale
of all or a substantial part of the assets,
business or stock of Greiner during the
period prior to the Closing or within nine
months after termination of the Merger
Agreement for any reason, Greiner has
agreed to pay URS a termination fee of
$5,000,000. See "The Merger - The Merger
Agreement."
Accounting Treatment . . . . . The Merger is expected to be treated as a
"purchase" under generally accepted
accounting principles. See "The Merger -
Accounting Treatment."
Tax Consequences of
The Merger . . . . . . . . . . A Greiner stockholder who exchanges Greiner
Common Stock for URS Common Stock and cash
generally will recognize income or gain to
the extent the cash and the fair market
value of the URS Common Stock received as
Merger Consideration exceeds the Greiner
stockholder's adjusted tax basis in the
Greiner Common Stock surrendered in the
exchange. The Merger is not intended to
constitute a tax-free "reorganization"
4
<PAGE> 12
within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended
(the "Code"). See "The Merger - Certain
Federal Income Tax Consequences."
Effect of Merger for Performance
Plan Participants . . . . . . . At the Effective Time of the Merger, shares
of Greiner Common Stock held in participant
accounts by the Greiner Performance Plan
will be converted into shares of URS Common
Stock and cash on the same basis as other
shares of Greiner Common Stock. No federal
or state income tax will be currently due
from Greiner Performance Plan participants
with respect to any gain realized from
receipt of the Merger Consideration. Any
subsequent distribution of the Merger
Consideration by the Plan will result in
the receipt of taxable income by the
recipient unless the distributed funds are
reinvested in a tax qualified plan or other
investment vehicle in accordance with the
requirements of the Code.
Dissenters' Rights . . . . . . Based on the structure of the Merger and
Nevada corporate law, the holders of
Greiner Common Stock do not have any rights
to dissent to the Merger and seek a
judicial determination of the value of the
shares of Greiner Common Stock. See "The
Merger - Rights of Dissenting
Stockholders."
Management of URS
Following the Merger . . . . . The management of URS after the Merger will
not change, except that after the Effective
Time of the Merger, Mr. Robert L. Costello
will become a director and executive
officer of URS. See "The Merger -
Directors and Executive Officers After the
Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF GREINER
Approval by the Board . . . . . The Greiner Board has unanimously approved
the Merger Agreement and the Merger and
determined that the Merger is in the best
interests of Greiner and its stockholders.
THE GREINER BOARD RECOMMENDS THAT GREINER
STOCKHOLDERS VOTE FOR APPROVAL OF THE
MERGER. For a discussion of the factors
considered by the Greiner Board in reaching
its decision, see "The Merger - Reasons for
the Merger; Recommendations of the Board of
Directors of Greiner."
Fairness Opinion . . . . . . . Among the factors considered by the Greiner
Board in approving the Merger was the
receipt of the opinion of Houlihan Lokey
Howard & Zukin ("Houlihan Lokey") that the
consideration to be received by the public
stockholders of Greiner in connection with
the Merger is fair to them from a financial
point of view. See "The Merger Agreement -
Greiner Financial Advisor" and Appendix A
-- Fairness Opinion of Houlihan Lokey
Howard & Zukin.
Annual Meeting . . . . . . . . The Greiner Meeting will also include the
annual election of directors to serve if
the Merger is not consummated for any
reason. THE GREINER BOARD RECOMMENDS THAT
YOU VOTE FOR EACH NOMINEE FOR THE GREINER
BOARD OF DIRECTORS.
5
<PAGE> 13
SELECTED URS HISTORICAL FINANCIAL DATA
The selected historical consolidated financial information of URS shown
below for the five years ended October 31, 1995 has been derived from URS's
audited consolidated financial statements. This information should be read in
conjunction with URS's consolidated financial statements and related notes
included in this Proxy Statement/Prospectus. Historical operating results are
not necessarily indicative of the results that may be expected in any future
period.
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue $179,769,000 $164,088,000 $145,761,000 $136,793,000 $122,838,000
Net income $ 5,056,000 $ 4,439,000 $ 1,293,000 $ 4,268,000 $ 2,292,000
Earnings per share:
Primary $ .68 $ .60 $ .18 $ .55 $ .40
Fully diluted $ .67 $ .60 $ .18 $ .55 $ .38
BALANCE SHEET DATA
(END OF PERIOD):
Total assets $ 74,075,000 $ 65,214,000 $ 58,074,000 $ 54,892,000 $ 49,831,000
Working capital $ 36,307,000 $ 33,674,000 $ 27,684,000 $ 26,836,000 $ 21,891,000
Long-term liabilities $ 11,197,000 $ 10,650,000 $ 9,846,000 $ 10,038,000 $ 10,621,000
Stockholders' equity $ 39,478,000 $ 33,973,000 $ 29,389,000 $ 27,878,000 $ 23,264,000
</TABLE>
6
<PAGE> 14
SELECTED GREINER HISTORICAL FINANCIAL DATA
The selected historical consolidated financial information of Greiner shown
below for the five years ended December 31, 1995 has been derived from
Greiner's audited consolidated financial statements and should be read in
conjunction therewith. Historical operating results are not necessarily
indicative of the results that may be expected in any future period.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1995 (1) 1994 1993 1992 1991
--------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue $ 154,175,000 $ 151,856,000 $ 140,555,000 $ 131,803,000 $ 127,012,000
Net income (loss) $ (5,482,000) $ 3,979,000 $ 4,226,000 $ 4,040,000 $ 3,415,000
Earnings (loss) per share $ (1.15) $ .82 $ .88 $ .86 $ .75
Cash dividends per share $ .30 $ .28 $ .24 $ .24 $ .20
Balance Sheet Data
(end of period):
Total assets $ 72,146,000 $ 76,189,000 $ 73,398,000 $ 67,813,000 $ 61,941,000
Working capital $ 34,415,000 $ 41,232,000 $ 37,824,000 $ 34,669,000 $ 32,599,000
Long-term liabilities $ 1,297,000 $ 1,388,000 $ 1,367,000 $ 1,344,000 $ 1,663,000
Stockholders' equity $ 46,954,000 $ 55,226,000 $ 52,098,000 $ 48,424,000 $ 42,888,000
</TABLE>
(1) During 1995, Greiner initiated various activities to restructure
certain of its operations in order to reduce its cost structure and
improve future profitability, resulting in $3,700,000 of restructuring
charges. Also in 1995, Greiner reduced the carrying value of its
investment in a partnership by $2,300,000.
7
<PAGE> 15
SELECTED PRO FORMA COMBINED FINANCIAL DATA
The following unaudited selected pro forma financial information is based
on the historical consolidated balance sheets and related consolidated
statements of operations of URS and Greiner adjusted to give effect to the
Merger using the purchase method of accounting for business combinations.
The unaudited pro forma combined condensed balance sheets as of October 31,
1995 assume that the Merger occurred as of that date. The unaudited pro forma
combined condensed statement of operations for the twelve months ended October
31, 1995 assumes that the Merger occurred as of November 1, 1994. In order to
present comparable data for the combining companies, the pro forma statement of
operations includes the historical data for Greiner for the twelve month period
ended December 31, 1995.
This pro forma financial information should be read in conjunction with the
unaudited pro forma combined condensed financial information and notes thereto
included elsewhere in this Proxy Statement/Prospectus. The unaudited pro forma
financial information is not necessarily indicative of the operating results or
financial position that would have occurred had the Merger been consummated on
the dates indicated in the preceding paragraph nor is it necessarily indicative
of future operating results or financial position of the combined companies.
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
OCTOBER 31, 1995
----------------
<S> <C>
PRO FORMA INCOME STATEMENT DATA:
Revenue $333,944,000
Net income (loss) ($4,276,000)
Earnings (loss) per share ($0.50)
Cash dividends per share -
PRO FORMA BALANCE SHEET DATA (end of period):
Total assets $159,242,000
Working capital $50,528,000
Long-term liabilities $57,819,000
Stockholders' equity $49,453,000
</TABLE>
8
<PAGE> 16
PER SHARE DATA - HISTORICAL AND PRO FORMA
Set forth below is certain common share data of URS and Greiner on an
historical basis, a pro forma basis for URS and an equivalent pro forma basis
for Greiner. The URS pro forma data was derived by combining historical
consolidated financial information of URS and Greiner, giving effect to the
Merger under the purchase method of accounting for business combinations. The
equivalent pro forma data for Greiner was calculated by multiplying the URS pro
forma per common share data by the exchange ratio of .298.
This information should be read in conjunction with the historical
financial statements of URS and Greiner included elsewhere in this Proxy
Statement/Prospectus and the unaudited pro forma combined condensed financial
information included elsewhere in the Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
Fiscal Year
Ended
October 31, 1995
----------------
<S> <C>
URS
---
HISTORICAL PER COMMON SHARE DATA:
Net income $0.67
Dividends -
Book value $5.51
PRO FORMA PER COMMON SHARE DATA:
Net income (loss) ($0.50)
Dividends -
Book value $5.77
</TABLE>
<TABLE>
<CAPTION>
Year
Ended
December 31, 1995
-----------------
<S> <C>
GREINER
-------
HISTORICAL PER COMMON SHARE DATA:
Net income (loss) ($1.15)
Dividends $ 0.30
Book value $ 9.98
EQUIVALENT PRO FORMA PER COMMON SHARE DATA:
Net income (loss) ($ 0.15)
Dividends -
Book value $ 1.72
</TABLE>
Per share amounts for net income (loss) were computed based on the number
of average shares outstanding during the period and the dilutive effect of the
common share equivalents. Per share amounts for book value were computed based
on the number of shares outstanding at the end of the period presented. URS's
pro forma dividends per common share assume no dividend payments in accordance
with URS's historical dividend policy.
9
<PAGE> 17
MARKET PRICE DATA OF COMMON STOCK
URS Common Stock is quoted under the trading symbol "URS" on the New York
Stock Exchange ("NYSE") and the Pacific Stock Exchange ("PSE"). The following
table sets forth for the periods indicated the high and low sales prices per
share of URS Common Stock, as reported on the NYSE.
<TABLE>
<CAPTION>
Fiscal Year Ended
October 31, 1994 High Low
---------------- ---- ---
<S> <C> <C>
First Quarter . . . . . . . . . $7.38 $4.75
Second Quarter . . . . . . . . . 7.75 6.75
Third Quarter . . . . . . . . . 7.13 4.88
Fourth Quarter . . . . . . . . . 6.75 5.13
Fiscal Year Ended
October 31, 1995
----------------
First Quarter . . . . . . . . . $6.00 $5.00
Second Quarter . . . . . . . . . 6.00 5.38
Third Quarter . . . . . . . . . 5.88 5.25
Fourth Quarter . . . . . . . . . 6.63 5.50
</TABLE>
Greiner Common Stock is quoted under the trading symbol "GII" on the NYSE
and the PSE. The following table sets forth for the periods indicated the high
and low sales prices per share of Greiner Common Stock, as reported on the
NYSE.
<TABLE>
<CAPTION>
Fiscal Year Ended
December 31, 1994 High Low
----------------- ---- ---
<S> <C> <C>
First Quarter . . . . . . . . . $17.38 $13.50
Second Quarter . . . . . . . . . 14.25 12.00
Third Quarter . . . . . . . . . 15.13 12.00
Fourth Quarter . . . . . . . . . 13.75 9.75
Fiscal Year Ended
December 31, 1995
-----------------
First Quarter . . . . . . . . . $12.75 $10.13
Second Quarter . . . . . . . . . 12.63 11.00
Third Quarter . . . . . . . . . 11.63 10.63
Fourth Quarter . . . . . . . . . 14.00 8.13
</TABLE>
On December 1, 1995, the last trading day prior to the announcement by URS
and Greiner that they had executed the letter of intent, the closing prices of
URS Common Stock and Greiner Common Stock, as reported on the NYSE, were $6.88
and $9.25, respectively. On February 15, 1996, the closing prices of URS
Common Stock and Greiner Common Stock, as reported on the NYSE, were $6.63
and $15.00, respectively.
Following the Merger, URS Common Stock will continue to be traded on the
NYSE and the PSE. Following the Merger, Greiner Common Stock will cease to be
traded, and there will be no further market for such stock.
10
<PAGE> 18
DIVIDEND POLICY
URS has not paid cash dividends since 1986 and intends to continue to
retain its earnings for investment in its business for the foreseeable future.
Pursuant to the 8-5/8% Indenture, the Unsecured Credit Agreement and the
Secured Credit Agreement, the declaration of dividends, except stock dividends
by URS, is restricted.
Greiner commenced paying a cash dividend on its Common Stock in the
fourth quarter of 1988. Annual cash dividends of $.30 and $.28 per share of
Greiner Common Stock were declared and paid in 1995 and 1994, respectively.
11
<PAGE> 19
THE GREINER STOCKHOLDERS' MEETING
PLACE, TIME, AND DATE OF GREINER MEETING
The Annual Meeting of the Stockholders of Greiner (the "Greiner
Meeting") will be held on Tuesday, March 26, 1996, at 11:00 a.m., local time,
at the Doubletree Hotel at Park West, 1590 LBJ Freeway, Dallas, Texas 75234.
PURPOSE OF THE GREINER MEETING
Approval of the Merger. At the Greiner Meeting stockholders will be
asked to consider and vote upon a proposal by the Board of Directors of Greiner
to approve the Merger of Acquisition Corp. with and into Greiner, pursuant to
which each of the outstanding shares of Greiner Common Stock will be converted
into the right to receive 0.298 shares of URS Common Stock and $13.50 in cash.
As a result of the Merger, Greiner will become a wholly-owned subsidiary of URS
and holders of Greiner Common Stock will become stockholders of URS.
THE BOARD OF DIRECTORS OF GREINER RECOMMENDS A VOTE BY THE GREINER
STOCKHOLDERS FOR APPROVAL OF THE MERGER.
Election of Directors. The Greiner Meeting will also include the
annual election of directors to serve if the Merger does not close or is
delayed for any reason. Pursuant to the authority granted in Greiner's
Restated Articles of Incorporation and Bylaws, the Board has determined that
five directors be elected at the Greiner Meeting to serve until the next annual
meeting and until their successors are elected and have nominated for election
as directors the persons identified at "Annual Election of Greiner Board of
Directors - Nominees for the Greiner Board of Directors." If, by reason of
death or other unexpected occurrence, any one or more of the nominees should
for any reason become unavailable for election, the persons named as proxies in
the accompanying form of proxy may vote for the election of such substitute
nominees, and for such term or terms, as the Board of Directors may propose.
All of the nominees were elected to the Board of Directors at the last Annual
Meeting, except for Robert L. Costello, who was elected by action of the Board
in July 1995.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH NOMINEE FOR
THE BOARD OF DIRECTORS.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
shares of Greiner Common Stock entitled to vote thereon is required for the
approval of the Merger. The favorable vote of the holders of a majority of the
outstanding Greiner Common Stock present at the Greiner Meeting in person or by
proxy is required for election of each director. Participants in the Greiner
Performance Plan will be asked to direct the Trustees as to how to vote the
Greiner Common Stock allocated to their accounts. Shares as to which no
direction is received will be voted in accordance with the recommendation of an
adviser retained by the Trustees. The executive officers and directors of
Greiner own or have the power to vote 14.13% of the 4,704,642 issued and
outstanding shares entitled to vote on the Merger.
Abstentions and broker nonvotes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business
at the meeting. Abstentions are counted to determine the total number of votes
cast and will be counted as a vote against the election of directors, but will
not count as votes for or against approval of the Merger. Broker nonvotes are
not counted as votes cast for purposes of determining whether a proposal has
been approved and will have no effect on the outcome of the election of
directors. Because a majority vote of all issued and outstanding shares of
Greiner Common Stock which are eligible to be voted is required to approve the
Merger, a broker nonvote will have the same effect as a vote against approval
of the Merger.
As of the date of this Proxy Statement / Prospectus, 4,704,642 shares
of Greiner Common Stock were outstanding. In the Merger Agreement, Greiner has
agreed not to issue any additional shares of Greiner Common Stock or other
ownership interests in Greiner prior to the Effective Date, other than pursuant
to the exercise of vested stock options.
12
<PAGE> 20
Each holder of Greiner Common Stock will be entitled to one vote, in
person or by proxy, for each share standing in his or her name on the books of
Greiner on the Record Date on any matter submitted to a vote of the Greiner
stockholders.
REVOCABILITY OF PROXIES
A Proxy for use at the Greiner Meeting is enclosed with the definitive
Proxy Statement/Prospectus mailed to Greiner stockholders. A Greiner
stockholder executing and returning a proxy may revoke it at any time before
the vote is taken by filing with the Secretary of Greiner a written revocation
of the Proxy or a duly executed Proxy bearing a later date than the Proxy being
revoked, or such stockholder may revoke the Proxy in person at the Greiner
Meeting, at any time before the vote is taken, by electing to vote at such
meeting. All shares represented by a properly executed Proxy, unless such
Proxy previously has been revoked, will be voted in accordance with the
directions on such Proxy. IF NO DIRECTIONS ARE GIVEN TO THE CONTRARY ON SUCH
PROXY, THE SHARES REPRESENTED BY SUCH PROXY WILL BE VOTED FOR THE MERGER AND
FOR EACH NOMINEE FOR THE GREINER BOARD OF DIRECTORS. It is anticipated that no
matters will be presented at the Greiner Meeting other than as set forth in the
notice of the Greiner Meeting.
COST OF SOLICITING PROXIES
The expense of preparing, printing and mailing this Proxy Statement /
Prospectus and the material used in this solicitation of Proxies from Greiner
stockholders will be borne by Greiner. It is contemplated that Greiner Proxies
will be solicited through the mail, but officers, directors and employees of
Greiner may solicit Proxies personally for the Greiner Meeting. Greiner has
retained D. F. King, Inc. to assist in the solicitation of proxies and has
agreed to pay D. F. King, Inc. $5,000, plus out of pocket expenses, for such
services. Greiner has agreed that under certain circumstances it will be
liable for URS's transaction costs if the Merger is not consummated due to
Greiner's breach of the Merger Agreement. See "The Merger - The Merger
Agreement."
RECORD DATE
The close of business on February 22, 1996 has been fixed as the
record date ("Record Date") for the purpose of determining the Greiner
stockholders entitled to notice of and to vote at the Greiner Meeting.
DISSENTERS' RIGHTS
Under Nevada law, holders of Greiner Common Stock will not have the
right to seek a judicial appraisal of the fair value of their shares of Greiner
Common Stock in connection with the proposed Merger. See "The Merger - Rights
of Dissenting Stockholders."
13
<PAGE> 21
RISK FACTORS
The following risk factors should be considered carefully by the
stockholders of Greiner in evaluating the Merger. These risk factors should be
considered in conjunction with the other information included in this Proxy
Statement / Prospectus.
IMPACT OF MERGER FINANCING
To finance the Merger, and to provide for working capital needs, URS
has obtained a secured credit facility consisting of $50 million in term loans
maturing in 2002 and 2003 and a $20 million revolving line of credit to
terminate in 1999. As a result, following the Merger, URS will be a more
highly leveraged company with substantial future debt service requirements. To
meet these debt service requirements, URS and Greiner must generate sufficient
cash flow from operations or other sources. There is no assurance that the
future operations of URS and Greiner will provide sufficient funds to meet
these debt service needs and other operational requirements of URS and Greiner
necessary for continued success.
GREINER'S REPORTED LOSSES DURING 1995
Greiner's 1995 consolidated financial statements reflect significant
pre-tax charges related to the following items. First, Greiner incurred
substantial operating losses in 1995 from its California residential land
development operations. In 1995, Greiner management decided to discontinue
these operations and recorded restructuring charges of $1,700,000 in addition
to operating losses of approximately $1,400,000 during 1995. Second, during
1995, Greiner recorded a one-time write-off of goodwill of $1,500,000
associated with the discontinued California residential land development
operations. Third, Greiner recorded $500,000 in restructuring charges during
1995 in connection with the downsizing of its Hong Kong operations resulting
from Greiner's shift of its center of operations in Asia from Hong Kong to
Malaysia. Fourth, in 1995, Greiner took a non-cash write down of $2,300,000 on
its investment in NTA, a general partnership in which Greiner holds a 50%
general partnership interest. While there is no assurance of the future
financial performance of Greiner, management believes that the majority of
losses experienced during 1995 result primarily from non-recurring situations
and such losses will not have a significant impact on an ongoing basis;
however, Greiner's reported losses may negatively impact the value of URS
Common Stock after the Merger.
LEGAL PROCEEDINGS/LIABILITY INSURANCE COVERAGE
Certain subsidiaries of each of Greiner and URS have been named as
defendants in legal proceedings wherein substantial damages are claimed. Such
proceedings are not uncommon in their businesses and usually involve claims
against multiple defendants who were involved in the project which is the
subject of the proceeding. Historically, each company has been successful in
defending such actions or has settled them within insured limits. In the
opinion of management of each company, based upon their present knowledge, the
ultimate liability, if any, in these proceedings is not expected to exceed
amounts previously provided for in the consolidated financial statements.
Because of the nature of the professional services provided and the size and
nature of many of the projects upon which such services are performed, the
potential for claims in excess of insurance limits always exists. Should that
occur, and if the resulting liability is material, then the operations and
financial condition of URS and Greiner after the Merger would be adversely
affected. It is also possible that a large number of claims in any given year
could cause the total amount paid with respect to the deductible amounts
relating to such claims to be material, in which event Greiner's and URS's
operations and financial condition could be adversely affected.
Greiner. In 1995, Greiner was notified by the staff (the "Staff") of
the Central Regional Office of the Securities and Exchange Commission (the
"SEC") that it planned to recommend that a subsidiary of Greiner be named as a
respondent in an administrative action relating to the issuance of certain
revenue bonds used to finance the construction of the new Denver International
Airport. The subsidiary was a member of a joint venture formed for the sole
purpose of acting as the program management consultant for the City and County
of Denver on the new Denver International Airport project. The joint venture
was dissolved at the completion of the project. The Staff recommendation
relates to certain information about the airport project provided by the
subsidiary to the City and County of Denver in connection with the related bond
offerings. The subsidiary has disputed the Staff's recommendations.
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Management does not anticipate that the resolution of this matter will have a
material effect on Greiner's operations or financial condition.
Greiner presently carries professional liability insurance against
claims resulting from its alleged negligent performance of professional
services, with an aggregate limit of $30,000,000 per year in excess of an
aggregate $1,000,000 annual self-insured retention and a deductible of $250,000
per occurrence. This insurance, consistent with industry practice, is on a
"claims made" basis, which means coverage must be in place when a claim is
made. In addition, such insurance is subject to standard exclusions, including
exclusions for claims arising out of actual, alleged or threatened discharge,
dispersal, seepage, migration, release or escape of pollutants and the
performance of or failure to perform professional services rendered in the
abatement, replacement or removal of any product, material or process
containing asbestos. The continued availability and cost of professional
liability insurance will depend upon market conditions, the claims record of
Greiner and the claims experience of the insurers providing such coverage.
URS. URS has $31,000,000 per occurrence and aggregate commercial
general liability insurance coverage. URS is also insured for professional
errors and omissions ("E&O"), environmental impairment liability ("EIL") and
contractor pollution liability ("CPL") claims with an aggregate limit of
$25,000,000 after a self-insured per-claim deductible of $500,000. The E&O,
EIL and CPL coverages are on a "claims made" basis, covering only claims
actually made during the policy period currently in effect. Thus, if URS does
not continue to maintain this policy, it will have no coverage under the policy
for claims made after its termination date even if the occurrence was during
the term of coverage. It is URS management's intent to maintain this type of
coverage for its and Greiner's businesses after the Merger, but there can be no
assurance that URS can maintain its insurance coverage or that claims will not
exceed the amount of insurance coverage.
DEPENDENCE UPON GOVERNMENT PROGRAMS AND CONTRACTS
Both Greiner and URS derive more than 80% of their revenues from
local, state and Federal government agencies. The demand for engineering
services is directly related to the level of funding of government programs
that are created in response to public concern with rebuilding and expanding
the nation's infrastructure and addressing various environmental problems. The
success and further development of URS and Greiner is dependent, in significant
part, upon the continued existence and funding of such programs and upon URS
and Greiner's ability to participate in such programs. There can be no
assurance that public pressure for such programs will continue, that
governments will have the available resources to fund such programs (especially
in light of the budget constraints currently existing at all levels of
government), that such programs will continue to be funded even if governments
have available financial resources, or that URS and Greiner will continue to be
awarded contracts under such programs. In addition, contracts with government
agencies are subject to termination for convenience of the agency and contracts
with government agencies that have adopted Federal Acquisition Regulations, to
which both URS and Greiner are a party, are subject to audit of actual costs
incurred and provide for upward or downward adjustment of payments if audited
costs differ from billed costs.
PRICING RISKS
A substantial amount of Greiner's and URS's services are billed on
either a "cost-plus" or a "fixed-price" basis. Under cost-plus contracts, the
rates for direct and indirect costs are negotiated and fixed before work
commences. Under fixed-price contracts, the entire contract price is often
fixed before work commences. Frequently, proposals are submitted on extremely
complex projects that will be performed over the course of several years,
making the accurate forecasting of costs very difficult. In the recent past,
URS and Greiner have experienced low profit margins or losses on a portion of
both of their cost-plus and fixed-price contracts because overhead and general
and administrative costs exceeded government limits and could not be fully
recovered or the scope of work could not be completed within the original
budget and a supplemental work order could not be obtained.
ATTRACTION AND RETENTION OF QUALIFIED PROFESSIONALS
The ability to retain and expand the staff of qualified technical
professionals will be an important factor in determining the future success of
URS and Greiner. There is from time to time a shortage of qualified technical
professionals in various fields. The market for engineering and environmental
professionals is competitive and
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there can be no assurance that URS and Greiner will continue to be successful
in their efforts to attract and retain such professionals. In addition, both
companies rely heavily upon the experience and ability of their senior
management staff and the loss of a significant portion of such individuals
could have a material adverse effect upon the companies.
CONTROL OF URS BY PRINCIPAL STOCKHOLDERS
Richard C. Blum is a director of URS and the majority stockholder of
Richard C. Blum & Associates, Inc., a California corporation ("RCBA, Inc.").
RCBA, Inc. is the sole general partner of Richard C. Blum & Associates, L.P., a
California limited partnership ("RCBA, L.P."), which, in turn, is the sole
general partner of BK Capital Partners, a California limited partnership
("BK"), BK Capital Partners II, a California limited partnership ("BK II"), and
BK Capital Partners III, a California limited partnership ("BK III"). RCBA,
L.P. is an investment adviser to The Common Fund, an investment fund. BK, BK
II, BK III and The Common Fund collectively hold 2,472,693 shares (assuming the
exercise of certain warrants by only these entities), or approximately 34
percent, of the URS Common Stock outstanding prior to the effectiveness of the
Merger and approximately 28 percent of the URS Common Stock which would be
outstanding after the effectiveness of the Merger. RCBA, L.P. exercises voting
and investment discretion as to all such shares.
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THE MERGER
This section of the Proxy Statement / Prospectus contains information
furnished by the Board of Directors of URS and by the Board of Directors of
Greiner in connection with the Greiner Meeting for the purpose of obtaining
stockholder approval of the Merger.
A copy of the Merger Agreement is attached as Appendix B and
incorporated herein by reference. The Merger Agreement contains certain
representations and covenants of URS, Acquisition Corp. and Greiner, certain
conditions to the consummation of the Merger, and other terms and provisions
respecting the Merger and related transactions. Capitalized terms which are
used but not defined in this section shall have the meanings assigned in the
Merger Agreement.
SUMMARIES OF CERTAIN PROVISIONS OF THE MERGER AGREEMENT SET FORTH
HEREIN DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE PROVISIONS OF THE MERGER AGREEMENT. ALL GREINER STOCKHOLDERS
ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY.
GENERAL
The Merger Agreement provides for the merger of Acquisition Corp. into
Greiner, with Greiner as the surviving corporation. Upon consummation of the
Merger, each outstanding share of Greiner Common Stock will be converted into
the right to receive (i) 0.298 shares of URS Common Stock, and (ii) $13.50 in
cash, with additional cash to be paid in lieu of fractional shares. If the
Merger is completed, Greiner stockholders will no longer hold any interest in
Greiner other than indirectly through their interest in the shares of URS
Common Stock. Each outstanding share of URS Common Stock will remain
outstanding and unchanged following the Merger. Holders of Greiner Common
Stock will receive an aggregate of approximately 1,400,000 shares of URS Common
Stock upon consummation of the Merger and will hold in the aggregate
approximately 16% of the URS Common Stock outstanding immediately after
consummation of the Merger.
All Greiner Options outstanding at the Effective Time of the Merger
will be cancelled; provided, however, that the holders of Greiner Options will
be entitled to receive a cash payment equal to the excess, if any, of the value
of the per share Merger Consideration, based on the closing price per share of
URS Common Stock as quoted in The Wall Street Journal on the trading day
immediately preceding the Closing Date, over the exercise price of the option.
See "The Merger - Merger Consideration."
EFFECTIVE TIME OF THE MERGER
The Merger will become effective (the "Effective Time of the Merger")
upon the filing of articles of merger or other appropriate documents (in any
such case, the "Merger Documents") with the Nevada Secretary of State. The
Merger Agreement provides that the parties will cause the Merger Documents to
be filed as soon as practicable after the Closing Date, which will be the first
date after approval of the Merger by the Greiner stockholders on which all
conditions to the parties' obligations to close the Merger have been satisfied
or waived. The parties have agreed to use their best efforts to do all things
necessary to permit the closing of the Merger, but there can be no assurance as
to whether or when the Merger will become effective. The Merger Agreement may
be terminated by either URS or Greiner if the Merger has not become effective
on or before September 30, 1996 (unless the failure to consummate the Merger by
such date is due to the action or failure to act of the party seeking to
terminate the Merger Agreement in breach of such party's obligations
thereunder).
MERGER CONSIDERATION
Conversion of Greiner Common Stock. At the Effective Time of the
Merger, Acquisition Corp. will merge with and into Greiner, with Greiner as the
surviving corporation. The Articles of Incorporation and Bylaws of Greiner as
in effect immediately prior to the Effective Time of the Merger will be the
Articles of Incorporation and Bylaws of the surviving corporation until further
amended as provided therein and in accordance with law. At the Effective Time
of the Merger, each outstanding share of Greiner Common Stock will be converted
into the right to receive (i) 0.298 shares of URS Common Stock and (ii) $13.50
in cash, with additional cash to be paid in lieu of
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fractional shares. At the Effective Time of the Merger, Greiner stockholders
will no longer hold any interest in Greiner other than indirectly through their
interest in the shares of URS Common Stock. Each outstanding share of URS
Common Stock will remain outstanding and unchanged following the Merger.
Holders of Greiner Common Stock will receive an aggregate of approximately
1,400,000 shares of URS Common Stock upon consummation of the Merger and will
hold in the aggregate approximately 16% of the URS Common Stock outstanding
immediately after consummation of the Merger, based on the number of shares of
URS Common Stock outstanding at February 14, 1996. Each share of Acquisition
Corp. common stock outstanding immediately prior to the Effective Time of the
Merger will be converted into one share of a newly-created class of $1.00 par
value common stock of Greiner (the surviving corporation), and Greiner will
become a wholly-owned subsidiary of URS.
Greiner Stock Options. All Greiner Options outstanding at the
Effective Time of the Merger will be cancelled; provided, however, that the
holders of Greiner Options will be entitled to receive a cash payment in an
amount per share of Greiner Common Stock subject to his or her Greiner Option
equal to the excess, if any, of the value of the per share Merger
Consideration, based on the closing price per share of URS Common Stock as
quoted in The Wall Street Journal on the trading day immediately preceding the
Closing Date, over the exercise price per share with respect to the option. In
addition, instead of receiving the cash payment described above, each holder
of a Greiner Option has the right to exercise vested options prior to the
Effective Time of the Merger and purchase Greiner Common Stock, in which case
each share of Greiner Common Stock received pursuant to the option will be
exchanged pursuant to the Merger for the Merger Consideration.
Greiner Performance Plan and Employee Stock Ownership Plan. At the
Effective Time of the Merger, The Performance Plan and Stock Ownership Plan of
Greiner (the "Greiner Performance Plan") will be amended to cease to be an
employee stock ownership plan ("ESOP") within the meaning of Section 4975(e)(7)
of the Code, but will be continued as a profit sharing plan, subject to the
terms of the Greiner Performance Plan document regarding amendment and/or
termination. Cash proceeds received by the Greiner Performance Plan in
connection with the Merger will not be reinvested in URS Common Stock or
Greiner Common Stock, but will be reinvested in the various investment options
available under the non-ESOP portion of the Greiner Performance Plan, as
directed by plan participants, and employer stock will no longer be one of the
investment options offered under the Greiner Performance Plan. URS Common
Stock received by Greiner Performance Plan accounts in connection with the
Merger will continue to be held by the Greiner Performance Plan, but no
additional investments in URS Common Stock will be permitted. In addition, in
the event that as of the Effective Time of the Merger the aggregate value of
the unvested ESOP portion of the Greiner Performance Plan accounts is less than
$1,000,000 (valuing such unvested shares of Greiner Common Stock at an amount
equal to the closing price of the Greiner Common Stock as reported on the NYSE
on the trading day immediately preceding the Closing Date, as quoted in The
Wall Street Journal), all plan participants will be fully vested in their ESOP
accounts as of the Effective Time of the Merger.
CONVERSION AND EXCHANGE OF GREINER COMMON STOCK CERTIFICATES
As soon as practicable after the Effective Time of the Merger, First
Interstate Bank, the Exchange Agent (the "Exchange Agent"), will send a notice
and transmittal form to each holder of Greiner Common Stock of record at the
Effective Time of the Merger advising such holder of the effectiveness of the
Merger and the procedure for surrendering to the Exchange Agent their
certificates formerly evidencing Greiner Common Stock. GREINER STOCKHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES TO THE EXCHANGE AGENT OR GREINER UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS FROM THE EXCHANGE
AGENT.
Upon the surrender to the Exchange Agent of one or more certificates
formerly evidencing Greiner Common Stock, together with a properly completed
and signed letter of transmittal, there will be issued and mailed to the holder
thereof a new certificate or certificates representing the number of whole
shares of URS Common Stock to which such holder is entitled under the Merger
Agreement, a check for the amount of cash payable for each share of Greiner
Common Stock, and, where applicable, a check for the amount of cash payable in
lieu of a fractional share of URS Common Stock. A certificate representing URS
Common Stock or a check in lieu of a fractional share will be issued in a name
other than the name in which the surrendered Greiner Common Stock certificate
was registered only if (i) the Greiner Common Stock certificate surrendered is
properly endorsed or accompanied by appropriate stock powers and is otherwise
in proper form for transfer, and (ii) the person requesting the issuance of
such stock certificate or check either pays to the Exchange Agent any transfer
or other taxes required or establishes to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
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BACKGROUND OF THE MERGER
From time to time beginning in March of 1993, URS and Greiner
management held informal discussions about the possibility of a transaction
between the two companies. Until November of 1995, these informal discussions
did not result in any agreement regarding a transaction between the parties.
In early November of 1995, senior management of URS met with its
financial advisors regarding the advisability of developing an offer to acquire
Greiner. On November 20, 1995, a special meeting of the URS Board of Directors
was held to discuss the possibility of authorizing URS management to present an
acquisition proposal to Greiner management. The URS Board of Directors
authorized URS management to proceed with the presentation of an acquisition
proposal to Greiner management. The Board of Directors also authorized URS
management to contact Wells Fargo Bank, National Association ("Wells Fargo") to
initiate discussions about providing financing for the transaction.
On November 30, 1995, Martin Koffel, the Chief Executive Officer,
President and Chairman of URS, met with Robert Costello, the Chief Executive
Officer of Greiner. Mr. Koffel presented an outline to Mr. Costello describing
proposed terms by which URS would offer to acquire Greiner. On December 1,
1995, Mr. Costello and Messrs. William Bowen and Russell Cleveland, both
directors of Greiner, placed a call to Mr. Koffel to discuss the proposed terms
of the offer (Messrs. Costello, Bowen and Cleveland comprise the Executive
Committee of the Board of Directors). After discussion, a revised proposal was
sent to Mr. Costello.
On December 2, 1995, a proposed letter of intent and draft joint press
release with respect to the proposed transaction were prepared and reviewed by
URS and its advisors, and then transmitted to Greiner. Further discussions
regarding these documents and the terms of the transaction continued throughout
the day between URS and its advisors and Greiner.
On December 3, 1995, a letter of intent was signed and the wording of
a joint press release was prepared. The joint press release was issued prior
to the opening of trading on the NYSE on December 4, 1995.
On January 9, 1996, the Merger Agreement was approved by the Boards of
Directors of Greiner, URS and Acquisition Corp. The Merger Agreement was
executed by all parties thereto on January 10, 1996. In addition, on January
10, 1996, URS entered into a $70 million secured credit facility with Wells
Fargo, which consists of $50 million in term loans maturing in 2002 and 2003,
and a $20 million revolving line of credit. See "The Merger - Financing of the
Merger."
GREINER FINANCIAL ADVISOR
Greiner has engaged Houlihan Lokey to render an opinion to the Greiner
Board of Directors as to the fairness of the terms of the Merger to the Greiner
public stockholders, from a financial point of view. Houlihan Lokey is a
diversified financial advisory and specialty investment banking firm with
offices in Los Angeles, New York, Chicago, San Francisco, Minneapolis,
Washington, D.C., Dallas and Toronto. Houlihan Lokey offers business and
securities valuations, fairness and solvency opinions, financial restructuring
advice, dispute analysis and liquidation support, merchant banking services and
investment banking services, including merger and acquisition representation
and private placement of capital.
On January 10, 1996, Houlihan Lokey delivered to the Greiner Board of
Directors its written opinion dated January 10, 1996 (the "Houlihan Lokey
Opinion") that, based upon and subject to the matters set forth in the opinion,
the consideration to be received by the public stockholders of Greiner in
connection with the Merger is fair to them from a financial point of view.
The summary of the Houlihan Lokey Opinion set forth in this Proxy
Statement / Prospectus is qualified in its entirety by reference to the full
text of such opinion. The form of the Houlihan Lokey Opinion is attached
hereto as Appendix A. HOLDERS OF GREINER COMMON STOCK ARE URGED TO READ THE
HOULIHAN LOKEY OPINION IN ITS ENTIRETY FOR FURTHER INFORMATION AS TO THE
ASSUMPTIONS MADE, MATTERS CONSIDERED AND OTHER ASPECTS OF THE REVIEW BY
HOULIHAN LOKEY.
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Houlihan Lokey did not, and was not requested by the Greiner Board of
Directors to, make any recommendations as to the form or amount of
consideration to be paid to the Greiner stockholders in the Merger, which
issues were resolved in arm's length negotiations between Greiner and URS.
Houlihan Lokey did not participate in these negotiations. Furthermore,
Houlihan Lokey was not requested to, and did not, solicit third party
indications of interest in acquiring all or any part of Greiner.
In advising Greiner, Houlihan Lokey reviewed and analyzed: (1) the
Merger Agreement; (2) financial and operating information with respect to the
business, operations and prospects of Greiner furnished to it by Greiner; (3)
such publicly available information concerning URS which it deemed to be
relevant to its inquiry, including a recent trading history of URS's Common
Stock; (4) a comparison of the historical financial results and present
financial condition of Greiner with those of other companies which it deemed
relevant; and (5) a comparison of the financial terms of the Merger with the
terms of certain other recent transactions which it deemed relevant.
In addition, Houlihan Lokey had discussions with certain members of
the senior management of Greiner and URS to discuss the business, operations,
assets, financial conditions and prospects and the potential strategic benefit
to Greiner from a consolidation of the business of Greiner with URS.
In connection with its review, Houlihan Lokey assumed and relied upon
the accuracy and completeness of the financial and other information used by it
in advising Greiner without independent verification and further relied upon
the assurances of management of Greiner that they were not aware of any facts
that would make such information inaccurate or misleading.
Greiner decided to retain Houlihan Lokey based on its experience as a
financial advisor in mergers and acquisitions in the engineering industry. For
Houlihan Lokey's services as financial advisor to Greiner in connection with
the Merger, Greiner has agreed to pay Houlihan Lokey a fee of approximately
$100,000, plus out of pocket expenses. Greiner also has agreed to indemnify
Houlihan Lokey against certain liabilities under the Federal securities laws
relating to or arising out of services performed by Houlihan Lokey as financial
advisor to Greiner.
Houlihan Lokey has had two prior formal engagements with Greiner, and
has provided consulting services on one other occasion. Specifically, Houlihan
Lokey was engaged by Greiner (on behalf of its Employee Stock Ownership Plan)
in August of 1986 in connection with the Greiner ESOP's purchase of Greiner
Common Stock. In March 1993, Houlihan Lokey provided Greiner with preliminary
consulting services (not under a formal retention agreement), consisting of a
meeting at Greiner's headquarters, regarding a potential acquisition of another
company. Houlihan Lokey was next retained by Greiner in July 1995 to provide
Greiner with a preliminary analysis of the fair market value of a firm which
Greiner was considering acquiring at that time. Aggregate fees paid to Houlihan
Lokey for these engagements did not exceed $50,000.
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF GREINER
The Greiner Board of Directors believes that the combination of URS
and Greiner will benefit Greiner's stockholders by providing a cash payment
substantially in excess of prior trading prices for Greiner Common Stock and a
continuing interest in a larger company. The reasons for the Greiner Board
authorizing the Merger include, but are not limited to, the following:
1. The significant premium that URS is paying to Greiner stockholders, as
substantiated by the Houlihan Lokey Opinion. In evaluating the offer,
the Board also considered Greiner's stock performance in recent years
and the stock prices of other publicly traded engineering companies.
2. Consolidation that is occurring within the industry with other public
and private companies. The increased size of the combined
organization after the Merger has been consummated will help URS and
Greiner maintain a competitive advantage in the marketplace and pursue
larger, more comprehensive projects and client relationships. The
combined revenue of the two companies will place URS and Greiner in
the top echelon of their industry.
3. The Merger helps both URS and Greiner achieve strategic objectives
previously established independently by the two companies. These
objectives include: increased revenues, broader geographic coverage
both
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domestically and internationally and expansion into markets that the
companies on their own would find difficult to accomplish without the
Merger.
4. The combination will result in administrative efficiencies and cost
savings by eliminating certain overlapping expenses.
The Greiner Board of Directors considered the above factors in light of its
knowledge of the business, the industry in general and information provided by
Greiner management and its financial advisor, Houlihan Lokey. In view of the
number and complexity of factors considered, the Greiner Board did not assign a
relative weight to any of the factors considered.
THE GREINER BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS FAIR TO AND
IN THE BEST INTERESTS OF GREINER AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD
OF DIRECTORS OF GREINER HAS APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT
THE HOLDERS OF GREINER COMMON STOCK VOTE FOR THE APPROVAL OF THE MERGER.
DIRECTORS AND EXECUTIVE OFFICERS AFTER THE MERGER
After the Effective Time of the Merger, the URS Board of Directors and
URS executive officers will be the same as the current URS Board of Directors
and URS executive officers, except that Mr. Robert L. Costello will become a
director and executive officer of URS. See "URS Management - Executive
Officers of URS - Directors of URS."
REGISTRATION AND LISTING
The URS Common Stock to be issued in the Merger will be registered
under the Securities Act of 1933 (the "1933 Act"). URS has agreed to prepare
and file with the SEC the Registration Statement and any other documents
required by the 1933 Act in connection with the Merger. URS has also agreed to
take any action required to be taken under any applicable state securities or
"blue sky" laws in connection with the issuance of the URS Common Stock in
connection with the Merger.
URS filed a listing application with each of the NYSE and
the PSE covering the shares of URS Common Stock which are issuable upon
consummation of the Merger. The NYSE and the PSE have approved the listing of
such shares upon issuance.
THE MERGER AGREEMENT
THE FOLLOWING IS INTENDED MERELY AS A SUMMARY OF CERTAIN TERMS AND
PROVISIONS OF THE MERGER AGREEMENT. REFERENCE IS MADE TO THE MERGER AGREEMENT
ATTACHED AS APPENDIX B FOR A COMPLETE STATEMENT OF SUCH TERMS AND PROVISIONS.
Covenants. The Merger Agreement provides that from the date of the
Merger Agreement until the earlier of the Effective Time of the Merger or the
termination of the Merger Agreement, Greiner, URS and Acquisition Corp. will
perform the following pre-closing covenants:
Pre-Closing Covenants of All Parties.
1. Advice of Changes. Each party has agreed to promptly
advise the other parties of any event occurring subsequent to the date
of the Merger Agreement that would render any representation or
warranty of such party contained in the Merger Agreement untrue or
inaccurate in any material respect.
2. Regulatory Approvals. Each party has agreed to
execute and file, or join in the execution and filing, of any
application or other document that may be necessary in order to obtain
the authorization, approval or consent of any governmental body,
Federal, state or local or foreign, which may be reasonably required,
or which the other party may reasonably request, in connection with
the consummation of the transactions contemplated by the Merger
Agreement. Each party has agreed to use its best efforts to obtain
all such authorizations, approvals and consents.
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3. Confidentiality. Each party has agreed to hold in
confidence all nonpublic information until such time as such
information is otherwise publicly available, and, if the Merger
Agreement is terminated, each party has agreed to deliver to the other
all documents, work papers and other materials (including copies)
obtained by such party or on its behalf from the other party as a
result of the Merger Agreement or in connection therewith. Each party
has agreed to continue to abide by the terms of existing
confidentiality agreements.
4. Best Efforts. Each party has agreed to use its best
efforts to take or cause to be taken all actions, to do or cause to be
done, and to assist and cooperate with the other parties to the Merger
Agreement in doing, all things necessary, proper or advisable under
applicable laws and regulations, to consummate and make effective the
Merger.
5. Secured Credit Agreement. The parties have agreed to
take all actions as may be reasonably necessary to fulfill the
covenants and conditions set forth in the Secured Credit Agreement (as
defined below). See "The Merger - Financing of Merger."
Pre-Closing Covenants of Greiner.
1. Conduct of Business in Ordinary Course. Greiner and
its subsidiaries have agreed to carry on their respective businesses
in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and, to the extent consistent with
such businesses, Greiner and its subsidiaries have agreed to use all
reasonable efforts to preserve intact their present business
organizations, keep available the services of their present officers
and employees, and preserve their relationships with customers,
suppliers and others having business dealings with Greiner and its
subsidiaries. In particular, without limitation, Greiner and its
subsidiaries have agreed that neither Greiner nor any of its
subsidiaries shall (except with the prior written consent of URS):
(i) accelerate, amend or change the period of
exercisability of vesting of options granted
under any stock option plans or restricted
stock, stock bonus or other awards, or
authorize cash payments in exchange for any
options, restricted stock, stock bonus or
other awards granted under any of such plans;
(ii) grant any severance or termination pay to any
officer or director or, except in the
ordinary course of business consistent with
past practices, to any employee;
(iii) transfer any intellectual property rights
owned by Greiner;
(iv) commence a lawsuit other than for routine
collection of bills, except in cases where
Greiner in good faith determines that failure
to commence such suit would result in a
material impairment of a valuable aspect of
Greiner's business, or for breach of the
Merger Agreement; or
(v) enter into one or more leases which extend
for a period of two years beyond the date of
the Merger Agreement and which obligate
Greiner or its subsidiary to pay aggregate
gross rent in excess of $500,000.
2. Dividends; Change in Stock. Greiner has agreed that
it will not, and it will not permit any of its subsidiaries to, (i)
declare or pay any dividends on or make other capital distributions in
respect to any of its capital stock, except for intercompany dividends
or regular quarterly cash dividends to holders of Greiner Common Stock
in an amount which shall not exceed $0.075 per share and at times
consistent with prior practice, (ii) split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (iii) repurchase, redeem or otherwise
acquire, any shares of its capital stock.
3. Issuances of Securities. Greiner has agreed that it
will not, and it will not permit any of its subsidiaries to, issue,
deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares
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of its capital stock or any securities convertible into such shares,
or any rights, warrants, calls, subscriptions or options to acquire,
any such shares or convertible securities, or any other ownership
interests in such capital stock other than the issuance of Greiner
Common Stock pursuant to the exercise of vested options.
4. Governing Documents. Greiner has agreed that it will
not, and it will not cause or permit any of its subsidiaries to, amend
its Restated Articles of Incorporation or Bylaws.
5. No Acquisitions. Greiner has agreed that it will
not, and it will not permit any of its subsidiaries to, acquire, or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in all or any substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof.
6. No Dispositions. Greiner has agreed that other than
sales or licenses of products or technology in the ordinary course of
business consistent with prior practice, Greiner will not, and it will
not permit any of its subsidiaries to, sell, lease, license, encumber
or otherwise dispose of, any of its assets, except for such
dispositions in the ordinary course of business or in amounts which
are not material, in the aggregate, to the business of Greiner.
7. Indebtedness. Greiner has agreed that it will not,
and will not permit any of its subsidiaries to, incur any indebtedness
for borrowed money or guarantee any such indebtedness or sell any debt
securities or warrants or rights to acquire any debt securities of
Greiner or any of its subsidiaries or guarantee any debt securities of
others, except in the ordinary course of business consistent with past
practices.
8. Plans; Compensation. Greiner has agreed that it will
not, and it will not permit any of its subsidiaries to, adopt or amend
in any material respect any employee benefit plans (a "Greiner Plan"
as defined in the Merger Agreement) or pay any pension or retirement
allowance not required by any existing Greiner Plan. Greiner will
not, and will not permit any Greiner subsidiary to, enter into any
employment contracts, pay any special bonuses or special remuneration
to officers, directors or employees, or increase the salaries, wage
rates or fringe benefits of (i) any of its officers or employees whose
compensation exceeded $150,000 during the fiscal year ending December
31, 1995, or (ii) any of its other officers and employees other than
pursuant to scheduled reviews under Greiner's or the Greiner
subsidiary's normal compensation review cycle, in all cases consistent
with existing policies and past practice.
9. Tax Matters. Greiner has agreed that it will not
make any tax election that would have a Greiner Material Adverse
Effect (as defined in the Merger Agreement) or settle or compromise
any income tax liability of Greiner or any of its subsidiaries that
would have a Greiner Material Adverse Effect.
10. Discharge of Liabilities. Greiner has agreed that it
will not, and it will not permit any of its subsidiaries to, pay,
discharge, settle or satisfy any claims, liabilities or obligations,
except in the ordinary course of business or in amounts which are not
material, individually or in the aggregate, to the business of
Greiner.
11. Material Agreements. Greiner has agreed that except
in the ordinary course of business, neither Greiner nor any of its
subsidiaries will modify, amend, or terminate any Material Agreement
(as defined in the Merger Agreement) or waive, release or assign any
material rights or claims under such Material Agreement.
12. Stockholders' Meeting; Proxy Statement. Greiner has
agreed to hold a meeting of its stockholders at the earliest
practicable date to submit the Merger Agreement and related matters
for their consideration and approval, and that approval would be
recommended by Greiner's Board of Directors, subject to their
fiduciary duties. Greiner has agreed to send to its stockholders, for
the purpose of considering and voting upon the Merger, this Proxy
Statement/Prospectus, which is required to satisfy all requirements of
applicable state and Federal laws.
13. Acquisition Proposals; Termination Fee. From the
date of the Merger Agreement until the earlier of the termination of
the Merger Agreement or the consummation of the Merger, Greiner has
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agreed that Greiner and its subsidiaries will not, and will cause
their respective officers, directors, employees, agents and
representatives not to, directly or indirectly, encourage, solicit,
accept, initiate or conduct discussions or negotiations with, provide
any information to, or enter into any agreement with, any corporation,
partnership, limited liability company, person or other entity or
group concerning the acquisition of all or a substantial part of the
assets, business or capital stock of Greiner, whether through
purchase, merger, consolidation, exchange or any other business
combination. In the event that Greiner or any of its officers or
directors enter into negotiations or discussions which constitute a
breach of the no shop provisions, the Merger Agreement provides that
Greiner will be obligated to reimburse URS for expenses incurred in
connection with the transactions contemplated by the Merger Agreement
and, in certain circumstances, Greiner will be liable to pay to URS a
termination fee of $5,000,000. See "The Merger Agreement -
Acquisition Proposals; Limitation on Negotiations; Termination Fee."
In the event that either party terminates the Merger Agreement
because of a breach of any of the foregoing by the other party, and in
the event such breach is the result of negligence, the damages
recoverable by the non-breaching party shall not exceed the sum of
$500,000; but, provided, further, that in the event that such breach
is the result of recklessness or willful conduct, the amount of
damages shall not be limited hereby. See "The Merger-The Merger
Agreement."
14. Maintenance of Business. Greiner has agreed to use
its best efforts to carry on and preserve its business and its
relationships with clients, customers, suppliers, employees and others
in substantially the same manner as it has prior to the date of the
Merger Agreement. Greiner has agreed that if Greiner becomes aware of
a deterioration in the relationship with any client, customer,
supplier or key employee, it will promptly bring such information to
the attention of URS in writing and, if requested by URS, will use its
best efforts to restore the relationship.
15. Access. Greiner has agreed to afford to URS and to
URS's financial advisors, legal counsel, accountants, financing
sources and other authorized representatives access during normal
business hours to all of its books, records, properties, offices and
personnel.
16. Liability Insurance. Greiner has agreed to procure
(subject to the approval of URS) continuing directors' and officers'
liability coverage (tail coverage) for directors and officers of
Greiner who have served as directors and officers of Greiner or its
affiliates, prior to the Effective Time of the Merger, with respect to
acts or failures to act prior to the Effective Time of the Merger.
Greiner has also agreed to procure continuing fiduciary liability
coverage (tail coverage) for employees of Greiner who have served as
fiduciaries under any Greiner Plan prior to the Effective Time of the
Merger, with respect to acts or failures to act prior to the Effective
Time of the Merger.
Pre-Closing Covenants of URS.
1. Registration Statement. The URS Common Stock to be
issued in the Merger will be registered under the 1933 Act. URS has
agreed to prepare and file with the SEC the Registration Statement and
any other documents required by the 1933 Act in connection with the
Merger. URS has agreed to use its best efforts to have the
Registration Statement declared effective as promptly as practicable
after such filing. URS has also agreed to take any action required to
be taken under any applicable state securities or "blue sky" laws in
connection with the issuance of the URS Common Stock in the Merger.
2. Listing Agreement. URS has agreed to prepare and
submit to each of the NYSE and the PSE a listing application covering
the shares of the URS Common Stock to be issued in connection with the
Merger. URS has agreed to use its best efforts to obtain, prior to
the Effective Time of the Merger, approval for the listing of such URS
Common Stock, subject to official notice of issuance.
THE FOREGOING IS INTENDED MERELY AS A SUMMARY OF CERTAIN COVENANTS OF GREINER,
ACQUISITION CORP. AND URS. REFERENCE IS MADE TO ARTICLE 6 OF THE MERGER
AGREEMENT ATTACHED HERETO AS APPENDIX B FOR A COMPLETE STATEMENT OF THE
COVENANTS OF EACH PARTY.
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Conditions Precedent to Consummation of Merger. The Merger will occur
only if the Merger Agreement is approved and adopted by the requisite vote of
Greiner stockholders. In addition, consummation of the Merger is subject to
the satisfaction of certain other conditions, unless waived (to the extent such
waiver is permitted by law). A failure of any such condition to be satisfied,
if not waived, could prevent the consummation of the Merger.
Conditions to Obligations of Greiner. The obligation of Greiner to
consummate the Merger is subject to the satisfaction of the following
conditions, among others:
1. Representations and Warranties True at Closing. The
representations and warranties of URS and Acquisition Corp. contained
in the Merger Agreement are true in all material respects at and as of
the Closing Date.
2. Covenants Performed. All of the covenants of URS and
Acquisition Corp. to be performed at or before the Closing Date
pursuant to the terms of the Merger Agreement have been duly
performed.
3. Certificate. At the Closing, Greiner has received a
Certificate signed by the President of each of URS and Acquisition
Corp. to the effect that the conditions set forth in items (1) and (2)
have been satisfied.
4. Approval of Stockholders. The Merger has been
approved by a majority of the outstanding shares of Greiner Common
Stock.
5. Opinion of Counsel. Greiner has received an opinion
of counsel of Messrs. Sheppard, Mullin, Richter & Hampton, L.L.P.,
counsel to URS and Acquisition Corp., dated as of the Effective Time
of the Merger, as to certain matters relating to the organization of
URS and Acquisition Corp. and the authorization and enforceability of
the Merger Agreement.
6. Form S-4. The Registration Statement on Form S-4
pertaining to the URS Common Stock to be issued in connection with the
Merger has become effective under the 1933 Act, and is not the subject
of any stop order or proceedings seeking a stop order.
7. Merger Documents. The Merger Documents have been
filed with the Secretary of State of the State of Nevada, as required
by law.
8. No Material Adverse Effect. There has been no URS
Material Adverse Effect (as defined in the Merger Agreement) between
the date of the Merger Agreement and the Closing Date.
9. HSR Filing. Any waiting period applicable to the
consummation of the Merger under the Hart- Scott-Rodino Antitrust
Improvements Act (the "HSR Act") has expired or been terminated, and
no action has been instituted by the Department of Justice ("DOJ") or
Federal Trade Commission ("FTC") challenging or seeking to enjoin the
consummation of the transaction contemplated by the Merger Agreement,
which action has not been withdrawn or terminated. The waiting period
under the HSR Act was terminated on January 4, 1996.
Conditions to Obligations of URS and Acquisition Corp. The
obligations of URS and Acquisition Corp. to consummate the Merger are subject
to the satisfaction of the following conditions, among others:
1. Representations and Warranties True at Closing. The
representations and warranties of Greiner contained in the Merger
Agreement are true in all material respects at and as of the Closing
Date.
2. Covenants Performed. All of the covenants of Greiner
to be performed at or before the Closing Date pursuant to the terms of
the Merger Agreement have been duly performed.
3. Certificate. At the Closing, URS and Acquisition
Corp. has received a Certificate signed by the President of Greiner to
the effect that the conditions set forth in items (1) and (2) have
been satisfied.
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4. Approval of Stockholders. The Merger has been
approved by a majority of the outstanding shares of Greiner Common
Stock.
5. Opinion of Counsel. URS has received an opinion of
counsel of Messrs. Nossaman, Guthner, Knox & Elliott, counsel to
Greiner, dated as of the Effective Time of the Merger, as to certain
matters relating to the organization of Greiner and the authorization
and enforceability of the Merger Agreement.
6. Form S-4. The Registration Statement on Form S-4
pertaining to the URS Common Stock to be issued in connection with the
Merger has become effective under the 1933 Act and is not the subject
of any stop order or proceedings seeking a stop order.
7. Merger Documents. The Merger Documents have been
filed with the Secretary of State of the State of Nevada, as required
by law.
8. No Material Adverse Effect. There has been no
Greiner Material Adverse Effect (as defined in the Merger Agreement)
between the date of the Merger Agreement and the Closing Date.
9. HSR Filing. Any waiting period applicable to the
consummation of the Merger under the HSR Act has expired or been
terminated, and no action has been instituted by the DOJ or FTC
challenging or seeking to enjoin the consummation of the transaction
contemplated by the Merger Agreement, which action has not been
withdrawn or terminated. The waiting period under the HSR Act was
terminated on January 4, 1996.
10. Consents. Other than the filing of the Merger
Documents with the Nevada Secretary of State, the parties have made
such filings, and obtained all consents of Governmental Entities (as
defined in the Merger Agreement), required to consummate the
transactions contemplated by the Merger Agreement.
11. No Litigation. There is not pending any action,
proceeding or other application before any court or Governmental
Entity brought by any Governmental Entity (i) challenging or seeking
to restrain or prohibit the consummation of the transactions
contemplated by the Merger Agreement, or seeking to obtain any
material damages, or (ii) seeking to prohibit or impose any material
limitations on URS's ownership or operation of all or any portion of
the combined business of URS and Greiner.
12. Secured Credit Agreement. The conditions set forth
in Sections 4.2, 4.3 and 4.4 of the Secured Credit Agreement have been
satisfied. See "The Merger - Financing of the Merger."
Representations and Warranties. The following is a summary of the
representations and warranties of the parties contained in the Merger
Agreement.
Representations and Warranties of Greiner. In the Merger
Agreement, Greiner has made representations and warranties in favor of
URS and Acquisition Corp. with respect to the following matters: (1)
organization and good standing of Greiner; (2) capitalization of
Greiner; (3) subsidiaries of Greiner; (4) material investments of
Greiner; (5) corporate power and authority of Greiner to enter into
the Merger Agreement; (6) consents and approvals required to
consummate the Merger; (7) accuracy of Greiner SEC filings and
financial statements; (8) accuracy of information supplied by Greiner
in connection with the preparation of this Proxy Statement/Prospectus;
(9) absence of material adverse changes in Greiner's business; (10)
absence of undisclosed litigation involving Greiner; (11) absence of
undisclosed liabilities of Greiner; (12) absence of defaults under
Greiner organizational documents, contracts and agreements, orders,
decrees, etc., or registrations, licenses, permits, etc.; (13) good
title to Greiner's properties; (14) Greiner tax filings; (15) Greiner
benefit plans; (16) employee and labor relations matters; (17) Greiner
intellectual property rights; (18) nature and scope of Greiner
insurance policies; (19) compliance by Greiner with applicable laws;
(20) material contracts and agreements of Greiner; (21) no prohibited
payments by Greiner; (22) powers of attorney issued by Greiner; (23)
environmental matters and compliance; (24) regulatory matters; (25)
immigration law compliance; (26) Greiner board approvals; (27) brokers
used by Greiner in connection with the Merger; and (28) accuracy of
disclosure by Greiner.
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Representations and Warranties of URS. URS has made
representations and warranties in favor of Greiner with respect to the
following matters: (1) organization of URS and Acquisition Corp.; (2)
capitalization of URS and Acquisition Corp.; (3) corporate power and
authority of URS and Acquisition Corp. to enter into the Merger
Agreement; (4) consents and approvals required to consummate the
Merger; (5) accuracy of URS SEC filings and financial statements; (6)
accuracy of information supplied by URS in connection with the
preparation of this Proxy Statement/Prospectus; (7) URS and
Acquisition Corp. board approvals; (8) brokers used by URS in
connection with the Merger; and (9) accuracy of disclosure by URS.
The representations and warranties of all parties will
terminate at the Effective Time of the Merger.
Termination. The Merger Agreement may be terminated at any time
before the Merger becomes effective in the following circumstances:
1. By mutual agreement of URS and Greiner;
2. By either URS or Greiner if (i) the approval of the
Merger by a majority of the outstanding shares of Greiner Common Stock
is not obtained, (ii) a Governmental Entity shall have issued an
order, decree or ruling or taken any other actions permanently
restraining, enjoining or otherwise prohibiting the Merger, or (iii)
the Merger shall not have been consummated before September 30, 1996
(provided that the terminating party is not then in material breach of
any representation, warranty, covenant or agreement contained in the
Merger Agreement);
3. By URS, if there has been a breach by Greiner of any
representation, warranty, covenant or other agreement in the Merger
Agreement which has a Greiner Material Adverse Effect, and such breach
has not been cured, or Greiner has not commenced reasonable efforts to
cure such breach, within 30 days after written notice of such breach
is given by URS to Greiner;
4. By URS if Greiner shall enter into any discussions,
negotiations or any letter of intent, understanding or other agreement
relating to an Acquisition Proposal (as defined below);
5. By Greiner if there has been a breach by URS or
Acquisition Corp. of any material representation, warranty, covenant
or other agreement, and such breach has not been cured, or URS and
Acquisition Corp. have not commenced reasonable efforts to cure such
breach, within 30 days after written notice of such breach is given by
Greiner to URS; and
6. By either party, if any of the conditions that must
be satisfied by the other party has not been fulfilled on or prior to
the date specified for fulfillment thereof, or has become impossible
to fulfill for reasons beyond the control of the other party, and such
condition has not been waived.
If the Merger Agreement is terminated by either Greiner or URS
for any of the aforesaid reasons, the Merger Agreement will thereupon
become void and have no effect, and there will be no liability or
obligation on the part of Greiner, URS or Acquisition Corp., or their
respective officers and directors, except that (i) the provisions of
Section 6.2.3 of the Merger Agreement (relating to Acquisition
Proposals and the Termination Fee), and the provisions of any
then-existing confidentiality agreements between the parties, will
survive any such termination; and (ii) no party whose breach of its
representations, warranties, covenants or agreements was the basis of
the other party's termination of the Merger Agreement will be relieved
from liability for damages occasioned by such breach; provided,
however, if the breach is the result of negligence, damages may not
exceed the sum of $500,000; but, provided, further, if the breach is
the result of recklessness or willful misconduct, the amount of
damages will not be limited.
Waiver and Amendment. At any time before the Merger becomes
effective, any party to the Merger Agreement may (i) extend the time for the
performance of any of the obligations or other acts of the other parties to the
Merger Agreement, (ii) waive any inaccuracies in the representations and
warranties contained in the Merger Agreement, and (iii) waive compliance with
any of the agreements, covenants or conditions for the benefit of such party
contained in the Merger Agreement. However, the Secured Credit Agreement
provides that URS may not
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agree to any material amendment to, or waive any of its material rights under,
the Merger Agreement without the prior written consent of the Administrative
Agent (as defined below) for the Lenders under its credit facility.
The Merger Agreement may be amended by the parties by action
taken by their respective Boards of Directors at any time prior to or after the
approval of the Greiner stockholders, but after the approval of the Greiner
stockholders has been obtained, no amendment may be made which by law requires
the further approval of the Greiner stockholders without first obtaining such
approval. The Merger Agreement may not be amended except by a written
instrument signed on behalf of each of the parties.
Acquisition Proposals; Limitation on Negotiations; Termination Fee.
The Merger Agreement provides that Greiner and its subsidiaries will not, and
will cause their respective officers, directors, employees, agents and
representatives not to, directly or indirectly, encourage, solicit, accept,
initiate or conduct discussions or negotiations with, provide any information
to, or enter into any agreement with, any corporation, partnership, limited
liability company, person or other entity or group concerning the acquisition
of all or a substantial part of the assets, business or capital stock of
Greiner, whether through purchase, merger, consolidation, exchange or any other
business combination (each of the foregoing, an "Acquisition Proposal").
Notwithstanding the foregoing, nothing in the Merger Agreement prevents Greiner
and its officers and directors from responding to and considering unsolicited
firm offers for any such transactions from persons other than URS if and to the
extent that, in the written opinion of Greiner's outside counsel, failure to do
so would be reasonably likely to constitute a violation of applicable law or a
breach of the fiduciary duties of Greiner's directors to Greiner's
stockholders. Greiner has agreed to immediately provide written notice to URS
of the terms and other details of any such unsolicited inquiry or proposal
relating to an Acquisition Proposal.
In the event that Greiner or any of its officers or directors enters
into any negotiations or discussions for any reason which shall constitute a
breach of the no-shop provisions of the Merger Agreement as described in the
preceding paragraph, Greiner has agreed to immediately reimburse URS for all
expenses and costs incurred by URS in connection with the transactions
contemplated by the Merger Agreement. In the event that Greiner or any of its
officers or directors enters in to any letter of intent, understanding or other
agreement with a party other than URS relating to the acquisition of all or a
substantial part of the assets, business or capital stock of Greiner, whether
through purchase, merger, consolidation, exchange or any other business
combination, either in violation of the no-shop provisions of the Merger
Agreement or within nine months after termination of the Merger Agreement for
any reason, then immediately upon entering into such letter of intent,
understanding or other agreement, Greiner has agreed to pay to URS a
termination fee (the "Termination Fee") of $5,000,000 dollars; provided,
however, that the Termination Fee will not be payable if, prior to the entry by
Greiner into such letter of intent, understanding or other agreement, URS has
unilaterally declined to close the Merger. The foregoing provisions of the
Merger Agreement may have the effect of discouraging competing offers to
acquire or merge with Greiner.
In the event that either party terminates the Merger Agreement because
of a breach of any of the foregoing by the other party, and in the event such
breach is the result of negligence, the damages recoverable by the
non-breaching party shall not exceed the sum of $500,000; but, provided,
further, that in the event that such breach is the result of recklessness or
willful conduct, the amount of damages shall not be limited hereby. See "The
Merger-The Merger Agreement."
ACCOUNTING TREATMENT
The Merger will be treated as a "purchase" under generally accepted
accounting principles. The acquisition price will be allocated to the assets
acquired (including identifiable intangible assets) and liabilities. To the
extent any excess exists after the allocation, such excess will be allocated to
goodwill. See "The Merger - Pro Forma Financial Information."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is for general information only and is based
on the Federal income tax law now in effect, which is subject to change,
possibly retroactively. This summary does not discuss all aspects of Federal
income taxation which may be important to particular Greiner stockholders in
light of their individual circumstances (e.g., financial institutions,
broker-dealers, insurance companies, tax-exempt organizations and foreign
stockholders). In addition, there may be state or local tax consequences, none
of which are discussed below.
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A Greiner stockholder whose Greiner Common Stock is converted into
shares of URS Common Stock and cash pursuant to the Merger generally will
recognize income (or loss) equal to the difference between (i) the amount of
cash and the fair market value (determined as of the Effective Time of the
Merger) of the URS Common Stock received as Merger Consideration and (ii) the
Greiner stockholder's adjusted tax basis in the Greiner Common Stock so
converted. The Merger is not intended to constitute a tax-free
"reorganization" within the meaning of Section 368 of the Code. The
characterization of any such income (or loss) as capital gain (or capital loss)
or ordinary income (or ordinary loss) generally will depend on whether the
Greiner Common Stock surrendered in the exchange is held as a "capital asset"
within the meaning of Section 1221 of the Code. Any capital gain or loss will
be a long-term capital gain or loss if the exchanging Greiner stockholder is
treated as holding the Greiner Common Stock surrendered in the exchange for
more than one year. The maximum Federal tax rate applicable to long-term
capital gains of an individual taxpayer is 28%. Congress is considering
legislation which would reduce this rate but it is uncertain whether any
legislation that is enacted would apply to gain from the Merger recognized by a
Greiner stockholder. Greiner stockholders will have a tax basis in the URS
Common Stock received in the Merger equal to the fair market value of such URS
Common Stock, determined as of the Effective Time of the Merger.
A holder of Greiner Options who is paid an amount in connection with
the cancellation of the Greiner Options generally will recognize ordinary
income equal to the amount received.
Neither the Performance Plan nor the plan participants (as defined in
the Performance Plan) should recognize any Federal tax consequences as a result
of the Merger and the Greiner Performance Plan's ceasing to be an ESOP within
the meaning of Section 4975(e)(7) of the Code. See "The Merger - Merger
Consideration."
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS
NOT TAX ADVICE AND CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN OF THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO GREINER
STOCKHOLDERS WHO ARE CITIZENS OR RESIDENTS OF THE UNITED STATES, WITHOUT
CONSIDERATION OF THE PARTICULAR FACTS AND CIRCUMSTANCES OF EACH STOCKHOLDER'S
SITUATION. ACCORDINGLY, EACH STOCKHOLDER IS URGED TO CONSULT HIS OR HER OWN
TAX AND FINANCIAL ADVISORS AS TO MATTERS DESCRIBED HEREIN AND ALSO AS TO ANY
ESTATE, GIFT, STATE OR LOCAL OR FOREIGN TAX CONSEQUENCES ARISING OUT OF THE
MERGER.
REGULATORY APPROVALS
Under the Merger Agreement, the obligations of URS and Acquisition
Corp. are conditioned upon the receipt of all required consents of Governmental
Entities (as defined therein). There can be no assurance that any applicable
regulatory authority will approve or take other required action with respect to
the Merger or as to the date of such regulatory approval or other action.
Greiner and URS are not aware of any government approvals that are required in
order to consummate the Merger except as described below. Should any other
approval be required, Greiner and URS have agreed to use their best efforts to
obtain it. There can be no assurance as to whether or when any such other
approval, if required, could be obtained. See "The Merger - The Merger
Agreement."
HSR Act. The parties' obligations to close the Merger are subject to
the conditions that the waiting period applicable under the HSR Act has expired
and that no action has been instituted by the DOJ or FTC challenging or seeking
to enjoin the consummation of the transactions contemplated by the Merger
Agreement. Greiner and URS have submitted their respective applications under
the HSR Act to the DOJ and FTC and were notified of early termination of the
waiting period under the HSR Act on January 4, 1996.
Form S-4. The Registration Statement on Form S-4 pertaining to the
URS Common Stock to be issued in connection with the Merger has been filed with
the SEC and been declared effective prior to the mailing of this Proxy
Statement/Prospectus. The effectiveness of the Merger is conditioned upon the
continued effectiveness of the Registration Statement.
Listing Agreements. URS filed listing applications with the NYSE
and the PSE covering the shares of URS Common Stock to be issued in connection
with the Merger. The NYSE and the PSE have approved the listing of such shares
upon issuance.
29
<PAGE> 37
RIGHTS OF DISSENTING STOCKHOLDERS
URS Stockholders. Based upon the structure of the Merger and under
the Delaware General Corporation Law, URS stockholders will not be called upon
to vote upon the approval of the Merger and will not have any dissenters'
rights with respect to the Merger.
Greiner Stockholders. Based upon the structure of the Merger and
under the Nevada General Corporation Law, holders of Greiner Common Stock are
not entitled to dissenters' rights with respect to the Merger.
FINANCING OF THE MERGER
Generally. To finance the cash portion of the Merger, URS executed a
Credit Agreement, dated as of January 10, 1996 (the "Secured Credit
Agreement"), by and among URS, as Borrower, the financial institutions listed
therein as Lenders (the "Lenders"), and Wells Fargo, as Administrative Agent
(the "Administrative Agent") for the Lenders, pursuant to which the Lenders are
making the following loans to URS to finance the Merger and to provide for the
working capital needs of URS thereafter: (i) a $32,500,000 Tranche A term loan
(the "Tranche A Term Loans") maturing on October 31, 2002, with quarterly
principal payments gradually increasing from $500,000 to $1,750,000; (ii) a
$17,500,000 Tranche B term loan (the "Tranche B Term Loans") maturing on April
30, 2003, with nominal quarterly principal payments until October 31, 2002 and
then balloon payments due in January and April 2003; and (iii) a $20,000,000
revolving facility (including a letter of credit facility) (the "Revolving
Loans") expiring April 30, 1999 (the Tranche A Term Loans, the Tranche B Term
Loans and the Revolving Loans are hereinafter collectively referred to as the
"URS Loans"). The URS Loans will be secured by a pledge of the accounts
receivable and general intangibles of URS and its subsidiaries, and of the
stock of URS's subsidiaries. It is expected that the facility will be
syndicated to include other Lenders following consummation of the Merger.
Conditions to Initial Funding. The Lenders' obligation to fund the
URS Loans will expire on May 31, 1996 (the "Initial Funding Date"), provided,
however, that the Initial Funding Date can be extended, in URS's sole
discretion and upon the payment of an increased commitment fee, until September
30, 1996.
In addition, although the Secured Credit Agreement has been executed,
the Lenders are not obligated to fund the URS Loans until a number of
conditions have been satisfied, including: URS and Greiner must meet specified
financial performance tests; there must be no material adverse change in the
business of URS or Greiner from the date the Secured Credit Agreement was
executed until the Initial Funding Date; URS and Greiner must each conduct its
business in the ordinary course from the date the Secured Credit Agreement was
executed until the Initial Funding Date; all necessary governmental approvals
required for the Merger have been received; all conditions to the consummation
of the Merger have been satisfied; all necessary documents and legal opinions
must be delivered; all fees must be paid to Wells Fargo; and there shall not
have occurred any material disruption in the financial, banking or capital
markets that would have an adverse effect on the loan syndication markets for
loans similar to the URS Loans. Although no assurance may be made, management
believes that all conditions to the funding of the URS Loans will be satisfied.
Interest Rates. URS may select either of the following Wells Fargo
interest rates for the URS loans: (i) its Base Rate (the higher of the rate
most recently announced by Wells Fargo as its "Prime Rate" or one-half of one
percent in excess of the Federal Funds Effective Rate); or (ii) its Adjusted
Eurodollar Rate.
Tranche A Term Loans and Revolving Loans bearing interest at the Base
Rate will bear interest at the following rate: (i) from the Initial Funding
Date until either January 29, 1997 or June 16, 1997 (depending upon when the
Merger takes place), at the Base Rate plus 1.375% per annum; and (ii)
thereafter, at the Base Rate plus a margin (which varies from a high of 1.375%
to a low of 0%) depending upon the ratio of URS's total debt to earnings (i.e.,
the lower the ratio of funded debt to earnings, the lower the rate). Tranche B
Term Loans bearing interest at the Base Rate will bear interest at the Base
Rate plus 1.75% per annum.
Tranche A Term Loans and Revolving Loans bearing interest at the
Adjusted Eurodollar Rate will bear interest at the following rate: (i) from
the Initial Funding Date until either January 29, 1997 or June 16, 1997
(depending upon when the Merger takes place), at the Adjusted Eurodollar Rate
plus 2.625% per annum; and (ii) thereafter, at the Adjusted Eurodollar Rate
plus a margin (which varies from a high of 2.625% to a low of 1.375%) depending
upon the ratio of URS's total debt to earnings (i.e., the lower the ratio of
funded debt to earnings, the lower the rate). Tranche B Term Loans bearing
interest at the Adjusted Eurodollar Rate will bear interest at the Adjusted
Eurodollar Rate plus 3% per annum.
30
<PAGE> 38
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial
statements are derived from the historical consolidated balance sheets and
related consolidated statements of operations of URS and Greiner adjusted to
give effect to the Merger using the purchase method of accounting for business
combinations.
The pro forma combined balance sheet gives effect to the Merger as if
the Merger were effective October 31, 1995. The pro forma combined condensed
statement of operations has been prepared as if the Merger was effective
November 1, 1994. In order to present comparable data for the combining
companies, the pro forma statement of operations includes the historical data
of Greiner for the twelve month period ended December 31, 1995.
The pro forma combined condensed balance sheet and statement of
operations are provided for illustrative purposes only and should be read in
conjunction with the accompanying notes thereto, the audited consolidated
financial statement and notes thereto of URS for the year ended October 31,
1995 and the audited financial statements and notes thereto of Greiner for the
year ended December 31, 1995. The pro forma data is not necessarily indicative
of the operating results or financial position that would have been achieved
had the Merger been consummated at the dates indicated, nor is it necessarily
indicative of future operating results and financial condition.
31
<PAGE> 39
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
OCTOBER 31, 1995
(dollars in thousands)
<TABLE>
<CAPTION>
URS Greiner
October 31, December 31, Pro Forma Pro Forma
1995 1995 Adjustments Combined
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and short-term investments $8,836 $15,880 ($15,519) a $9,197
Accounts receivable, net 49,022 37,680 86,702
Other current assets 1,849 4,750 6,599
---------- ---------- ---------- ----------
Total current assets 59,707 58,310 (15,519) 102,498
---------- ---------- ---------- ----------
Property & equipment, net 5,835 9,380 15,215
Goodwill, net 7,765 691 29,533 b 37,989
Long-term investments - 2,993 (2,993) a -
Other assets 768 772 2,000 c 3,540
---------- ---------- ---------- ----------
14,368 13,836 28,540 56,744
---------- ---------- ---------- ----------
Total assets $74,075 $72,146 $13,021 $159,242
========== ========== ========== ==========
LIABILITIES AND EQUITY
----------------------
Current liabilities:
Current bank debt - - $4,675 a $4,675
Trade payables $7,724 $12,153 19,877
Other current liabilities 15,676 11,742 27,418
---------- ---------- ---------- ----------
Total current liabilities 23,400 23,895 4,675 51,970
Long-term debt 9,999 - 45,325 a 55,324
Other 1,198 1,297 2,495
---------- ---------- ---------- ----------
Total liabilities 34,597 25,192 50,000 109,789
---------- ---------- ---------- ----------
Greiner equity - 46,954 (46,954) d -
URS equity 39,478 - 9,975 a,d 49,453
---------- ---------- ---------- ----------
Total liabilities and equity $74,075 $72,146 $ 13,021 $159,242
========== ========== ========== ==========
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
32
<PAGE> 40
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1995
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
URS Greiner
October 31, December 31, Pro Forma Pro Forma
1995 1995 Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue $179,769 $154,175 $333,944
Expenses:
Direct operating expenses 108,845 93,276 202,121
Indirect, general & administrative 63,217 63,462 $1,000 e 125,679
Restructuring charges - 3,700 3,700
Valuation adjustment-investment in
partnership - 2,300 2,300
------------ ------------ ------------ ------------
Operating income (loss) 7,707 (8,563) 1,000 144
Interest (income) expense, net 1,351 (911) 5,990 f 6,430
------------ ------------ ------------ ------------
Income (loss) before taxes 6,356 (7,652) (4,990) (6,286)
Income tax expense (benefit) 1,300 (2,170) (1,140) g (2,010)
------------ ------------ ------------ ------------
Net income (loss) $5,056 ($5,482) ($3,850) ($4,276)
============ ============ ============ ============
Weighted average shares outstanding 8,632 4,755 h 8,567
============ ============ ============
Earnings (loss) per share:
Primary $0.68 ($1.15) ($0.50)
============ ============ ============
Fully diluted $0.67 ($1.15) ($0.50)
============ ============ ============
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
33
<PAGE> 41
NOTES TO THE PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
(UNAUDITED)
1. Organization and Basis of Presentation:
The Merger Agreement described within this Proxy Statement/Prospectus
contemplates the merger of a wholly owned subsidiary of URS with and into
Greiner, after which Greiner will be a wholly owned subsidiary of URS. Greiner
stockholders will receive $13.50 per share in cash plus 0.298 shares of URS
Common Stock for each outstanding share of Greiner Common Stock. Based on the
4,704,642 outstanding shares of Greiner Common Stock (net of shares held in
treasury) on the date of this Proxy Statement/Prospectus, the aggregate
consideration will be approximately $64,000,000 in cash and 1,400,000 shares of
URS Common Stock.
The pro forma financial statements have been prepared based on the
historical financial statements of Greiner, whose fiscal year ends December 31,
and URS, whose fiscal year ends October 31, as adjusted for the effects of the
proposed Merger under the purchase method of accounting. The pro forma balance
sheet assumes the Merger was consummated on October 31, 1995, and the statement
of operations has been prepared as if the Merger had been consummated on
November 1, 1994. However, in order to present comparable data for the
combining companies, the pro forma statement of operations includes the
historical data of Greiner for the twelve month period ended December 31, 1995.
These statements should be read in conjunction with the historical financial
statements, and the related notes thereto, incorporated by reference herein.
The unaudited pro forma financial statements are not necessarily
indicative of what the actual financial position would have been at October 31,
1995, nor of the actual results of operations for the year ended October 31,
1995, had the Merger occurred on October 31, 1995, and November 1, 1994,
respectively, nor does it purport to present the future financial position or
results of operations of URS and Greiner.
2. The Pro Forma Adjustments:
a. The balance sheet has been adjusted to reflect the cash to be
paid, debt to be incurred and equity to be issued to acquire Greiner as if URS
had acquired Greiner on October 31, 1995 (dollars in thousands).
<TABLE>
<S> <C>
Cash $15,519
Long-term investments 2,993
Term loan - current portion 4,675
Term loan - long term portion 45,325
Common stock 9,975
-------
$78,487
=======
</TABLE>
b. Pro forma adjustments resulting in the excess purchase price over
net assets acquired consist of the following (dollars in thousands):
<TABLE>
<S> <C>
Purchase price of Greiner (net of prepaid
loan fees of $2,000) $ 76,487
Fair value of net assets acquired (46,954)
--------
Excess purchase price over net
assets acquired $ 29,533
========
</TABLE>
URS management believes that the amounts reflected on Greiner's
historical consolidated balance sheet as to tangible assets and liabilities
approximate the fair market values of such assets and liabilities and,
accordingly, such amounts have not been adjusted in the accompanying pro forma
financial statements. The excess purchase price over net assets acquired
resulting from the Merger will be amortized on a straight-line basis over 30
years.
34
<PAGE> 42
c. Fees and expenses related to the Merger are estimated to be
$5,000,000, $2,000,000 of which are associated with the financing of the
transaction. The financing fees are being capitalized and charged to interest
expense over the term of the loan. The remaining fees and expenses are being
capitalized as goodwill.
d. The pro forma combined condensed balance sheets reflect the
issuance of approximately 1,400,000 shares of URS Common Stock and cash
consideration of $13.50 per Greiner share in exchange for 100% of the shares of
Greiner Common Stock, based upon an assumed URS closing stock price of $7.125
per share.
e. Adjustments to reflect: 1) the reductions in public company costs
and expenses of approximately $2,000,000, net of, 2) $1,000,000 of amortization
of goodwill arising from the Merger.
f. Adjustment includes interest expense related to debt incurred in
connection with the Merger, and the reduction in interest income incurred as
follows (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C>
Increase in interest expense $5,090
Decrease in interest income 900
------
Net $5,990
======
</TABLE>
g. Subsequent to the Merger, Greiner's operating results will be
included in URS's consolidated tax returns, which results in a pro forma
reduction to the income tax provision of $1,140,000 for the year ended October
31, 1995.
h. The pro forma combined loss per share calculation is based upon
the weighted average number of shares of URS Common Stock outstanding, assuming
the issuance of 1,400,000 shares of URS Common Stock pursuant to the Merger.
Common stock equivalents, such as options and warrants, have been excluded from
the calculation as they are anti- dilutive.
35
<PAGE> 43
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
With the approval of URS, Mr. Costello expects to execute an
employment agreement with Greiner to be effective upon consummation of the
Merger. Under this agreement, Mr. Costello will (i) be employed by Greiner for
a term of three years from the date the agreement is executed, (ii) receive an
annual base salary of $250,000, and (iii) be entitled to a 40% target bonus
award percentage to be calculated under an incentive compensation plan to be
established by Greiner which will be comparable to URS Consultants, Inc. 1995
Incentive Compensation Plan, with appropriate modifications. If Mr. Costello's
employment is terminated involuntarily by Greiner without cause (other than by
reason of death or disability), he will be entitled to a severance payment of
one hundred percent (100%) of his annual base compensation (subject to certain
adjustments) and group long-term disability insurance coverage, basic term life
insurance coverage with a death benefit of up to $100,000 and reimbursement of
dental and health insurance premiums for a period of one year after such
termination. If Mr. Costello is terminated by Greiner other than for cause or
voluntarily leaves for specified reasons within one year following a Change of
Control (as defined in the agreement), Mr. Costello will be entitled to receive
a severance payment equal to two hundred percent (200%) of his then current
base salary.
Mr. Costello was previously granted options to acquire 49,500 shares
of Greiner Common Stock at exercise prices ranging from $10.38 to $16.00 per
share. As described generally in "The Merger - Merger Consideration - Greiner
Stock Options" above, like other holders of Greiner options, upon consummation
of the Merger such options will be cancelled and Mr. Costello will be entitled
to receive a cash payment of approximately $137,500 (assuming a per share
Merger Consideration of $15.50 at the Effective Time of the Merger). Upon
consummation of the Merger, Mr. Costello will also be granted an option to
purchase 50,000 shares of URS Common Stock under the URS Corporation 1991 Stock
Incentive Plan, as amended.
With the approval of URS, Greiner also expects to offer basic
employment agreements to certain other senior executive officers of Greiner to
become effective upon the consummation of the Merger. These agreements will
provide for two year employment terms with base salaries at varying levels, and
for a severance payment of one hundred percent (100%) of base salary (subject
to certain adjustments) in the event of involuntary termination, but will not
contain change of control provisions. At the current time, it is not known how
many senior executive officers will accept such agreement.
William E. Guthner, Jr., a director of Greiner, is a partner of
Nossaman, Guthner, Knox & Elliott, attorneys at law. Nossaman, Guthner, Knox &
Elliott represents Greiner in connection with the transactions described herein.
36
<PAGE> 44
ANNUAL ELECTION OF GREINER BOARD OF DIRECTORS
The Greiner Meeting will include the annual election of directors to
serve if the Merger does not close or is delayed for any reason. Pursuant to
the authority granted in Greiner's Restated Articles of Incorporation and
Bylaws, the Board has determined that five directors be elected at the Greiner
Meeting to serve until the next annual meeting and until their successors are
elected and have nominated for election as directors the persons identified
below. If, by reason of death or other unexpected occurrence, any one or more of
the nominees should for any reason become unavailable for election, the persons
named as proxies in the accompanying form of proxy may vote for the election of
such substitute nominees, and for such term or terms, as the Board of Directors
may propose. All of the nominees were elected to the Board of Directors at the
last Annual Meeting, except for Robert L. Costello, who was elected by action of
the Board in July 1995.
NOMINEES FOR THE GREINER BOARD OF DIRECTORS
The nominees for directors of Greiner, their ages, the period they
have served as directors, the number of shares of Greiner Common Stock that
they beneficially owned, directly or indirectly, and their percentage of
outstanding Greiner Common Stock, at February 6, 1996 are shown below. Unless
indicated otherwise, beneficial ownership includes both sole voting and sole
investment power.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
DIRECTOR COMMON OUTSTANDING
DIRECTOR AGE SINCE STOCK SHARES
-------- --- -------- ----------- --------------
<S> <C> <C> <C> <C>
William H. Bowen . . . . . . . . . . . 79 1982 362,089(1) 7.70%
Russell Cleveland . . . . . . . . . . . 57 1983 42,790 0.91%
Robert L. Costello . . . . . . . . . . 44 1995 26,934(2) 0.57%
William E. Guthner, Jr. . . . . . . . . 64 1969 2,290 0.05%
Patrick M. Sullivan . . . . . . . . . 52 1995 53,729(3) 1.14%
All directors and executive officers as
a group (15 persons) . . . . . . . . 664,670(4) 14.13%
</TABLE>
- ------------------------
(1) Includes 282,673 shares owned by Mr. Bowen personally; 21,374 shares
owned by Camway, Inc., a corporation controlled by Mr. Bowen; and 58,042
shares owned by Mr. Bowen's wife, Bebe D. Bowen as of December 31, 1995.
Does not include 7,200 shares held in trust, as to which Mr. Bowen has
expressly disclaimed beneficial ownership.
(2) Includes 16,780 shares of exercisable stock options and 3,843 shares held
by the Trust for the Performance Plan for Mr. Costello's account as of
December 31, 1995.
(3) Includes 52,585 shares owned by Dr. Sullivan's wife, Patricia B.
Sullivan, and 1,144 shares owned by Grayson, Inc., a corporation in which
Dr. Sullivan is an officer, director, and majority stockholder.
(4) Includes 111,255 shares of exercisable stock options and 63,226 shares
held by the Trust for the Performance Plan in accounts for such officers
as of December 31, 1995.
The present principal occupations and other biographical information
with respect to Greiner's nominees for directors are as follows:
William H. Bowen has been a director of Greiner since 1982. He served
as Chairman of the Board of Greiner from May 1985 until June 1992 and was
elected interim Chairman in August 1995. Mr. Bowen is also Chairman of the
Board and President of GARVON, Inc., a private investment company, a position
he has held since 1971. He is a graduate of the University of Chicago and the
Harvard Law School.
37
<PAGE> 45
Russell Cleveland has been a director of Greiner since 1983. He is
President of the Renaissance Capital Group, Inc., Renaissance Capital Partners,
Ltd., Renaissance Capital Partners, II, Ltd., and Renaissance Capital Growth
and Income Fund III, Inc., which are investment partnerships. In addition, Mr.
Cleveland serves on the Board of Directors of Global Environmental Corp.,
UNICO, Inc. and Biopharmaceutics, Inc. He is a graduate of the University of
Pennsylvania and the Wharton School of Finance and Commerce.
Robert L. Costello was elected Chief Executive Officer in August 1995
and a director in July 1995. He has served as President and Chief Operating
Officer since February 1994. Prior to this appointment, Mr. Costello served as
Chief Administrative and Financial Officer, Treasurer and Executive Vice
President of Greiner. He has been employed with Greiner or its subsidiaries
for over 17 years and holds a master's degree in business administration from
the University of Oregon.
William E. Guthner, Jr. has been a director of Greiner since 1969. He
has been a Partner of Nossaman, Guthner, Knox & Elliott, attorneys at law, Los
Angeles, California, since 1965. Mr. Guthner is a graduate of Northwestern
University and the University of Michigan Law School.
Patrick M. Sullivan has been a director of Greiner since 1995. Since
1992, Dr. Sullivan has served as President of Caribbean Marine, Inc., a
privately held diversified operating company, and has also served as a director
for this company, or its predecessors since 1979. Dr. Sullivan is a
son-in-law of William H. Bowen, a Director of Greiner. He has a degree in
chemistry from St. Louis University and is also a graduate of the Stanford
University School of Medicine.
Based solely on Greiner's review of Forms 3, 4, and 5 and amendments
thereto furnished to Greiner pursuant to Rule 16a-3(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), covering the period from
January 1, 1995 through December 31, 1995, Greiner believes that its officers,
directors, and ten percent stockholders complied with all applicable filing
requirements under Section 16 of the Exchange Act.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH NOMINEE FOR
THE GREINER BOARD OF DIRECTORS.
1995 MEETINGS OF THE GREINER BOARD OF DIRECTORS
Greiner's Board of Directors held five regularly scheduled meetings and two
special meetings, with all current members of the Board attending.
COMMITTEES OF THE GREINER BOARD OF DIRECTORS
Greiner's Board of Directors has standing Audit, Nominating, Compensation,
and Executive Committees.
Audit Committee. Greiner has an Audit Committee consisting of three
members appointed annually by the Greiner Board of Directors from those
directors who are neither officers nor employees of Greiner or its
subsidiaries. The members of the Audit Committee during 1995 were William E.
Guthner, Jr. (Chairman), Larry J. Cain, who resigned from the Board in November
1995, and Patrick M. Sullivan, who was appointed to the Audit Committee in May
1995. The Audit Committee reviews Greiner's audited financial statements and
considers and recommends the employment of, and approves the fee arrangement
with, Greiner's independent public accountants. The Audit Committee met twice
during 1995, with all members attending.
Nominating Committee. Greiner has a Nominating Committee consisting of two
members appointed annually by the Greiner Board of Directors. The members of
the Nominating Committee during 1995 were William H. Bowen (Chairman) and
William E. Guthner, Jr. The Nominating Committee has the responsibility for
recommending the Board's slate of directors, which may include proposed new
directors who would replace existing directors or become additional directors.
The Nominating Committee met once during 1995, with both members attending.
The Nominating Committee will consider nominees recommended by Greiner's
stockholders provided that such recommendations are accompanied by information
sufficient to enable the Nominating Committee to evaluate the qualifications of
the nominee. Stockholders wishing to recommend nominees should do so in a
written
38
<PAGE> 46
communication addressed to the Nominating Committee, care of Melissa K. Holder,
Corporate Secretary of Greiner, at Greiner's principal office, at 909 E. Las
Colinas Boulevard, Suite 1900, Irving, Texas 75039. Such recommendations must
be submitted no later than the first day of December preceding the annual
meeting of stockholders.
Compensation Committee. Greiner has a Compensation Committee consisting of
four members appointed annually by the Greiner Board of Directors. Such
Committee has the responsibility of reviewing and making recommendations with
respect to compensation and benefit programs for Greiner's employees. The
members of the Compensation Committee during 1995 were Russell Cleveland
(Chairman), William H. Bowen, Larry J. Cain, who resigned from the Board in
November 1995, and Patrick M. Sullivan, who was appointed May 1995. The
Committee met three times during 1995, with all members attending.
Executive Committee. Greiner has an Executive Committee consisting of
three members appointed annually by the Greiner Board of Directors. The
members of the Executive Committee during 1995 were William H. Bowen
(Chairman), Russell Cleveland, and Frank T. Callahan, who resigned from the
Executive Committee in July 1995, and Robert L. Costello, who was appointed to
the Executive Committee in July 1995. The Committee has the responsibility of
maintaining close contact with the operational management of Greiner and
advising management of Greiner on behalf of the Board in such matters as are
appropriate in the interest of timeliness. The Committee is required to report
to the entire Board on a regular basis. The Committee held one regular meeting
and one special meeting in 1995, with all members attending.
DIRECTOR COMPENSATION
All non-employee directors of Greiner receive $1,000 per month for their
services as directors and are also reimbursed for reasonable travel expenses
incurred in attending Board and committee meetings. Non-employee Executive
Committee members also receive $1,000 per month for their services on this
committee. In addition, non-employee directors receive $1,000 for each Board
meeting attended, $250 for each partial-day committee meeting attended and $500
for each full-day or Executive Committee meeting attended.
39
<PAGE> 47
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Greiner Board of Directors is
charged with the responsibility of reviewing and making recommendations with
respect to compensation and benefit programs for Greiner and its executives.
With regard to executive compensation, it is the philosophy of the Greiner
organization to provide a program which encourages continuous improvements in
our ability to provide quality services for our clients while achieving a level
of financial performance that exceeds the average of our industry peer group
for our stockholders, employees, and the ongoing needs of Greiner. Greiner's
program is designed to link all compensation for executives to the achievement
of Greiner's immediate and long-term business performance and goals.
The primary elements of this program are Base Salary, Cash Incentive
Compensation, Stock Options, and participation in standard company benefit
programs such as health and disability insurance and the 401(k)/ESOP which are
available to all employees. No single element of compensation is awarded
without consideration of the potential total compensation to be paid for the
designated position.
Base Salary ranges are established for each position, based on the
duties and level of responsibility held, taking into account "market
ranges/rates" for specific positions, verified against similar or like duties
and responsibilities that exist within the market and industry (defined as
professional service firms providing engineering and architectural consulting
services). Once ranges are established, factors such as local cost-of-living
differences or the movement of the consumer price index have only minor impact
on changes to the person's base compensation. Adjustments to base compensation
are made based upon assigned responsibility and performance and are measured
against successful attainment of specific goals and objectives of Greiner and
individual employees.
Greiner believes that Cash Incentive Compensation plays a strong role
in stimulating management actions aimed at achievement of Company profit goals.
Acceptable profit levels shall be determined by the Board of Directors in
consultation with the Compensation Committee and with management of Greiner.
Overall economic conditions, the markets for Greiner's services and other
factors may be taken into consideration when determining such profit levels.
Currently, a minimum level of profit (before taxes and incentives) equal to six
percent of net revenue is necessary to generate a contribution pool for this
plan.
If a cash incentive pool is generated, it is distributed to executives
upon consideration of individual attainment of Company objectives and upon
review of all aspects of the individual's total compensation package. All such
awards are reviewed and approved by this Compensation Committee.
Stock Options are awarded to executives in order to encourage future
management actions aimed at improving Greiner's sales efforts, client service
quality and Company profitability. If Greiner is successful in improving these
areas, it is anticipated that these actions will generate a positive impact on
the value of Greiner's stock for stockholders, and the individuals will be
given the opportunity to share in the increased value that results from their
efforts. Specific awards of options are based on the individual's ability to
impact company-wide performance and with consideration of the total
compensation appropriate for the position.
In establishing compensation levels for Mr. Callahan and Mr. Costello,
consideration was given to individual performance level relative to their role
as Chief Executive Officer, as well as the progress made in meeting strategic
company objectives. Based on the philosophy of providing a competitive total
compensation package, Mr. Callahan's and Mr. Costello's duties and
responsibilities, actual performance results, and the overall profitability of
Greiner were evaluated and compared to industry norms to determine the total
compensation paid.
Amounts paid or accrued for fiscal 1995 under these plans for the
Chief Executive Officers and four highest- paid executive officers are
presented elsewhere in this Proxy Statement/Prospectus. No member of this
committee is a former or current officer or employee of Greiner or any of its
subsidiaries.
Compensation Committee
William H. Bowen
Russell Cleveland
Patrick M. Sullivan
40
<PAGE> 48
PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG GREINER ENGINEER, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- -------------------------------------------- FISCAL YEAR ENDING -------------------------------
COMPANY 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
GREINER ENGIN INC 100 115.82 129.66 102.71 80.07 105.83
PEER GROUP 100 154.44 157.03 130.40 94.90 127.83
BROAD MARKET 100 130.48 140.46 154.62 156.66 215.54
</TABLE>
(1) The above graph compares the performance of Greiner Engineering, Inc.
with that of the S&P 500 Composite Index and the weighted performance
of a peer group of similar engineering companies. It should be noted
that many of the companies which provide services similar to Greiner's
are privately held and therefore are not included in this comparison.
The peer index of publicly held companies is comprised of Greiner and:
ICF International, Jacobs Engineering Group, Inc., Michael Baker
Corporation, STV Group, Inc. and URS Corporation.
(2) The comparison of total return on investment (change in year-end stock
price plus reinvested dividends) as of December 31 for each of the
periods assumes that $100 was invested on January 1, 1991 in each of
Greiner Engineering, Inc., the S&P 500 Composite Index and the peer
group, with investment weighted by relative market capitalization.
INDEPENDENT ACCOUNTANTS
The Board of Directors of Greiner appointed the firm of Price
Waterhouse LLP ("Price Waterhouse") to act as independent accountants for
calendar year 1995. A representative of Price Waterhouse is expected to be
present at the Greiner Meeting and available to respond to appropriate
questions and, although it has been indicated that no statement will be made,
an opportunity for a statement will be provided.
Greiner has not selected an independent accountant for 1996 as its
policy is for the Board of Directors to do so after the Annual Meeting each
year.
The reports of Price Waterhouse on Greiner's financial statements for
each of three years in the period ended December 31, 1995 contained unqualified
opinions.
OTHER MATTERS
At the time of mailing this Proxy Statement / Prospectus, Greiner was not
aware of any matter not referred to in the form of proxy that would be
presented for action at the meeting. If, however, any other business shall
properly come before the meeting, it is intended that the shares represented by
proxies will be voted with respect thereto in accordance with the judgment of
the person voting them.
If the Merger is not consummated for any reason, Greiner's stockholders may
submit proposals for consideration at Greiner's 1997 Annual Meeting of
Stockholders. Any such proposal must be received by December 1, 1996.
41
<PAGE> 49
SELECTED FINANCIAL INFORMATION
SELECTED URS HISTORICAL FINANCIAL DATA
The selected historical consolidated financial information of URS shown
below for the five years ended October 31, 1995 has been derived from URS's
audited consolidated financial statements. This information should be read in
conjunction with URS's consolidated financial statements and related notes
included elsewhere in this Proxy Statement/Prospectus. Historical operating
results are not necessarily indicative of the results that may be expected in
any future period.
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue $179,769,000 $164,088,000 $145,761,000 $136,793,000 $122,838,000
Net income $ 5,056,000 $ 4,439,000 $ 1,293,000 $ 4,268,000 $ 2,292,000
Earnings per share:
Primary $ .68 $ .60 $ .18 $ .55 $ .40
Fully diluted $ .67 $ .60 $ .18 $ .55 $ .38
BALANCE SHEET DATA
(END OF PERIOD):
Total assets $ 74,075,000 $ 65,214,000 $ 58,074,000 $ 54,892,000 $ 49,831,000
Working capital $ 36,307,000 $ 33,674,000 $ 27,684,000 $ 26,836,000 $ 21,891,000
Long-term liabilities $ 11,197,000 $ 10,650,000 $ 9,846,000 $ 10,038,000 $ 10,621,000
Stockholders' equity $ 39,478,000 $ 33,973,000 $ 29,389,000 $ 27,878,000 $ 23,264,000
</TABLE>
42
<PAGE> 50
URS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations.
Fiscal 1995 Compared with Fiscal 1994. Revenues in fiscal
1995 were $179.8 million, or 10% over the amount reported in fiscal 1994. The
growth in revenues is primarily attributable to increases in revenues derived
from all areas of URS's business, particularly transportation and other
infrastructure projects in the Northeast. Revenues generated from URS's three
largest contracts: Navy CLEAN; EPA ARCS 9&10; and EPA ARCS 6,7,&8, decreased in
fiscal 1995 to $37.1 million as compared to $41.0 million in fiscal 1994. The
decrease in revenues from these contracts is primarily due to a decrease in the
number of task orders for hazardous waste services on all of the above EPA ARCS
contracts. Revenues generated from private commercial businesses increased
from $16.3 million in fiscal 1994 to $21.1 million in fiscal 1995.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $6.3 million, or 6%, over the
amount reported in fiscal 1994. The increase is due to an overall increase in
URS's business in fiscal 1995 as compared to fiscal 1994. Indirect general and
administrative expenses ("IG&A") increased to $63.2 million in fiscal 1995 from
$55.5 million in fiscal 1994. Expressed as a percentage of revenues, IG&A
expenses increased from 34% in fiscal 1994 to 35% in fiscal 1995. URS
attributes this increase to the overall increase in URS's business. Net
interest expense remained relatively constant at $1.4 million in fiscal 1995.
URS earned $6.4 million before income taxes in fiscal 1995 compared to
$4.9 million in fiscal 1994. While URS has available net operating loss
("NOL") carryforwards which partially off-set otherwise taxable income for
Federal income tax purposes, for state income tax purposes such amounts are not
necessarily available to offset income subject to tax. Accordingly, URS's
effective tax rate for fiscal 1995 was approximately 20%. This effective
income tax rate is based on URS using a significant portion of the unlimited
NOL available to it in fiscal year 1995. See "Income Taxes" below and "Note 6 -
Income Taxes" to URS's consolidated financial statements.
Net income increased to $5.1 million in fiscal 1995 as compared to
$4.4 million in fiscal 1994. URS earned $.67 per share on a fully-diluted
basis in fiscal 1995 compared to $.60 per share in fiscal 1994.
URS's backlog of signed and funded contracts at October 31, 1995 was
$196.4 million as compared to $159.1 million at October 31, 1994. The value of
URS's designations, which are awarded projects for which contracts have not
been signed, was $194.1 million at October 31, 1995, as compared to $172.0
million at October 31, 1994.
Fiscal 1994 Compared with Fiscal 1993. Revenues in fiscal
1994 grew to $164.1 million, or 13%, over the amount reported in fiscal 1993.
The growth in revenues was primarily attributable to increases in revenues
generated from all areas of URS's business, particularly transportation and
other infrastructure projects in the Northeast. Revenues derived from URS's
three largest contracts: Navy CLEAN; EPA ARCS 9&10; and EPA ARCS 6,7&8, were
$41.0 million in fiscal 1994 compared to $38.5 million in fiscal 1993. The
increase in revenues from these contracts was due to an increase in the number
of task orders for hazardous waste clean-up services. Revenues generated from
private commercial businesses decreased to $16.3 million from $16.7 million in
fiscal 1993.
Direct operating expenses, which consist of direct labor and direct
expenses including subcontractor costs, increased $11.0 million, or 12%, over
the amount reported in fiscal 1993. The increase was due to an overall
increase in URS's business in fiscal 1994 as compared to fiscal 1993. In
fiscal 1994, IG&A expenses increased to $55.5 million from $51.6 million in
fiscal 1993. However, expressed as a percentage of revenues, IG&A expenses
decreased from 35% in fiscal 1993 to 34% in fiscal 1994. URS attributes this
decrease to continued emphasis on cost controls, as well as the one-time charge
of $2.0 million taken in the third quarter of fiscal 1993 in connection with
the planned phase-out of certain of URS's architectural offices and for claims
on certain of URS's architectural projects. Net interest expense remained
constant at $1.2 million in fiscal 1994 due to significantly lower debt levels
in fiscal 1993 and 1994 as the result of the secondary common stock offering
completed by URS in June 1991.
URS earned $4.9 million before income taxes in fiscal 1994 compared to
$1.4 million in fiscal 1993. While URS had available NOL carryforwards which
partially off-set otherwise taxable income for Federal income
43
<PAGE> 51
tax purposes, for state income tax purposes such amounts were not necessarily
available to offset income subject to tax. Accordingly, URS's effective tax
rate for fiscal 1994 was approximately 9%.
Net income increased 238% to $4.4 million compared to $1.3 million in
fiscal 1993. URS earned $.60 per share in fiscal 1994 compared to $.18 per
share in fiscal 1993.
URS's backlog of signed and funded contracts at October 31, 1994 was
$159.1 million as compared to $142.0 million at October 31, 1993. The value of
URS's designations, which are awarded projects for which contracts have not
been signed, was $172.0 million at October 31, 1994 as compared to $213.6
million at October 31, 1993.
Income Taxes. Prior to October 10, 1989, URS had available NOL
carryforwards for Federal income tax purposes of approximately $51.0 million.
As a result of a change in ownership as defined by Section 382 of the Code that
occurred on October 10, 1989, URS's NOL carryforwards for financial statement
and Federal income tax purposes became limited to approximately $750,000 per
year for the succeeding fifteen-year carryforward period, for an aggregate of
$11.2 million, plus NOL attributable to recognized built-in gains, limited to
$14.0 million by Section 382 of the Code, for a total of $25.2 million. The
financial statement tax benefits arising from these NOL carryforwards will be
recognized as a reduction in financial statement tax expense and an addition to
paid-in capital in the years utilized. At October 31, 1995, URS had utilized
$18.4 million of the total $25.2 million for Federal income tax purposes,
including all of the $14.0 million NOL attributable to recognized built-in
gains. The remaining available NOL is limited to $750,000 per year.
Effective November 1, 1993, URS adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") Number 109, "Accounting for Income
Taxes." This standard requires companies to record all deferred tax
liabilities and assets for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis, including tax loss
carryforwards. As permitted under SFAS Number 109, prior years' financial
statements were not restated. This change did not materially affect URS's
consolidated financial statements.
Liquidity and Capital Resources. URS's liquidity and capital
measurements are set forth below:
<TABLE>
<CAPTION>
October 31,
------------------------------------------
1995 1994 1993
------------------------------------------
<S> <C> <C> <C>
Working capital $36,307,000 $33,674,000 $27,684,000
Working capital ratio 2.6 to 1 2.6 to 1 2.5 to 1
Average days to convert billed
accounts receivable to cash 62 66 67
Percentage of debt to equity 25.0% 27.3% 28.2%
</TABLE>
As discussed in "Information Concerning URS - Acquisitions" below, on
January 4, 1995, URS acquired E.C. Driver & Associates, Inc. for an aggregate
purchase price of $3,596,000, which was paid in cash.
In April 1995, URS amended its existing line of credit with Wells Fargo
Bank, National Association (the "Bank"), to be an unsecured line of credit up
to $15,000,000 and expiring April 29, 1997. Borrowings on the unsecured line
of credit bear interest at the option of URS at a per annum rate equal to
either the Bank's prime rate, or 1.5% over the interest rate offered to the
Bank in the interbank Eurodollar market, adjusted for the Bank's Eurodollar
reserve requirements. At October 31, 1995, URS had outstanding letters of
credit totaling $386,000, which reduced the amount available to URS under the
unsecured line of credit to $14,614,000. See Note 7 - Long-Term Debt - Credit
Agreement - to URS's consolidated financial statements. Under the unsecured
credit agreement, URS is required to satisfy certain financial and
non-financial covenants. URS was in compliance with all financial and
non-financial covenants contained in the unsecured credit agreement at October
31, 1995 and a predecessor secured credit agreement at October 31, 1994.
As discussed more fully in "The Merger", on December 3, 1995, URS and
Greiner executed a letter of intent for URS to acquire all the outstanding
stock of Greiner pursuant to a merger of Greiner with a wholly-owned subsidiary
of URS. To finance the cash portion of this proposed acquisition, URS has
executed the Secured Credit
44
<PAGE> 52
Agreement, as more fully discussed in "The Merger -- Financing of the Merger."
See also Note 7 - Long-Term Debt - Credit Agreement - to URS's consolidated
financial statements.
URS is a professional services organization and, as such, is not capital
intensive. Capital expenditures during fiscal years 1995, 1994, and 1993 were
$1,610,000, $2,149,000, and $1,952,000, respectively. The expenditures were
principally for computer-aided design and drafting equipment and facilities
expansion to accommodate URS's growth. URS expects fiscal 1996 capital
expenditures to be comparable to the expenditures in fiscal 1995.
URS believes that its existing financial resources, together with its
planned cash flow from operations and its unused line of credit, as well as
credit facilities provided for in the Secured Credit Agreement, will provide
sufficient capital to fund its operations and its capital expenditure needs for
the forseeable future.
45
<PAGE> 53
SELECTED GREINER HISTORICAL FINANCIAL DATA
The selected historical consolidated financial information of Greiner shown
below for the five years ended December 31, 1995 has been derived from
Greiner's audited consolidated financial statements and should be read in
conjunction therewith. Historical operating results are not necessarily
indicative of the results that may be expected in any future period.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 (1) 1994 1993 1992 1991
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue $154,175,000 $151,856,000 $140,555,000 $ 131,803,000 $ 127,012,000
Net income (loss) $ (5,482,000) $ 3,979,000 $ 4,226,000 $ 4,040,000 $ 3,415,000
Earnings (loss) per share $ (1.15) $ .82 $ .88 $ .86 $ .75
Cash dividends per share $ .30 $ .28 $ .24 $ .24 $ .20
BALANCE SHEET DATA
(END OF PERIOD):
Total assets $ 72,146,000 $ 76,189,000 $ 73,398,000 $ 67,813,000 $ 61,941,000
Working capital $ 34,415,000 $ 41,232,000 $ 37,824,000 $ 34,669,000 $ 32,599,000
Long-term liabilities $ 1,297,000 $ 1,388,000 $ 1,367,000 $ 1,344,000 $ 1,663,000
Stockholders' equity $ 46,954,000 $ 55,226,000 $ 52,098,000 $ 48,424,000 $ 42,888,000
</TABLE>
(1) During 1995, Greiner initiated various activities to restructure
certain of its operations in order to reduce its cost structure and
improve future profitability, resulting in $3,700,000 of restructuring
charges. Also in 1995, Greiner reduced the carrying value of its
investment in a partnership by $2,300,000.
46
<PAGE> 54
GREINER MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations. The following table sets forth, for the years
1995, 1994 and 1993, the percentage of gross revenue represented by the items
in Greiner's consolidated statements of net income:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Gross revenue 100.0% 100.0% 100.0%
Direct costs, principally outside services 26.2 24.6 23.9
---- ----- -----
Net revenue 73.8 75.4 76.1
Operating expenses:
Salaries and related costs 54.0 53.7 55.1
General expenses 21.5 17.9 16.4
Restructuring charges 2.4 - -
Partnership valuation adjustment 1.5 - -
---- ----- -----
79.4 71.6 71.5
---- ----- -----
Income (loss) from operations (5.6) 3.8 4.6
Other income, principally interest 0.6 0.6 0.4
---- ----- -----
Income (loss) before income taxes (5.0) 4.4 5.0
Income tax provision (benefit) (1.4) 1.8 2.0
---- ----- -----
Net income (loss) (3.6)% 2.6% 3.0%
==== ===== =====
</TABLE>
Revenue. During each of the years 1993 through 1995, Greiner
generated approximately 80% of its revenue from public sector clients and the
remainder of its revenue from private sector clients. Greiner reports its
services by division based on the type of client and market for which the
service is performed. All of Greiner's services are performed in one segment
and are all engineering and architectural services. In 1995, Greiner expanded
its reporting of divisions to include marine transportation and
federal/military clients. In previous periods, the marine transportation
division was included with the air transportation division and the
federal/military division was included with the institutional division.
Greiner's total revenue was derived from the following market-focused divisions
in the approximate percentages as shown in the following table:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Surface transportation 46% 48% 53%
Air transportation 24% 24% 23%
Development 10% 10% 10%
Institutional 13% 16% 12%
Water resources 2% 2% 2%
Marine transportation 2% - -
Federal/military 3% - -
</TABLE>
Greiner's gross revenue increased to $154,175,000 in 1995, from
$151,856,000 in 1994, an increase of 1.5%. The increase in revenue in 1995 is
primarily due to the increased use of subconsultants which permitted a greater
volume of work to be performed by Greiner. This increase in revenue followed
an increase of 8.0% in 1994. The 1994 revenue increase was primarily due to
additional contracts resulting from an increased marketing effort.
Direct Cost of Revenue. As a percentage of gross revenue,
Greiner's direct cost of revenue increased to 26.2% in 1995 from 24.6% in 1994
and 23.9% in 1993. These changes primarily resulted from the increased use of
subconsultants on various projects. On many projects with public clients,
Greiner is required to have subcontractors complete specified percentages of
the awarded contracts. This percentage to be completed by
47
<PAGE> 55
subcontractors varies by client and project. Additionally, Greiner uses
subconsultants on some projects to provide additional engineering services or
other areas of expertise for which Greiner does not have available staff.
Salaries and Related Costs. Salaries and related costs
(payroll taxes, insurance and other fringe) increased slightly in 1995 to 54.0%
of gross revenue from 53.7% in 1994. This increase relates primarily to
project labor overruns in the California land development and mid-Atlantic
operations, as well as increased indirect labor due to the greater marketing
effort on international projects. These increases were partially offset by
declines in the employee incentive and insurance expense. Because of the
operating loss recorded in 1995, there was not a Greiner incentive
contribution.
In 1994, salaries and related costs declined to 53.7% of gross revenue
from 55.1% in 1993. This decrease is a result of decreases in the direct labor
incurred to fulfill contract requirements and a decline in the employee
incentive expense. Salaries and related costs were higher in 1994 over 1993
for marketing pursuits and for indirect activities related to employee
training, quality management and long-term strategic planning.
General Expenses. General expenses increased to 21.5% of
gross revenue in 1995 compared to 17.9% in 1994. Greiner experienced three
significant increases in general expenses in 1995. First, Greiner recorded a
$850,000 addition to the allowance for doubtful accounts as a result of
contract and payment disputes related to a contract termination in Hong Kong.
Second, Greiner accrued approximately $600,000 of non-reimbursable expenses
related to the completion of various projects in the California residential
land development operations. Third, Greiner incurred higher costs related to
contract audit matters, litigation and other contingencies. Additionally,
depreciation expense increased approximately $700,000 due to continued
upgrading of computer hardware and software, and data processing expense was
higher as fewer of these expenses were directly reimbursable on projects in
1995 compared to 1994.
In 1994, general expenses increased to 17.9% of gross revenue from
16.4% in 1993. The primary reasons for this increase were: higher marketing
and travel expenses resulting from Greiner's expanded international marketing
efforts; increased depreciation expense due to continued upgrading of computer
hardware and software; and increased reserves related to litigation and other
contingencies.
Restructuring Charges. During 1995, Greiner incurred
approximately $3,700,000 of restructuring charges related to the reduction of
operations in Greiner's California residential land development and Hong Kong
operations. The decision by Greiner to restructure these operations resulted
in the following charges in 1995: $1,375,000 associated with the closing of
the California residential land development offices and the early termination
or sublease of office leases; additional office exit costs in California of
$85,000; employee severance costs of $240,000 related to the termination of
approximately 30 employees in California; the reduction of the carrying value
of goodwill associated with the California residential land development
operations of $1,500,000; and $500,000 related primarily to lease termination
costs in the restructured Hong Kong operations. See Note 10 in the Notes to
Consolidated Financial Statements.
Partnership Valuation Adjustment. The National Transportation
Authority ("NTA") -- a general partnership between Greiner and The Perot Group
- - was formed in 1992 to pursue the planning, financing, construction, and
operation of tollroad facilities worldwide, principally through public/private
partnerships. NTA currently holds the franchise rights for the tollway
extension to State Route 57 (SR 57) in Orange County, California. To date, NTA
has been unsuccessful in securing necessary financing for the preliminary
environmental phases of the SR 57 project and currently holds no other
significant project franchises. Although NTA is continuing to pursue financing
alternatives for the SR 57 project and is actively seeking new project
opportunities in public/private transportation projects, the lack of progress
on the SR 57 project has caused Greiner to record a non-cash charge of
$2,300,000 in 1995 to reduce the carrying value of its investment in NTA. See
Note 4 in the Notes to Consolidated Financial Statements.
Other Income. Other income, consisting primarily of interest
income, remained relatively constant in 1995 compared to 1994. Other income
increased in 1994 compared to 1993 as a result of the increase in interest
rates on Greiner's investments.
Provision (Benefit) For Income Taxes. The effective income
tax rate for 1995, 1994 and 1993 was (28.4%), 40% and 40% respectively. The
income tax rate for 1995 reflects deferred tax benefits resulting from
48
<PAGE> 56
the losses recorded during the year, partially offset by permanent differences,
primarily related to the $1,500,000 writeoff of goodwill discussed above.
Liquidity and Capital Resources. For internal management purposes,
Greiner reviews, among other things, its working capital, accounts receivable
activity and the percentage of debt to equity on a continuing basis.
Greiner's liquidity and capital measurements are set forth below:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Working capital (in thousands) $34,415 $41,232 $37,824
Working capital ratio 2.4 to 1 3.1 to 1 2.9 to 1
Average days to convert billed accounts
receivable to cash 78 72 73
Percentage of debt to equity - 0.4% 0.5%
</TABLE>
The decline in Greiner's working capital and working capital ratio is
primarily a result of the operating losses incurred in 1995, which resulted in
increases in accounts payable and accrued liabilities partially offset by an
increase in current deferred tax benefits. Also in 1995, Greiner's long-term
investments increased due to the purchase of treasury notes in excess of one
year. The increase in 1995 in the average days to convert billed accounts
receivable to cash is primarily a result of Greiner's emphasis on accelerating
the billing process which increased billed accounts receivable but
significantly reduced unbilled accounts receivable. See Note 2 in the Notes to
Consolidated Financial Statements. In 1995, Greiner paid off all outstanding
debt resulting in the decline in the percentage of debt to equity.
Greiner's assets include cash and investments in excess of its
day-to-day operating needs. It is anticipated that a substantial portion of
Greiner's cash will be used to pay the cash portion of the Merger Consideration
to holders of Greiner Common Stock.
Greiner has an unsecured bank line of credit which aggregates
$15,000,000 and provides for the payment of interest at the lower of the bank's
prime rate or 1-1/2% over the bank's cost of funds rate. At December 31, 1995,
1994 and 1993, there were no working capital borrowings outstanding. This line
of credit will be terminated if the merger discussed above is consummated.
Greiner has had a cash dividend program which provided for cash
dividend payments of $.30, $.28 and $.24 per share of Greiner's outstanding
common stock for 1995, 1994 and 1993, respectively. Greiner may not pay cash
dividends in 1996 if the proposed merger is completed.
On March 7, 1995 Greiner's Board of Directors authorized the purchase
of up to 500,000 shares of Greiner's common stock to be held in treasury.
Through December 31, 1995, 127,292 shares of common stock had been purchased to
be held in treasury, of which 6,200 of these shares were released in 1995 for
the exercise of stock options.
Greiner's operations are professional services and as such are not
capital intensive. However, in order to enhance productivity, remain
competitive and potentially increase revenue, Greiner has increased its annual
purchases of computer hardware and software. Greiner presently has no material
commitments for purchases of additional equipment.
49
<PAGE> 57
INFORMATION CONCERNING URS
OVERVIEW
URS offers a broad range of planning, design and program and
construction management services for engineering, architectural and
environmental projects. URS serves public and private sector clients
throughout the United States in two principal markets: infrastructure projects
involving transportation systems, institutional and commercial facilities and
water resources, and environmental projects involving hazardous waste
management and pollution control.
URS conducts its business through 24 offices located throughout the
United States. URS has approximately 1,500 full-time employees, many of whom
hold advanced or technical degrees and have extensive experience in
sophisticated disciplines applicable to URS's business. URS believes that its
geographic and technical diversity allow it to compete for local, regional and
national projects, and enable it to apply to each project a variety of
resources from its national network.
URS provides professional services through URS's 24 offices in three
major areas: planning, design and program and construction management. Each of
these offices is responsible for obtaining local or regional contracts. This
approach allows regional government agencies and private clients to view URS's
offices as local businesses with superior service delivery capabilities.
Because URS can draw from its large and diverse network of professional and
technical resources, URS has the capability to market and perform large
multi-state projects.
Planning. Planning covers a broad range of assignments ranging from
conceptual design and technical and economic feasibility studies to community
involvement programs. Planning services also involve developing alternative
concepts for project implementation and analyzing the impacts of each
alternative.
In addition to traditional engineering and architectural planning
services, URS has extensive expertise in a number of highly specialized areas,
including toll facilities, health care facility renovation, environmental site
analysis, water quality planning for urban storm water management and site
remediation assignments.
Design. URS's professionals provide a broad range of design and
design-related services, including computerized mapping, architectural and
interior design, civil, sanitary and geotechnical engineering, process design
and seismic (earthquake) analysis and design. For each project, URS identifies
the project requirements and then integrates and coordinates the various design
elements. The result is a set of contract documents that may include plans,
specifications and cost estimates that are used to build a project. These
documents detail design characteristics and set forth for the contractor the
materials which should be used and the schedule for construction. Other
critical tasks in the design process may include value analysis and the
assessment of construction and maintenance requirements.
Program and Construction Management. URS's program and construction
management services include master scheduling of both the design and
construction phases, construction and life-cycle cost estimating, cash flow
analysis, value engineering, constructability reviews and bid management. Once
construction has begun, URS supervises and coordinates the activities of the
construction contractor. This frequently involves acting as the owner's
representative for on-site supervision and inspection of the contractor's work.
In this role, URS's objective is to monitor a project's schedule, cost and
quality. URS generally does not take contractual responsibility for the
contractor's risks and methods, nor for site safety conditions.
MARKETS
URS's strategy is to focus on two major markets: (i) infrastructure
projects involving transportation systems, institutional and commercial
facilities and water resources; and (ii) environmental projects involving
hazardous waste management and pollution control. URS has developed a
nationwide identity based on its successful completion of a number of highly
visible rehabilitation and expansion projects in these markets. Although URS
views these markets as being distinct, URS provides its planning, design and
program and construction management services to both markets.
50
<PAGE> 58
Infrastructure. URS has significant expertise in three areas relating
to the infrastructure market: transportation systems, institutional and
commercial facilities and water resources projects.
Transportation Systems. URS's engineers, designers, planners
and managers provide services for projects involving all types of
transportation networks, such as highways, roadways, streets, bridges,
rapid and mass transit systems, airports and marine facilities. These
services range from the design of interstate highways to harbor
traffic simulation studies and may extend from conceptual planning
through preliminary and final design to construction management.
Historically, URS's emphasis in this market area has been on the
design of new transportation facilities, but in recent years the
rehabilitation of existing facilities has become a major focus.
Institutional and Commercial Facilities. URS provides
architectural, engineering design, space planning and construction
supervision services to this market area. Demand for low-maintenance,
energy efficient facilities drives today's market for commercial and
industrial buildings. In addition, there is increased pressure to
renovate facilities to meet changing needs and current building
standards.
Water Resources. URS's capabilities in this market area
include the planning, design and program and construction management
of water supply, storage, distribution and treatment systems, as well
as work in basin plans, groundwater supply, customer rate studies,
urban run-off, bond issues, flood control, water quality analysis and
beach erosion control.
Environmental. URS has developed expertise in two principal
environmental markets: hazardous waste management and pollution control.
Hazardous Waste Management. URS conducts initial site
investigations, designs remedial actions for site clean-up and
provides construction management services during site clean-up. This
market involves identifying and developing measures to effectively
dispose of hazardous and toxic waste at contaminated sites. URS also
provides air quality monitoring and designs individual facility
modifications required to meet local, state and Federal air quality
standards. This work requires specialized knowledge of and compliance
with complex Federal and state regulations, as well as the permitting
and approval processes. Solid waste management services provided by
URS include facility siting, transfer station design and
community-wide master planning.
URS has been awarded several significant contracts with
government agencies, including a contract with the U.S. Department of
Defense for environmental engineering and remediation work in the
Northwest and Alaska under the Comprehensive Long-Term Environmental
Action-Navy ("Navy CLEAN") program and two contracts with the U.S.
Environmental Protection Agency ("EPA") under its Alternative Remedial
Contracting Strategy ("EPA ARCS") program. Under the Navy CLEAN
contract, URS provides site inspections, site characterizations,
remediation designs and action plans for contaminated Navy facilities.
A portion of the Navy CLEAN contract, which is expected to have a
ten-year term, is awarded each year over the life of the contract. In
fiscal 1995 and 1994, URS generated revenues associated with the Navy
CLEAN contract of $16.6 million and $14.3 million, respectively.
URS's services under the ten-year EPA ARCS contracts include
investigating the nature and extent of contamination by hazardous
materials, performing risk assessments, evaluating the feasibility of
various options for remedial action and providing management,
technical, quality assurance and health and safety reviews of
potentially responsible party submittals. Work under the EPA ARCS
contracts is performed on a task order basis. In fiscal 1995 and
1994, URS recognized revenues of $20.5 million and $26.7 million,
respectively, under the EPA ARCS contracts.
Pollution Control. URS's principal services in this market
include the planning and design of new wastewater facilities, such as
sewer systems and wastewater treatment plants, and the analysis and
expansion of existing systems. The types of work performed by URS
include infiltration/inflow studies, combined sewer overflow studies,
water quality facilities planning projects and design and construction
management services for wastewater treatment plants.
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<PAGE> 59
COMPETITION
The engineering and architectural services industry is highly
fragmented and very competitive. As a result, in each specific market area URS
competes with many engineering and consulting firms, several of which are
substantially larger than URS and which possess greater financial resources.
No firm currently dominates any significant portion of URS's market areas.
Competition is based on quality of service, expertise, price,
reputation and local presence. URS believes that it competes favorably with
respect to each of these factors in the market areas it serves.
CLIENTS
URS's clients include local, state and Federal government agencies and
private sector businesses. URS's revenues from local, state and Federal
government agencies and private businesses for the last five fiscal years are
as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------------- ------------- -------------- ------------- -------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Local and state agencies $ 99,871 56% $ 88,207 54% $ 80,350 55% $ 65,315 48% $ 68,720 56%
Federal agencies 58,751 33 59,611 36 48,713 33 52,530 38 35,614 29
Private businesses 21,147 11 16,270 10 16,698 12 18,948 14 18,504 15
-------- --- -------- --- -------- --- -------- --- -------- ---
Total $179,769 100% $164,088 100% $145,761 100% $136,793 100% $122,838 100%
======== === ======== === ======== === ======== === ======== ===
</TABLE>
CONTRACT PRICING AND TERMS OF ENGAGEMENT
Under its cost-plus contracts, URS charges clients negotiated rates
based on URS's direct and indirect costs. Labor costs and subcontractor
services are the principal components of URS's direct costs. Federal
Acquisition Regulations limit the recovery of certain specified indirect costs
on contracts subject to such regulations. In negotiating a cost-plus contract,
URS estimates all recoverable direct and indirect costs and then adds a profit
component, which is either a percentage of total recoverable costs or a fixed
negotiated fee, to arrive at a total dollar estimate for the project. URS
receives payment based on the total actual number of labor hours expended. If
the actual total number of labor hours is lower than estimated, the revenues
from that project will be lower than estimated. If the actual labor hours
expended exceed the initial negotiated amount, URS must obtain a contract
modification in order to receive payment for such overage. URS's profit margin
will increase to the extent URS is able to reduce actual costs below the
estimates used to produce the negotiated fixed prices on contracts not covered
by Federal Acquisition Regulations; conversely, URS's profit margin will
decrease and URS may realize a loss on the project if URS does not control
costs and exceeds the overall estimates used to produce the negotiated price.
Cost-plus contracts covered by Federal Acquisition Regulations require
an audit of actual costs and provide for upward or downward adjustments if
actual recoverable costs differ from billed recoverable costs. The Defense
Contract Audit Agency, auditors for the Department of Defense and other Federal
agencies, has completed incurred cost audits of URS's Federal contracts for
fiscal years ended through October 31, 1988, resulting in immaterial
adjustments.
Under its fixed-price contracts, URS receives an agreed sum negotiated
in advance for the specified scope of work. Under fixed-price contracts, no
payment adjustments are made if URS over-estimates or under-estimates the
number of labor hours required to complete the project, unless there is a
change of scope in the work to be performed. Accordingly, URS's profit margin
will increase to the extent the number of labor hours and other costs are below
the contracted amounts. The profit margin will decrease and URS may realize a
loss on the project if the number of labor hours required and other costs
exceed the estimates.
BACKLOG, PROJECT DESIGNATIONS AND INDEFINITE DELIVERY CONTRACTS
URS's contract backlog was $196,400,000 at October 31, 1995, compared
to $159,100,000 at October 31, 1994. URS's contract backlog consists of the
amount billable at a particular point in time for future services under
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<PAGE> 60
executed funded contracts. Indefinite delivery contracts, which are executed
contracts requiring the issuance of task orders, are included in contract
backlog only to the extent the task orders are actually issued and funded. Of
the contract backlog of $196,400,000 at October 31, 1995, approximately 30%, or
$59,000,000, is not reasonably expected to be filled within the next fiscal
year ending October 31, 1996.
URS has also been designated by customers as the recipient of certain
future contracts. These "designations" are projects that have been awarded to
URS but for which contracts have not yet been executed. Task orders under
executed indefinite delivery contracts which are expected to be issued in the
immediate future are included in designations. Total contract designations
were estimated to be $194,000,000 at October 31, 1995, as compared to
$172,000,000 at October 31, 1994. Typically, a significant portion of
designations are converted into signed contracts. However, there is no
assurance this will continue to occur in the future.
Indefinite delivery contracts are signed contracts pursuant to which
work is performed only when specific task orders are issued by the client.
Generally these contracts exceed one year and often indicate a maximum term and
potential value. Examples of such contracts are the Navy CLEAN and EPA ARCS
contracts. Certain indefinite delivery contracts are for a definite time
period with renewal option periods at the client's discretion. While URS
believes that it will continue to get work under these contracts over their
entire term, because of renewals and the necessity for issuance of individual
task orders, continued work by URS and the realization of their potential
maximum values under these contracts is not assured.
However, because of the increasing frequency with which URS's
government and private sector clients use this contracting method, URS believes
their potential value should be disclosed along with backlog and designations
as an indicator of URS's future business. When the client notifies URS of the
scope and pricing of task orders, the estimated value of such task orders is
added to designations. When such task orders are signed and funded, their
value goes into backlog. At October 31, 1995, the potential value of URS's
five largest indefinite delivery contracts was as follows:
<TABLE>
<CAPTION>
AT OCTOBER 31, 1995
----------------------------------
REVENUES
RECOGNIZED
TOTAL THRU ESTIMATED
POTENTIAL OCTOBER 31, FUNDED ESTIMATED REMAINING
CONTRACT TERM VALUES 1995 BACKLOG DESIGNATIONS VALUES
- ---------------------------------- --------- --------- ----------- ------- ------------ ---------
(In millions)
<S> <C> <C> <C> <C> <C> <C>
EPA ARCS (9&10) 1989-1999 $182.5 $ 29.7 $10.6 $6.8 $135.4
Navy CLEAN 1989-1999 166.0 109.4 6.4 3.2 47.0
EPA ARCS (6,7&8) 1989-1999 119.7 61.0 3.3 3.0 52.4
Brooks AFB System 1994-1999 50.0 1.7 5.0 - 43.3
NY State Environmental Remediation 1990-1996 20.0 7.7 1.4 - 10.9
------ ------ ----- ----- ------
Total $538.2 $209.5 $26.7 $13.0 $289.0
====== ====== ===== ===== ======
</TABLE>
EMPLOYEES
URS has approximately 1,500 full-time and part-time and temporary
employees, many of whom hold advanced or technical degrees and have extensive
experience in a variety of disciplines applicable to URS's business. URS also
employs, at various times on a temporary basis, up to several hundred
additional persons to meet contractual requirements. Twenty-seven of URS's
employees are covered by a collective bargaining agreement. URS has never
experienced a strike or work stoppage. URS believes that employee relations
are good.
ACQUISITIONS
In January 1995, URS acquired privately-held E.C. Driver & Associates,
Inc. ("ECD") of Tallahassee, Florida. ECD is a leading Florida-based
transportation engineering firm specializing in bridge and highway design,
53
<PAGE> 61
including particular expertise in moveable bridges. The 50-person firm has
annualized revenues of approximately $5,000,000.
On December 3, 1995, URS and Greiner executed a letter of intent for
URS to acquire all the outstanding stock of Greiner pursuant to a merger of
Greiner with a wholly-owned subsidiary of URS. Greiner is a professional
services firm operating in the engineering and architectural design services
industry and headquartered in Irving, Texas. The acquisition price will
consist of $13.50 in cash plus 0.298 shares of URS Common Stock for each of the
4,704,642 outstanding shares of Greiner Common Stock, for an aggregate price of
approximately $64,000,000 and 1,400,000 shares of URS Common Stock. Completion
of this transaction is subject to due diligence, mutual approval of a formal
purchase agreement, and shareholder, regulatory and other approvals. The
transaction is expected to close by April, 1996.
PROPERTIES
URS leases office space in 24 principal locations throughout the
United States. Most of the leases are written for a minimum term of three
years with options for renewal, sublease rights and allowances for
improvements. Significant lease agreements expire at various dates through the
year 2005. URS believes that its current facilities are sufficient for the
operation of its business and that suitable additional space in various local
markets is available to accommodate any needs that may arise.
LEGAL PROCEEDINGS
Certain subsidiaries of URS have been named as defendants in legal
proceedings wherein substantial damages are claimed. Such proceedings are not
uncommon in its business and usually involve claims against multiple defendants
who were involved in the project which is the subject of the proceeding.
Historically, URS subsidiaries have been successful in defending such actions
or have settled them within insured limits. In the opinion of URS management,
based upon its present knowledge, URS ultimate liability, if any, in these
proceedings is not expected to exceed amounts previously provided for in the
consolidated financial statements. See "Risk Factors - Legal Proceedings /
Liability Insurance Coverage."
DESCRIPTION OF URS CAPITAL STOCK
The authorized capital stock of URS consists of 20,000,000 shares of URS
Common Stock, $.01 par value per share, and 1,000,000 shares of preferred
stock, $1.00 par value per share. As of January 31, 1996, there were 7,167,591
shares of URS Common Stock outstanding held by 2,013 holders of record and no
outstanding shares of preferred stock. The following summary is qualified in
its entirety by reference to URS's Certificate of Incorporation, which is filed
as an exhibit to the Registration Statement of which this Proxy Statement /
Prospectus is a part.
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<PAGE> 62
INFORMATION CONCERNING GREINER
OVERVIEW
Greiner is a professional services firm operating in the engineering
and architectural design services industry. Greiner, through its operating
subsidiaries, provides a broad range of engineering, planning, architectural,
environmental analysis, design, surveying, program management and other
services to public and private sector clients throughout the United States, its
territories and in foreign countries, including Hong Kong and Malaysia.
Greiner's services have been provided through the following market-focused
divisions of Greiner:
o SURFACE TRANSPORTATION -- serving governmental agencies and
private entities responsible for planning, designing and
operating and maintaining highways, bridges and rail
transportation facilities.
o AIR TRANSPORTATION -- serving governmental agencies and
private entities (including air carriers) responsible for
planning, designing and operating and maintaining airports and
airport-related facilities.
o DEVELOPMENT -- serving private sector owners, developers and
operators of commercial, industrial and recreational
properties.
o INSTITUTIONAL -- serving public agencies and private entities
engaged in planning, designing and operating and maintaining
institutional facilities such as schools and health care
facilities.
o WATER RESOURCES -- serving public agencies and private
entities engaged in the supply, storage, treatment and control
of water and wastewater and the provision of other municipal
services.
o MARINE TRANSPORTATION -- serving developers and operators of
port and marine transportation facilities.
o FEDERAL/MILITARY -- serving federal government agencies and
military branches responsible for planning, designing,
operating and maintaining government and military facilities.
Greiner has historically concentrated its professional services in the
transportation infrastructure area (highways, bridges, airports and transit
systems). Greiner's specialization and expertise in the field of
transportation engineering dates back, through its subsidiary operations, to
the early 1900's. Among the notable transportation projects in which Greiner
has been involved are the Pennsylvania Turnpike, the Chesapeake Bay Bridges,
the Washington, D.C. Metro rail-transit system and the new Denver and Hong Kong
International Airports.
Greiner operates throughout the United States and in Hong Kong and
Malaysia through over 40 offices. Based on total revenue for the year ended
December 31, 1994, Greiner is ranked in the top 50 design services firms in
America and is one of the top five firms which specialize in transportation
engineering in the United States according to the Engineering News Record (a
McGraw-Hill publication).
Greiner was incorporated in California in 1954 and reincorporated in
Nevada in 1986. Greiner's shares are listed on the NYSE and the PSE.
COMPETITION
The market in which Greiner provides services is highly competitive.
Greiner's competitors include large national firms as well as many small local
firms. Greiner competes with these firms on the basis of technical
capabilities, qualifications and availability of personnel, experience,
reputation, quality of performance and, to a lesser extent, price of services.
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<PAGE> 63
SALES AND BACKLOG
Greiner's revenues were earned as shown below:
<TABLE>
<CAPTION>
1995 1994 1993
---------------------- ---------------------- ----------------------
PERIOD REVENUES PERCENT REVENUES PERCENT REVENUES PERCENT
- ------------- ------------ ------- ------------ ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter $ 37,332,000 24.2 $ 37,148,000 24.5 $ 33,098,000 23.5
2nd Quarter 40,015,000 25.9 38,484,000 25.3 33,489,000 23.8
3rd Quarter 39,745,000 25.8 38,181,000 25.1 37,080,000 26.4
4th Quarter 37,083,000 24.1 38,043,000 25.1 36,888,000 26.3
------------ ----- ------------ ----- ------------ -----
$154,175,000 100.0 $151,856,000 100.0 $140,555,000 100.0
============ ===== ============ ===== ============ =====
</TABLE>
The amount of revenue earned by Greiner for services performed outside
of the United States during each of the last three fiscal years was not
significant; however, Greiner has been involved in major projects in Hong Kong
in each of the last three years. Revenue derived from services to domestic
governmental agencies was approximately 80% of the consolidated revenue for
each of the years 1993 through 1995. Also, for each of the years 1993 through
1995 Greiner had no single customer from which it derived 10% or more of its
revenue. Pass-through subconsultant and other direct materials costs were
approximately 26%, 25% and 24% of revenue in 1995, 1994 and 1993, respectively.
Greiner's backlog is the sum of its Category I and Category II
backlog. Category I backlog is the estimated revenue, excluding pass-through
subconsultant costs and other direct materials costs, from contracts entered
into with clients less that portion of the contracts which Greiner has already
reported as revenue. Category II backlog is based upon estimated revenue,
excluding pass-through subconsultant costs and other direct materials costs,
from projects for which Greiner has been selected and is negotiating a contract
or is awaiting receipt of a "Notice to Proceed" on a signed contract.
Greiner's backlog at December 31, 1995 was approximately $170,000,000
and at December 31, 1994 was approximately $162,000,000. Management estimates
that approximately $100,000,000 of services included in Greiner's backlog at
December 31, 1995 will be performed in 1996. Greiner also expects additional
revenue in 1996 from sales generated in 1996 which are not included in the
December 31, 1995 backlog.
The composition of backlog as of the dates indicated was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Category I backlog $ 98,000,000 $ 98,000,000
Category II backlog 72,000,000 64,000,000
------------ ------------
Total backlog $170,000,000 $162,000,000
============ ============
</TABLE>
Greiner's backlog is subject to revision from time to time due to
cancellations, modifications or changes in the scope of work or changes in
design and construction schedules of particular projects. While Greiner
management believes that its backlog estimates are accurate, there can be no
assurance that such backlog will be realized.
COMPLIANCE WITH ENVIRONMENTAL LAWS
Compliance with Federal, state and local regulations which have been
enacted or adopted relating to the protection of the environment is not
expected to have any material effect upon the capital expenditures, earnings
and competitive position of Greiner. However, such compliance by Greiner's
clients may increase the need for the environmental related services which
Greiner provides.
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<PAGE> 64
EMPLOYEES
At December 31, 1995 Greiner employed approximately 1,500 persons,
which include registered professionals (engineers, architects and surveyors);
technicians; and management and administrative personnel. Except for
approximately 25 surveyors located in California, none of Greiner's employees
is represented by a labor union. Greiner considers its relations with its
employees to be good.
PROPERTIES
Greiner's executive office is located in Irving, Texas and occupies
approximately 13,300 square feet of space. The office is leased for a term
expiring in 1999.
Greiner's subsidiaries lease approximately 400,000 square feet of
office space which includes the principal offices used for engineering and
planning or architectural services. These principal offices are located in
Grand Rapids, Michigan; Orlando, Florida; Phoenix, Arizona; Santa Ana and
Pleasanton, California; Tampa, Florida; Timonium, Maryland; Rocky Hill,
Connecticut; and Hong Kong.
LEGAL PROCEEDINGS
Certain subsidiaries of Greiner have been named as defendants in legal
proceedings wherein substantial damages are claimed. Such proceedings are not
uncommon in its business and usually involve claims against multiple defendants
who were involved in the project which is the subject of the proceeding.
Historically, Greiner's subsidiaries have been successful in defending such
actions or have settled them within insured limits. In the opinion of
management, based upon its present knowledge, Greiner's ultimate liability, if
any, in these proceedings is not expected to exceed amounts previously provided
for in the consolidated financial statements. See "Risk Factors - Legal
Proceedings / Liability Insurance Coverage."
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<PAGE> 65
URS MANAGEMENT
EXECUTIVE OFFICERS OF URS
The following is a list of URS's executive officers and other key
employees, their ages and their positions as of February 1, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Martin M. Koffel 56 Chief Executive Officer, President and
Chairman of the Board
Kent P. Ainsworth 49 Vice President, Chief Financial Officer and
Secretary
Marvin J. Bloom 54 Senior Vice President and Regional Manager of
URSC
Joseph Masters 39 Vice President, Legal Affairs
Peter J. Pedalino 48 Vice President and Treasurer of URSC
Charles A. Rodenfels 40 Senior Vice President of Architectural
Services of URSC
Irwin L. Rosenstein 59 Vice President and Director of URS; President
of URSC
Martin S. Tanzer Ph.D. 51 Executive Vice President of URSC
</TABLE>
Business Experience
Martin M. Koffel has been the Chief Executive Officer, President and
Director of URS since May 1989. Mr. Koffel has served as Chairman of the
Board of URS since June 1989. Mr. Koffel has also served as a Director of
Regent Pacific Corporation since 1993.
Kent P. Ainsworth has served as Vice President and Chief Financial
Officer of URS since January 1991. Mr. Ainsworth has also served as Secretary
of URS since May 1994. From March 1990 to December 1990, Mr. Ainsworth served
as a financial consultant. From November 1987 to February 1990, Mr. Ainsworth
was President and Chief Financial Officer of DiGiorgio Corporation.
Marvin J. Bloom has served as Senior Vice President and Regional
Manager of URS Consultants, Inc., a wholly- owned subsidiary of URS ("URSC")
since January 1993. From December 1992 through January 1993, Mr. Bloom served
as Senior Vice President and Division Manager of URSC. From March 1991 through
December 1992, Mr. Bloom served as Vice President and Division Manager of URSC.
From August 1990 through February 1991, Mr. Bloom served as Vice President and
Branch Manager of URSC.
Joseph Masters has served as Vice President, Legal of URS since July
1994. From April 1994 through July 1994, Mr. Masters served as Vice President
and Director of Legal Affairs for URSC. From May 1992 through April 1994, Mr.
Masters served as Vice President and Associate General Counsel of URSC. From
January 1990 through May 1992, Mr. Masters served as outside counsel to URSC.
Peter J. Pedalino has served as Vice President and Treasurer of URSC
since July 1989.
Charles A. Rodenfels has served as Senior Vice President of
Architectural Services and National Director of Achitectual Services of URSC
since July 1993. From November 1990 through July 1993, Mr. Rodenfels served as
Senior Vice President and Ohio Division Manager of URS Consultants, Inc.-Ohio
("URS - Ohio"). From November 1989 through November 1990, Mr. Rodenfels
served as Vice President and Ohio Branch Manager for URSC - Ohio. From November
1981 through November 1989, Mr. Rodenfels served as Director of Business
Development of URSC.
Irwin L. Rosenstein has served as President of URSC since February
1989. Mr. Rosenstein has served as Vice President of URS since 1987 and as
Director of URS since February 1989. From August 1986 through February 1989,
Mr. Rosenstein served as President of Eastern Region of URSC.
Martin S. Tanzer Ph.D. has served as Executive Vice President of URSC
since February 1989. From 1984 through February 1989, Dr. Tanzer served as
Vice President of URSC.
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DIRECTORS OF URS
The following is an alphabetical list of URS's Directors, their ages
and their positions as of February 1, 1996:
<TABLE>
<CAPTION>
NAME AGE YEAR FIRST ELECTED
---- --- ------------------
<S> <C> <C>
Richard C. Blum 60 1975
Emmet J. Cashin, Jr. 73 1972
Armen Der Marderosian 58 1994
Adm. S. Robert Foley, Jr., USN (Ret.) 67 1994
Martin M. Koffel 56 1989
Richard B. Madden 66 1992
Richard Q. Praeger 71 1970
Irwin L. Rosenstein 59 1989
William D. Walsh 65 1988
</TABLE>
Business Experience
Richard C. Blum has served as Chairman and President of Richard C. Blum
& Associates, Inc. ("RCBA Inc."), the sole general partner of Richard C. Blum &
Associates, L.P., a merchant banking firm ("RCBA, L.P.") since 1985. Mr. Blum
has also served as Vice Chairman of the Board of Directors and financial
consultant to URS since 1985. Mr. Blum has also served as a Director of
National Education Corporation since 1985; as Vice Chairman of Shanghai
Pacific Partners, Inc. since 1986; as a Director of Sumitomo Bank of California
since 1987; as a Director of Northwest Airlines Corp. since 1989; as a Director
of Shaklee Corporation since 1990; as a Director of Triad Systems Corporation
since 1992 and as a Director of CB Commercial since 1993.
Emmet J. Cashin, Jr. has served as Chairman of Cashin Investments
since 1993. Mr. Cashin has also served as Trustee for Thompson McKinnon Asset
Management, Inc. (Pimco Advisory Finds) since 1980. From 1968 to 1993, Mr.
Cashin served as Chairman and Chief Executive Officer of Fox Group, a real
estate investment corporation.
Armen Der Marderosian has served as Senior Vice President, Technology
and Systems for GTE Corporation since 1995. From 1993 to 1995, Mr. Der
Marderosian served as Executive Vice President and General Manager for GTE
Government Systems Corporation. From 1990 to 1992, Mr. Der Marderosian served
as Vice President and General Manager for GTE Government Systems Corporation.
Admiral S. Robert Foley, Jr., USN (Ret.) has served as Vice President
of Raytheon International Inc. and President of Raytheon Japan since January
1995. Admiral Foley has also served as Director of New Japan Radio Company
since 1995. From 1991 to 1993, Admiral Foley served as Vice President,
Commercial Marketing and Planning of Raytheon Corporation. From 1990 to 1991,
Admiral Foley served as Vice Chairman of ICF Kaiser Engineers. From 1985 to
1987, Admiral Foley served as Assistant Secretary for Defense Programs, United
States Department of Energy. From 1950 to 1985, Admiral Foley served in the
United States Navy, including Commander-in-Chief, U.S. Pacific Fleet from 1982
to 1985.
Martin M. Koffel has been the Chief Executive Officer, President and a
Director of URS since May 1989. Mr. Koffel has served as Chairman of the
Board of URS since June 1989. Mr. Koffel has also served as a Director of
Regent Pacific Management Corporation since 1993.
Richard B. Madden has served as Director since 1971, as Chairman
from 1977 to 1994, and as Chief Executive Officer from 1971 to 1994, of
Potlatch Corporation. Mr. Madden has also served as a Director of Pacific Gas
and Electric Company since 1977; as a Director of Consolidated Freightways,
Inc. since 1992; and as a Director of Pacific Gas Transmission Company since
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Richard Q. Praeger has served as a management and engineering
consultant since 1974. Mr. Praeger is also the owner of Transition Books, a
book store, since 1979. Prior to 1974, Mr. Praeger served as President of
URS/Madigan-Praeger, Incorporated.
Irwin L. Rosenstein has served as President of URSC since 1989. Mr.
Rosenstein has also served as Vice President of URS since 1987 and as a Director
of URS since 1989. From 1986 through 1989, Mr. Rosenstein served as President
of the Eastern Region of URSC.
William D. Walsh has served as General Partner, Sequoia Associates, a
private investment firm, since 1983. Mr. Walsh has also served as Chairman of
the Board of Champion Road Machinery, Ltd. and Newell Industrial Corporation
since 1988. Mr. Walsh has also served as a Director of National Education
Corporation since 1987; as a Director of Basic Vegetable Products since 1990;
as a Director of Acquisition Newcourt Credit Group, Inc. since 1994 and as a
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------------------------------------
OTHER ANNUAL
COMPENSATION
SALARY BONUS (1)
NAME PRINCIPAL POSITION YEAR ($) ($) ($)
----------------------- ----------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Martin M. Koffel Chairman of the Board; 1995 $385,000 $280,261 $1,585
Chief Executive 1994 $385,000 $283,580 $1,585
Officer; President 1993 $385,000 $0 $3,220
Irwin L. Rosenstein Vice President; 1995 $300,000 $190,659 $1,190
President, URS 1994 $300,400 $169,106 $840
Consultants, Inc. 1993 $300,000 $0 $261
Martin S. Tanzer, Ph.D. Executive Vice 1995 $238,780 $122,019 $1,904
President, URS 1994 $224,555 $99,209 $1,344
Consultants, Inc. 1993 $220,000 $0 $492
Kent P. Ainsworth Vice President; Chief 1995 $188,986 $94,633 $0
Financial Officer; 1994 $185,000 $90,844 $0
Secretary 1993 $179,434 $0 $0
Joseph Masters Vice President - Legal 1995 $130,000 $31,544 $0
1994 $119,237 $21,489 $0
1993 $104,998 $5,000 $0
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
AWARDS PAYOUTS
-------------------------- -------
RESTRICTED SECURITIES
STOCK UNDERLYING
AWARD(S) OPTIONS/ LTIP ALL OTHER
(2) SARS PAYOUTS COMPENSATION
NAME ($) (#) ($) ($)
----------------------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C>
Martin M. Koffel $0 25,000 $0 $40,775 (3)
$0 40,000 $0 $39,639
$0 0 $0 $35,606
Irwin L. Rosenstein $0 25,000 $0 $13,270 (4)
$0 25,000 $0 $18,105
$0 0 $0 $16,707
Martin S. Tanzer, Ph.D. $0 15,000 $0 $10,610 (5)
$0 27,500 $0 $22,431
$0 0 $0 $33,469
Kent P. Ainsworth $0 12,000 $0 $1,500 (6)
$0 10,000 $0 $1,500
$0 0 $0 $1,803
Joseph Masters $0 2,400 $0 $1,100 (7)
$0 3,000 $0 $ 842
$0 0 $0 $1,100
</TABLE>
(1) The amounts in this column primarily represent automobile allowances.
(2) The aggregate number and value as of October 31, 1995 of each of the
Named Executive's restricted share holdings are as follows: Mr.
Koffel, 0 shares, $0; Mr. Rosenstein, 0 shares, $0; Dr. Tanzer, 5,000
shares, $28,750; Mr. Ainsworth, 7,500 shares, $43,125; Mr. Masters, 0
shares, $0. Dr. Tanzer's and Mr. Ainsworth's shares vested in 1995.
(3) Consists of matching contributions of $1,500 paid pursuant to URS's
Defined Contribution Plan, a $2,241 cost of living adjustment to
amounts previously credited under URS's Selected Executives Deferred
Compensation Plan, and $10,464 of term life insurance premiums and
$26,550 of disability insurance premiums paid pursuant to Mr. Koffel's
employment agreement (see "Employment Agreements").
(4) Consists of matching contributions of $1,500 paid by the Company
pursuant to URS's Defined Contribution Plan, $5,770 paid by URS for
the surrender of accrued vacation time, a $4,397 cost of living
adjustment to amounts previously credited under URS's Selected
Executives Deferred Compensation Plan and $1,603 for life and
disability insurance premiums.
(5) Consists of matching contributions of $1,500 paid by the URS pursuant
to URS's Defined Contribution Plan, $4,616 paid by URS for the
surrender of accrued vacation time, a $2,521 cost of living adjustment
to amounts previously credited under URS's Selected Executives
Deferred Compensation Plan and $1,973 for life and disability
insurance premiums.
(6) Consists of matching contributions of $1,500 paid by URS pursuant to
URS's Defined Contribution Plan.
(7) Consists of matching contributions of $1,100 paid by URS pursuant to
URS's Defined Contribution Plan.
61
<PAGE> 69
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
---------------------------------------------------------------------------------- --------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---------------- ------------ ------------ ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
M. M. Koffel 25,000 12% $5.75 3/21/2005 90,404 229,100
I. L. Rosenstein 25,000 12% $5.75 3/21/2005 90,404 229,100
M. S. Tanzer 15,000 7% $5.75 3/21/2005 54,242 137,460
K. P. Ainsworth 12,000 6% $5.75 3/21/2005 43,394 109,968
J. Masters 2,400 1% $5.75 3/21/2005 8,679 21,994
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)(1)
------------- -------------
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---------------- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
M. M. Koffel 0 $0 372,333 $1,118,000
51,667 $15,625
I. L. Rosenstein 0 $0 76,592 $0
41,667 $15,625
M. S. Tanzer 0 $0 49,366 $3,750
33,334 $16,875
K. P. Ainsworth 0 $0 63,334 $0
18,667 $7,500
J. Masters 0 $0 3,500 $0
4,400 $1,500
</TABLE>
(1) Based on 1995 fiscal year-end share price equal to $6.375.
62
<PAGE> 70
DIRECTORS' COMPENSATION
During fiscal year 1995, the non-employee members of URS's Board of
Directors received an annual director's fee of $15,000, plus an attendance fee
of $2,000 for each URS Board of Directors meeting attended, and a fee of $500
for participation in any telephonic URS Board of Directors meeting.
Non-employee directors who are members of a committee of the Board received
$625 for each committee meeting attended and the Chairman of the committee
received an additional $625 per meeting. Employee members of the URS Board of
Directors did not receive any such fees. In addition, URS maintains a policy
whereby non-employee directors may be hired on an as-needed basis from time to
time as consultants for special projects at the rate of up to $3,000 per day
(plus reasonable expenses) upon the recommendation of the Chairman of the Board
or any officer designated by the Chairman of the Board.
Upon the conclusion of each Annual Meeting of Stockholders, each
non-employee director who is reelected to serve as a director automatically
receives an option to purchase 1,000 shares under the 1991 Stock Incentive
Plan. During fiscal year 1995, Messrs. Blum, Cashin, Der Marderosian, Foley,
Madden, Praeger and Walsh each received an option to purchase 1,000 shares
under the 1991 Stock Incentive Plan for services rendered as non-employee
directors during fiscal year 1995. Employee members of the URS Board of
Directors did not receive any such options.
Richard C. Blum, a director of URS, receives $60,000 per year for
services provided under a consulting agreement with URS. In addition, URS pays
$90,000 per year to RCBA, L.P. under a separate consulting agreement. URS may
terminate these consulting agreements at any time. RCBA, Inc., in its capacity
as the sole general partner of RCBA, L.P., indirectly through several entities,
holds 2,472,693 shares (assuming the exercise of certain warrants), or
approximately 34 percent, of URS's outstanding Common Stock. Mr. Blum is the
majority stockholder of RCBA, Inc.
EMPLOYMENT AGREEMENTS
Martin M. Koffel. Mr. Koffel has an evergreen employment agreement
with URS, executed in December 1991, under which Mr. Koffel is eligible for a
target bonus equal to 60 percent of his base salary and received an annual base
salary of not less than $385,000 through December 17, 1995. On December 15,
1995, the Compensation/Option Committee increased Mr. Koffel's annual base
salary, effective December 18, 1995, to $415,000. The agreement obligates URS
to reimburse Mr. Koffel for the cost of maintaining disability insurance
providing monthly benefits of not less than $10,000 in the event of his
disability and provides for certain supplemental life insurance benefits which
currently are in the form of a $1,155,000 term life insurance policy. If Mr.
Koffel's employment is terminated involuntarily by URS without cause (other
than by reason of death or disability), URS must pay a severance payment equal
to 150 percent of his then current base salary and his then current target
bonus. If Mr. Koffel ceases to be employed by URS for any reason other than
for cause within one year following a Change in Control (see below), he becomes
entitled to a special severance payment equal to three times the sum of his
then current base salary and his then current target bonus. In addition, all
awards held by Mr. Koffel under any of URS's incentive, deferred compensation,
bonus, stock and similar plans, to the extent unvested, will become vested
immediately upon a Change in Control. A Change in Control is defined in the
agreement to include (i) a change in control required to be reported pursuant
to Item 6(e) of Schedule 14A of Regulation 14A under the Securities Exchange
Act of 1934, as amended, or (ii) any person acquiring 20 percent or more of the
voting power of URS or (iii) more than two-thirds of the Directors not having
served on the Board for 24 months prior to the Change in Control.
Under the terms of an earlier employment agreement executed in May
1989, Mr. Koffel was granted SARs on 15,000 shares at the base price of $28.75
which expire upon the earlier of May 9, 1999 or the termination of Mr. Koffel's
employment with URS. At URS's option, Mr. Koffel's SARs may at any time be
replaced with options to purchase URS Common Stock on the same economic basis
as the SARs. The SARs are fully vested.
63
<PAGE> 71
Irwin L. Rosenstein. Mr. Rosenstein has an evergreen employment
agreement with URSC, executed in August 1991, under which Mr. Rosenstein
received an annual base salary of not less than $300,000 from March 2, 1992
through December 17, 1995. On December 15, 1995, the Compensation/Option
Committee increased Mr. Rosenstein's annual base salary, effective December 18,
1995, to $315,000. The agreement also obligates URS to maintain a $400,000
term life insurance policy for Mr. Rosenstein and disability insurance
providing him with benefits of at least $7,000 per month in the event of his
disability. If Mr. Rosenstein's employment is terminated involuntarily by URS
without cause (other than by reason of death or disability) he is entitled to
continuation of his base salary for one year (or until normal retirement at age
65, if less). Under the agreement, as amended, if Mr. Rosenstein ceases to be
employed by URS within one year following a Change of Control (see below), Mr.
Rosenstein will be entitled to receive a severance payment equal to 200 percent
of his then current base salary. Change in Control is defined in Mr.
Rosenstein's agreement as the acquisition by any person of 51 percent of more
of URSC's or URS's then current outstanding securities having the right to vote
at elections of Directors.
Under the terms of an earlier employment agreement executed in
February 1989, Mr. Rosenstein was granted SARs on 7,500 shares at the base
price of $27.50 which expire upon the earlier of February 24, 1999 or the
termination of Mr. Rosenstein's employment with URS. At URS's option, Mr.
Rosenstein's SARs may at any time be replaced with options to purchase URS
Common Stock on the same economic basis as the SARs. The SARs are fully
vested.
Martin S. Tanzer, Ph.D. Dr. Tanzer has an evergreen employment
agreement with URSC, executed in August 1991, under which Dr. Tanzer received
an annual base salary of $220,000 from November 1, 1992 through November 14,
1994 and $240,000 from November 15, 1994 through December 17, 1995. On
December 15, 1995, the Compensation/Option Committee increased Dr. Tanzer's
annual base salary, effective December 18, 1995, to $250,000. The agreement
also obligates URS to maintain a $400,000 term life insurance policy for Dr.
Tanzer and disability insurance providing him with benefits of at least $7,000
per month in the event of his disability. If Dr. Tanzer's employment is
terminated involuntarily by URS without cause (other than by reason of death or
disability) he is entitled to continuation of his base salary for one year (or
until normal retirement at age 65, if less). Under the agreement, as amended,
if Dr. Tanzer ceases to be employed by URS within one year following a Change
of Control (as defined above in the description of Mr. Rosenstein's employment
agreement), Dr. Tanzer will be entitled to receive a severance payment equal to
200 percent of his then current base salary.
Under the terms of an earlier employment agreement executed in
February 1989, Dr. Tanzer was granted SARs on 5,000 shares at the base price of
$26.25 which expire upon the earlier of February 27, 1999 or the termination of
Dr. Tanzer's employment with URS. At URS's option, Dr. Tanzer's SARs may at
any time be replaced with options to purchase URS Common Stock on the same
economic basis as the SARs. The SARs are fully vested.
Kent P. Ainsworth. Mr. Ainsworth executed an evergreen employment
with URS in May 1991 following his employment as URS's Vice President and Chief
Financial Officer in January 1991. Under this employment agreement, Mr.
Ainsworth received an annual base salary of $165,000 from February 24, 1992
through March 22, 1993, $185,000 through December 14, 1994, and $195,000
through December 17, 1995. On December 15, 1995, the Compensation/Option
Committee increased Mr. Ainsworth's annual base salary, effective December 18,
1995, to $205,000. If Mr. Ainsworth's employment is terminated involuntarily
by URS without cause (other than by reason of death or disability), he is
entitled to continuation of his base salary for one year (or until normal
retirement at age 65, if less). If Mr. Ainsworth is terminated by URS other
than for cause or voluntarily leaves for specified reasons within one year
following a Change of Control (as defined in the description of Mr. Koffel's
employment agreement), Mr. Ainsworth will be entitled to receive a severance
payment equal to 280 percent of his then current base salary (reduced pro rata
if such termination occurs within two years prior to normal retirement). In
addition, all awards held by Mr. Ainsworth under any of URS's incentive,
deferred compensation, bonus, stock and similar plans, to the extent unvested,
will become vested immediately upon a Change of Control.
64
<PAGE> 72
Joseph Masters. Mr. Masters does not have a written employment
agreement with URS. Mr. Masters's compensation is reviewed and established
periodically by the Compensation/Option Committee. In fiscal year 1995, Mr.
Masters's annual base salary was $130,000. On December 15, 1995, the
Compensation/Option Committee increased Mr. Masters's annual base salary,
effective December 18, 1995, to $140,000. Mr. Masters has a severance
agreement with URS, executed on November 22, 1993, which provides that if Mr.
Masters is terminated by URS other than for cause or voluntarily leaves for
specified reasons within one year following a Change of Control (as defined in
the description of Mr. Koffel's employment agreement), Mr. Masters will be
entitled to receive his base salary and participate in any insurance plans
maintained by URS during a severance period commencing on the date his
employment terminates and ending on the earlier of six months thereafter or his
death.
PRINCIPAL URS STOCKHOLDERS
The following table contains information as of January 15, 1996 as to
the beneficial ownership of URS Common Stock, including URS Common Stock
obtainable upon the exercise of warrants ("warrant shares") and upon exercise
of stock options exercisable on or prior to March 16, 1996, by each director
and nominee for director and the executive officers. To URS's knowledge, the
persons named in the table have sole voting and investment power with respect
to all URS Common Stock shown as beneficially owned by them, subject to
applicable community property laws and except as otherwise noted.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of Class(1)
- -------------------------------------------------------------------------------------
<S> <C> <C>
Richard C. Blum & Associates, L.P.
909 Montgomery Street
San Francisco, CA 94133
(directly)(2) 996 shares Less than 1%
(through the following
entities)(3):
BK Capital Partners 104,719 shares 6.71%
403,546 warrant shares
-------
508,265
BK Capital Partners II 117,869 shares 6.89%
403,546 warrant shares
-------
521,415
BK Capital Partners III 248,738 shares 5.00%
115,299 warrant shares
-------
364,037
The Common Fund 1,077,980 shares 15.04%
Richard C. Blum(4) 17,841 shares Less than 1%
Emmet J. Cashin, Jr.(5) 8,000 shares Less than 1%
Martin M. Koffel(6) 357,333 shares 4.75%
Richard B. Madden(7) 7,000 shares Less than 1%
Richard Q. Praeger(8) 12,211 shares Less than 1%
Irwin L. Rosenstein(9) 71,206 shares Less than 1%
</TABLE>
65
<PAGE> 73
<TABLE>
<S> <C> <C>
William D. Walsh(10) 8,500 shares Less than 1%
Martin S. Tanzer, Ph.D.(11) 49,866 shares Less than 1%
Kent P. Ainsworth(12) 70,834 shares Less than 1%
Joseph Masters(13) 3,601 shares Less than 1%
All Officers and Directors 3,079,085 shares 35.54%
as a group (10 persons)(14)
</TABLE>
- ---------------
(1) Percentages are calculated with respect to a holder of warrants or
options exercisable prior to March 16, 1996 as if such holder had
exercised its warrants or options. Warrant shares and option shares
held by other holders are not included in the percentage calculation
with respect to any other stockholder.
(2) Richard C. Blum is the President, Chief Executive Officer and majority
stockholder of RCBA, Inc.
(3) RCBA, Inc. is the sole general partner of RCBA, L.P., which is, in
turn, the sole general partner of BK Capital Partners, a California
Limited Partnership, BK Capital Partners II, a California Limited
Partnership, and BK Capital Partners III Limited Partnership, the
address of each of which is 909 Montgomery Street, San Francisco,
California 94133. RCBA, L.P. is an investment adviser to The Common
Fund, the address of which is 909 Montgomery Street, San Francisco,
California 94133. RCBA, L.P. exercises voting and investment
discretion as to all such shares.
(4) Includes 7,387 shares held directly, 2,454 shares held as beneficiary
of the RCB Keogh Plan, and currently exercisable portions of options.
Does not include shares held by RCBA, L.P. or entities managed by
RCBA, L.P., which Mr. Blum may be deemed to own indirectly in his
capacity as the majority stockholder of RCBA, Inc., in its capacity as
the sole general partner of RCBA, L.P.
(5) Represents currently exercisable portions of options.
(6) Represents currently exercisable portions of options.
(7) Includes 5,000 shares held directly and currently exercisable portions
of options.
(8) Includes 4,211 shares held directly and currently exercisable portions
of options.
(9) Includes 2,114 shares held directly and currently exercisable portions
of options.
(10) Includes 2,500 shares held directly and currently exercisable portions
of options.
(11) Includes 5,500 shares held directly and currently exercisable portions
of options.
(12) Includes 7,500 shares held directly and currently exercisable portions
of options.
(13) Includes 101 shares held directly and currently exercisable portions
of options.
(14) Includes shares held by RCBA, L.P. and by entities managed by RCBA,
L.P., which Mr. Blum may be deemed to own indirectly in his capacity
as the majority stockholder of RCBA, Inc., in its capacity as the sole
general partner of RCBA, L.P.
66
<PAGE> 74
GREINER MANAGEMENT
IDENTIFICATION OF EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES
The following is an alphabetical list of Greiner's executive officers
and other key employees, their ages and their positions as of February 1, 1996:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Carole A. Chaney 56 Vice President, Director of Human Resources
Robert L. Costello 44 President and Chief Executive Officer
Arnold M. Davidson 44 Treasurer
Richard L. Haury 63 Division Director - Air Transportation
T. Wallace Hawkes 58 Division Director - Surface Transportation
Melissa K. Holder 36 Corporate Secretary
William E. Kallas 49 Vice President, Director of Asian Operations
Patrick J. McColpin 38 Vice President, Chief Financial Officer
Sam Militello 58 Operations Director
William A. Stevenson 55 Division Director - Institutional; Managing
Principal, Grand Rapids, Michigan
Frederick K. Walker 48 Division Director - Federal/Military and Marine
</TABLE>
There are no family relationships among the officers listed, and there
are no arrangements or understandings pursuant to which any of them were
elected as officers. All officers hold office for one year and until their
successors are elected and qualified, unless otherwise specified by the Greiner
Board of Directors; provided, however, that the Chief Executive Officer of
Greiner may remove any other officer of Greiner if he deems such removal
appropriate whether or not said officer was elected by the Board of Directors.
Business Experience
Carole A. Chaney has been Vice President, Director of Human Resources
since October 1993. Mrs. Chaney has been with Greiner for over 28 years, most
recently as human resources manager in Greiner's Pleasanton, California office.
She is a registered Senior Professional in Human Resources, accredited by the
Certification Institute of the Society of Human Resource Management.
Robert L. Costello was appointed Chief Executive Officer in August
1995 and a Director in July 1995. He has served as President and Chief
Operating Officer since February 1994. Prior to this appointment, Mr. Costello
served as Chief Administrative and Financial Officer, Treasurer and Executive
Vice President of Greiner. He has been employed with Greiner or its
subsidiaries for over 17 years and holds a master's degree in business
administration from the University of Oregon.
Arnold M. Davidson was elected Treasurer of Greiner in May 1994.
Prior to that he had served as Assistant Treasurer since May 1987. Mr.
Davidson also served as Assistant Secretary from June 1985 to May 1990. He has
been employed by Greiner or its subsidiaries for more than 18 years and has
served in an executive capacity for more than eight years. Mr. Davidson is a
graduate of San Diego State University and is a certified public accountant.
Richard L. Haury is the Division Director, Air Transportation, and has
been employed with Greiner for over 31 years. Mr. Haury's experience includes
managing, directing, coordinating, planning and engineering for major,
multidiscipline projects. He graduated from Auburn University with a degree in
civil engineering and is a registered professional engineer.
67
<PAGE> 75
T. Wallace Hawkes is the Division Director, Surface Transportation,
and has been employed with Greiner for over 38 years. In May 1992, Mr. Hawkes
was appointed to the management committee of NTA, a general partnership formed
to participate in public/private transportation projects. He has extensive
experience in all aspects of highway planning and design and is a registered
professional engineer.
Melissa K. Holder was elected Corporate Secretary in February 1994.
Mrs. Holder previously served as Assistant Secretary since May 1990. She
currently has responsibility for the Management of Administrative Services for
Greiner. Mrs. Holder earned her Bachelors degree from Sam Houston State
University. She has been employed by Greiner for over 10 years.
William E. Kallas was appointed Director of Asian Operations in
December 1994 and has served as Vice President since May 1991. Mr. Kallas
previously served as Director of Marketing of Greiner and was Marketing Manager
for the north and midwest operations. He has been employed by Greiner for 27
years and is a registered professional engineer. Mr. Kallas holds both
Bachelors and Masters degrees in civil engineering from the University of
Maryland.
Patrick J. McColpin was appointed Vice President and Chief Financial
Officer in May 1994. From 1991 to 1994, Mr. McColpin was Executive Vice
President for Integra Management Company, and from 1992-1994, he was Vice
President of Integra-A Hotel and Restaurant Company, both in Irving, Texas.
Prior to that position, Mr. McColpin was employed for 13 years by the public
accounting firm of Deloitte and Touche. Mr. McColpin holds a Bachelors degree
from the University of Texas and is a certified public accountant.
Sam Militello is an Operations Director and has been employed with
Greiner for over 34 years. Mr. Militello's professional experience includes
management responsibility for a wide variety of projects, including roadway and
airport projects. He graduated from the University of Florida with a degree in
civil engineering and is a registered professional engineer.
William A. Stevenson is the Division Director for the Institutional
Division of Greiner, and has been employed with Greiner for over 26 years. In
January 1996, he assumed responsibility as Managing Principal for Greiner's
Grand Rapids, Michigan office. Mr. Stevenson has extensive experience in the
architectural design of health care, educational and vocational facilities. He
graduated from Cornell University with a degree in architecture and is a
registered architect.
Frederick K. Walker is the Division Director for the Federal/Military
and Marine Divisions of Greiner, and has been employed with Greiner for over 23
years. Mr. Walker was previously Division Manager for the Air/Marine
Transportation Division of Greiner's Tampa office operations, and has extensive
experience in multi-discipline design and construction of airports and military
facilities. He received an undergraduate degree from Ohio Wesleyan University,
a Master of Science in Civil Engineering from Case Western Reserve University,
and a Master of Science degree from Georgia Institute of Technology and is a
registered professional engineer.
68
<PAGE> 76
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation. The following table shows
all cash compensation paid by Greiner during the fiscal years indicated to the
Chief Executive Officers and the four highest-paid executive officers of
Greiner in 1995 in all capacities in which they served:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS PAYOUTS
OTHER LONG-TERM
NAME ANNUAL RESTRICTED NO. OF INCENTIVE ALL OTHER
AND PRINCIPAL FISCAL COMPENSATION STOCK OPTIONS PAYOUTS COMPENSATION
POSITION YEAR SALARY BONUS AWARDS /SARS
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Frank T. Callahan, 1995 $128,000 $ - - - 16,000 - $61,261(B)
Chairman of the 1994 165,000 24,000 - - 15,000 - 8,096
Board and Chief 1993 164,500 70,000 - - 5,000 - 16,754
Executive Officer
(A)
Robert L. Costello 1995 140,000 - - - 16,000 - 10,558(D)
President and 1994 129,600 24,000 - - 20,000 - 13,807
Chief Executive 1993 109,800 38,000 - - 5,000 - 10,004
Officer
(C)
William E. Kallas 1995 141,500 - 19,038(E) - 4,000 - 37,534(F)
Director of Asian 1994 106,500 12,000 - - 4,000 - 8,122
Operations 1993 104,000 37,000 - - 2,000 - 10,593
Mark S. Anderson 1995 130,000 - - - 4,000 - 12,154(H)
Operation Director 1994 130,000 11,000 - - 4,000 - 8,122
(G) 1993 129,100 35,000 - - 3,000 - 10,593
Richard L. Haury 1995 117,000 - - - 9,000 - 1,410(I)
Division Director, 1994 117,000 13,000 - - 4,000 - 41,523
Air/Marine 1993 116,700 35,000 - - 3,000 - 12,051
Transportation
T. Wallace Hawkes, 1995 117,000 - - - 9,000 - 8,319(J)
Division Director, 1994 117,000 11,000 - - 4,000 - 5,685
Surface 1993 116,000 45,000 - - 3,000 - 16,766
Transportation
</TABLE>
(A) Mr. Callahan retired as Chairman and Chief Executive Officer in July
1995. He maintained his seat on the Board of Directors.
(B) "All Other Compensation" for the 1995 fiscal year for Mr. Callahan
includes the following items: $757 - for company-paid life insurance;
$2,491 - for company-paid executive medical plan; $58,013 for
relocation expenses and retirement payments. Also, in connection with
Mr. Callahan's retirement, a consultant's agreement providing $6,000
in monthly payments for 36 months was executed.
69
<PAGE> 77
(C) Mr. Costello was appointed Chief Executive Officer in July 1995. He
continues to also serve as President and Chief Operating Officer.
(D) "All Other Compensation" for Mr. Costello for the 1995 fiscal year
includes the following items: $263 - for company-paid life insurance;
$2,495 - for company-paid executive medical plan; and $7,800 - cash
out of accrued vacation time.
(E) Mr. Kallas received $19,038 in Other Annual Compensation for services
related to his employment in Hong Kong.
(F) "All Other Compensation" for Mr. Kallas for the 1995 fiscal year
includes the following items: $1,412 - for company-paid life
insurance; $3,710 - for company-paid executive medical plan; $788 -
cash out of accrued vacation time; and $31,624 for relocation
expenses.
(G) Mr. Anderson resigned December 22, 1995.
(H) "All Other Compensation" for Mr. Anderson for the 1995 fiscal year
includes the following items: $263 - for company-paid life insurance;
$3,710 - for company-paid executed medical plan; and $8,181 - cash out
of accrued vacation at resignation.
(I) "All Other Compensation" for Mr. Haury for the 1995 fiscal year
includes the following items: $652 - for company-paid life insurance;
and $758 - for company-paid executive medical plan.
(J) "All Other Compensation" for Mr. Hawkes for the 1995 fiscal year
includes the following items: $519 - for company-paid life insurance;
$1,955 - for company-paid executive medical plan; and $5,845 - cash
out of accrued vacation time.
70
<PAGE> 78
Greiner Options. The following table contains information concerning
the grant of stock options made during fiscal 1995 under Greiner's 1991 Stock
Option Plan to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR (A)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM (B)
-----------------------------------------------------------------------------
% OF TOTAL
NO. OF OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (C) (D) FISCAL YEAR (PER SHARE) DATE 5% 10%
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank T. Callahan . . 16,000 14.7% $10.375 08/31/95(E) $ - $ -
Robert L. Costello . 16,000 14.7% 10.375 01/11/2000 45,862 101,344
William E. Kallas . . 4,000 3.7% 10.375 01/11/2000 11,465 25,336
Mark S. Anderson . . 4,000 3.7% 10.375 12/22/95(F) - -
Richard L. Haury . . 9,000 8.3% 10.375 01/11/2000 25,797 57,006
T. Wallace Hawkes . . 9,000 8.3% 10.375 01/11/2000 25,797 57,006
</TABLE>
- ------------------------
(A) No SARs were granted to any of the named executives during the last
fiscal year.
(B) Potential realizable value illustrates what might be realized upon
exercise of options at assumed compounded rates of appreciation. The
actual value, if any, will depend on the excess of market value over
option price on the date stock is sold after it is exercised.
(C) Options granted in 1995 are 30% exercisable one year from date of
grant, with an additional 30% exercisable two years from date of grant
and the remaining 40% exercisable three years from date of grant for
all options except Mr. Costello's, which are exercisable as follows:
8% one year from grant, 10% two years from grant; 10% three years from
grant; 45% four years from grant and the final 27% on January 11,
2000.
(D) All options were granted for a term of five years, subject to earlier
termination in certain events.
(E) Mr. Callahan's options granted in 1995 lapsed upon his retirement at
August 31, 1995.
(F) Mr. Anderson's options lapsed upon his resignation on December 22,
1995.
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<PAGE> 79
Option/SAR Exercises and Holdings. The following table sets forth
information, with respect to the named executive officers, concerning the
exercise of options during the last fiscal year and unexercised options held as
of the end of the fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NO. OF NUMBER OF UNEXERCISED IN-THE-MONEY
NAME SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED VALUE FISCAL YEAR-END FISCAL YEAR-END (A)
ON REALIZED ----------------------------------------------------------
EXERCISE (B) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frank T. Callahan . . 0 $0 14,825 0 $2,500 $0
Robert L. Costello . 0 0 15,500 34,000 1,750 52,000
William E. Kallas . . 0 0 5,400 7,600 150 12,850
Mark S. Anderson . . 6,200 0 0 0 0 0
Richard L. Haury . . 0 0 11,500 13,000 1,400 28,475
T. Wallace Hawkes . . 0 0 10,500 13,000 1,025 28,475
</TABLE>
- ---------------
(A) Market value of underlying securities at December 31, 1995, minus the
exercise price.
(B) Market value of underlying securities on date of exercise, minus the
exercise price.
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<PAGE> 80
BENEFICIAL OWNERSHIP OF GREINER COMMON STOCK
The following table summarizes the number of shares of Greiner Common
Stock that the Chief Executive Officers and the four highest-paid executive
officers of Greiner beneficially owned, directly or indirectly, and the
percentage thereto of the outstanding Greiner Common Stock, at December 31,
1995:
<TABLE>
<CAPTION>
PERCENT OF
SHARES OF OUTSTANDING
NAME COMMON STOCK SHARES
-------------------- -------------- -------------
<S> <C> <C>
Frank T. Callahan 27,485 (A) .58%
Robert L. Costello 26,934 (B) .57%
William E. Kallas 9,426 (C) .20%
Mark S. Anderson 17,242 (D) .37%
Richard L. Haury 23,487 (E) .50%
T. Wallace Hawkes 18,669 (F) .40%
</TABLE>
- ------------------------
(A) Includes 14,825 shares of exercisable stock options and 12,660 shares
held by the Trust for the Performance Plan as of December 31, 1995 in
an account for Mr. Callahan.
(B) Includes 16,780 shares of exercisable stock options and 3,843 shares
held by the Trust for the Performance Plan as of December 31, 1995 in
an account for Mr. Costello.
(C) Includes 6,600 shares of exercisable stock options and 2,826 shares
held by the Trust for the Performance Plan as of December 31, 1995 in
an account for Mr. Kallas.
(D) Includes 2,968 shares held by the Trust for the Performance Plan as of
December 31, 1995 in an account for Mr. Anderson.
(E) Includes 14,200 shares of exercisable stock options and 6,473 shares
held by the Trust for the Performance Plan as of December 31, 1995 in
an account for Mr. Haury.
(F) Includes 13,200 shares of exercisable stock options and 2,969 shares
held by the Trust for the Performance Plan as of December 31, 1995 in
an account for Mr. Hawkes.
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<PAGE> 81
PRINCIPAL STOCKHOLDERS OF GREINER
The following table sets forth certain information with respect to the
beneficial ownership of Greiner Common Stock as of December 31, 1995 as to (i)
each person known by Greiner to own beneficially more than five percent of the
outstanding shares of Greiner Common Stock, (ii) each director of Greiner, and
(iii) all directors and executive officers of Greiner as a group. Except as
otherwise noted, the named beneficial owner has sole voting and investment
power with respect to the shares shown.
Each person known to management to be the beneficial owner of more
than 5% of the outstanding Greiner Common Stock based on the most recent
information available, is listed below.
<TABLE>
<CAPTION>
PERCENT OF
NO. OF OUTSTANDING
STOCKHOLDER ADDRESS SHARES SHARES
----------- ------- ------ -----------
<S> <C> <C> <C>
The Greiner Engineering, Inc. Performance 909 East Las Colinas Boulevard 939,422 (1) 19.97%
Plan and Employee Stock Ownership Trust Suite 1900, Irving, Texas 75039
William H. Bowen 5646 Milton Street, 369,289 (2) 7.70%
Suite 900, Dallas, Texas 75206
Brinson Partners, Inc. 209 South LaSalle 454,922 (3) 9.67%
Chicago, Illinois 60604-1295
Dimensional Fund Advisors Inc. 1299 Ocean Avenue 330,671 (4) 7.03%
11th Floor, Santa Monica, CA 90401
Heartland Advisors, Inc. 790 North Milwaukee Street 483,300 (5) 10.27%
Milwaukee, WI 53202
</TABLE>
- ---------------
(1) Pursuant to the terms of The Performance Plan and Employee Stock
Ownership Plan of Greiner Engineering, Inc. (the "Performance Plan"),
the participants in the Performance Plan will have an opportunity to
vote 939,422 shares. The Trustees of the Performance Plan are Carole
A. Chaney, Arnold M. Davidson, Katherine L. Gardner, Thomas D.
Jenkins, and Robert J. Vensas.
(2) Includes 21,374 shares held by Camway, Inc., a corporation controlled
by Mr. Bowen, 58,042 shares held by Mr. Bowen's spouse, Bebe D.
Bowen, and 7,200 shares held in trust to which Mr. Bowen has expressly
disclaimed beneficial ownership.
(3) Information as of Schedule 13G dated February 9, 1996.
(4) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 330,671
shares as of December 31, 1995, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares. Information as of Schedule 13G dated February 9, 1996.
(5) Information as of Schedule 13G dated February 9, 1996.
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<PAGE> 82
COMPARISON OF RIGHTS OF STOCKHOLDERS OF URS AND GREINER
URS is incorporated in the state of Delaware and is subject to the
provisions of the Delaware General Corporation Law (the "DGCL"). Greiner is
incorporated in the state of Nevada and is subject to the provisions of the
Nevada General Corporation Law ("NGCL"). Following the consummation of the
Merger, stockholders of Greiner will hold URS Common Stock rather than Greiner
Common Stock and, therefore, the rights of such stockholders will be governed
by the DGCL and URS's Certificate of Incorporation (the "URS Certificate") and
URS's Bylaws.
There are many similarities between the DGCL and the NGCL, as well as
between the charter and bylaws of URS and Greiner; however, a number of
differences do exist. The following is a summary comparison of certain
differences affecting stockholder rights in the provisions of the NGCL and the
DGCL and the charter documents and bylaws of URS and Greiner. This summary
does not purport to be a complete discussion of, and is qualified in its
entirety by reference to, the corporate statutes of Nevada and Delaware, and
the URS Certificate and the URS Bylaws and the Greiner Restated Articles of
Incorporation (the "Greiner Articles") and the Greiner Bylaws.
CUMULATIVE VOTING
In an election of directors governed by cumulative voting rights, each
share of stock otherwise having one vote is entitled to a number of votes equal
to the number of directors to be elected. A stockholder may then cast all such
votes for a single nominee or may allocate them among as many nominees as the
stockholder may choose. Without cumulative voting rights, the holders of a
majority of the shares present at an annual meeting or any special meeting held
to elect directors would have the power to elect all the directors to be
elected at that meeting, and it is possible that no person could be elected
without the support of holders of a majority of the shares voting at such
meeting.
Under the DGCL and the NGCL, cumulative voting rights in the election
of directors are not mandatory and are not available to stockholders unless
provided for in the corporation's certificate of incorporation. Neither the
URS Certificate nor the Greiner Articles provide for cumulative voting rights.
STOCKHOLDER POWER TO CALL SPECIAL STOCKHOLDERS MEETINGS
Under the DGCL and the NGCL, a special meeting of stockholders may be
called by the board of directors or any other person specified in the
certificate of incorporation or bylaws. Greiner's Bylaws provide that only the
president or chairman of the board may call special meetings. URS's Bylaws
provide that special meetings of the stockholders, for any purpose or purposes,
may be called by the president, and must be called by the president or the
secretary at the request in writing of a majority of the URS Board of
Directors, or at the request in writing of stockholders owning not less than
20% of the issued and outstanding capital stock of URS entitled to vote.
SIZE OF BOARD OF DIRECTORS
Under the NGCL and the DGCL, the number of directors may be stated in
the certificate of incorporation or the bylaws, or may be determined in the
manner provided in the bylaws. Greiner's Bylaws provide that the number of
directors may be not less than three nor more than eleven, and will be
determined from time to time by resolution of the Greiner Board of Directors.
Greiner's Board of Directors currently consists of six members. URS's Bylaws
provide that the number of directors may be not less than five nor more than
eleven, and will be determined from time to time by resolution of the Greiner
Board of Directors or by the stockholders at the annual meeting. The URS Board
of Directors currently consists of nine members.
CLASSIFIED BOARD OF DIRECTORS
The DGCL and the NGCL each provide that a corporation's board of
directors may be divided into various classes with staggered terms of office;
provided that, in the case of the NGCL, at least one-fourth of the directors
must be elected annually. Classification of directors has the effect of making
it more difficult for stockholders to change the composition of a corporation's
board. At least two annual meetings of stockholders, instead of one, will
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<PAGE> 83
generally be required to effect a change in the majority of a corporation's
board. Such a delay may help ensure that the corporation's directors, if
confronted by a holder attempting to force a proxy contest, a tender or
exchange offer or other extraordinary corporate transaction, would have
sufficient time to review the proposal as well as any available alternatives to
the proposal and to act in what they believe to be the best interests of the
stockholders.
The classification provisions could also have the effect of
discouraging a third party from initiating a proxy contest, making a tender
offer or otherwise attempting to obtain control of a corporation, even though
such a transaction could be beneficial to the corporation and its stockholders.
The classification of a corporation's board might also increase the likelihood
that incumbent directors will retain their positions.
None of the Greiner Articles, Greiner Bylaws, URS Certificate or URS
Bylaws currently provide for a classified board. The adoption of a classified
board would require the vote of the stockholders of Greiner or URS.
REMOVAL OF DIRECTORS
Under the NGCL, a director may be removed by the vote of the holders
of not less than 66-2/3% of the voting power of the voting stock, subject to
certain restrictions concerning cumulative voting. However, a Nevada
corporation may include in its articles of incorporation a provision requiring
the approval of a larger percentage of the stockholders to remove a director.
Any vacancy in the board of directors may be filled by a majority of the
remaining directors, though less than a quorum, even if the vacancy is due to
an increase in the number of directors. The Greiner Bylaws do not permit
cumulative voting, and provide that directors may be removed with or without
cause by the vote of not less than 66-2/3% of the voting power of the voting
stock.
Under the DGCL, a director of a corporation that does not have a
classified board of directors may be removed with or without cause by
stockholder vote; provided, that in the case of a corporation having cumulative
voting, if less than the entire board is to be removed, a director may not be
removed if the shares voted against such removal would not be sufficient to
elect the director under cumulative voting rules at an election of the Board of
Directors. A director of a corporation with a classified board of directors
can be removed only for cause unless the certificate of incorporation otherwise
provides. Since there is no controlling definition of "cause" under Delaware
law, the resolution of any dispute as to what constitutes "cause" may be a
matter for determination by the courts. The URS Certificate and Bylaws do not
provide for a classified board of directors or for cumulative voting.
VOTING REQUIREMENTS
The NGCL requires most amendments to the articles of incorporation to
be approved by the board of directors, then by the vote of the holders of a
majority of the voting stock, unless the articles of incorporation require a
greater percentage of votes. If an amendment would alter any preferences or
relative rights of a class or series of outstanding shares, it must be approved
by a majority of the outstanding shares of each class or series so affected,
regardless of limitations or restrictions on the voting power thereof. The
NGCL gives the board of directors the power to make bylaws, subject to any
limitations contained in bylaws adopted by the stockholders. The Greiner
Articles do not contain any provisions requiring a greater percentage of votes
for amendment. The Greiner Bylaws may be amended by the vote of a majority of
directors at any meeting at which a quorum is present.
Under the DGCL, a corporation with stock outstanding or subscribed
ordinarily may amend its charter provided that the amendment is advised by the
board of directors and approved by affirmative vote of a majority of all the
votes entitled to be cast. Holders of a class of stock may vote as a class if
the amendment would increase or decrease the number of authorized shares of
such class or the par value of shares of such class, or would alter the
preferences, powers, or special rights of any class so as to affect them
adversely. The URS Certificate provides that the corporation reserves the
right to amend, alter, change or repeal any provision in the certificate of
incorporation as prescribed by the DGCL. As a result, the URS Certificate may
be amended provided that the amendment is advised by the board of directors and
approved by the affirmative vote of a majority of all of the outstanding shares
of URS Common Stock.
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<PAGE> 84
BUSINESS COMBINATIONS / REORGANIZATIONS
Section 203 of the DGCL provides that, subject to certain exceptions
specified therein, a corporation shall not engage in any business combination
with any "interested stockholder" for a three-year period following the date
that such stockholder becomes an interested stockholder unless (i) prior to
such date, the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding shares
held by directors who are also officers and employee stock purchase plans in
which employee participants do not have the right to determine confidentially
whether plan shares will be tendered in a tender or exchange offer) or (iii) on
or subsequent to such date, the business combination is approved by the board
of directors of the corporation and by the affirmative vote at an annual or
special meeting, and not by written consent, of at least 66-2/3% of the
outstanding voting stock which is not owned by the interested stockholder.
Except as specified in Section 203 of the DGCL, an interested
stockholder is defined to include (a) any person that is the owner of 15% or
more of the outstanding voting stock of the corporation or is an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation, at any time within three years
immediately prior to the relevant date and (b) the affiliates and associates of
any such person.
For purposes of Section 203, the term "business combination" is
defined broadly to include mergers with or caused by the interested
stockholder; sales or other dispositions to the interested stockholder (except
proportionately with the corporation's other stockholders) of assets of the
corporation or a subsidiary equal to ten percent or more of the aggregate
market value of the corporation's consolidated assets or its outstanding stock;
the issuance or transfer by the corporation or a subsidiary of stock of the
corporation or such subsidiary to the interested stockholder (except for
transfers in a conversion or exchange or a pro rata distribution or certain
other transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock); or receipt by the interested stockholder (except
proportionately as a stockholder), directly or indirectly, of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section
203 does not apply if: (a) prior to the date on which such stockholder becomes
an interested stockholder the board of directors approves either the business
combination or the transaction which resulted in the person becoming an
interested stockholder; (b) the interested stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction which made him
an interested stockholder (excluding from the 85% calculation shares owned by
directors who are also officers of the target corporation and shares held by
employee stock plans which do not permit employees to decide confidentially
whether to accept a tender or exchange offer); or (c) on or after the date such
person becomes an interested stockholder, the board approves the business
combination and it is also approved at a stockholder meeting by sixty-six and
two-thirds percent (66-2/3%) of the voting stock not owned by the interested
stockholder.
Section 203 only applies to Delaware corporations which have a class
of voting stock that is listed on a national securities exchange, are quoted on
an interdealer quotation system such as the New York Stock Exchange (as is URS)
or are held of record by more than 2,000 stockholders. A Delaware corporation
may subsequently elect not to be governed by Section 203 by an amendment to its
charter or to the bylaws, which amendment must be approved by majority
stockholder vote.
Under certain circumstances, Section 203 of the DGCL may make it more
difficult for a person who would be an "interested stockholder" to effect
various business combinations with a corporation for a three-year period,
although the corporation's certificate of incorporation or stockholders may
elect to exclude a corporation from the restrictions imposed thereunder. The
URS Certificate does not exclude URS from the restrictions imposed under
Section 203 of the DGCL. It is anticipated that the provisions of Section 203
of the DGCL may encourage companies interested in acquiring URS to negotiate in
advance with URS, since the stockholder approval
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<PAGE> 85
requirement would be avoided if a majority of the directors then in office
approve either the business combination or the transaction which results in the
stockholder becoming an interested stockholder.
Section 203 has been challenged in lawsuits arising out of ongoing
takeover disputes, and it is not yet clear whether and to what extent its
constitutionality will be upheld by the courts. Although the United States
District Court for the District of Delaware has consistently upheld the
constitutionality of Section 203, the Delaware Supreme Court has not yet
considered the issue. URS believes that so long as the constitutionality of
Section 203 is upheld, Section 203 will encourage any potential acquiror to
negotiate with URS's Board of Directors. Section 203 also has the effect of
limiting the ability of a potential acquiror to make a two-tiered bid for URS
in which all stockholders would not be treated equally. Section 203 may also
discourage certain potential acquirors unwilling to comply with its provisions.
The NGCL also prohibits certain business combinations between a
corporation and an "interested stockholder" (one beneficially holding, directly
or indirectly, at least 10% of the outstanding voting stock) for five years
after such person became an interested stockholder unless such interested
stockholder, prior to becoming an interested stockholder, obtained the approval
of the board of directors of either the business combination or the transaction
that resulted in such person becoming an interested stockholder.
Notwithstanding the foregoing, the NGCL permits business combinations that meet
all requirements of the corporation's articles of incorporation and (i) are
approved by the board of directors before the interested stockholder became an
interested stockholder (or as to which the purchase of shares made by the
interested stockholder had been approved by the board of directors before the
date of purchase), (ii) are approved by the affirmative vote of the holders of
stock representing a majority of the voting stock (excluding voting stock of
the interested stockholder and its affiliates and associates) at a meeting
called for such purpose no earlier than five years after the interested
stockholder became an interested stockholder, or (iii) the form and amount of
consideration to be received by stockholders (excluding the interested
stockholder) of the corporation satisfy certain tests and, with limited
exceptions, the interested stockholder has not become the beneficial owner of
additional voting shares of the corporation after becoming an interested
stockholder and before the business combination is consummated. A corporation
may expressly exclude itself from application of the foregoing business
combination provisions of the NGCL but Greiner has not done so.
RIGHTS OF DISSENTING STOCKHOLDERS
Under the NGCL, dissenter's rights do not exist in a merger if the
holder's shares are listed on a national securities exchange, unless the
consideration to be received in the merger is anything but cash and/or stock.
Under the DGCL, dissenters' rights are not available with respect to (a) a sale
of assets, (b) a merger by a corporation, if the shares of the corporation are
either listed on a national securities exchange or held by more than 2,000
stockholders of record or if stockholders receive shares of the surviving
corporation or of a listed or widely-held corporation, or (c) a merger in which
the corporation is the surviving corporation; provided, that no vote of its
stockholders is required to approve the merger. Because Greiner Common Stock
is listed on the NYSE and because Greiner stockholders will receive cash and
stock in the Merger, stockholders of Greiner will not be entitled to appraisal
rights with respect to the proposed Merger.
INSPECTION OF BOOKS AND RECORDS
The NGCL provides for an absolute right of inspection of a
corporation's books and records for persons holding 15% or more of the
corporation's voting shares. The DGCL, however, gives any stockholder of
record the right to inspect a corporation's books and records for a purpose
reasonably related to such person's interest as a stockholder.
DIVIDENDS
The NGCL permits the payment of dividends, if authorized by the Board
of Directors, however, dividends may not be paid if, after giving it effect,
the corporation would not be able to pay its debts as they become due or the
corporation's assets would be less than the corporation's total liabilities
plus whatever amount would be needed to satisfy preferential rights under
dissolution.
The DGCL also permits the payment of dividends out of surplus or, if
there is no surplus, out of net profits for the current and preceding fiscal
years (provided that the amount of capital of the corporation is not less than
the
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<PAGE> 86
aggregate amount of the capital represented by the issued and outstanding stock
of all classes having a preference upon the distribution of assets). In
addition, Delaware law generally provides that a corporation may redeem or
repurchase its own shares only if such redemption or repurchase would not
"impair the capital" of the corporation. The ability of a Delaware corporation
to pay dividends on, or redeem or to make repurchases or redemptions of, its
shares is dependent on the financial status of the corporation standing alone
and not on a consolidated basis. In determining the amount of surplus of a
Delaware corporation, the assets of the corporation, including stock of
subsidiaries owned by the corporation, must be valued at their fair market
value as determined by the board of directors, without regard to their
historical value.
The Greiner Bylaws provide that dividends may be paid at the
discretion of the Greiner Board. Greiner has paid dividends since 1988. URS
has not paid cash dividends since 1986. See "Summary - Dividend Policy."
LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS
Both the NGCL and the DGCL permit a corporation to include a provision
in its articles or certificate of incorporation eliminating or limiting the
personal liability of a director or officer to the corporation or its
stockholders for damages for breach of the director's fiduciary duty, subject
to certain limitations. Each of the Greiner Articles and the URS Certificate
include such a provision, to the maximum extent permitted by law.
The Greiner Articles provide that a director will not be personally
liable to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for acts or omissions
which involve intentional misconduct, fraud or a knowing violation of the law
or (ii) the payment of dividends in violation of Section 78.300 of the NGCL.
Article XI of the URS Certificate provides that a director of the
corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any beach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL, as the same exists or hereafter may be amended,
or (iv) for any transaction from which the director derived an improper
personal benefit. Article XI of the URS Certificate further provides that if
the DGCL is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the corporation, in
addition to the limitation on personal liability provided in Article XI as
currently written, shall be limited to the fullest extent permitted by the
amended DGCL. Finally, Article XI provides that any repeal or modification of
Article XI shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such repeal or modification.
While these provisions provide directors with protection from awards
for monetary damages for breaches of their duty of care, they do not eliminate
such duty. Accordingly, these provisions will have no effect on the
availability of equitable remedies such as an injunction or rescission based on
a director's breach of his or her duty of care. The provisions described above
apply to an officer of the corporation only if he or she is a director of the
corporation and is acting in his or her capacity as director, and do not apply
to officers of the corporation who are not directors.
In addition, both the NGCL and the DGCL permit a corporation to
indemnify officers, directors, employees and agents for actions taken in good
faith and in a manner they reasonably believed to be in, or not opposed to, the
best interests of the corporation, and with respect to any criminal action,
which they had no reasonable cause to believe was unlawful. Both states' laws
provide that a corporation may advance expenses of defense (upon receipt of a
written undertaking to reimburse the corporation if indemnification is not
appropriate) and must reimburse a successful defendant for expenses, including
attorney's fees, actually and reasonably incurred, and both states permit a
corporation to purchase and maintain liability insurance for its directors and
officers. Both the NGCL and the DGCL provide that indemnification may not be
made for any claim, issue or matter as to which a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation, unless and only to the extent a court determines
that the person is entitled to indemnity for such expenses as the court deems
proper.
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The Greiner Articles provide that each person who is involved in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise will be indemnified by the corporation if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of Greiner, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
indemnification rights conferred by the Greiner Articles are not exclusive of
any other right to which a person seeking indemnification may be entitled under
any law, bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
The URS Bylaws provide that any officer, director or employee of URS
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, wither civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he or she is or was a director,
officer or employee of the corporation, or is or was serving at the request of
the corporation as a director, officer or employee of another corporation or of
a partnership, joint venture, trust or other enterprise, shall be indemnified
by the corporation if such person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was unlawful. In addition,
the URS Bylaws provide that any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director, officer or employee of the
corporation, or is or was serving at the request of the corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the corporation if
such person acted in good faith any in a manner he or she reasonably believed
to be in, or not opposed to, the best interests of the corporation; provided,
however, that no indemnification shall be made in respect of any claim, issue
or manner as to which such person shall have been adjudged to have been liable
for negligence or misconduct in the performance of his or her duties to the
corporation (unless a court shall determine, upon application, that such person
is reasonably entitled to indemnity for such expenses which the court deems
proper). The indemnification rights conferred by the URS Bylaws are not
exclusive of any other right to which a person seeking indemnification may be
entitled under any law, bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or controlling
the registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
80
<PAGE> 88
AFFILIATES' RESTRICTION ON SALE OF URS COMMON STOCK
The shares of URS Common Stock to be issued pursuant to the Merger have
been registered under the Securities Act by a Registration Statement on Form
S-4, thereby allowing such securities to be traded without restriction by any
former holder of Greiner Common Stock who is not deemed to be an "affiliate" of
Greiner prior to the consummation of the Merger, as "affiliate" is defined for
purposes of Rule 145 under the Securities Act, and who does not become an
"affiliate" of URS after the consummation of the Merger.
Shares of URS Common Stock received by persons who are deemed to be
affiliates of Greiner prior to the Merger may be resold by them only in
transactions permitted by the resale provisions of Rule 145 promulgated under
the Securities Act or as otherwise permitted under the Securities Act. Rule
145, as currently in effect, imposes restrictions in the manner in which such
affiliates, and others with whom they might act in concert, may sell URS Common
Stock within any three-month period. Persons who may be deemed to be
affiliates of Greiner generally include individuals or entities that control,
are controlled by or are under common control with Greiner and may include
certain officers and directors as well as principal stockholders of Greiner.
Greiner stockholders who are identified as affiliates will be so advised by
Greiner prior to the Effective Date.
Each of URS and Greiner will use its best efforts to cause each and any
Greiner stockholder who is an affiliate to agree not to make any public sale of
any URS Common Stock received upon consummation of the Merger except in
compliance with Rule 145 under the Securities Act or otherwise in compliance
with the Securities Act. In general, Rule 145, as currently in effect, imposes
restrictions on the manner in which such affiliates may make resales of URS
Common Stock and also on the quantity of resales that such stockholders, and
others with whom they may act in concert, may make within any three-month
period for a period of two (2) years after consummation of the Merger. In
addition, officers and directors of URS following the Merger will be subject to
the resale restrictions of Rule 144 as it applies to affiliates of an issuer.
81
<PAGE> 89
LEGAL MATTERS
Certain legal matters with respect to the validity of the URS Common Stock
to be issued in connection with the Merger being passed upon for URS by
Sheppard, Mullin, Richter & Hampton LLP, San Francisco, California. The
Federal income tax consequences to Greiner stockholders in connection with the
Merger are being passed upon for Greiner by Nossaman, Guthner, Knox & Elliott,
L.L.P., San Francisco, California.
EXPERTS
The consolidated financial statements of URS for the three year period
ended October 31, 1995, have been included in this Proxy Statement / Prospectus
and Registration Statement in reliance upon the report of Coopers & Lybrand
L.L.P. independent certified public accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements of Greiner for the three year period
ended December 31, 1995 have been included in this Proxy Statement/Prospectus
and Registration Statement in reliance on the reports of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
82
<PAGE> 90
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
URS CORPORATION Page
----
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of October 31, 1994 and 1995 . . . . . . . . . . . . . F-3
Consolidated Statements of Operations at October 31, 1993, 1994 and 1995 . . . . . . . F-4
Consolidated Statements of Changes in Stockholders'
Equity at October 31, 1993, 1994 and 1995 . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flow at October 31, 1993, 1994 and 1995 . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-7
GREINER ENGINEERING, INC.
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . F-20
Consolidated Balance Sheets as of December 31, 1994 and 1995 . . . . . . . . . . . . . F-21
Consolidated Statements of Operations at December 31, 1993, 1994 and 1995 . . . . . . F-23
Consolidated Statements of Stockholders' Equity at December 31, 1993, 1994 and 1995 . F-24
Consolidated Statements of Cash Flows at December 31, 1993, 1994 and 1995 . . . . . . F-25
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-27
Supplementary Data -- Selected Quarterly Financial Data -- Unuadited . . . . . . . . . F-39
</TABLE>
F-1
<PAGE> 91
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders of URS Corporation:
We have audited the accompanying consolidated balance sheets of URS
Corporation and its subsidiaries as of October 31, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended October 31,
1995. 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 URS
Corporation and its subsidiaries as of October 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in the notes to the consolidated financial statements,
effective November 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes.
COOPERS & LYBRAND L.L.P.
San Francisco, California
December 15, 1995
F-2
<PAGE> 92
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
October 31,
-----------------------
1995 1994
--------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,836 $ 9,457
Accounts receivable, including retainage amounts of $3,895 and $2,925,less
allowance for doubtful accounts of $664 and $495 35,822 30,132
Costs and accrued earnings in excess of billings on contracts in process, less
allowances for losses of $606 and $646 13,200 13,747
Prepaid expenses 1,849 929
--------- ----------
Total current assets 59,707 54,265
Property and equipment at cost, net 5,835 5,469
Goodwill, net 7,765 4,787
Other assets 768 693
--------- ----------
$ 74,075 $ 65,214
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,724 $9,440
Accrued salaries and wages 6,588 5,700
Accrued expenses and other 9,088 5,451
--------- ----------
Total current liabilities 23,400 20,591
Long-term debt 7,204 6,638
Long-term debt to related parties 2,795 2,632
Deferred compensation and other 1,198 1,380
--------- ----------
Total liabilities 34,597 31,241
--------- ----------
Commitments and contingencies (Note 8)
Stockholders' equity:
Common Shares, par value $.01; authorized 20,000 shares;
issued 7,167 and 7,019 shares, respectively 73 71
Treasury stock (287) (59)
Additional paid-in capital 31,791 30,261
Retained earnings since February 21, 1990, date of
quasi-reorganization 7,901 3,700
--------- ----------
Total stockholders' equity 39,478 33,973
--------- ----------
$ 74,075 $ 65,214
========= ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE> 93
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Years Ended October 31,
1995 1994 1993
---------- ------------ ----------
<S> <C>
Revenues $ 179,769 $ 164,088 $ 145,761
---------- ------------ ------------
Expenses:
Direct operating 108,845 102,500 91,501
Indirect, general and administrative 63,217 55,455 51,607
Interest expense, net 1,351 1,244 1,220
---------- ------------ ------------
173,413 159,199 144,328
---------- ------------ ------------
Income before taxes 6,356 4,889 1,433
Income tax expense 1,300 450 140
---------- ------------ ------------
Net income $ 5,056 $ 4,439 $ 1,293
========== ============ ============
Net income per share:
Primary $ .68 $ .60 $ .18
========== ============ ============
Fully diluted $ .67 $ .60 $ .18
========== ============ ============
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE> 94
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (IN THOUSANDS)
<TABLE>
<CAPTION>
Common Shares Additional Retained Total
-------------------- Treasury Paid-in Earnings Shareholders'
Number Amount Stock Capital (Deficit) Equity
------ ------ ----- ------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances November 1, 1992 6,959 $ 70 $ 0 $ 27,697 $ 111 $ 27,878
Stock in lieu of interest 4 - - 31 - 31
Employee stock purchases 26 - - 187 - 187
Quasi-reorganization
NOL carryforward - - - 450 (450) -
Net income - - - - 1,293 1,293
---------- ------- -------- ---------- --------- -------------
Balances, October 31, 1993 6,989 70 0 28,365 954 29,389
---------- ------- -------- ---------- --------- -------------
Employee stock purchases 40 1 - 203 - 204
Purchase of treasury shares (10) - (59) - - (59)
Quasi-reorganization
NOL carryforward - - - 1,693 (1,693) -
Net income - - - - 4,439 4,439
---------- ------- -------- ---------- --------- -------------
Balances October 31, 1994 7,019 71 (59) 30,261 3,700 33,973
---------- ------- -------- ---------- --------- -------------
Employee stock purchases 190 2 - 675 - 677
Purchase of treasury shares (42) - (228) - - (228)
Quasi-reorganization
NOL carryforward - - - 855 (855) -
Net income - - - - 5,056 5,056
---------- ------- -------- ---------- --------- -------------
Balances, October 31, 1995 7,167 $ 73 $ (287) $ 31,791 $ 7,901 $ 39,478
========== ======= ======== ========== ========= =============
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE> 95
URS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended October 31,
---------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,056 $ 4,439 $ 1,293
-------- -------- --------
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization 3,124 2,596 2,986
Changes in current assets and liabilities:
Increase in accounts receivable and costs and accrued earnings in
excess of billings on contracts in process (4,067) (4,938) (1,949)
Decrease (increase) in prepaid expenses and other (881) 26 137
Increase in accounts payable, accrued salaries and wages and accrued
expenses 1,252 1,682 1,455
Other, net (391) 28 517
-------- -------- --------
Total adjustments (963) (606) 3,146
-------- -------- --------
Net cash provided by operating activities 4,093 3,833 4,439
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for business acquisition (3,596) - -
Capital expenditures (1,610) (2,149) (1,952)
Other 43 - (400)
-------- -------- --------
Net cash used by investing activities (5,163) (2,149) (2,352)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt - - (1,340)
Repurchase of common shares (228) (59) -
Proceeds from sale of common shares 247 204 152
Proceeds from exercise of stock options 430 - -
Other - 1,000 -
-------- -------- --------
Net cash provided (used) by financing activities 449 1,145 (1,188)
-------- -------- --------
Net increase (decrease) in cash (621) 2,829 899
Cash at beginning of year 9,457 6,628 5,729
-------- -------- --------
Cash at end of year $ 8,836 $ 9,457 $ 6,628
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE> 96
URS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of URS and
its subsidiaries, all of which are wholly-owned. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Revenue Recognition
Revenue from contract services is recognized by the
percentage-of-completion method and includes a proportion of the earnings
expected to be realized on a contract in the ratio that costs incurred bear to
estimated total costs. Revenue on cost reimbursable contracts is recorded as
related contract costs are incurred and includes estimated earned fees in the
proportion that costs incurred to date bear to total estimated costs. The fees
under certain government contracts may be increased or decreased in accordance
with cost or performance incentive provisions which measure actual performance
against established targets or other criteria. Such incentive fee awards or
penalties are included in revenue at the time the amounts can be reasonably
determined. Revenue for additional contract compensation related to unpriced
change orders is recorded when realization is probable. Revenue from claims by
URS for additional contract compensation is recorded when agreed to by the
customer. If estimated total costs on any contract indicate a loss, URS
provides currently for the total loss anticipated on the contract.
Costs under contracts with the U.S. Government are subject to
government audit upon contract completion. Therefore, all contract costs,
including direct and indirect, general and administrative expenses, are
potentially subject to adjustment prior to final reimbursement. Management
believes that adequate provision for such adjustments, if any, has been made in
the accompanying consolidated financial statements. All overhead and general
and administrative expense recovery rates for fiscal 1989 through fiscal 1995
are subject to review by the U.S. Government.
Cash and Cash Equivalents
URS considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Cash equivalents are recorded
at cost, which approximates fair value.
Income Taxes
Effective November 1, 1993, URS adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") Number 109, "Accounting for Income
Taxes." This standard requires companies to record all deferred tax
liabilities and assets for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis, including tax loss
carryforwards. As permitted under SFAS Number 109, prior years' financial
statements were not restated. This did not materially affect URS's
consolidated financial statements.
Depreciation and Amortization
Depreciation is provided on the straight-line method over the useful
service lives of the assets. Goodwill is amortized on the straight-line method
ranging from 10 to 20 years.
F-7
<PAGE> 97
Income Per Share
The computation of earnings per common and common equivalent shares is
based upon the weighted average number of common shares outstanding during the
period plus (in periods in which they have a dilutive effect) the effect of
common shares contingently issuable, primarily from stock options, exercise of
warrants and the potential conversion of convertible debentures, less the
number of shares assumed to be purchased from the proceeds using the average
market price of URS's common stock.
The fully diluted per share computation reflects the effect of common
shares contingently issuable upon the exercise of warrants in periods in which
such exercise would cause dilution. Fully diluted earnings per share may also
reflect additional dilution related to stock options due to the use of the
market price at the end of the period when higher than the average price for
the period.
COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Years Ended October 31,
----------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Net income $5,056 $4,439 $1,293
Add:
Interest on debentures and notes, net of
applicable income taxes 696 715 -
------ ------ ------
Net income for fully-diluted income per common share $5,752 $5,154 $1,293
====== ====== ======
Weighted average number of common shares
outstanding during the year 7,080 7,001 6,971
Add:
Common equivalent shares (determined using the "treasury
stock" method) representing shares issuable upon exercise
of employee stock options and warrants 2,985 2,959 -
Less:
Twenty percent limit on repurchase (1,433) (1,404) -
------ ------ ------
Weighted average number of shares used in
calculation of fully-diluted income per share 8,632 8,556 6,971
====== ====== ======
Fully-diluted income per common share $ .67 $ .60 $ .18
====== ====== ======
</TABLE>
F-8
<PAGE> 98
Industry Segment Information
URS's single business segment, consulting, provides engineering and
architectural services to local and state governments, the Federal government
and the private sector. URS's services are primarily utilized for planning,
design and program and construction management of infrastructure and
environmental projects.
URS's revenues from local, state and Federal government agencies and
private businesses for the last three fiscal years are as follows:
<TABLE>
<CAPTION>
Years Ended October 31,
----------------------------------------------------------------------
1995 1994 1993
-------------------- ---------------------- ------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Local and state agencies $ 99,871 56% $ 88,207 54% $ 80,350 55%
Federal agencies 58,751 33 59,611 36 48,713 33
Private business 21,147 11 16,270 10 16,698 12
----------- ----- ----------- ----- ----------- -----
Total $ 179,769 100% $ 164,088 100% $ 145,761 100%
=========== ===== =========== ===== =========== =====
</TABLE>
NOTE 2. QUASI-REORGANIZATION
In conjunction with a restructuring completed in fiscal year 1990,
URS, with the approval of its Board of Directors, implemented a
quasi-reorganization effective February 21, 1990 and revalued certain assets
and liabilities to fair value as of that date.
The fair values of URS's assets and liabilities at the date of the
quasi-reorganization were determined by management to approximate their
carrying value and no further adjustment of historical bases was required. No
assets were written-up in conjunction with the revaluation. As part of the
quasi-reorganization, the deficit in retained earnings of $92,523,000 was
eliminated against additional paid-in capital. The balance in retained
earnings at October 31, 1995 represents the accumulated net earnings arising
subsequent to the date of the quasi-reorganization.
NOTE 3. ACQUISITION
During the year ended October 31, 1995, URS acquired E.C. Driver &
Associates, Inc. ("ECD") for an aggregate purchase price of $3,596,000, and the
assumption of ECD's liabilities totaling $1,356,000. This acquisition was
accounted for by the purchase method of accounting and the net assets of ECD
are included in URS's consolidated balance sheet as of October 31, 1995 based
upon its estimated fair value at the transaction's effective date of January 4,
1995. Pro forma operating results for the years ended October 31, 1994 and
1995, as if the acquisition had been made on November 1, 1993, are not
presented as they would not be materially different from URS's reported
results. The excess of the purchase price over the estimated fair value of the
assets acquired (goodwill) of $3,596,000 will be amortized on a straight line
basis over twenty years.
F-9
<PAGE> 99
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
October 31,
--------------------------
1995 1994
----------- -----------
(In thousands)
<S> <C> <C>
Furniture and fixtures $ 3,889 $ 3,192
Equipment 11,512 7,764
Leasehold improvements 952 866
----------- -----------
16,353 11,822
Less: Accumulated depreciation and
amortization (10,518) (6,353)
----------- -----------
Net property and equipment $ 5,835 $ 5,469
=========== ===========
</TABLE>
NOTE 5. GOODWILL
Goodwill represents the excess of the purchase price over the fair
value of the net tangible assets of various operations acquired by URS.
Accumulated amortization at October 31, 1995 and 1994 was $3,129,000 and
$2,507,000, respectively.
F-10
<PAGE> 100
NOTE 6. INCOME TAXES
The components of income tax expense applicable to the operations each
year are as follows:
<TABLE>
<CAPTION>
Years Ended October 31,
----------------------------------------
1995 1994 1993
---------- --------- -----------
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 1,325 $ 150 $ 70
State and local 590 230 85
---------- --------- -----------
Subtotal 1,915 380 155
---------- --------- -----------
Deferred:
Federal (385) - -
State and local (230) 70 (15)
---------- --------- -----------
Subtotal (615) 70 (15)
---------- --------- -----------
Total tax provision $ 1,300 $ 450 $ 140
========== ========= ===========
</TABLE>
As of October 31, 1995, URS has available net operating loss ("NOL")
carryforwards for Federal income tax purposes and financial statement purposes
of $6,750,000. The NOL utilization is limited to $750,000 per year.
While URS has available NOL carryforwards which partially off-set
otherwise taxable income for Federal income tax purposes, for state tax
purposes such amounts are not necessarily available to offset income subject to
tax. Accordingly, state income taxes have been provided.
F-11
<PAGE> 101
The significant components of URS's deferred tax assets and
liabilities as of October 31, 1995 are as follows:
Deferred tax assets/(liabilities) - due to:
<TABLE>
<CAPTION>
(In thousands)
1995 1994
------------- -------------
<S> <C> <C>
State taxes $ 201 $ 78
Allowance for doubtful accounts 202 183
Other accruals and reserves 3,073 3,155
Net operating loss 2,302 3,135
Alternative minimum tax credit - 360
------------- -------------
Total 5,778 6,911
Valuation allowance (3,907) (5,166)
------------- -------------
Deferred tax asset 1,871 1,745
------------- -------------
Other deferred gain and unamortized bond premium (1,826) (1,979)
Depreciation & amortization (45) -
Deferred tax liability (1,871) (1,979)
------------- -------------
Net deferred tax liability $ -0- $ (234)
============= =============
</TABLE>
The net change in the total valuation allowance for the year ended
October 31, 1995 was a decrease of $1,259,000 due to the utilization of net
operating losses, AMT credits and other changes in deferred tax assets.
The difference between total tax expense and the amount computed by
applying the statutory Federal income tax rate to income before taxes is as
follows:
<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------------------------
1995 1994 1993
---------- ---------- ---------
(In thousands)
<S> <C> <C> <C>
Federal income tax expense based upon
Federal statutory tax rate of 34% $ 2,160 $ 1,665 $ 490
Nondeductible goodwill amortization 160 160 185
Nondeductible expenses 217 120 60
NOL carryforwards utilized (1,142) (1,693) (640)
AMT credit utilized (333) - -
State taxes, net of Federal benefit 238 198 45
--------- ---------- ---------
Total taxes provided $ 1,300 $ 450 $ 140
========= ========== =========
</TABLE>
F-12
<PAGE> 102
NOTE 7. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
October 31,
---------------------------
1995 1994
----------- ----------
(In thousands)
<S> <C> <C>
Third party:
6 1/2% Convertible Subordinated Debentures due 2012 (net
of bond issue costs of $41 and $44) $ 2,104 $ 2,101
8-5/8% Senior Subordinated Debentures due 2004 (net of
discount and bond issue costs of $3,830 and $3,969)
(effective interest rate on date of restructuring was 25%) 2,625 2,486
Obligations under capital leases 3,406 2,721
----------- ----------
8,135 7,308
Less: Current maturities of capital leases 931 670
----------- ----------
$ 7,204 $ 6,638
=========== ==========
Related parties:
January Notes (net of discount of $1,205 and $1,368)
(effective interest rate on date of restructuring was 12%) $ 2,795 $ 2,632
=========== ==========
</TABLE>
Credit Agreement
At October 31, 1995, URS's unsecured line of credit agreement with
Wells Fargo Bank, National Association ("the "Bank") provides for advances up
to $15,000,000 and expires April 30, 1997. Borrowings on the line of credit
bear interest at the option of URS at a per annum rate equal to either the
Bank's prime rate, or 1.5% over the interest rate offered to the Bank in the
interbank Eurodollar market, adjusted for the Bank's Eurodollar reserve
requirements. At October 31, 1995, URS had outstanding letters of credit
totaling $386,000 which reduced the amount available to URS under its unsecured
line of credit to $14,614,000.
To finance the cash portion of the proposed Greiner acquisition
(discussed more fully in Note 16 - "Subsequent Event"), URS is negotiating to
obtain a $20,000,000 senior secured revolving credit facility expiring three
years from the closing of the loan and a $50,000,000 senior secured term loan
maturing six years from the closing of the loan. The senior secured revolving
credit facility would replace the current unsecured line of credit.
Under the unsecured line of credit agreement URS is required to
satisfy certain financial and non-financial covenants. The declaration of
dividends, except stock dividends, is restricted by the terms of URS's
unsecured credit agreement with the Bank and the indenture governing the 8 5/8%
Senior Subordinated Debentures due 2004 (the "8 5/8 Indenture"), described
below. URS was in compliance with all financial and non-financial covenants
related to the unsecured line of credit agreement at October 31, 1995 and to a
predecessor secured line of credit agreement at October 31, 1994.
Related Parties
At October 31, 1995, URS had fully-drawn $4,000,000 under its line of
credit with Richard C. Blum & Associates, L.P. ("RCBA"). The indebtedness is
represented by the January Notes, which bear interest at 6 1/2% per annum, are
subordinate only to the Bank line of credit and are due November 1, 2000.
RCBA, through various partnerships, beneficially owns approximately 22% of
URS's Common Stock (approximately 34% assuming exercise
F-13
<PAGE> 103
of additional warrants) outstanding at October 31, 1995. Richard C. Blum, a
director of URS, is also Chairman of RCBA.
Debentures
URS's 6 1/2% Convertible Subordinated Debentures due 2012 are
convertible into URS's common shares at the rate of $206.30 per share. Sinking
fund payments are calculated to retire 70% of the debentures prior to maturity
beginning in February 1998. Interest is payable semi-annually in February and
August. Interest is payable semi-annually in January and July on URS's 8 5/8%
Senior Subordinated Debentures due 2004. Both the 6 1/2% Convertible
Subordinated Debentures and the 8 5/8% Senior Subordinated Debentures are
subordinate to all debt to RCBA and the Bank.
The amounts of long-term debt outstanding at October 31, 1995 maturing
in the next five years are as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1996 $ -
1997 -
1998 -
1999 -
2000 -
Thereafter $12,600
</TABLE>
Amounts payable under capitalized lease agreements are excluded from
the above table.
Obligations under Leases
Total rental expense included in operations for operating leases for
the fiscal years ended October 31, 1995, 1994 and 1993 amounted to $5,717,000,
$5,275,000 and $4,938,000, respectively. Certain of the lease rentals are
subject to renewal options and escalation based upon property taxes and
operating expenses. These operating lease agreements expire at varying dates
through 2005.
Obligations under non-cancelable lease agreements are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------------ ----------
(In thousands)
<S> <C> <C>
1996 $ 1,253 $ 5,384
1997 1,137 4,346
1998 833 3,355
1999 643 2,584
2000 440 1,994
Thereafter 63 3,311
------------ ----------
Total minimum lease payments 4,369 $ 20,974
==========
Less amounts representing interest 963
------------
Present value of net minimum
lease payments $ 3,406
============
</TABLE>
F-14
<PAGE> 104
NOTE 8. COMMITMENTS AND CONTINGENCIES
Currently, URS has $31,000,000 per occurrence and aggregate commercial
general liability insurance coverage. URS is also insured for professional
errors and omissions ("E&O") and pollution liability ("EIL") claims with an
aggregate limit of $25,000,000 after a self-insured deductible of $500,000.
The E&O and EIL coverages are on a "claims made" basis, covering only claims
actually made during the policy period currently in effect. Thus, if URS does
not continue to maintain this policy, it will have no coverage under the policy
for claims made after its termination date even if the occurrence was during
the term of coverage. It is URS's intent to maintain this type of coverage,
but there can be no assurance that URS can maintain its existing coverage, that
claims will not exceed the amount of insurance coverage or that there will not
be claims relating to prior periods that were subject only to "claims made"
coverage.
Various legal proceedings are pending against URS or its subsidiaries
alleging breaches of contract or negligence in connection with the performance
of professional services. In some actions punitive or treble damages are
sought which substantially exceed URS's insurance coverage. URS's management
does not believe that any of such proceedings will have a material adverse
effect on the consolidated financial position and operations of URS.
NOTE 9. CAPITAL STOCK
Declaration of dividends, except Common Stock dividends, is restricted
by the unsecured line of credit agreement and the 8 5/8% Debenture. Further,
declaration of dividends may be precluded by existing Delaware law.
During fiscal year 1995, URS repurchased a total of 42,000 shares of
its Common Stock at an average repurchase price of $5.43, pursuant to a
systematic repurchase plan approved by URS's Board of Directors on September
13, 1994.
The 1987 Restricted Stock Plan (the "Plan") provides for grants of up
to 16,537 shares of Common Stock to key employees of URS and its subsidiaries.
An employee selected to receive shares under the Plan will not be required to
pay any consideration for the shares. Shares issued to an employee are subject
to forfeiture in the event that the employment of the employee terminates for
any reason other than death. The forfeiture restrictions lapse with respect to
portions of the grant over a five-year period subsequent to the grant date. As
of October 31, 1995, 6,872 restricted shares have been granted.
The 1979 Stock Option Plan (the "1979 Plan") provided for grants of
options to purchase shares of Common Stock to directors, officers and key
employees of URS and its subsidiaries at prices and for periods (not to exceed
ten years) as determined by the Board of Directors. The 1979 Plan also
provided for the granting of Stock Appreciation Rights and incentive stock
options. The 1979 Plan expired in February 1989, and no further options or
rights may be granted under the 1979 Plan.
On October 20, 1988, the stockholders approved a replacement option
program pursuant to which non-management members of the Board of Directors
granted replacement stock options to selected employees, exercisable at then
current market prices. The selected employees then exchanged their outstanding
options for new options covering two shares for each three shares covered by
the options being replaced. Options to purchase 16,561 shares were exchanged
for pre-existing options.
On April 27, 1989, the stockholders approved the 1989 Stock Option and
Rights Plan (the "1989 Plan"). The 1989 Plan provides for the grant of options
to purchase 50,000 shares of Common Stock to directors, officers and key
employees of URS and its subsidiaries at prices and for periods (not to exceed
ten years) as determined by the Board of Directors. The 1989 Plan also
provides for the granting of Stock Appreciation Rights. No options have been
granted under the 1989 Plan.
On March 26, 1991, the stockholders approved the 1991 Stock Incentive
Plan (the "1991 Plan"). The 1991 Plan provides for the grant not to exceed
1,500,000 Restricted Shares, Stock Units and Options, plus the number of shares
of Common Stock remaining available for awards under the 1987 Plan (9,665) and
the 1989 Plan (50,000) to
F-15
<PAGE> 105
key employees of URS and its subsidiaries at prices and for periods as
determined by the Board of Directors. The 1991 Plan prohibits granting new
options under the 1987 Plan and the 1989 Plan. As of October 1995, URS had
issued 21,200 shares of Restricted Stock under the 1991 Plan.
Under the Employee Stock Purchase Plan (the "ESP Plan") implemented in
September 1985, employees may purchase shares of Common Stock through payroll
deductions of up to 10% of the employee's base pay. Contributions are credited
to each participant's account on the last day of each six-month participation
period of the ESP Plan (which commences on January 1 and July 1 of each year).
The purchase price for each share of Common Stock shall be the lower of 85% of
the fair market value of such share on the last trading day before the
participation period commences or 85% of the fair market value of such share on
the last trading day in the participation period. The ESP Plan was suspended
effective September 19, 1988. On March 24, 1992, the stockholders approved
reinstating the ESP Plan. Employees purchased 46,610 shares under the ESP Plan
in fiscal 1995 and 36,195 shares in fiscal 1994.
On February 21, 1990, URS issued warrants to purchase 1,819,148 shares
of Common Stock at a purchase price of $4.34 per share which expire on February
14, 1997.
F-16
<PAGE> 106
A summary of the number of stock options granted under the 1979, 1989
and 1991 Plans is as follows:
<TABLE>
<CAPTION>
October 31, 1995
-------------------------------
Shares Per Share (1)
----------- --------------
<S> <C> <C>
Number of options:
Outstanding at year end 1,166,324 $3.12 - 31.25
Exercisable at year end 768,166 $3.12 - 31.25
Exercised during the year 137,600 $3.12 - 3.12
Available for grant at year end 239,665
</TABLE>
<TABLE>
<CAPTION>
October 31, 1994
--------------------------------
Shares Per Share (1)
----------- ---------------
<S> <C> <C>
Number of options:
Outstanding at year end 1,139,964 $3.12 - 31.25
Exercisable at year end 790,967 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 413,765 -
</TABLE>
<TABLE>
<CAPTION>
October 31, 1993
--------------------------------
Shares Per Share (1)
----------- ---------------
<S> <C> <C>
Number of options:
Outstanding at year end 856,445 $3.12 - $31.25
Exercisable at year end 689,275 $3.12 - 31.25
Exercised during the year - -
Available for grant at year end 705,565 -
</TABLE>
(1) Reflects lowest and highest exercise price.
NOTE 10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
<TABLE>
<CAPTION>
Years Ended October 31,
---------------------------------------------------
1995 1994 1993
-------------- ------------- -------------
<S> <C> <C> <C>
Interest $ 891 $ 1,301 $ 1,170
Income taxes $ 1,358 $ 499 $ 518
</TABLE>
URS purchased all of the capital stock of ECD for $3,596,000. In
conjunction with the acquisition, liabilities were assumed as follows:
<TABLE>
<S> <C> <C> <C>
Fair value of assets acquired $ 4,952 $ - $ -
Cash paid for the capital stock (3,596) $ - $ -
-------------- ------------- -------------
Liabilities assumed $ 1,356 $ - $ -
============== ============= =============
</TABLE>
There were no significant non-cash investing or financing activities in
fiscal 1994 and 1993.
F-17
<PAGE> 107
NOTE 11. DEFINED CONTRIBUTION PLAN
URS has a defined contribution retirement plan under Internal Revenue Code
Section 401(k). The plan covers all full-time employees who are at least 18
years of age. Contributions by URS are made at the discretion of the Board of
Directors. Contributions in the amount of $643,000, $551,000 and $486,000 were
made to the plan in fiscal 1995, 1994 and 1993, respectively.
NOTE 12. VALUATION AND ALLOWANCE ACCOUNTS
<TABLE>
<CAPTION>
Additions
Charged to Deductions
Beginning Costs and from Ending
Balance Expenses Reserves Balance
------- -------- -------- -------
(In thousands)
<S> <C> <C> <C> <C>
October 31, 1995
Allowances for losses and doubtful
collections $1,141 $442 $313 $1,270
October 31, 1994
Allowances for losses and doubtful
collections $1,081 $322 $262 $1,141
October 31, 1993
Allowances for losses and doubtful
collections $ 768 $603 $290 $1,081
</TABLE>
NOTE 13. RELATED PARTY TRANSACTIONS
Interest paid to related parties in connection with the January Notes
was $194,000, $363,000 and $254,000 in fiscal 1995, 1994 and 1993,
respectively. (See Note 7 - Long-Term Debt).
URS has agreements for business consulting services to be provided by
RCBA and Richard C. Blum, a Director of URS. Under these agreements, URS paid
$90,000 and $60,000 to RCBA and Richard C. Blum, respectively, for fiscal 1995,
1994 and 1993. Richard C. Blum also received an additional $25,000, $24,000
and $19,000 for his services as a Director of URS in fiscal 1995, 1994 and
1993, respectively. In addition, during fiscal 1993, URS Consultants, Inc., a
wholly- owned subsidiary of URS ("URSC"), performed an underground storage tank
remediation investigation on behalf of RCBA. Such investigation was completed
by October 28, 1993, and on November 19, 1993, RCBA, Inc. paid URSC $70,000 in
gross revenues.
NOTE 14. CONCENTRATION OF CREDIT RISK
URS provides services primarily to local, state and Federal government
agencies. URS believes the credit risk associated with these types of revenues
is minimal. However, URS does perform ongoing credit evaluations of its
customers and, generally, requires no collateral. URS maintains reserves for
potential credit losses and such losses have been within management's
expectations.
F-18
<PAGE> 108
NOTE 15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for fiscal 1995 and 1994 is
summarized as follows:
<TABLE>
<CAPTION>
Fiscal 1995 Quarters Ended
----------------------------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues $ 40,307 $ 44,810 $ 44,456 $ 50,196
Gross profit 15,878 17,688 18,052 19,306
Operating income 1,356 1,625 2,060 2,666
Net income $ 800 $ 1,051 $ 1,336 $ 1,869
Income per share:
Primary $ .11 $ .15 $ .18 $ .24
========== ========== ========== ==========
Fully diluted $ .11 $ .15 $ .18 $ .23
========== ========== ========== ==========
Weighted average
number of shares 8,528 8,725 8,731 8,696
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Fiscal 1994 Quarters Ended
----------------------------------------------------------
Jan. 31 Apr. 30 July 31 Oct. 31
---------- ------------ ----------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues $ 36,756 $ 40,520 $ 41,333 $ 45,479
Gross profit 13,928 15,769 15,878 16,013
Operating income 1,050 1,484 1,450 2,149
Net income $ 651 $ 1,016 $ 985 $ 1,787
Income per share:
Primary $ .10 $ .14 $ .14 $ .23
========== ========== ========== ==========
Fully diluted $ .09 $ .14 $ .14 $ .23
========== ========== ========== ==========
Weighted average
number of shares 8,280 8,568 8,571 8,567
========== ========== ========== ==========
</TABLE>
Operating income represents continuing operations before interest
income and interest expense.
NOTE 16. SUBSEQUENT EVENT
Subsequent to URS's year-end, a letter of intent was signed to acquire
Greiner Engineering, Inc. for a combination cash and stock transaction
aggregating $63.4 million in cash, and 1.4 million shares of URS's Common
Stock. Completion of this transaction is subject to a number of conditions
including a satisfactory due diligence review, mutual approval of a formal
purchase agreement, and shareholder, regulatory and other approvals. The
completion of this transaction is anticipated by April, 1996. The completion
of the cash portion of this acquisition will necessitate financing via a
revolving credit facility and senior secured term loan, increasing URS's debt
and interest expense. URS is negotiating a banking agreement which secures
adequate and appropriate financing for this acquisition as well as other future
growth opportunities.
F-19
<PAGE> 109
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
Greiner Engineering, Inc.
Irving, Texas
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Greiner
Engineering, Inc. and its subsidiaries at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
Greiner's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Dallas, Texas
February 14, 1996
F-20
<PAGE> 110
GREINER ENGINEERING, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 13,873,000 $ 15,043,000
Short-term investments 2,007,000 5,871,000
Accounts receivable, net 37,680,000 37,723,000
Deferred tax assets 2,589,000 -
Prepaid expenses and other current assets 2,161,000 2,170,000
-------------- --------------
Total current assets 58,310,000 60,807,000
Property and equipment, net 9,380,000 8,959,000
Long-term investments 2,993,000 973,000
Investment in partnerships 153,000 2,475,000
Excess of cost over net assets acquired, net 691,000 2,359,000
Other assets 619,000 616,000
-------------- --------------
$ 72,146,000 $ 76,189,000
============== ==============
</TABLE>
F-21
<PAGE> 111
GREINER ENGINEERING, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Current liabilities:
Accounts payable $12,153,000 $ 8,222,000
Accrued liabilities 11,742,000 8,484,000
Accrued profit sharing and incentives - 1,726,000
Current and deferred income taxes - 1,099,000
Long-term debt due within one year - 44,000
----------- -----------
Total current liabilities 23,895,000 19,575,000
----------- -----------
Long-term liabilities:
Long-term debt - 157,000
Other 1,297,000 1,231,000
----------- -----------
Total long-term liabilities 1,297,000 1,388,000
----------- -----------
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000 shares
authorized, none issued - -
Common stock, $.50 par value, 20,000,000 shares authorized,
4,825,734 (1995 and 1994) shares issued and outstanding 2,413,000 2,413,000
Paid-in capital 24,809,000 24,797,000
Retained earnings 21,107,000 28,016,000
----------- -----------
48,329,000 55,226,000
Common stock held in treasury, at cost, 121,092 shares (1995) (1,375,000) -
----------- -----------
Total stockholders' equity 46,954,000 55,226,000
----------- -----------
$72,146,000 $76,189,000
=========== ===========
</TABLE>
F-22
<PAGE> 112
GREINER ENGINEERING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993
-------------- ---------------- ---------------
<S> <C> <C> <C>
Gross revenue
$ 154,175,000 $ 151,856,000 $ 140,555,000
Direct cost, principally outside services 40,422,000 37,385,000 33,546,000
-------------- ---------------- ---------------
Net revenue 113,753,000 114,471,000 107,009,000
Operating expenses:
Salaries and related costs 83,318,000 81,599,000 77,477,000
General expenses 32,998,000 27,140,000 23,109,000
Restructuring charges 3,700,000 - -
Valuation adjustment - investment in
partnership 2,300,000 - -
-------------- ---------------- ---------------
122,316,000 108,739,000 100,586,000
-------------- ---------------- ---------------
Income (loss) from operations (8,563,000) 5,732,000 6,423,000
Other income (expense):
Other income, principally interest 929,000 914,000 637,000
Interest expense (18,000) (15,000) (17,000)
-------------- ---------------- ---------------
Income (loss) before income taxes (7,652,000) 6,631,000 7,043,000
Income tax provision (benefit) (2,170,000) 2,652,000 2,817,000
-------------- ---------------- ---------------
Net income (loss) $ (5,482,000) 3,979,000 $ 4,226,000
============== ================ ===============
Earnings (loss) per share $ (1.15) $ .82 $ .88
============== ================ ===============
Weighted average shares outstanding 4,754,837 4,825,734 4,820,720
============== ================ ===============
</TABLE>
See notes to consolidated financial statements
F-23
<PAGE> 113
GREINER ENGINEERING, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
--------------------- --------------------
PAID-IN RETAINED ESOP
SHARES PAR VALUE CAPITAL EARNINGS SHARES COST BASIS RECEIVABLE
---------- ---------- ------------ ------------ ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
January 1, 1993 4,802,193 $2,401,000 $ 24,460,000 $ 22,319,000 - - $ (756,000)
Exercise of stock options 23,541 12,000 337,000 - - - -
Payments received from
ESOP, net - - - - - - 256,000
Cash dividends - - - (1,157,000) - - -
Net income - - - 4,226,000 - - -
---------- ---------- ------------ ------------ ------- ----------- -----------
December 31, 1993 4,825,734 2,413,000 24,797,000 25,388,000 - - (500,000)
Payments received from
ESOP - - - - - - 500,000
Cash dividends - - - (1,351,000) - - -
Net income - - - 3,979,000 - - -
---------- ---------- ------------ ------------ ------- ----------- -----------
December 31, 1994 4,825,734 2,413,000 24,797,000 28,016,000 - - -
Purchase of treasury stock - - - - 127,292 1,445,000 -
Exercise of stock options - - 12,000 - (6,200) (70,000) -
Cash dividends - - - (1,427,000) - - -
Net loss - - - (5,482,000) - - -
---------- ---------- ------------ ------------ ------- ----------- -----------
December 31, 1995 4,825,734 $2,413,000 $ 24,809,000 $ 21,107,000 121,092 $ 1,375,000 $ -
========== ========== ============ ============ ======= =========== ===========
</TABLE>
F-24
<PAGE> 114
GREINER ENGINEERING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)
Adjustments to reconcile to cash provided by $(5,482,000) $ 3,979,000 $ 4,226,000
operating activities:
Depreciation and amortization
Valuation adjustment investment in partnership 3,962,000 3,681,000 2,980,000
Valuation adjustment - writedown of
goodwill 2,300,000 500,000 -
Provision for losses on accounts
receivable 1,500,000 - -
Other
Changes in assets and liabilities: 1,362,000 15,000 27,000
Accounts receivable 84,000 (11,000) 16,000
Accounts payable and accrued liabilities
Current and deferred income taxes (1,319,000) (2,939,000) (2,944,000)
Prepaid expenses 5,463,000 (935,000) 1,968,000
Other assets and liabilities (3,688,000) 576,000 (83,000)
9,000 (158,000) (119,000)
- - (15,000)
----------- ----------- -----------
Net cash provided by operating activities 4,191,000 4,708,000 6,056,000
----------- ----------- -----------
Cash Flows From Investing Activities:
Change in short-term investments 3,864,000 37,000 (5,909,000)
Change in long-term investments (2,020,000) - -
Increase in ESOP receivable - - (500,000)
Payments received on ESOP receivable - 500,000 756,000
Change in investment in partnership 22,000 (16,000) 44,000
Additions to property and equipment (4,210,000) (4,394,000) (3,647,000)
Payments received on notes receivable - 480,000 -
Proceeds from sale of property and equipment 1,000 11,000 54,000
Net changes in other assets (93,000) 9,000 27,000
----------- ----------- -----------
Net cash used by investing activities $(2,436,000) $(3,373,000) $(9,175,000)
----------- ----------- -----------
</TABLE>
continued on next page
See notes to consolidated financial statements
F-25
<PAGE> 115
GREINER ENGINEERING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows From Financing Activities:
Cash dividends paid
Purchase of treasury stock $(1,427,000) $(1,351,000) $(1,157,000)
Payments on debt (1,375,000) - -
Exercise of stock options (201,000) (43,000) (40,000)
Net increase in other long term liabilities 12,000 - 349,000
66,000 65,000 65,000
----------- ----------- -----------
Net cash used by financing activities (2,925,000) (1,329,000) (783,000)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (1,170,000) 6,000 (3,902,000)
Cash and cash equivalents at beginning of year 15,043,000 15,037,000 18,939,000
----------- ----------- -----------
Cash and cash equivalents at end of year $13,873,000 $15,043,000 $15,037,000
=========== =========== ===========
Supplemental Cash Flow Disclosures:
Interest paid $ 18,000 $ 15,000 $ 17,000
=========== =========== ===========
Income taxes paid $ 1,518,000 $ 2,076,000 $ 2,900,000
=========== =========== ===========
Non-Cash Investing Activities:
Exchange of property and equipment for
long-term notes receivable $ - $ - $ 480,000
=========== =========== ===========
</TABLE>
F-26
<PAGE> 116
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business:
Greiner, through its subsidiaries, operates a single line of business which
provides a broad range of engineering, planning, architectural, environmental
analysis, design, surveying, program management and other services to public
and private sector clients throughout the United States, its territories and in
foreign countries, including Hong Kong and Malaysia. Revenue derived from
services to domestic governmental agencies was approximately 80% of the
consolidated revenue for 1993 through 1995. Greiner did not derive more than
10% of its consolidated revenue from any one client in any of the years 1993
through 1995.
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. All material intercompany
transactions and balances have been eliminated.
Use of Estimates in the Preparation of Financial Statements:
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.
Method of Accounting for Contracts:
Greiner records income on its contracts on the percentage-of-completion method.
Revenue is recorded as costs are incurred, and profit is recognized on each
contract based on the percentage that incurred costs bear to estimated total
costs. In the event of an anticipated loss, the entire amount of the loss is
charged to current operations.
Revenue and the direct cost of revenue include amounts applicable to
subconsultants and other direct material costs on contracts for which Greiner
is responsible.
Depreciation and Amortization:
Greiner depreciates and amortizes property and equipment, which are stated at
cost, on the straight-line method over the following useful lives:
<TABLE>
<S> <C>
Buildings 16-30 years
Leasehold improvements 10 years or term of lease, whichever is less
Office furnishings and fixtures 5-7 years
Equipment 3-5 years
</TABLE>
Cash Equivalents:
Greiner considers all short-term investments, including U.S. Treasury
repurchase agreements, U.S. Treasury Bills, certificates of deposit and/or
commercial paper with original maturities of 90 days or less to be cash
equivalents.
F-27
<PAGE> 117
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Short-term Investments:
Greiner includes in short-term investments all U.S. Treasury repurchase
agreements, U.S. Treasury Bills, certificates of deposit and/or commercial
paper with original maturities greater than 90 days but less than one year.
The carrying values of these investments are approximately equal to their fair
market value at the end of each year.
Excess of Costs Over Net Assets Acquired:
The excess of costs over net assets acquired of $691,000 at December 31, 1995,
is net of accumulated amortization of $3,204,000. In 1994, the balance of
$2,359,000 is net of accumulated amortization of $1,536,000. The amounts are
being amortized on a straight-line basis over a 20-year period. During the
third quarter of 1995, Greiner incurred restructuring charges which included
additional amortization of $1,500,000 to reduce the carrying value of goodwill
related to the 1990 acquisition of Bissell and Karn, Inc.
Other Assets:
Other assets are composed primarily of investments in real property of $442,000
and $411,000 in 1995 and 1994, respectively.
Investment in Partnerships:
Greiner accounts for its investment in non-majority owned partnerships using
the equity method of accounting. It is Greiner's policy to periodically review
the underlying assets and expected future revenues of these partnerships and
adjust the carrying value in accordance with such review.
Long-Term Investments:
Greiner had long-term investments of $2,993,000 and $973,000 invested in U.S.
Treasury Notes at December 31, 1995 and 1994, respectively, with maturity dates
in excess of one year.
Earnings (Loss) and Cash Dividends Per Share Information:
Earnings (loss) per share information is based on the weighted average number
of shares of Common Stock outstanding during each period, adjusted for stock
options that have a materially dilutive effect on the calculations of earnings
per share. Earnings per share are computed independently for each of the
quarters. As a result, the sum of the quarterly earnings per share may not
equal the earnings per share for the year-to-date results.
Annual cash dividends of $.30, $.28 and $.24 per share of Common Stock were
declared in 1995, 1994 and 1993, respectively, on the historical shares
outstanding at the time of the dividend record dates.
Reclassifications:
Certain reclassifications have been made to the 1994 and 1993 financial
statements to conform to the 1995 presentation.
F-28
<PAGE> 118
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
Newly Issued Accounting Standards:
In 1995, Statement of Financial Accounting Standards No. 121, "Accounting for
Long-Lived Assets" (SFAS 121) was issued. Greiner will adopt this standard in
1996. The effect of the adoption is not expected to be significant. In
October 1995, Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-based Compensation" ("SFAS 123"), was issued. This statement
requires the fair value of stock options and other stock-based compensation
issued to employees to either be included as compensation expense in the income
statement, or the pro forma effect on net income and earnings per share of such
compensation expense to be disclosed in the footnotes to Greiner's financial
statements commencing in 1996. Greiner expects to adopt SFAS 123 on a
disclosure basis only. As such, implementation of SFAS 123 is not expected to
impact Greiner's consolidated balance sheet or income statement.
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable are composed of:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1995 1994
------------- -------------
<S> <C> <C>
Billed accounts receivable $ 33,382,000 $ 30,381,000
Unbilled accounts receivable 6,809,000 8,925,000
------------- -------------
40,191,000 39,306,000
Less allowance for doubtful accounts (2,511,000) (1,583,000)
------------- -------------
$ 37,680,000 $ 37,723,000
============= =============
</TABLE>
Unbilled accounts receivable principally represent revenue earned during the
latter part of the year but not billed until the following year. Included in
billed accounts receivable are retainages of approximately $2,800,000 at
December 31, 1995 and $2,700,000 at December 31, 1994, which Greiner expects to
collect within one year.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are composed of:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Leasehold improvements $ 1,063,000 $ 785,000
Office furnishings and fixtures 4,275,000 3,762,000
Equipment, primarily computers 18,536,000 15,684,000
------------ ------------
23,874,000 20,231,000
Less accumulated depreciation and amortization (14,494,000) (11,272,000)
------------ ------------
$ 9,380,000 $ 8,959,000
============ ============
</TABLE>
Depreciation and amortization of property and equipment was $3,794,000,
$3,085,000 and $2,440,000 in 1995, 1994 and 1993, respectively.
F-29
<PAGE> 119
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
NOTE 4 - INVESTMENT IN PARTNERSHIPS
In 1992, Greiner acquired a 50% interest in a partnership, the National
Transportation Authority ("NTA"), for a $1,000,000 cash contribution and a
contribution of common stock valued at $2,000,000. The following is a summary
of the partnership's financial position at December 31, 1995 and 1994 and
results of operations for the periods then ended:
<TABLE>
<CAPTION>
DECEMBER 31,
(UNAUDITED)
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash
Other Assets $ 227,000 $ 117,000
4,512,000 4,907,000
----------- -----------
Total Assets $ 4,739,000 $ 5,024,000
Other Accrued Liabilities $ - $ 75,000
Partner's Capital - Greiner 2,869,000 2,975,000
Partner's Capital - Other 1,870,000 1,974,000
----------- -----------
Total Equity $ 4,739,000 $ 5,024,000
=========== ===========
Net Loss $ (510,000) $ (4,000)
=========== ===========
</TABLE>
NTA currently holds the franchise for the tollway extension to State Route 57
("SR 57") in Orange County, California. To date, NTA has been unsuccessful in
securing necessary financing for the preliminary environmental phases of the SR
57 project and currently holds no other significant project franchises.
Although NTA is continuing to pursue financing alternatives for the SR 57
project and is actively seeking new project opportunities in public/private
transportation projects, the lack of progress on the SR 57 project caused
Greiner to record a non-cash charge of $500,000 in the fourth quarter of 1994
and $2,300,000 in the third quarter of 1995 to reduce the carrying value of its
investment in NTA.
NOTE 5 - INCOME TAXES
The income tax provision (benefit) is composed of:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal $ 670,000 $2,000,000 $1,806,000
State 225,000 475,000 445,000
Foreign 123,000 (11,000) 6,000
----------- ---------- ----------
1,018,000 2,464,000 2,257,000
----------- ---------- ----------
Deferred:
Federal (2,974,000) 180,000 534,000
State (214,000) 8,000 26,000
----------- ---------- ----------
(3,188,000) 188,000 560,000
----------- ---------- ----------
$(2,170,000) $2,652,000 $2,817,000
=========== ========== ==========
</TABLE>
F-30
<PAGE> 120
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
A reconciliation of the income tax provision and the amount computed by
applying the statutory rate to income before income taxes is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Federal statutory rate (34.0)% 34.0% 34.0%
State income taxes (net of federal income tax effect) - 4.8 4.4
Nondeductible costs (primarily goodwill) 8.9 2.3 1.8
Permanent difference (basis adjustment) (5.5) - -
Other 2.2 (1.1) (.2)
----- ---- ----
Income tax provision (benefit) (28.4)% 40.0% 40.0%
===== ==== ====
</TABLE>
Greiner provides for deferred taxes on the tax effect of changes in temporary
differences between financial and tax reporting. The source of these
differences and the tax effect of each are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Change in retainages $ 33,000 $ 11,000 $ 63,000
Change in accrued vacation benefits (103,000) 63,000 (8,000)
Depreciation and amortization 42,000 333,000 242,000
Change in deferred earnings and profits (446,000) (43,000) 123,000
Change in accrued legal settlements (595,000) (56,000) 96,000
Change in provision for doubtful accounts (479,000) 18,000 47,000
Valuation adjustment - investment in partnership (729,000) (122,000) -
Change in deferred restructuring charges (748,000) - -
Other (163,000) (16,000) (3,000)
----------- ----------- -----------
$(3,188,000) $ 188,000 $ 560,000
=========== =========== ===========
</TABLE>
Deferred tax liabilities (assets) are comprised of the following at December
31:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1995 1994
----------- -------------
<S> <C> <C>
Deferred earnings and profits $ 632,000 $ 1,078,000
Retainages 957,000 924,000
Depreciation and amortization 575,000 533,000
Other - 23,000
----------- -------------
Gross deferred tax liabilities 2,164,000 2,558,000
----------- -------------
Accrued vacation benefits (391,000) (288,000)
Accrued legal settlements (1,330,000) (735,000)
Provision for doubtful accounts (1,017,000) (538,000)
Deferred compensation (441,000) (419,000)
Deferred restructuring charges (748,000) -
Valuation adjustment -investment in partnership (851,000) (122,000)
Other (118,000) -
----------- -------------
Gross deferred tax assets (4,896,000) (2,102,000)
----------- -------------
Net deferred tax (assets) liabilities $(2,732,000) $ 456,000
=========== =============
</TABLE>
F-31
<PAGE> 121
NOTE 6 - LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Notes payable in annual installments of $57,914
(principal and interest) through 1998, at
varying interest rates; fully paid in 1995 $ - $201,000
Less amounts due within one year - (44,000)
-------- --------
$ - $157,000
======== ========
</TABLE>
Greiner has an unsecured bank line of credit with an aggregate limit of
$15,000,000 bearing interest at the lower of the bank's prime rate (8 1/2% at
December 31, 1995) or 1 1/2% over the bank's cost of funds rate (5%-5 3/4% at
December 31, 1995 depending on the length of the loan). Under the terms of the
line of credit, maintenance of specified amounts of net worth and ratios of
working capital are required and payments of cash dividends are restricted to
an amount not in excess of Greiner's current year's earnings. Greiner exceeded
these dividend restrictions in 1995, however, the bank waived those
restrictions for 1995. At December 31, 1995 and 1994, no borrowings were
outstanding on the line of credit.
Also included in long-term liabilities are other deferred credits of $1,297,000
(1995) and $1,231,000 (1994) consisting primarily of liabilities associated
with deferred compensation plans discussed in Note 8.
NOTE 7 - CAPITAL STOCK AND STOCK PLANS
Capital Stock:
Greiner had a cash dividend program in 1995 which provided for quarterly
payments of $.075 per share on Greiner's outstanding Common Stock. The
quarterly dividend rate for 1994 was $.07 per share per quarter.
Treasury Stock:
On March 7, 1995 Greiner's Board of Directors authorized the purchase of up to
500,000 shares of Greiner's common stock to be held in treasury. Purchases
will be made from time to time, either on the open market or in private
transactions, at a price and limit to be determined by Greiner. Through
December 31, 1995 127,292 shares of common stock had been purchased to be held
in treasury, of which 6,200 shares were released in 1995 for the exercise of
stock options.
Stock Option Plans:
Greiner has two stock option plans designated the 1981 Stock Option Plan ("1981
Plan") and the 1991 Stock Option Plan ("1991 Plan"). Under both plans the
exercise price of the options granted may not be less than the fair market
value of the Common Stock on the date the option is granted. The term of
options granted under these plans may not exceed ten years. Options are
exercisable over a period of years as determined by the Board of Directors and
in accordance with the other provisions of the Plans.
F-32
<PAGE> 122
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
1981 Plan
The 1981 Plan was approved by stockholders to be effective April 24, 1981. No
options may be granted under this plan after April 23, 1991.
A summary of the 1981 Plan activity is as follows:
<TABLE>
<CAPTION>
Shares Price Range
--------- ---------------
<S> <C> <C>
Outstanding at December 31, 1992 227,412 $13.25 - $15.84
Cancelled (11,784) $14.13 - $15.84
Exercised (23,541) $13.25 - $15.84
---------
Outstanding at December 31, 1993 192,087 $13.25 - $15.84
Cancelled (4,200) $14.13 - $15.00
---------
Outstanding at December 31, 1994 187,887 $13.25 - $15.84
Cancelled (144,387) $13.25 - $15.84
Exercised (5,000) $13.25 - $13.25
---------
Outstanding at December 31, 1995 38,500 $13.25 - $13.25
=========
</TABLE>
As of December 31, 1995 options covering 38,500 shares of Common Stock were
exercisable.
1991 Plan
The 1991 Plan was approved by stockholders in May 1991 with an effective date
of April 24, 1991 and reserved 200,000 shares of Greiner's Common Stock for
grants to employees as designated by the Board of Directors. In May 1993,
stockholders approved the first amendment to the Plan increasing the total
number of reserved shares to 400,000. And, in May 1995, stockholders approved
a second amendment to the 1991 Plan, increasing the total number of reserved
shares to 650,000. A summary of the 1991 Plan activity is as follows:
<TABLE>
<CAPTION>
Shares Price Range
--------- ---------------
<S> <C> <C>
Outstanding at December 31, 1992 98,350 $15.00 - $16.38
Granted 108,250 $16.00 - $16.00
Cancelled (9,400) $15.00 - $16.38
---------
Outstanding at December 31, 1993 197,200 $15.00 - $16.38
Granted 115,000 $13.38 - $13.38
Cancelled (23,050) $13.38 - $16.38
---------
Outstanding at December 31, 1994 289,150 $13.38 - $16.38
Granted 109,000 $10.38 - $13.38
Cancelled (56,300) $10.38 - $16.38
Exercised (1,200) $13.38 - $13.38
---------
Outstanding at December 31, 1995 340,650 $10.38 - $16.38
=========
</TABLE>
As of December 31, 1995, options covering 123,255 shares of Common Stock were
exercisable.
F-33
<PAGE> 123
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Rental Commitments:
Future minimum rental commitments under noncancellable operating leases,
principally on buildings and office space, with an initial or remaining term of
more than one year approximated $17,354,000 at December 31, 1995, payable as
follows: $6,356,000 (1996); $4,972,000 (1997); $2,463,000 (1998);
$1,913,000(1999), $1,009,000 (2000) and $641,000 thereafter. Certain leases
provide options for renewal at the end of the lease, provide for the payment of
real estate taxes, utilities and insurance and have rent or operating cost
escalation provisions (see Note 10).
Rental expense was $10,800,000 (1995), $8,543,000 (1994) and $8,194,000 (1993).
The amounts of noncancellable subleases, which are not material, have been
deducted from rental expense.
Greiner leases approximately 30,000 square feet of office space in Pleasanton,
California from a partnership of which certain partners were employees of
Greiner. Total payments by Greiner under this lease agreement were
approximately $628,000 in 1995, $613,000 in 1994 and $610,000 in 1993.
Contingencies:
Certain subsidiaries of Greiner have been named as defendants in legal
proceedings wherein substantial damages are claimed. Such proceedings are not
uncommon in Greiner's business and usually involve claims against multiple
defendants who were involved in the project which is the subject of the
proceeding. Historically, Greiner's subsidiaries have been successful in
defending such actions or have settled them within insured limits. In the
opinion of management, based upon its present knowledge, Greiner's ultimate
liability, if any, in these proceedings is not expected to exceed amounts
previously provided for in Greiner's consolidated financial statements.
Because of the nature of the professional services provided by Greiner and the
size and nature of many of the projects upon which such services are performed,
the potential for claims in excess of insurance limits always exists. Should
that occur, and if Greiner's resulting liability is material, then Greiner's
operations and financial condition would be adversely affected. It is also
possible that a large number of claims in any given year could cause the total
amount paid with respect to the deductible amounts relating to such claims to
be material, in which event Greiner's operations and financial condition could
be adversely affected.
In 1995, Greiner was notified by the staff of the Central Regional Office of
the Securities and Exchange Commission (the "Staff") that it planned to
recommend that a subsidiary of Greiner be named as a respondent in an
administrative action relating to the issuance of certain revenue bonds used to
finance the construction of the new Denver International Airport. The
subsidiary was a member of a joint venture formed for the sole purpose of
acting as the program management consultant for the City and County of Denver
on the new Denver International Airport project. The joint venture was
dissolved at the completion of the project. The Staff recommendation relates
to certain information about the airport project provided by the subsidiary to
the City and County of Denver in connection with the related bond offering.
Greiner has disputed the Staff's recommendations. Management does not
anticipate that the resolution of this matter will have a material effect on
Greiner's operations or financial condition.
F-34
<PAGE> 124
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED) YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993
Greiner presently carries professional liability insurance against claims
resulting from Greiner's alleged negligent performance of professional
services, with an aggregate limit of $30,000,000 per year in excess of an
aggregate $1,000,000 annual self-insured retention and a deductible of $250,000
per occurrence. This insurance, consistent with industry practice, is on a
"claims made" basis, which means coverage must be in place when a claim is
made. In addition, such insurance is subject to standard exclusions, including
exclusions for claims arising out of actual, alleged or threatened discharge,
dispersal, seepage, migration, release or escape of pollutants and the
performance of or failure to perform professional services rendered in the
abatement, replacement or removal of any product, material or process
containing asbestos. The continued availability and cost of professional
liability insurance will depend upon market conditions, the claims record of
Greiner and the claims experience of the insurers providing such coverage.
Greiner performs services for certain government entities which are subject to
post contract audit adjustments for periods beyond the project completion date.
In the opinion of management, based upon its present knowledge, Greiner's
ultimate liability, if any, related to these contract audits is not expected to
exceed amounts previously provided for in Greiner's financial statements.
Deferred Compensation Plans:
Greiner has deferred compensation plans covering certain of its former senior
executives, which provide for periodic payments upon retirement. Charges to
operations under these plans were $186,000 (1995), $193,000 (1994) and $189,000
(1993).
Employee Incentive Programs:
Greiner has adopted a profit sharing formula for determining its contribution
to the Performance Plan and Employee Stock Ownership Plan of Greiner
Engineering, Inc. (the "Performance Plan") and for management cash incentive
payments. The profit sharing formula is based on a sliding scale of Company
profits. A minimum level of profit equal to six percent of net revenue before
taxes and incentives is necessary to generate a contribution pool for these
plans. The maximum contribution to these plans is 33% of Greiner's profit
before computation of taxes and contributions to these incentive plans. Total
charges to operations under the profit sharing formula amounted to $0 (1995),
$1,681,000 (1994) and $2,770,000 (1993).
The total number of allocated shares held in the ESOP were 612,459, 552,477 and
494,384 at December 31, 1995, 1994 and 1993, respectively.
Employees who have attained the age of twenty-one years and completed six
months of employment are eligible to participate in the Performance Plan. The
Performance Plan, which is qualified under section 401(k) of the Internal
Revenue Code, includes an employee stock ownership provision, pursuant to which
all Company contributions to the Performance Plan have been used to purchase
shares of Greiner's Common Stock.
If the proposed merger discussed in Note 11 is consummated, the ESOP would be
terminated and all shares will be converted into other investment options in
the Performance Plan designated by the participants.
F-35
<PAGE> 125
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1995, 1994 and 1993
NOTE 9 - ACCRUED LIABILITIES
Accrued liabilities are composed of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Payroll and related taxes $ 3,989,000 $ 3,977,000
Legal fees and self insurance 3,688,000 2,160,000
Restructuring charges (see Note 10) 2,200,000 -
Deferred rent payments 892,000 1,404,000
Other 973,000 943,000
----------- -----------
Total accrued liabilities $11,742,000 $ 8,484,000
=========== ===========
</TABLE>
F-36
<PAGE> 126
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 10 - RESTRUCTURING CHARGES
During 1995, Greiner initiated various activities to restructure certain of its
operations in order to reduce its cost structure and improve profitability.
Greiner shifted its center of Asian operations from Hong Kong to Kuala Lumpur,
Malaysia. Through consolidation of the Asian activities in its Kuala Lumpur
office, Greiner will be able to reduce its office staff and office space in
Hong Kong. Greiner recorded a 1995 restructuring charge of $500,000 for this
office shift, primarily related to the termination of lease obligations.
Greiner has historically maintained two principal service disciplines in the
California marketplace - land development design and surface transportation
design. Continuing hardships in California's residential land development
market have prompted Greiner's decision to de-emphasize residential land
development services within that geography. The firm intends to continue to
pursue transportation infrastructure projects and serve commercial,
recreational and industrial clients. In redirecting its market priorities, the
firm will complete existing contract obligations to residential developers and
then reduce staff and office space and consolidate office locations to match
its ongoing level of operations.
Restructuring charges associated with the closing of these offices and the
early termination or sublease of the office leases of $1,375,000 were recorded
in 1995. An additional $85,000 was accrued in 1995 to cover the office
closeout costs. Approximately 30 employees in Greiner's land development group
will be terminated in 1996. Costs related to these staff reductions of $240,000
were accrued in 1995.
A significant portion of Greiner's residential land development business was
obtained through the 1990 acquisition of Bissell and Karn, Inc. As a result of
the restructuring of the California operations, Greiner recorded a non-cash
charge of $1,500,000 in 1995 to reduce the carrying value of the goodwill
associated with the acquired residential land development operations.
The following table sets forth Greiner's restructuring accruals as of December
31, 1995:
<TABLE>
<CAPTION>
Restructuring Costs Remaining
Accruals Incurred Balance
------------- -------- ----------
<S> <C> <C> <C>
Lease Termination - Hong Kong $ 500,000 - $ 500,000
Lease Termination - California 1,375,000 - 1,375,000
Employee Termination - California 240,000 - 240,000
Exit Costs - California 85,000 - 85,000
---------- ----------
$2,200,000 $2,200,000
========== ==========
</TABLE>
F-37
<PAGE> 127
GREINER ENGINEERING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 11 - SUBSEQUENT EVENT
On January 10, 1996, Greiner entered into a definitive agreement to sell all of
the Company's outstanding common stock to a newly formed subsidiary of URS
Corporation through an exchange of cash and stock. Under the terms of the
agreement, Greiner stockholders will receive $13.50 cash and .298 of a share of
URS common stock for each share of Greiner common stock owned. The agreement
is subject to approval by Greiner stockholders and certain other closing
conditions. The consolidated financial statements do not include adjustments,
if any, which might result from the consummation of this transaction.
F-38
<PAGE> 128
GREINER ENGINEERING, INC.
SUPPLEMENTARY DATA
SELECTED QUARTERLY FINANCIAL DATA -- UNAUDITED
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross revenue $37,332,000 $40,015,000 $39,745,000 $37,083,000
=========== =========== =========== ===========
Net revenue $28,748,000 $29,255,000 $29,285,000 $26,464,000
=========== =========== =========== ===========
Net income (loss) $ 806,000 $ 40,000 $(4,277,000) $(2,051,000)
=========== =========== =========== ===========
Earnings per share $ .17 $ .01 $ (.91) $ (.44)
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross revenue $37,148,000 $38,484,000 $38,181,000 $38,043,000
=========== =========== =========== ===========
Net revenue $28,486,000 $28,126,000 $28,790,000 $29,069,000
=========== =========== =========== ===========
Net income $ 950,000 $ 1,010,000 $ 776,000 $ 1,243,000
=========== =========== =========== ===========
Earnings per share $ .20 $ .21 $ .16 $ .26
=========== =========== =========== ===========
</TABLE>
In the fourth quarter of 1995, the Company recorded certain expenses related to
the closing of its residential land development operations in California. These
charges included approximately $1,500,000 related to completion of the existing
projects and $600,000 of accrued restructuring charges for employee termination,
office lease termination and office exit costs. The Company also recorded fourth
quarter charges of approximately $1,200,000 related to project overruns in the
Company's mid-Atlantic operations.
F-39
<PAGE> 129
APPENDICES
Appendix A -- Fairness Opinion of Houlihan Lokey Howard & Zukin
Appendix B -- Agreement and Plan of Merger among Greiner Engineering,
Inc., URS Corporation and URS Acquisition Corporation
<PAGE> 130
APPENDIX A
FAIRNESS OPINION OF HOULIHAN LOKEY HOWARD & ZUKIN
<PAGE> 131
January 10, 1996
To The Board of Directors
Greiner Engineering, Inc.
909 East Los Colinas Boulevard
Suite 1900 LB 44
Irving, TX 75039-3907
Gentlemen:
We understand that pursuant to the Agreement and Plan of Merger Among
Greiner Engineering, Inc. ("Greiner" or the "Company"), URS Corporation
("URS"), and URS Acquisition Corporation, the "Merger Agreement", Greiner plans
to merge into and become a wholly owned subsidiary of URS, (the "Merger"). We
further understand that ownership in Greiner is currently represented by
4,704,642 shares of common stock issued and outstanding, 121,092 shares are
issued and held in treasury, and 377,650 options for common stock issued and
outstanding. Moreover, we understand that ownership of URS is represented by
7,167,591 shares of common stock issued and outstanding, with 287,000 shares
of common stock issued but held in treasury. Finally, we understand upon the
close of the Merger, each share of Greiner's common stock will be converted
into the right to receive consideration (the "Consideration") as follows: (i)
0.298 shares of URS common stock; and (ii) $13.50 in cash; all of which shall
be payable upon the surrender of the certificates representing such shares of
Greiner stock. The Merger, the payment of the Consideration in exchange for
Greiner's common stock, and all related transactions disclosed to Houlihan
Lokey Howard & Zukin are referred to collectively herein as the "Transaction."
You have requested our opinion (the "Opinion") as to the matters set
forth below. The Opinion does not address the Company's underlying business
decision to effect the Transaction. We have not been requested to, and did not,
solicit third party indications of interest in acquiring all or any part of the
Company. Furthermore, at your request, we have not negotiated the Transaction
or advised you with respect to alternatives to it.
In connection with this Opinion, we have made such reviews, analyses
and inquiries as we have deemed necessary and appropriate under the
circumstances. Among other things, we have:
1. reviewed the Company's annual reports to shareholders and on
Form 10-K for the five fiscal years ended December 31, 1994 and quarterly
reports on Form 10-Q for the three quarters ended September 30, 1995, and
Company- prepared interim financial statements for the period ended November
30, 1995, which the Company's management has identified as being the most
current financial statements available;
<PAGE> 132
The Board of Directors
Greiner Engineering, Inc.
January 10, 1996
Page 2
2. reviewed URS's annual reports to shareholders and on Form 10-K
for the four fiscal years ended October 31, 1994, a draft of Form 10-K for the
fiscal year ended October 31, 1995, and quarterly reports on Form 10-Q for the
three quarters ended July 31, 1995;
3. reviewed a copy of the Merger Agreement dated January 10,
1996;
4. reviewed a copy of the Company's latest proxy statement;
5. met with certain members of the senior management of the
Company and URS to discuss the operations, financial condition, future
prospects and projected operations and performance of the Company, and met with
representatives of the Company's counsel to discuss certain matters;
6. visited certain facilities and business offices of the
Company;
7. reviewed the 1996 business plans for the Company's principal
offices and divisions, and forecasts and projections prepared by the Company's
management with respect to the Company for the years ended December 31, 1996
through 2002;
8. reviewed the historical market prices and trading volume for
the Company's and URS's publicly traded securities;
9. reviewed certain other publicly available financial data for
certain companies that we deem comparable to the Company, and publicly
available prices and premiums paid in other transactions that we considered
similar to the Transaction;
10. conducted such other studies, analyses and inquiries as we
have deemed appropriate.
We have relied upon and assumed, without independent verification,
that the financial forecasts and projections provided to us have been
reasonably prepared and reflect the best currently available estimates of the
future financial results and condition of the Company, and that there has been
no material change in the assets, financial condition, business or prospects of
the Company since the date of the most recent financial statements made
available to us.
We have not independently verified the accuracy and completeness of
the information supplied to us with respect to the Company and do not assume
any responsibility with respect to it. We have not made any physical
inspection or independent appraisal of any of the properties or assets of the
Company. Our opinion is necessarily based on business, economic, market and
other conditions as they exist and can be evaluated by us at the date of this
letter.
<PAGE> 133
The Board of Directors
Greiner Engineering, Inc.
January 10, 1996
Page 3
Based upon the foregoing, and in reliance thereon, it is our opinion
that the Consideration to be received by the public stockholders of the Company
in connection with the Transaction is fair to them from a financial point of
view.
/s/ HOULIHAN, LOKEY, HOWARD & ZUKIN, INC.
HOULIHAN, LOKEY, HOWARD & ZUKIN, INC.
<PAGE> 134
APPENDIX B
AGREEMENT AND PLAN OF MERGER AMONG
GREINER ENGINEERING, INC., URS CORPORATION AND
URS ACQUISITION CORPORATION
<PAGE> 135
AGREEMENT AND PLAN OF MERGER
AMONG
GREINER ENGINEERING, INC.,
URS CORPORATION,
AND
URS ACQUISITION CORPORATION
January 10, 1996
<PAGE> 136
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Merger of the Subsidiary into Greiner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. EFFECT OF MERGER ON CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS . . . . . . . . . . . . . . . . . . 3
2.1 Conversion of the Greiner Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Conversion of the Subsidiary Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Cancellation of Treasury Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Closing; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF GREINER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Material Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Greiner SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Absence of Material Adverse and Other Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.13 Properties, Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.15 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.16 Employment Matters; Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.17 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.19 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.20 Certain Contracts and Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.21 Prohibited Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.22 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.23 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.24 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.25 Immigration Reform and Control Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.26 Board Approvals; Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.27 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.28 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.29 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF URS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 URS SEC Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Board Approvals; Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.9 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 6. PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 137
<TABLE>
<S> <C> <C>
6.1 Covenants of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1.1 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.2 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.4 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.5 Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2 Covenants of Greiner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2.1 Conduct of Business Pending Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.2.2 Stockholders' Meeting; Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2.3 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2.4 Maintenance of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2.5 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2.6 Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Covenants of URS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3.1 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3.2 Listing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 7. CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1 Conditions to Obligations of Greiner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1.1 Representations and Warranties True at Closing . . . . . . . . . . . . . . . . . . . . . . . 28
7.1.2 Covenants Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.4 Approval of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.6 Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.7 Merger Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.8 Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.1.9 HSR Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Conditions to Obligations of URS and the Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2.1 Representations and Warranties True at Closing . . . . . . . . . . . . . . . . . . . . . . . 30
7.2.2 Covenants Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2.4 Approval of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2.6 Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.7 Merger Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.8 Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.9 HSR Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.11 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.12 Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8. ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.1 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Use of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.6 Non-Liability of Agents and Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.7 Greiner Engineering, Inc. Performance Plan and Employee Stock Ownership Plan . . . . . . . . . . . . . 32
ARTICLE 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.2 Entire Agreement; Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
<PAGE> 138
<TABLE>
<S> <C> <C>
10.5 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.8 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.9 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10 Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
<PAGE> 139
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is
entered into as of January 10, 1996, by and among GREINER ENGINEERING, INC., a
Nevada corporation ("Greiner"), URS CORPORATION, a Delaware corporation
("URS"), and URS ACQUISITION CORPORATION, a Nevada corporation (the
"Subsidiary"). Greiner is sometimes referred to herein as the "Surviving
Corporation" and Greiner and the Subsidiary are sometimes collectively referred
to herein as the "Constituent Corporations."
RECITALS
A. Greiner is a corporation duly organized and existing under the
laws of the State of Nevada, having as of the date hereof authorized capital
stock consisting of (i) 20,000,000 shares of common stock, par value $0.50 per
share (the "Greiner Common Stock"), of which as of the date hereof, 4,704,642
are issued and outstanding, 121,092 are issued and held in treasury, and
15,174,266 are reserved for issuance, and (ii) 1,000,000 shares of preferred
stock, par value $1.00 per share, of which no shares are issued and
outstanding.
B. URS is a corporation duly organized and existing under the
laws of the State of Delaware, having as of the date hereof authorized capital
stock consisting of (i) 20,000,000 shares of common stock, par value $0.01 per
share (the "URS Common Stock"), of which as of the date hereof, 7,167,591 are
issued and outstanding, 287,000 are issued and held in treasury, and 12,545,409
are reserved for issuance, and (ii) 1,000,000 shares of preferred stock, par
value $1.00 per share, of which no shares are issued and outstanding.
C. The Subsidiary is a corporation duly organized and existing
under the laws of the State of Nevada, having as of the date hereof authorized
capital stock consisting of 100 shares of common stock, par value $1.00 per
share (the "Subsidiary Common Stock"), all of which have been issued to, and
are owned by, URS.
D. URS, Greiner and the Subsidiary have determined that it is
advisable that the Subsidiary be merged with and into Greiner on the terms and
conditions set forth herein and pursuant to the applicable statutes and
regulations (the "Merger").
E. The respective boards of directors of Greiner, URS and the
Subsidiary have authorized and approved the execution, delivery and the
performance of this Agreement and the transactions contemplated hereby, and the
board of directors of Greiner has directed that this Agreement be submitted to
the stockholders of Greiner for consideration of and vote upon the approval of
this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants contained herein, and subject to the terms
and conditions hereof, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
-1-
<PAGE> 140
ARTICLE 1.
THE MERGER
Section 1..1 Merger of the Subsidiary into Greiner. Upon the
terms and subject to the conditions set forth in this Agreement, and in
accordance with the Nevada Business Corporation Law set forth in Title 7 of the
Nevada Revised Statues (the "Nevada Law"), at the Effective Time of the Merger
(as defined in Section 1.2 below), the Subsidiary shall be merged with and into
Greiner, and the separate existence of the Subsidiary shall thereupon cease,
and Greiner shall continue its corporate existence as the surviving corporation
of the Merger under the laws of the State of Nevada under the name of Greiner
Engineering, Inc., and Greiner shall succeed to and assume all the rights and
obligations of the Subsidiary in accordance with the Nevada Law.
Section 1..2 Effective Time of the Merger. Subject to the provisions
of this Agreement, as soon as practicable after the Closing Date, the parties
shall file articles of merger, certificate of merger or other appropriate
documents (in any such case, the "Merger Documents"), executed in accordance
with the relevant provisions of the Nevada Law and shall make all other filings
or recordings required under the Nevada Law. The Merger shall become effective
at such time as the Merger Documents are duly filed with the Secretary of State
of the State of Nevada, or at such other time as the parties hereto shall agree
should be specified in the Merger Documents (the "Effective Time of the
Merger").
Section 1..3 Effects of the Merger. At the Effective Time of the
Merger:
(a) the separate corporate existence of the Subsidiary
shall cease and the Subsidiary shall be merged with and into Greiner, which
shall be the Surviving Corporation, and all of the assets of the Subsidiary
shall become the property of Greiner as the Surviving Corporation of the
Merger, subject to the liabilities of the Subsidiary as of the Effective Time
of the Merger;
(b) the Articles of Incorporation of Greiner, as in
effect immediately prior to the Effective Time of the Merger, shall be the
Articles of Incorporation of the Surviving Corporation, and may be amended
thereafter as provided by law;
(c) the by-laws of Greiner, as in effect immediately prior to
the Effective Time of the Merger, shall be the by-laws of the Surviving
Corporation; such by-laws may be amended thereafter in accordance with their
terms and as provided by law;
(d) the directors of the Subsidiary immediately prior to
the Effective Time of the Merger shall be the directors of the Surviving
Corporation, each of such directors to hold office, subject to the applicable
provisions of the Articles of Incorporation and by-laws of the Surviving
Corporation, until the next annual stockholders' meeting of the Surviving
Corporation and until their successors are elected and duly qualified; if at
the Effective Time of the Merger, any of the foregoing persons shall for any
reason be unwilling or unable to serve, the resulting vacancy shall be filled
as provided in such by-laws;
(e) the officers of Greiner immediately prior to the
Effective Time of the Merger shall be the officers of the Surviving
Corporation, each of such officers to hold office, subject to the applicable
provisions of the Articles of Incorporation and by-laws of the Surviving
Corporation, at the pleasure of the board of directors of the
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Surviving Corporation and until their successors are elected and duly
qualified; and
(f) the Surviving Corporation shall possess all the
rights, privileges, immunities, powers and purposes of each of the Constituent
Corporations; and all the property, real, personal or mixed, including causes
of action and every other asset of each of the Constituent Corporations, shall
vest in the Surviving Corporation without further act or deed. The Surviving
Corporation shall be responsible and liable for all liabilities and obligations
of each of the Constituent Corporations. No liability or obligation due or to
become due, claim or demand for any cause existing against either of the
Constituent Corporations, or any stockholder, officer or director thereof,
shall be released or impaired by the Merger. No action or proceeding, whether
civil or criminal, then pending by or against the Constituent Corporations, or
any stockholder, officer or director thereof, shall abate or be discontinued by
the Merger, but may be enforced, prosecuted, settled or compromised as if the
Merger had not occurred, or the Surviving Corporation may be substituted in
such action or special proceeding in place of the Constituent Corporations.
ARTICLE 2.
EFFECT OF MERGER ON CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
Section 2..1 Conversion of the Greiner Common Stock.
(a) Conversion; Merger Consideration. At the Effective
Time of the Merger, each share of the Greiner Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall, by
virtue of the Merger, and without any action on the part of the holder thereof,
be converted into the right to receive (i) 0.298 shares of the URS Common
Stock, and (ii) $13.50 in cash, all of which shall be payable upon the
surrender of the certificate(s) formerly representing such shares of Greiner
Common Stock. The cash and the URS Common Stock so deliverable is hereinafter
collectively referred to as the "Merger Consideration."
(b) Fractional Shares. No fractional shares of the URS
Common Stock will be issued as a result of the Merger. In lieu of the issuance
of any fractional shares of the URS Common Stock, holders of shares of the
Greiner Common Stock who would otherwise have been entitled to receive a
fraction of a share of the URS Common Stock shall be entitled to receive, from
URS, an amount of cash, without interest, equal to the closing price of the URS
Common Stock as reported on the New York Stock Exchange on the trading day
immediately preceding the Closing Date as listed in The Wall Street Journal,
multiplied by the fraction of a share of the URS Common Stock to which such
holder would otherwise have been entitled.
(c) Options. At the Effective Time of the Merger, all
options to purchase Greiner Common Stock (the "Greiner Options") issued under
the 1981 Stock Option Plan of Greiner Engineering, Inc. (the "1981 Greiner
Plan") or under the 1991 Stock Option Plan of Greiner Engineering, Inc. (the
"1991 Greiner Plan") which remain outstanding at that time (whether or not
previously exercisable or vested) shall, by virtue of the Merger, and without
any further action on the part of Greiner or any holder of said Greiner
Options, be cancelled. If, at the Effective Time of the Merger, the Exercise
Price per share with respect to any Greiner Option (whether or not previously
exercisable or vested) so cancelled (the "Exercise Price") is less than the sum
of (x) $13.50 per share, plus (y) 0.298 multiplied by the closing price per
share of the URS Common Stock as reported on the New York Stock Exchange on the
trading day immediately
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preceding the Closing Date as listed in The Wall Street Journal (the "Merger
Value"), then the holder of such Greiner Option shall be paid as soon as
practicable following the Closing Date cash in an amount per each share of
Greiner Common Stock subject to such option equal to the excess, if any, of the
Merger Value over the Exercise Price. Notwithstanding anything to the contrary
in this Section 2.1(c), pursuant to the terms of Section 6(b) of the 1981
Greiner Plan and Section 6(b) of the 1991 Greiner Plan, promptly following
execution of this Agreement, Greiner shall give each holder of the Greiner
Options (whether or not previously exercisable or vested) written notice that
such Greiner Options will be cancelled in connection with the Merger and, shall
permit said holders to exercise their Greiner Options and purchase Greiner
Common Stock pursuant to the terms of the 1981 Greiner Plan and/or the 1991
Greiner Plan, as the case may be.
(d) Surrender of Certificates and Receipt of
Consideration.
(1) Appointment of Exchange Agent; Exchange Fund.
As of the Effective Time of the Merger, URS shall deposit, or shall cause to be
deposited with an exchange agent selected by URS and reasonably satisfactory to
Greiner (the "Exchange Agent"), for the benefit of holders of the Greiner
Common Stock, for exchange in accordance with this Article 2, (i) certificates
representing the number of shares of the URS Common Stock issuable as part of
the Merger Consideration, and (ii) cash in an amount equal to the aggregate
cash component of the Merger Consideration, and (iii) cash to be paid in lieu
of the issuance of fractional shares (such cash and certificates for the shares
of URS Common Stock are hereinafter referred to collectively as the "Exchange
Fund").
(2) Notice to Greiner Stockholders. As soon as
reasonably practicable after the Effective Time of the Merger, URS shall cause
the Exchange Agent to mail to each holder of record of a certificate or
certificates representing the Greiner Common Stock (A) a letter of transmittal
which shall specify that delivery shall be effected, and risk of loss and title
to the certificates for shares of the Greiner Common Stock shall pass, only
upon delivery of the certificates for the shares of the Greiner Common Stock to
the Exchange Agent, and shall be in such form and have such other provisions as
URS may reasonably specify, and (B) instructions for use in effecting the
surrender of the certificates for the shares of the Greiner Common Stock in
exchange for the Merger Consideration.
(3) Surrender of Greiner Stock Certificates.
Upon surrender of a certificate for shares of the Greiner Common Stock (a
"Greiner Stock Certificate") for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by URS, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, the holder thereof shall be entitled to receive in exchange therefor
the number of whole shares of the URS Common Stock to which the holder of the
Greiner Common Stock is entitled pursuant to this Article 2 plus that portion
of the Exchange Fund which such holder has the right to receive pursuant to the
provisions of this Section 2.1, after giving effect to any required withholding
tax, and the Greiner Stock Certificate for the shares of the Greiner Common
Stock so surrendered shall forthwith be cancelled.
(4) Limitations. Notwithstanding any other
provision of this Agreement, until holders of Greiner Stock Certificates
representing shares of the Greiner Common Stock have surrendered them for
exchange as provided herein, (1) no dividends or other distributions shall be
paid with respect to any shares represented by such Certificates and no payment
for fractional shares shall be made, and (2) without regard to when such
Greiner Stock Certificates are surrendered for exchange as provided herein,
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no interest shall be paid on any dividends or other distributions or any
payment for fractional shares. Upon surrender of a Greiner Stock Certificate,
there shall be paid to the holder of such Greiner Stock Certificate the amount
of any dividends or other distributions which theretofore became payable, but
which were not paid by reason of the preceding sentence, with respect to the
number of whole shares of URS Common Stock represented by the Greiner Stock
Certificate or Certificates issued upon such surrender. If any certificate for
URS Common Stock is to be issued in a name other than in which the Greiner
Stock Certificate surrendered in exchange therefore is registered, it shall be
a condition of such exchange that the person requesting such exchange pay any
transfer or other taxes required by reason of the issuance of certificates for
such shares of URS Common Stock in a name other than that of the registered
holder of the Greiner Stock Certificate surrendered, or establish to the
satisfaction of Greiner that such tax has been paid or is not applicable.
Certificates of URS Common Stock issued to holders of Greiner Common Stock
issued under a Greiner restricted stock plan shall bear legends substantially
similar to the legends presently on the Greiner Common Stock Certificates and
as required by applicable law.
(5) Payment. The Exchange Agent shall within 15
business days of receipt of such Greiner Stock Certificate pay the holder of
such Certificate, in immediately available funds, the amount of cash into which
the shares theretofore represented by such Certificate shall have been
converted pursuant to Section 2.1, and the Greiner Stock Certificate so
surrendered shall be cancelled. In the event of a transfer of ownership of
shares of Greiner Common Stock that is not registered in the transfer records
of Greiner, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of such
Greiner Stock Certificate or establish to the satisfaction of the Greiner that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.1, each Greiner Stock Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the right to receive
upon such surrender the amount of the Merger Consideration, without interest,
into which the shares theretofore represented by such Greiner Stock Certificate
shall be converted pursuant to Section 2.1. No interest will be paid or will
accrue on the cash payable upon the surrender of any Greiner Stock Certificate.
(e) Cancellation of the Greiner Common Stock. At the
Effective Time of the Merger, all of the authorized and outstanding shares of
the Greiner Common Stock shall be cancelled and cease to represent any interest
in Greiner and such holders shall cease to have any rights of a stockholder of
Greiner. From and after the Effective Time of the Merger, the holders of
shares of the Greiner Common Stock outstanding immediately prior to the
Effective Time of the Merger as such holders shall be entitled to receive only
the Merger Consideration. From the Effective Time of the Merger, the holders
of the shares of the Greiner Common Stock which shall be converted into the URS
Common Stock pursuant to Section 2.1(a) shall have all of the rights of holders
of the number of shares of the URS Common Stock into which such Greiner Common
Stock has been converted.
Section 2..2 Conversion of the Subsidiary Common Stock. At the
Effective Time of the Merger, each share of the Subsidiary Common Stock
outstanding immediately prior to the Effective Time of the Merger shall be
converted into one (1) share of a newly-created class of $1.00 par value common
stock of the Surviving Corporation.
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Section 2..3 Cancellation of Treasury Shares. Any share of the
Greiner Common Stock held in the treasury of Greiner at the Effective Time of
the Merger shall be cancelled and retired at the Effective Time of the Merger
and no shares shall be issuable with respect thereto.
Section 2..4 Withholding Tax. The right of any shareholder to
receive the Merger Consideration shall be subject to and reduced by the amount
of any required tax withholding obligation.
ARTICLE 3.
CLOSING
Section 3..1 Closing; Closing Date. Unless this Merger Agreement
shall have been terminated and the Merger abandoned pursuant to the provisions
of Article 9, a closing ("Closing") shall take place at the offices of Messrs.
Sheppard, Mullin, Richter & Hampton, Four Embarcadero Center, Suite 1700, San
Francisco, CA 94111, at 10:00 A.M., California time, on the business day
following approval of the Greiner stockholders as contemplated by Section
6.2.2, or at such other time and place as may be agreed upon in writing by the
parties hereto (the "Closing Date").
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF GREINER
Except as otherwise disclosed to URS in a letter delivered to it prior
to the execution hereof (which letter shall contain appropriate references to
identify the representations and warranties herein to which the information in
such letter relates) (the "Greiner Disclosure Letter"), Greiner represents and
warrants to URS and the Subsidiary as follows:
Section 4..1 Organization. Each of Greiner and the Greiner
Subsidiaries (as hereinafter defined) is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own,
lease, and operate its properties, and to carry on its business as now being
conducted, except where the failure to be so organized, existing, and in good
standing or to have such power and authority would not have a Greiner Material
Adverse Effect (as defined below). Each of Greiner and the Greiner
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased, or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except in any such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not have a Greiner Material Adverse Effect
(defined below) on the Business Condition (defined below) of Greiner. For
purposes of this Agreement: (a) "Greiner Material Adverse Effect" means, when
used in connection with Greiner, any change or effect that is materially
adverse to the Business Condition of Greiner, other than changes or effects
resulting from (i) changes attributable to conditions affecting the engineering
business generally, (ii) changes in general economic conditions, or (iii)
changes attributable to the announcement or pendency of the Merger; and (b)
"Business Condition" with respect to an entity shall mean the business,
financial condition, results of operations, or assets (without giving effect to
the consequences of the transactions contemplated by this Agreement) of such
entity and its Subsidiaries taken as a whole.
Section 4..2 Capitalization. The authorized capital stock of Greiner
consists of 20,000,000 shares of Greiner Common Stock, par value $0.50 per
share, and 1,000,000 shares of preferred stock, par value $1.00 per share (the
"Greiner Preferred Stock"). As of the date hereof, (i)
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4,704,642 shares of Greiner Common Stock are issued and outstanding, (ii)
options to acquire 377,650 shares of Greiner Common Stock are outstanding under
all stock option plans and agreements of Greiner, (iii) 737,300 shares of
Greiner Common Stock (including shares of Greiner Common Stock issuable upon
exercise of the options identified in clause (ii) above) are reserved for
issuance pursuant to all employee plans of Greiner, and (iv) there are no
shares of Greiner Preferred Stock outstanding. All of the issued and
outstanding shares of Greiner Common Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. Except as set forth above or as
specified in Section 4.2 of the Greiner Disclosure Letter, as of the date of
this Agreement there are no shares of capital stock of Greiner issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating Greiner to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock or securities. Except as provided in this Agreement or as set
forth in Section 4.2 of the Greiner Disclosure Letter, after the Effective Time
of the Merger, Greiner will have no obligation to issue, transfer or sell any
shares of its capital stock pursuant to any employee benefit plan or otherwise.
Section 4..3 Subsidiaries. Section 4.3 of the Greiner Disclosure
Letter identifies each corporation or other entity of which Greiner, directly
or indirectly, owns or controls voting securities or other interests which are
sufficient to elect a majority of the board of directors or others performing
similar functions of such corporation or other entity (a "Greiner Subsidiary")
and sets forth for each Greiner Subsidiary: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock; and (iii) the
number of issued and outstanding shares of capital stock. Greiner owns
directly or indirectly each of the outstanding shares of capital stock (or
other ownership interests having by their terms ordinary voting power to elect
a majority of directors or others performing similar functions with respect to
such Greiner Subsidiary) of each of the Greiner Subsidiaries. Each of the
outstanding shares of capital stock of each of the Greiner Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable. Each of the
outstanding shares of capital stock of each Greiner Subsidiary is owned,
directly or indirectly, by Greiner, free and clear of all liens, pledges,
security interests, claims, or other encumbrances of any nature whatsoever
("Liens"). There are not now, and at Closing there will not be, (a) any issued
or outstanding securities convertible into or exchangeable for, or any options,
warrants, calls, subscriptions or other rights (preemptive or otherwise) to
acquire, any shares of capital stock of any of the Greiner Subsidiaries; or
(b) any agreements or contractual commitments obligating Greiner, or
restricting Greiner's rights, to transfer, sell, or vote, the capital stock of
the Greiner Subsidiaries owned by it, directly or indirectly.
Section 4..4 Material Investments. Except as set forth in Section
4.4 of the Greiner Disclosure Letter, Greiner does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation (other than a Greiner Subsidiary), partnership, joint venture or
other business association or entity that is material to Greiner. With respect
to those entities indicated on Section 4.4 of the Greiner Disclosure Letter,
Greiner has heretofore delivered to URS financial statements (audited to the
extent available) and interim unaudited financial statements of each of such
entities (through the most recently concluded fiscal quarter for each of such
persons) and, to the best knowledge of Greiner, such financial statements
fairly present, in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated in the notes
thereto or in Section 4.4 of the Greiner Disclosure Letter), the financial
condition
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of each thereof as at and the results of operations for the periods so
indicated (subject to normal year-end adjustments in the case of the interim
unaudited financial statements), and Greiner's disclosures with respect to its
investment in each such entities otherwise included in the Greiner SEC Reports
(as defined below) do not contain any untrue statements of material fact or
omit to state any material fact required to be stated therein or which are
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as set forth
in Section 4.4 of the Greiner Disclosure Letter, Greiner (or, as indicated
thereon, a Greiner Subsidiary) has good and marketable title to the securities
evidencing its investment in the entities indicated in Section 4.4 of the
Greiner Disclosure Letter, which have been validly issued and are fully paid
and nonassessable and are held by Greiner or a Greiner Subsidiary free and
clear of any Lien, restraint on alienation, or any other restriction with
respect of the transferability or assignability thereof (other than
restrictions on transfer imposed by Federal or state securities laws).
Section 4..5 Authority Relative to this Agreement. Greiner has all
requisite corporate power and authority to enter into this Agreement and
subject, in the case of this Agreement, to approval of this Agreement by the
stockholders of Greiner and to the consents and approvals set forth in Section
4.6 below, to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Greiner and the consummation by
Greiner of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Greiner, including the unanimous
approval of the Board of Directors of Greiner, and no other corporate
proceedings on the part of Greiner are necessary to authorize this Agreement or
the transactions contemplated hereby (except for approval by the stockholders
of Greiner). This Agreement has been duly and validly executed and delivered
by Greiner and constitutes a valid and binding agreement of Greiner,
enforceable against Greiner in accordance with its terms, except that such
enforceability may be subject to (i) bankruptcy, insolvency, reorganization or
other similar laws relating to enforcement of creditors' rights generally, and
(ii) general equitable principles.
Section 4..6 Consents and Approvals; No Violations. Except for
applicable requirements of the Hart-Scott- Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (the HSR Act, Securities Act and Exchange Act, collectively,
the "Governmental Requirements"), state or foreign laws relating to takeovers,
if applicable, state securities or blue sky laws, state and local laws and
regulations relating to licensing, and the filing of the Documents of Merger as
required by the Nevada Law, no filing with, and no permit, authorization,
consent or approval of, any court or tribunal or administrative, governmental
or regulatory body, agency or authority ("Government Entity") is necessary for
the execution, delivery and performance of this Agreement by Greiner or the
transactions contemplated by this Agreement. Neither the execution, delivery
nor performance of this Agreement by Greiner, nor the consummation by Greiner
of the transactions contemplated hereby, nor compliance by Greiner with any of
the provisions hereof, will (i) conflict with or result in any breach of any
provisions of the Articles of Incorporation or By-Laws of Greiner or the
Articles or Certificate of Incorporation, as the case may be, or By-Laws of any
of the Greiner Subsidiaries, (ii) except as set forth in Section 4.6(ii) of the
Greiner Disclosure Letter, result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation, acceleration, vesting, payment,
exercise, suspension or revocation) under, any of the terms, conditions or
provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, license, contract, agreement, plan or other
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instrument or obligation to which Greiner or any of the Greiner Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound or affected, (iii) except as set forth in Section 4.6(iii) of the Greiner
Disclosure Letter, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Greiner, any Greiner Subsidiary or any of their
properties or assets, (iv) except as set forth in Schedule 4.6(iv) of the
Greiner Disclosure Letter, result in the creation or imposition of any Lien on
any asset of Greiner or any Greiner Subsidiary, or (v) except as set forth in
Section 4.6(v) of the Greiner Disclosure Letter, cause the suspension or
revocation of any certificates of need, accreditation, registrations, licenses,
permits and other consents or approvals of governmental agencies or
accreditation organizations, except in the case of clauses (ii), (iii), (iv)
and (v) for violations, breaches, defaults, terminations, cancellations,
accelerations, creations, impositions, suspensions or revocations which would
not individually or in the aggregate have a Greiner Material Adverse Effect.
Section 4..7 Greiner SEC Reports and Financial Statements. Greiner
has delivered or made available to URS true and complete copies of each
registration statement, report and proxy or information statement, including,
without limitation, its Annual Reports to Stockholders incorporated in material
part by reference in certain of such reports, in the form (including exhibits
and any amendments thereto) required to be filed with the Securities and
Exchange Commission ("SEC") since January 1, 1992 (collectively, the "Greiner
SEC Reports"). Except as set forth in Section 4.7 of the Greiner Disclosure
Letter, as of the respective dates such Greiner SEC Reports were filed or, if
any such Greiner SEC Reports were amended, as of the date such amendment was
filed, each of the Greiner SEC Reports (i) complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act,
and the rules and regulations promulgated thereunder, and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the audited consolidated financial statements and
unaudited consolidated interim financial statements of Greiner (including any
related notes and schedules) included (or incorporated by reference) in its
Annual Reports on Form 10-K for each of the three fiscal years ended December
31, 1992, 1993 and 1994 and Quarterly Reports on Form 10-Q for all interim
periods subsequent thereto (the "Greiner Financial Statements") fairly present,
in conformity with GAAP applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of Greiner
and the Greiner Subsidiaries as of its date and the consolidated results of
operations and cash flows for the period then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements). There
has been no change in Greiner's accounting policies or the methods of making
accounting estimates or changes in estimates that are material to the Greiner
Financial Statements, except as described in the notes thereto.
Section 4..8 Information Supplied. None of the information supplied
or to be supplied by Greiner or the Greiner Subsidiaries, auditors, attorneys,
financial advisors, or other consultants or advisors for inclusion in (a) the
registration statement on Form S-4, and any amendment thereto, to be filed
under Securities Act with the SEC by URS in connection with the issuance of the
URS Common Stock in or as a result of the Merger (the "Form S-4"), or (b) the
proxy statement and any amendment or supplement thereto to be distributed in
connection with Greiner's meeting of stockholders to vote upon this Agreement
and the transactions contemplated hereby (the "Proxy Statement" and, together
with the Form S-4, the "Proxy Statement/Form S-4"), will: (i) in the case of
the Proxy Statement and any amendment or supplement thereto, (1) at the time of
the mailing of the Proxy Statement and any amendments or supplements thereto,
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and (2) at the time of Greiner's meeting of stockholders, and (ii) in the case
of the Form S-4, as amended or supplemented, (x) at the time it becomes
effective, (y) at the time of any post-effective amendment thereto, and (z) at
the time of the meeting of the stockholders of Greiner, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Greiner
agrees to correct as promptly as practicable any such information provided by
it that shall have become false or misleading in any material respect and to
take all steps necessary to file with the SEC and have declared effective or
cleared by the SEC any amendment or supplement to the Proxy Statement so as to
correct the same and to cause the Proxy Statement as so corrected to be
disseminated to Greiner's stockholders to the extent required by applicable
law. The Proxy Statement/Form S-4 shall comply as to form in all material
respects with the provisions of all applicable laws, including the provisions
of the Exchange Act and the rules and regulations of the SEC thereunder, except
that no representation is made by Greiner with respect to information supplied
by URS specifically for inclusion therein.
Section 4..9 Absence of Material Adverse and Other Changes. Except
as contemplated by this Agreement, and except as set forth in Section 4.9 of
the Greiner Disclosure Letter, since September 30, 1995, Greiner and the
Greiner Subsidiaries have conducted their business in the ordinary course,
consistent with past practices, and there has not been: (a) any event or
occurrence that has resulted in a Greiner Material Adverse Effect, or any
development or combination of developments of which Greiner has knowledge that
is reasonably likely, in Greiner's commercially reasonable judgment, to result
in a Greiner Material Adverse Effect, (b) any declaration, setting aside or
payment of any dividend or other capital distributions in respect of any of its
capital stock, except for regular cash dividends to holders of Greiner Common
Stock in amounts and at times consistent with prior practice, or any redemption
or repurchase or other acquisition of any shares of its capital stock, (c) any
increase in the regular compensation of any of the officers or employees of
Greiner or the Greiner Subsidiaries, except such increases as have been granted
in the ordinary course of business in accordance with its customary practices
(which shall include normal periodic performance reviews, promotions and
related compensation increases), (d) any incurrence, assumption or guarantee by
Greiner or any of the Greiner Subsidiaries of any indebtedness for borrowed
money other than in the ordinary course of business consistent with past
practices, (e) any transaction or commitment made, or any contract or agreement
entered into, by Greiner or any of the Greiner Subsidiaries (including the
acquisition or disposition of any assets) or any relinquishment by Greiner or
any of the Greiner Subsidiaries of any contract or other right, in either case,
material to Greiner's business taken as a whole, other than transactions and
commitments in the ordinary course of business consistent with past practices
and those contemplated by this Agreement, (f) any change in any method of
accounting or accounting practice by Greiner or any of the Greiner
Subsidiaries, except for any such change after the date hereof required by
reason of a mandatory concurrent change in GAAP, (g) any loss or damage to the
properties or assets of Greiner or the Greiner Subsidiaries which has resulted
or is reasonably likely to result in a Greiner Material Adverse Effect, or (h)
any agreement or any commitment to take any of the actions described in this
Section 4.9.
Section 4..10 Litigation. Except for litigation disclosed in the
notes to the financial statements included in the Greiner SEC Reports or as set
forth in Section 4.10 of the Greiner Disclosure Letter, there is no suit,
action or proceeding (whether at law or equity, before or by any Federal, state
or foreign court, tribunal, commission, board, agency or instrumentality, or
before any arbitrator) pending or, to the best knowledge of Greiner, threatened
against or affecting Greiner or any of the
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Greiner Subsidiaries, the outcome of which, in the reasonable judgment of
Greiner, is likely individually or in the aggregate to have a Greiner Material
Adverse Effect, or which challenges the validity of this Agreement or seeks to
prevent, enjoin, materially alter or materially delay the transactions
contemplated hereby, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Greiner or any of the Greiner
Subsidiaries having, or which, insofar as can reasonably be foreseen, in the
future may have, any such effect.
Section 4..11 Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in the Greiner
Financial Statements (or reflected in the notes thereto) or which were incurred
after September 30, 1995 in the ordinary course of business and consistent with
past practices or in connection with the transactions contemplated by this
Agreement, Greiner and the Greiner Subsidiaries do not have any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet (or reflected
in the notes thereto).
Section 4..12 No Default. Except as set forth in Section 4.12 of the
Greiner Disclosure Letter, neither Greiner nor any of the Greiner Subsidiaries
is in violation or breach of, or default under (and no event has occurred which
with notice or the lapse of time or both would constitute a violation or breach
of, or default under) any term, condition or provision of (a) its Articles or
Certificate of Incorporation, as the case may be, or By-Laws, (b) any note,
bond, mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan, lease, commitment or other instrument or obligation to which
Greiner or any of the Greiner Subsidiaries is a party or by which any of them
or any of their properties or assets may be bound or affected, (c) any order,
writ, injunction, decree, statute, rule or regulation applicable to Greiner or
any of the Greiner Subsidiaries or any of their properties or assets, or (d)
any certificate of need, accreditation, registration, license, permit and other
consent or approval of governmental agencies or accreditation organization,
except in the case of clauses (b), (c) and (d) above for violations, breaches
or defaults which would not individually or in the aggregate have a Greiner
Material Adverse Effect.
Section 4..13 Properties, Liens, Etc. Greiner and the Greiner
Subsidiaries own all of their tangible and intangible property, real and
personal, free and clear of any Liens, except for statutory mechanics' and
materialmens' liens, liens for current taxes not yet delinquent, and liens and
encumbrances which do not confer upon the secured parties rights to property
which, if exercised upon default, would have a Greiner Material Adverse Effect.
All plants, structures and material equipment owned or leased by Greiner or the
Greiner Subsidiaries and used in the operation of their business are in
satisfactory condition and repair for the requirements of such business as
presently conducted. Neither Greiner nor any of the Greiner Subsidiaries have
received notice, or have knowledge of, any pending, threatened or contemplated
condemnation proceeding, or of any sale or other disposition in lieu of
condemnation, affecting any real property owned or leased by Greiner or any of
the Greiner Subsidiaries.
Section 4..14 Taxes. Except as set forth in Section 4.14 of the
Greiner Disclosure Letter:
(a) Greiner and each of the Greiner Subsidiaries has (i)
timely filed (or has had timely filed on its behalf) or will cause to be timely
filed all material Tax Returns (as defined below) required by applicable law to
be filed by any of them for tax years ended prior to the date of this Agreement
and all such Tax Returns and amendments thereto are or will be true, complete,
and correct in all material respects, (ii) has
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paid (or has had paid on its behalf) all Taxes due or has properly accrued or
reserved for all such Taxes for such periods, and (iii) has accrued for all
Taxes for periods subsequent to the periods covered by such Tax Returns.
(b) There are no material liens for Taxes upon the assets
of Greiner or any of the Greiner Subsidiaries, except liens for Taxes not yet
due.
(c) There are no material deficiencies or adjustments for
Taxes that have been proposed or assessed by any Tax Authority (as defined
below) against Greiner or any of the Greiner Subsidiaries and which remain
unpaid.
(d) The Federal income tax returns of Greiner and each of
the Greiner Subsidiaries have been examined by the Internal Revenue Service for
all past taxable years and periods to and including the years set forth in
Section 4.14 of the Greiner Disclosure Letter, and all material deficiencies
finally assessed as a result of such examinations have been paid. Section 4.14
of the Greiner Disclosure Letter sets forth (i) all taxable years and periods
of Greiner and the Greiner Subsidiaries that are presently under Audit (as
defined below) or in respect of which Greiner or any of the Greiner
Subsidiaries has been notified in writing by the relevant Tax Authority that it
will be Audited, (ii) the taxable years of Greiner and the Greiner Subsidiaries
in respect of which the statutory period of limitations for the assessment of
Federal, state and local income or franchise Taxes has expired, and (iii) all
waivers extending the statutory period of limitation applicable to any material
Tax Return filed by Greiner or any of the Greiner Subsidiaries for any taxable
period ending prior to the date of this Agreement.
(e) Prior to the date hereof, Greiner and the Greiner
Subsidiaries have disclosed all material Tax sharing, Tax indemnity, or similar
agreements to which Greiner or any of the Greiner Subsidiaries is a party to,
is bound by, or has any obligation or liability for Taxes.
(f) As used in this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes, (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding), including any
interest, additions to tax, or penalties applicable thereto, (iii) "Tax
Authority" shall mean the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of any Taxes,
and (iv) "Tax Returns" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
Section 4..15 Benefit Plans.
(a) Section 4.15 of the Greiner Disclosure Letter lists each
Greiner Plan. With respect to each of the Greiner Plans, Greiner has
heretofore delivered or made available to URS true and complete copies of each
of the following documents: (i) a copy of each written plan (including all
amendments thereto) or a description of each unwritten plan; (ii) a copy of the
annual report, if required under ERISA, with respect to each Greiner Plan for
the last three years; (iii) a copy of the actuarial report, if required under
ERISA, with respect to each Greiner Plan for the last three years and any
interim actuarial reports or calculations provided by the actuary since the
date of the most recent annual actuarial report; (iv) the most recent summary
plan description and all succeeding summaries
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of material modifications for each Greiner Plan for which a summary plan
description is required; (v) if the Greiner Plan is funded through a trust or
any third party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements thereof;
and (vi) the most recent determination letter issued with respect to each
Qualified Greiner Plan. Each of the Greiner Plans has been operated and
administered in all material respects in accordance with their terms and with
all applicable laws, including Federal and state securities laws. Each Greiner
Plan intended to be qualified under Section 401(a) of the Code is so qualified
and has received a favorable determination letter from the Internal Revenue
Service with respect to such qualification, its related trust has been
determined to be exempt from taxation under Section 501(a) of the Code and
nothing has occurred since the date of such letter that would adversely affect
such qualification or exemption.
(b) Section 4.15 of the Greiner Disclosure Letter lists each
Greiner Benefit Arrangement. With respect to each of the Greiner Benefit
Arrangements, Greiner has heretofore delivered to or made available to URS true
and complete copies of each written plan (including all amendments thereto) or
a description of each unwritten plan. Each Greiner Benefit Arrangement has
been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules, and
regulations, including, without limitation, ERISA and the Code, that are
applicable to such Greiner Benefit Arrangement, including Federal and state
securities laws.
(c) Neither Greiner nor the Greiner Subsidiaries nor any of their
ERISA Affiliates has been involved in any transaction, taken any action, or
failed to take any action that could cause Greiner or the Greiner Subsidiaries
to be subject to any liability that would likely cause a Greiner Material
Adverse Effect. No fiduciary of any Greiner Plan or Greiner Benefit
Arrangement has taken any action that would result in such fiduciary being
liable for the payment of damages under ERISA Section 409 and that would result
in any material liability for Greiner, the Greiner Subsidiaries or URS.
(d) Except with respect to contributions to Greiner Plans under
Section 412 that are current and not past due, neither Greiner nor the Greiner
Subsidiaries has incurred (directly or indirectly) prior to the Closing any
current obligation to pay (i) any liability under Title IV of ERISA or (ii) any
liability under Section 412 of the Code that remains unpaid at the date of
signing of this Agreement. There is no "unfunded pension liability," i.e.,
excess of the value of benefits earned to date over assets, with respect to
Employee Benefit Plans subject to Title IV of ERISA. All premiums owed to the
Pension Benefit Guaranty Corporation with respect to any Employee Benefit Plan
subject to Title IV have been paid.
(e) None of Greiner, the Greiner Subsidiaries, or their ERISA
Affiliates is making or accruing an obligation to make contributions or has, on
or after January 1, 1980, made or accrued an obligation to make contributions
to a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
(f) Full payment has been made of all amounts that Greiner and the
Greiner Subsidiaries are required to pay as contributions to the Employee
Benefit Plans as of the last day of the most recent fiscal year of each of the
plans ended prior to the date of this Agreement.
(g) No Greiner Plan or Greiner Benefit Arrangement provides or
ever provided benefits, including without limitation, death or medical benefits
(whether or not insured and whether or not funded), with respect
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to current or former employees of Greiner and the Greiner Subsidiaries beyond
their retirement or other termination of service (other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under
any "employee pension benefit plan," as that term is defined in Section 3(2) of
ERISA, (iii) deferred compensation benefits accrued as liabilities on the books
of Greiner and disclosed heretofore to URS, or (iv) benefits the full cost of
which are borne by the current or former employee (or his or her beneficiary)).
The consummation of the transactions contemplated hereby will not (i) entitle
any current or former employee of Greiner or the Greiner Subsidiaries to
severance pay, unemployment compensation or any similar payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of any
compensation due to any such employee or former employee.
(h) With respect to Greiner Plans and Greiner Benefit
Arrangements, all reports, forms, and other documents required to be filed with
any governmental authority or distributed to plan participants (including,
without limitation, summary plan descriptions, Forms 5500, and summary annual
reports) have been timely filed (if applicable) and distributed (if applicable)
and were accurate.
(i) There are no pending, threatened, or anticipated claims (other
than routine claims for benefits) by, on behalf of, or against any Greiner
Plans or Greiner Benefit Arrangements. No Greiner Plans or Greiner Benefit
Arrangements are presently under audit or examination (nor has notice been
received of a potential audit) by the Internal Revenue Service, the Department
of Labor, or PBGC, nor are there any matters pending with respect to any
Greiner Plan with the Internal Revenue Service under its Voluntary Compliance
Resolution program, its Closing Agreement Program, or other similar programs.
(j) No "prohibited transaction," as such term is defined in Code
Section 4975 and ERISA Section 406, has occurred with respect to any Greiner
Plan or Greiner Benefit Arrangement that could subject such plan, any fiduciary
thereof, Greiner, the Greiner Subsidiaries or URS to a material penalty for
such prohibited transaction imposed by ERISA Section 502 or a material tax
imposed by Code Section 4975.
(k) Any bonding required by applicable provisions of ERISA with
respect to any Greiner Plan or Greiner Benefit Arrangement has been obtained
and is in full force and effect.
(l) For purposes of this Section 4.15:
(1) "Greiner Benefit Arrangement" means each
employment, severance, or other similar contract, arrangement, or policy and
each plan or arrangement (written or oral, formal or informal) providing for
insurance coverage (including any self-insured arrangements), cafeteria
benefits under Section 125 of the Code, fringe benefits (including but not
limited to paid holidays, personal leave, employee discount, educational
benefit, or similar programs), workers' benefits, vacation benefits, severance
benefits, disability benefits, death benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock purchase, phantom
stock, stock appreciation or other forms of incentive compensation or
postretirement insurance or health benefits, compensation or benefits that (i)
is not a Greiner Plan, (ii) is or has been entered into, maintained, or
contributed to by Greiner or its ERISA Affiliates, and (iii) covers, or within
the last five years covered and has further or continuing obligations, any
employee of Greiner or any Greiner Subsidiary.
(2) "Greiner Plan" means any Employee Benefit
Plan or "multiemployer plan" as defined in Section 4001(a)(3) of ERISA
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(a) maintained or contributed to by or on behalf of Greiner or any Greiner
Subsidiary, whether currently or within the six years prior to the Closing
Date, or (b) in which any employee of Greiner or any Greiner Subsidiary has
participated, as an employee of Greiner or any Greiner Subsidiary, within the
six years prior to the Closing Date, or under which any such employee has
accrued and remains entitled to any benefit.
(3) "Employee Benefit Plan" means any deferred
compensation, retirement, severance, health, or other plan or program
constituting an "employee benefit plan" as defined in Section 3(3) of ERISA
maintained or previously maintained for current or former employees of Greiner
or the Greiner Subsidiaries, or any ERISA Affiliate of Greiner or the Greiner
Subsidiaries or in which any such employees participate or participated, other
than a Multiemployer Plan.
(4) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and all regulations and published
interpretations promulgated thereunder, as in effect from time to time.
(5) "ERISA Affiliate" means each person (as
defined in Section 3(9) of ERISA) that, together with Greiner or a Greiner
Subsidiary, would be treated as a single employer under Section 4001(b) of
ERISA or that would be deemed to be a member of the same "controlled group"
within the meaning of Section 414(b), (c), (m), and (o) of the Code (provided,
however, that when the subject of the provision is a Multiemployer Plan only
subsections (b) and (c) of Section 414 shall be taken into account).
Section 4..16 Employment Matters; Labor Relations.
(a) Section 4.16 of the Greiner Disclosure Letter sets
forth a true and complete list of the names, classifications, dates of hire and
base compensation for the year ending December 31, 1995, of each employee of
Greiner and the Greiner Subsidiaries whose base compensation exceeds $75,000
per annum.
(b) With respect to current or former employees of
Greiner and the Greiner Subsidiaries,
(i) Each of Greiner and the Greiner Subsidiaries
is in substantial compliance with all applicable laws respecting employment and
employment practices, and occupational safety and health, except for such
violations, if any, that in the aggregate have not had and would not have a
Greiner Material Adverse Effect. There is no charge or compliance action
pending or threatened against or with respect to Greiner or any of the Greiner
Subsidiaries before the Equal Employment Opportunity Commission or any state,
local, or foreign agency responsible for the prevention of unlawful employment
practices as to which there is a reasonable likelihood of adverse
determination. None of Greiner nor any of the Greiner Subsidiaries has
received notice of the intent of any Federal, state, local or foreign agency
responsible for the enforcement of labor or employment laws to conduct an
investigation, and, to Greiner's knowledge, no such investigation is in
progress.
(ii) The employees of Greiner and the Greiner
Subsidiaries are not represented by any labor union, nor are there any
collective bargaining agreements or any other types of agreements with labor
unions otherwise in effect with respect to such employees, nor are any
collective bargaining agreements currently being negotiated, and, to Greiner's
knowledge, no union organizational campaign is in progress. None of Greiner or
the Greiner Subsidiaries is engaged in any unfair labor practices as defined in
the National Labor Relations Act or other applicable law, ordinance, or
regulation. There is no unfair labor
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practice charge or complaint against any of Greiner or the Greiner Subsidiaries
pending or, to Greiner's knowledge, threatened before the National Labor
Relations Board. There is no labor strike, lockout, slow-down or work stoppage
pending or threatened against Greiner or any of the Greiner Subsidiaries. None
of Greiner and the Greiner Subsidiaries has experienced any significant work
stoppage or been party to any proceedings before the National Labor Relations
Board for the past three years.
Section 4..17 Intellectual Property.
(a) Except as set forth in Section 4.17 of the Greiner
Disclosure Letter, and except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy), individually
and in the aggregate, would not have a Greiner Material Adverse Effect:
(i) Greiner and the Greiner Subsidiaries own, or
are licensed or otherwise have the right to use (in each case, clear of any
lien or encumbrance of any kind) all Intellectual Property (as defined below)
that in any material respect is used or proposed to be used in the business of
Greiner and the Greiner Subsidiaries.
(ii) No claims are pending, or to the knowledge of
Greiner, threatened that Greiner or any of the Greiner Subsidiaries is
infringing on or otherwise violating the rights of any person with regard to
any Intellectual Property owned by and/or licensed to Greiner or the Greiner
Subsidiaries.
(iii) To the knowledge of Greiner, no person is
infringing on or otherwise violating any right of Greiner or any Greiner
Subsidiary with respect to any Intellectual Property owned by and/or licensed
to Greiner or the Greiner Subsidiaries, provided, that the foregoing
representation is qualified to the extent of publicly known problems of general
applicability with respect to software piracy and copyright protection.
(iv) None of the former or current members of
management or key personnel of Greiner or any Greiner Subsidiary, including all
former and current employees, agents, consultants and contractors who have
contributed to or participated in the conception and development of designs,
computer software or other Intellectual Property of Greiner or the Greiner
Subsidiaries, has asserted in writing any claim against Greiner or any of the
Greiner Subsidiaries in connection with the involvement of such persons in the
conception and development of any design, computer software or other
Intellectual Property, and no such claim, to the knowledge of Greiner, has been
threatened.
(v) The execution and delivery of this Agreement,
compliance with its terms and the consummation of the transactions contemplated
hereby do not and will not conflict with or result in any violation or default
(with or without notice or the lapse of time) or give rise to any right,
license or encumbrance relating to the Intellectual Property, or any right of
termination, cancellation, or acceleration of any material Intellectual
Property right or obligation.
(b) For purposes of this Agreement, "Intellectual
Property" means (a) trademarks (registered on unregistered), service marks,
brand names, certification marks, trade dress, assumed names, trade names and
other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of
any such registration or application; (b) inventions, discoveries and ideas,
whether patented, patentable or not
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in any jurisdiction; (c) nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; (d) writings and other works, whether copyrighted,
copyrightable or not in any jurisdiction; (e) registration or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; (f) any similar intellectual property or proprietary rights and
computer programs and software (including source code, object code and data);
(g) licenses, immunities, covenants not to sue and the like relating to the
foregoing; and (h) any claims or causes of action arising out of or related to
any infringement or misappropriation of any of the foregoing.
(c) Except for the name "Greiner" and the Greiner logo,
there are no (i) material domestic and foreign registered trademarks,
registered copyrights and patents, and applications for registration of any of
the foregoing; (ii) material trade names, service marks, service names, logos
and assumed names which are owned by Greiner or any of the Greiner
Subsidiaries, as the case may be, and that are used or proposed to be used in
the business of Greiner and the Greiner Subsidiaries as currently conducted; or
(iii) material licenses and other agreements to which Greiner or any Greiner
Subsidiary is a party and pursuant to which Greiner is authorized to use any
Intellectual Property. To the knowledge of Greiner, all registered
Intellectual Property has been validly issued or registered and is subsisting.
Neither Greiner nor the Greiner Subsidiaries have taken or omitted to take any
act which act or omission might have the effect of waiving or impairing any of
the rights of Greiner to practice and enforce any patent, or to use and enforce
any trademark or copyright listed on Section 4.17 of the Greiner Disclosure
Letter.
Section 4..18 Insurance. Section 4.18 of the Greiner Disclosure
Letter contains a complete and correct list and accurate summary description of
all insurance policies and material completion bonds (including, without
limitation, professional liability coverage) maintained by or on behalf of or
covering Greiner and the Greiner Subsidiaries, their assets or operations, or
the conduct of their business. Greiner has made available to URS complete and
correct copies of all the declaration sheets or binders (if declaration sheets
are not yet issued) relating to such policies and bonds. Except as noted on
Section 4.18 of the Greiner Disclosure Letter, all such policies and bonds are
in full force and effect, no notices of cancellation or nonrenewal have been
received with respect thereto, and all premiums due thereon have been paid.
Greiner and the Greiner Subsidiaries have complied in all material respects
with the provisions of such policies and bonds. Such policies and bonds are of
the type and in amounts customarily carried by persons conducting businesses
similar to the business conducted by Greiner and the Greiner Subsidiaries.
Section 4..19. Compliance with Applicable Law. Greiner and the
Greiner Subsidiaries are not in violation of, or to Greiner's knowledge, are
neither under investigation with respect to nor have been threatened to be
charged with or given notice of any violation of, any applicable laws,
ordinances, rules and regulations of any court, administrative agency or
commission or other governmental authority or instrumentality, whether domestic
or foreign (each a "Governmental Entity") applicable to Greiner or any Greiner
Subsidiary, except for such violations, if any, that, in the aggregate, have
not had and would not, in the reasonable judgment of Greiner, be likely to have
a Greiner Material Adverse Effect.
Section 4..20. Certain Contracts and Arrangements. Section 4.20 of
the Greiner Disclosure Letter lists all of the following agreements to which
Greiner or any of the Greiner Subsidiaries is a party ("Material Agreements"):
(a) Each partnership, joint venture or other similar
agreement or arrangement to which Greiner or any Greiner Subsidiary is a
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party that has involved or is expected to involve an annual sharing of revenues
of $5,000,000 or more to other persons;
(b) Each lease for real or personal property in which the
amount of payments which Greiner or a Greiner Subsidiary is required to make
on an annual basis is $500,000 or more;
(c) Each agreement of Greiner and the Greiner
Subsidiaries relating to indebtedness for borrowed money (whether incurred,
assumed, guaranteed or secured by any asset) in an aggregate outstanding
principal amount of $1,000,000 or more;
(d) Each other agreement, license or franchise which has
not been terminated or performed in its entirety and not renewed which may be,
by its terms, terminated, impaired or adversely affected by reason of the
execution of this Agreement, the closing of the Merger, or the consummation of
the transactions contemplated hereby or thereby, and the loss of which would,
individually or in the aggregate with other such agreements, licenses, or
franchises, have a Greiner Material Adverse Effect;
(e) Each agreement of Greiner or the Greiner Subsidiaries
with or for the benefit of any affiliate of Greiner with annual payments of
$50,000 or more;
(f) Each contract containing covenants purporting to
materially limit the freedom of Greiner or any Greiner Subsidiary to compete in
any line of business or in any geographic area; and
All Material Agreements are valid, binding and enforceable in accordance with
their terms and none of Greiner or the Greiner Subsidiaries nor, to the
knowledge of Greiner, any other party thereto, is in default under any of such
agreements, nor, to the knowledge of Greiner, has any event or circumstance
occurred that, with notice or lapse of time or both, would constitute any event
of default by Greiner or the Greiner Subsidiaries or any other party thereto
other than with respect to any of the foregoing such defaults, if any, that
would not, individually or in the aggregate, have a Greiner Material Adverse
Effect. To Greiner's knowledge, none of the parties to the contracts
identified in this Section have terminated, or have expressed an intent to
reduce materially or terminate presently or in the future, such contracts.
Section 4..21 Prohibited Payments. Greiner has not, with respect to
the opportunities, business or operation of Greiner, (a) entered into any
understanding agreement or arrangement, written or oral, under or pursuant to
which bribes, kickbacks, rebates, payoffs or other forms of illegal payments
have been or will be made, provided for or suffered, either directly or
indirectly, through agents, brokers or other intermediaries, (b) made any
illegal payment or contribution of moneys, services or property to any
political party, candidate or elected official, directly or indirectly, for any
purpose or (c) directly or indirectly engaged in any activity prohibited by the
Foreign Corrupt Practices Act of 1977.
Section 4..22 Powers of Attorney. Greiner has not given a power of
attorney, except for revocable powers of attorney routinely granted in the
ordinary course of business which related to routine representations before
governmental agencies or given in connection with the qualification to conduct
business in other jurisdictions.
Section 4..23 Environmental Matters.
(a) (i) Greiner and each of the Greiner
Subsidiaries hold, and are in substantial compliance with, all Environmental
Permits,
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and with all applicable Environmental Laws, except where the failure to hold
such permits or to be in compliance would not have a Greiner Material Adverse
Effect.
(ii) Neither Greiner nor any of the
Greiner Subsidiaries has received any written request for information, or has
been notified that it is a potentially responsible party, under the Federal
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or any similar state law with respect to any on-site or off-site
location.
(iii) No notice, notification, demand,
request for information, citation, summons, complaint or order has been issued,
no complaint has been filed, no penalty has been assessed and no investigation
or review (collectively, "Environmental Notices") is pending, or to Greiner's
knowledge, threatened by any governmental entity or other person with respect
to any (1) alleged violation by Greiner or any of the Greiner Subsidiaries of
any Environmental Law or liability thereunder or (2) alleged failure by Greiner
or any of the Greiner Subsidiaries to have any Environmental Permit, except, in
each case, for Environmental Notices that would not have a Greiner Material
Adverse Effect.
(iv) To Greiner's knowledge, there have
been no discharges, emissions or releases of Hazardous Substances by Greiner
which are or were reportable under Environmental Laws, other than such
discharges, emissions or releases that would not have a Greiner Material
Adverse Effect.
(b) There has been no material environmental
investigation of Greiner, study, audit, test, review or other analysis
(including any Phase I environmental assessments) conducted of which Greiner
has knowledge in relation to any real property or lease which has not been
delivered to URS prior to the date hereof. Neither Greiner nor any of the
Greiner Subsidiaries is subject to any judgment, decree or order relating to
compliance with, or the cleanup of regulated substances under, any applicable
Environmental Law.
(c) For purposes of this Agreement: (i) the term
"Environmental Laws" means any and all applicable Federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, judicial orders, decrees, codes, injunctions, permits, consent
decrees, consent orders and governmental restrictions, now in effect, relating
to human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment,
including without limitation ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, Hazardous Substances or wastes or the clean-up or other
remediation thereof; (ii) the term "Environmental Permits" means all permits
licenses, authorizations, certificates and approvals of governmental
authorities relating to or required by Environmental Laws and necessary or
proper for the business of Greiner and the Greiner Subsidiaries as currently
conducted; and (iii) "Hazardous Substance" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, including, without
limitation, any substance regulated under Environmental Laws.
Section 4..24 Regulatory Matters. Greiner has filed or
otherwise provided all reports, data, other information and applications which
are required to be filed with or otherwise provided to the U.S. Environmental
Protection Agency (the "EPA"), the U.S. Occupational Safety and Health
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Administration ("OSHA"), and any other Federal, state, local or foreign
governmental authorities with jurisdiction and all regulatory approvals in
respect thereof are in full force and effect on the date hereof, the failure to
file or provide which or obtain which would, in the aggregate, result in a
Greiner Material Adverse Effect.
Section 4..25 Immigration Reform and Control Act.
(a) Greiner has fully complied with the
verification requirements and the recordkeeping requirements of the Immigration
Reform and Control Act of 1986 ("IRCA").
(b) To the best knowledge and belief of Greiner
and the Greiner Subsidiaries, the information and documents on which Greiner
relied in complying with IRCA are true and correct.
(c) There have not been any discrimination
complaints filed against Greiner pursuant to IRCA.
Section 4..26 Board Approvals; Opinion of Financial Advisor.
The Board of Directors of Greiner (at a meeting duly called and held or
pursuant to valid written consent) has unanimously determined that the
transactions contemplated hereby are fair to and in the best interests of
Greiner and its stockholders. Greiner has received the opinion of Houlihan,
Lokey, Howard & Zukin, Inc. ("HL"), Greiner's financial advisor, or another
financial advisor selected by Greiner and reasonably acceptable to URS,
substantially to the effect that the Merger consideration to be paid to holders
of the Greiner Common Stock in the Merger is fair to such stockholders from a
financial point of view.
Section 4..27 Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's fee or commission payable by
Greiner in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Greiner.
Section 4..28 Disclosure. No representation or warranty by
Greiner in this Agreement, the schedules hereto or any certificates delivered
pursuant to the terms hereof, contains or will contain an untrue statement of
material fact, or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
Section 4..29 Reliance. The foregoing representations and
warranties are made by Greiner with the knowledge and expectation that URS is
placing reliance thereon.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF URS
Except as otherwise disclosed to Greiner in a letter delivered
to it prior to the execution hereof (which letter shall contain appropriate
references to identify the representations and warranties herein to which the
information in such letter relates) (the "URS Disclosure Letter"), URS and the
Subsidiary represent and warrant to Greiner as follows:
Section 5..1 Organization. Each of URS and the Subsidiary is
a corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease, and operate its properties, and to carry on
its business as now being conducted, except where the failure to be so
organized, existing, and in good standing or to have such
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power and authority would not have a URS Material Adverse Effect. Each of URS
and the Subsidiary is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased, or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except in any such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a URS Material
Adverse Effect on the Business Condition of URS. For purposes of this
Agreement, "URS Material Adverse Effect" means, when used in connection with
URS, any change or effect that is materially adverse to the Business Condition
of URS, other than changes or effects resulting from (i) changes attributable
to conditions affecting the engineering business generally, (ii) changes in
general economic conditions, or (iii) changes attributable to the announcement
or pendency of the Merger.
Section 5..2 Capitalization. The authorized capital stock of
URS consists of 20,000,000 shares of URS Common Stock, par value $0.01 per
share, and 1,000,000 shares of preferred stock, par value $1.00 per share (the
"URS Preferred Stock"). As of the date hereof, (i) 7,167,591 shares of URS
Common Stock are issued and outstanding, (ii) options to acquire 1,166,324
shares of URS Common Stock are outstanding under all stock option plans and
agreements of URS, (iii) 1,559,665 shares of URS Common Stock (including shares
of URS Common Stock issuable upon exercise of the options identified in clause
(ii) above) are reserved for issuance pursuant to all employee plans of URS,
and (iv) there are no shares of URS Preferred Stock outstanding. All of the
issued and outstanding shares of URS Common Stock are validly issued, fully
paid and nonassessable and free of preemptive rights. All of the URS Common
Stock reserved for issuance in exchange for the shares of the Greiner Common
Stock at the Effective Time of the Merger in accordance with this Agreement
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. The authorized capital stock of
the Subsidiary consists of 100 shares of the Subsidiary Common Stock, par value
$1.00 per share, all of which shares are validly issued and outstanding, fully
paid and nonassessable and are owned by URS. Except as set forth above or as
specified in Section 5.2 of the URS Disclosure Letter, as of the date of this
Agreement there are no shares of capital stock of URS issued or outstanding or
any options, warrants, subscriptions, calls, rights, convertible securities or
other agreements or commitments obligating URS to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock or
securities. Except as provided in this Agreement or as set forth in Section
5.2 of the URS Disclosure Letter, after the Effective Time of the Merger, URS
will have no obligation to issue, transfer or sell any shares of its capital
stock pursuant to any employee benefit plan or otherwise.
Section 5..3 Authority Relative to this Agreement. Each of
URS and the Subsidiary has all requisite corporate power and authority to enter
into this Agreement and subject, in the case of this Agreement, to the consents
and approvals set forth in Section 5.4 below, to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by URS and the Subsidiary and the consummation by URS and the Subsidiary of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of URS and the Subsidiary, including the unanimous
approval of their respective Boards of Directors, and no other corporate
proceedings on the part of URS or the Subsidiary are necessary to authorize
this Agreement or the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by URS and the Subsidiary and
constitutes a valid and binding agreement of each of them, enforceable against
each of them in accordance with its terms, except that such enforceability may
be subject to (i) bankruptcy, insolvency, reorganization or other similar laws
relating to enforcement of creditors' rights generally, and (ii) general
equitable principles.
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Section 5..4 Consents and Approvals; No Violations. Except
for the applicable requirements of the Governmental Requirements, state or
foreign laws relating to takeovers, if applicable, state securities or blue sky
laws, state and local laws and regulations relating to licensing, and the
filing of the Documents of Merger as required by the Nevada Law, no filing
with, and no permit, authorization, consent or approval of, any Government
Entity is necessary for the execution, delivery and performance of this
Agreement by URS and the Subsidiary of the transactions contemplated by this
Agreement. Neither the execution, delivery nor performance of this Agreement
by URS and the Subsidiary, nor the consummation by URS and the Subsidiary of
the transactions contemplated hereby, nor compliance by URS and the Subsidiary
with any of the provisions hereof, will (i) conflict with or result in any
breach of any provisions of the Certificate of Incorporation or By-Laws of URS
or the Subsidiary or the Articles or Certificate of Incorporation, as the case
may be, or By-Laws of any of the URS Subsidiaries, (ii) except as set forth in
Section 5.4(ii) of the URS Disclosure Letter, result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, acceleration,
vesting, payment, exercise, suspension or revocation) under, any of the terms,
conditions or provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, license, contract, agreement, plan or other instrument or
obligation to which URS or any of the URS Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound or affected,
(iii) except as set forth in Section 5.4(iii) of the URS Disclosure Letter,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to URS, any URS Subsidiary or any of their properties or assets,
(iv) except as set forth in Section 5.4(iv) of the URS Disclosure Letter,
result in the creation or imposition of any Lien on any asset of URS or any URS
Subsidiary, or (v) except as set forth in Section 5.4(v) of the URS Disclosure
Letter, cause the suspension or revocation of any certificates of need,
accreditation, registrations, licenses, permits and other consents or approvals
of governmental agencies or accreditation organizations, except in the case of
clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults,
terminations, cancellations, accelerations, creations, impositions, suspensions
or revocations which would not individually or in the aggregate have a URS
Material Adverse Effect.
Section 5..5 URS SEC Reports and Financial Statements. URS
has delivered to Greiner true and complete copies of each registration
statement, report and proxy or information statement, including, without
limitation, its Annual Reports to Stockholders incorporated in material part by
reference in certain of such reports, in the form (including exhibits and any
amendments thereto) required to be filed with SEC since January 1, 1992
(collectively, the "URS SEC Reports"). Except as set forth in Section 5.5 of
the URS Disclosure Letter, as of the respective dates such URS SEC Reports were
filed or, if any such URS SEC Reports were amended, as of the date such
amendment was filed, each of the URS SEC Reports (i) complied in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act, and the rules and regulations promulgated thereunder, and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the audited consolidated financial statements and
unaudited consolidated interim financial statements of URS (including any
related notes and schedules) included (or incorporated by reference) in its
Annual Reports on Form 10-K for each of the three fiscal years ended October
31, 1992, 1993 and 1994, and to be included on Form 10-K for the fiscal year
ended October 31, 1995, when filed, and Quarterly Reports on Form 10-Q for all
interim periods subsequent thereto (the "URS Financial Statements") fairly
present, in conformity with GAAP applied on a consistent basis
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(except as may be indicated in the notes thereto), the consolidated financial
position of URS and the URS Subsidiaries as of its date and the consolidated
results of operations and cash flows for the period then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements). There has been no change in URS's accounting policies or methods
of making accounting estimates or changes in estimates that are material to the
URS Financial Statements, except as described in the notes thereto.
Section 5..6 Information Supplied. None of the information
supplied or to be supplied by URS, the URS Subsidiaries, auditors, attorneys,
financial advisors, other consultants or advisors or the Subsidiary for
inclusion in the Form S-4 or the Proxy Statement/Form S-4, will, in the case of
the Proxy Statement and any amendment or supplement thereto, at the time of the
mailing of the Proxy Statement and any amendment or supplement thereto, and at
the time of any meeting of stockholders of Greiner to vote upon this Agreement
and the transactions contemplated hereby, or in the case of the Form S-4, as
amended or supplemented, at the time it becomes effective and at the time of
any post-effective amendment thereto contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading or necessary to correct any statement in
any earlier filing with the SEC of such Proxy Statement/Form S-4 or any
amendment or supplement thereto or any earlier communication (including the
Proxy Statement/Form S-4) to stockholders of Greiner with respect to the
transactions contemplated by this Agreement. The Form S-4 and the Proxy
Statement/Form S-4 will comply as to form in all material respects with the
provisions of all applicable laws including the provisions of the Securities
Act and the Exchange Act and the rules and regulations of the SEC thereunder,
except that no representation is made by URS with respect to information
supplied by Greiner specifically for inclusion therein.
Section 5..7 Board Approvals; Opinion of Financial Advisor.
The Boards of Directors of URS and the Subsidiary (at meetings duly called and
held or pursuant to valid written consents) have unanimously determined that
the transactions contemplated hereby are fair to and in the best interests of
URS and the Subsidiary and the stockholders of URS. URS has received the
opinion of Morgan Stanley & Co. Incorporated ("MS"), URS's financial advisor,
substantially to the effect that the Merger consideration to be paid to holders
of the Greiner Common Stock in the Merger is fair to URS from a financial point
of view.
Section 5..8 Brokers. No broker, finder or investment
banker (other than MS) is entitled to any brokerage, finder's fee or commission
payable by URS in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of URS.
Section 5..9 Disclosure. No representation or warranty by
URS in this Agreement, the schedules hereto or any certificates delivered
pursuant to the terms hereof, contains or will contain an untrue statement of
material fact, or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
ARTICLE 6.
PRE-CLOSING COVENANTS
Section 6..1 Covenants of All Parties. During the period
from the date of this Agreement until the earlier of the termination of this
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Agreement or the Effective Time of the Merger, each of the parties hereto
covenants and agrees as follows;
6..1.1 Advice of Changes. Each party shall
promptly advise each of the other parties in writing (i) of any event occurring
subsequent to the date of this Agreement that would render any representation
or warranty of such party contained in this Agreement, if made on or as of the
date of such event or the Closing Date, untrue or inaccurate in any material
respect.
6..1.2 Regulatory Approvals. Each party
shall execute and file, or join in the execution and filing, of any application
or other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, Federal, state or local or
foreign, which may be reasonably required, or which the other party may
reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, filings under
the HSR Act. Each party shall use its best efforts to obtain all such
authorizations, approvals and consents.
6..1.3 Confidentiality. Each party shall
hold in confidence all nonpublic information until such time as such
information is otherwise publicly available and, if this Agreement is
terminated, each party will deliver to the other all documents, work papers and
other materials (including copies) obtained by such party or on its behalf from
the other party as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution hereof. Each party shall
continue to abide by the terms of the confidentiality agreement between URS and
Greiner in effect as of the date hereof.
6..1.4 Best Efforts. Upon the terms and
subject to the conditions herein provided, each of the parties hereto agrees to
use its best efforts to take or cause to be taken all actions, to do or cause
to be done, and to assist and cooperate with the other party hereto in doing,
all things necessary, proper or advisable under applicable laws and
regulations, to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including (i)
using all reasonable efforts to obtain all necessary waivers, consents and
approvals from third parties, (ii) defending any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby and thereby, and (iii)
executing and delivering such instruments, and taking such other actions as the
other party hereto may reasonably require in order to carry out the intent of
this Agreement.
6..1.5 Credit Agreement. The parties hereto
shall take all actions as may be reasonably necessary to fulfill the covenants
and conditions set forth in that certain Credit Agreement dated as of January
10, 1996 (the "Credit Agreement"), by and among URS, as Borrower, the lenders
listed therein as Lenders, and Wells Fargo Bank, National Association, as
Administrative Agent.
Section 6..2 Covenants of Greiner. During the period from
the date of this Agreement until the earlier of the termination of this
Agreement or the Effective Time of the Merger, Greiner agrees (except as
expressly contemplated by this Agreement or with the prior written consent of
URS) that:
6.2.1 Conduct of Business Pending Merger.
(a) Ordinary Course. Greiner and the Greiner
Subsidiaries shall carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted
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and, to the extent consistent with such businesses, use all reasonable efforts
to preserve intact their present business organizations, keep available the
services of their present officers and employees, and preserve their
relationships with customers, suppliers and others having business dealings
with Greiner and the Greiner Subsidiaries. Greiner shall promptly notify URS
of any event or occurrence or emergency not in the ordinary course of business,
of Greiner or the Greiner Subsidiaries, and material and adverse to the
Business Condition of Greiner. Neither Greiner nor any of the Greiner
Subsidiaries shall (except with the prior written consent of URS):
(i) accelerate, amend or change the period of
exercisability or vesting of options granted under any stock option plans or
restricted stock, stock bonus or other awards (including any discretionary
acceleration of the exercise periods by Greiner's Board of Directors permitted
under such plans) or authorize cash payments in exchange for any options,
restricted stock, stock bonus or other awards granted under any of such plans;
(ii) grant any severance or termination pay
to any officer or director or, except in the ordinary course of business
consistent with past practices, to any employee of Greiner or any Greiner
Subsidiary;
(iii) except in the ordinary course of
business consistent with past practices and other than transfers between or
among Greiner and any Greiner Subsidiary, transfer to any person or entity any
rights to the Greiner Intellectual Property Rights;
(iv) commence a lawsuit other than: (1) for
the routine collection of bills; (2) in such cases where Greiner in good faith
determines that failure to commence suit would result in a material impairment
of a valuable aspect of Greiner's business, provided Greiner consults with URS
prior to filing such suit; or (3) for a breach of this Agreement; and
(v) enter into one or more leases which
extend for a period of two years beyond the date of this Agreement and which
obligate the Company to pay aggregate gross rent in excess of $500,000.
(b) Dividends; Changes in Stock. Greiner shall
not, and it shall not permit any of the Greiner Subsidiaries to, (i) declare or
pay any dividends on or make other capital distributions in respect of any of
its capital stock, except for intercompany dividends or regular quarterly cash
dividends in an amount which shall not exceed $0.075 per share to holders of
Greiner Common Stock and at times consistent with prior practice, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) repurchase, redeem or
otherwise acquire, any shares of its capital stock.
(c) Issuances of Securities. Greiner shall not,
and it shall not permit any of the Greiner Subsidiaries to, issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any shares of
its capital stock or any securities convertible into such shares, or any
rights, warrants, calls, subscriptions or options to acquire, any such shares
or convertible securities, or any other ownership interests in such capital
stock.
(d) Governing Documents. Greiner shall not, nor
shall it cause or permit any of the Greiner Subsidiaries to, amend its articles
or certificate of incorporation or by-laws.
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(e) No Acquisitions. Greiner shall not, and it
shall not permit any of the Greiner Subsidiaries to acquire, or agree to
acquire by merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof.
(f) No Dispositions. Other than sales or
licenses of products or technology in the ordinary course of business
consistent with prior practice, Greiner shall not, and it shall not permit any
of the Greiner Subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, any of its assets, except for such dispositions in the ordinary
course of business or in amounts which are not material, in the aggregate, to
the business of Greiner.
(g) Indebtedness. Greiner shall not, and shall
not permit any of the Greiner Subsidiaries to, incur any indebtedness for
borrowed money or guarantee any such indebtedness or sell any debt securities
or warrants or rights to acquire any debt securities of Greiner or any of the
Greiner Subsidiaries or guarantee any debt securities of others, except in the
ordinary course of business consistent with past practices.
(h) Plans; Compensation. Except as otherwise
provided in this Agreement, Greiner shall not, and shall not permit any of the
Greiner Subsidiaries to, adopt or amend in any material respect any Greiner
Plan or pay any pension or retirement allowance not required by any existing
Greiner Plan. Greiner shall not and shall not permit any Greiner Subsidiary
to, enter into any employment contracts, pay any special bonuses or special
remuneration to officers, directors or employees, or increase the salaries,
wage rates or fringe benefits of (i) any of its officers or employees whose
compensation exceeded $150,000 during the fiscal year ending December 31, 1995,
or (ii) any of its other officers and employees other than pursuant to
scheduled reviews under Greiner's or the Greiner Subsidiary's normal
compensation review cycle, in all cases consistent with existing policies and
past practice.
(i) Tax Matters. Greiner shall not make any tax
election that would have a Greiner Material Adverse Effect or settle or
compromise any income tax liability of Greiner or any of the Greiner
Subsidiaries that would have a Greiner Material Adverse Effect.
(j) Discharge of Liabilities. Greiner shall not,
and it shall not permit any of the Greiner Subsidiaries to, pay, discharge,
settle or satisfy any claims, liabilities or obligations, except in the
ordinary course of business or in amounts which are not material, individually
or in the aggregate, to the business of Greiner.
(k) Material Agreements. Except in the ordinary
course of business, neither Greiner nor any of the Greiner Subsidiaries shall
modify, amend, or terminate any Material Agreement or waive, release or assign
any material rights or claims under such Material Agreement.
(l) Agreement. Neither Greiner nor any of the
Greiner Subsidiaries shall agree or commit to do any of the actions described
in this Section 6.2.1.
6.2.2 Stockholders' Meeting; Proxy Statement.
Greiner shall hold a meeting of its stockholders at the earliest practicable
date to submit this Agreement and related matters for their consideration and
approval, which approval shall be recommended by Greiner's Board of Directors
(subject to the fiduciary obligations of its directors and officers). Greiner
shall send to its stockholders, for the purpose of considering and voting upon
the Merger, a Proxy Statement satisfying all
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requirements of applicable state and Federal laws, and Greiner shall be solely
responsible for any statement, information or omission in said Proxy Statement
relating to it or its affiliates.
6.2.3 Acquisition Proposals. From the date hereof
until the earlier of the termination of this Agreement or the consummation of
the Merger, Greiner and the Greiner Subsidiaries will not, and will cause their
respective officers, directors, employees, agents and representatives not to,
directly or indirectly, encourage, solicit, accept, initiate or conduct
discussions or negotiations with, provide any information to, or enter into any
agreement with, any corporation, partnership, limited liability company, person
or other entity or group concerning the acquisition of all or a substantial
part of the assets, business or capital stock of Greiner, whether through
purchase, merger, consolidation, exchange or any other business combination
(each of the foregoing, an "Acquisition Proposal"). Notwithstanding anything
to the contrary in the preceding sentence, nothing herein shall prevent Greiner
and its officers and directors, from responding to and considering unsolicited
firm offers for any such transaction from persons other than URS if and to the
extent that, in the written opinion of Greiner's outside counsel, failure to do
so would be reasonably likely to constitute a violation of applicable law or a
breach of the fiduciary duties of Greiner's directors to Greiner's
stockholders. Greiner shall immediately provide written notice to URS of the
terms and other details of any such unsolicited inquiry or proposal relating to
an Acquisition Proposal. In the event that Greiner or any of its officers or
directors enters into any such negotiations or discussions for any reason which
thereby constitute a breach of this Section 6.2.3, Greiner shall immediately
reimburse URS for all expenses and costs incurred by URS in connection with the
transactions contemplated by this Agreement. In the event that Greiner or any
of its officers or directors shall enter into any letter of intent,
understanding or other agreement with a party other than URS relating to the
acquisition of all or a substantial part of the assets, business or capital
stock of Greiner, whether through purchase, merger, consolidation, exchange or
any other business combination, either in violation of the no-shop agreement
set forth in this Section or within nine (9) months after termination of this
Agreement for any reason, then immediately upon entering into such letter of
intent, understanding or other agreement, Greiner shall pay to URS a
termination fee in the amount of $5.0 million (the "Termination Fee");
provided, however, that such Termination Fee shall not be payable if, prior to
the entry by Greiner into such letter of intent, understanding or other
agreement, URS has unilaterally declined to close the Merger. The parties
acknowledge and agree that the expense reimbursement obligation and Termination
Fee described in this Section shall not be the exclusive remedy to URS in the
event of a breach by Greiner of this Agreement, and, in any such event, URS
shall be entitled, in addition to receiving such payments, to equitable
remedies, including, without limitation, specific performance and enjoining of
any actions determined to be in breach of this Agreement.
6.2.4 Maintenance of Business. Greiner will use
its best efforts to carry on and preserve its business and its relationships
with clients, customers, suppliers, employees and others in substantially the
same manner as it has prior to the date hereof. If Greiner becomes aware of a
deterioration in the relationship with any client, customer, supplier or key
employee, it will promptly bring such information to the attention of URS in
writing and, if requested by URS, will use its best efforts to restore the
relationship.
6.2.5 Access. Greiner shall afford to URS and to
URS's financial advisors, legal counsel, accountants, financing sources and
other authorized representatives access during normal business hours to all of
its books, records, properties, offices and personnel.
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6.2.6 Liability Insurance.
(a) On or before the Closing Date,
Greiner shall procure (subject to the approval of URS) continuing directors'
and officers' liability coverage (tail coverage) for directors and officers of
Greiner who have served as directors and officers of Greiner or its affiliates
(the "Greiner D & O Policy"), prior to the Effective Time of the Merger, with
respect to acts or failures to act prior to the Effective Time of the Merger.
Said policy shall have a term of not less than three (3) years after the
Closing Date.
(b) On or before the Closing Date,
Greiner shall procure (subject to the approval of URS) continuing fiduciary
liability coverage (tail coverage) for employees of Greiner who have served as
fiduciaries under any Greiner Plan (the "Greiner Fiduciary Policy") prior to
the Effective Time of the Merger, with respect to acts or failures to act prior
to the Effective Time of the Merger. Said policy shall have a term that shall
expire not less than one (1) year after the expiration of the term of the ESOP
portion of The Performance Plan and Stock Ownership Plan of Greiner
Engineering, Inc.
Section 6..3 Covenants of URS. During the period from the
date of this Agreement until the earlier of the termination of this Agreement
or the Effective Time of the Merger, URS and the Subsidiary agree (except as
expressly contemplated by this Agreement or with the prior written consent of
Greiner) that:
6.3.1 Registration Statement. The URS Common Stock
to be issued in the Merger shall be registered under the 1933 Act on Form S-4.
As promptly as practicable after the date hereof, URS shall prepare and file
with the SEC the Form S-4 and any other documents required by the 1933 Act in
connection with the Merger. URS shall use its best efforts to have the Form
S-4 declared effective as promptly as practicable after such filing. URS shall
also take any action required to be taken under any applicable state securities
or "blue sky" laws in connection with the issuance of the URS Common Stock in
connection with the Merger.
6.3.2 Listing Agreement. As promptly as practicable
after the date hereof, URS shall prepare and submit to each of the New York
Stock Exchange and the Pacific Stock Exchange a listing application covering
the shares of the URS Common Stock to be issued in connection with the Merger.
URS shall use its best efforts to obtain, prior to the Effective Time of the
Merger, approval for the listing of such URS Common Stock, subject to official
notice of issuance.
ARTICLE 7.
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7..1 Conditions to Obligations of Greiner. The
obligations of Greiner to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the Merger of the following
conditions:
7..1.1 Representations and Warranties True
at Closing. The representations and warranties contained in this Agreement of
URS and the Subsidiary shall be deemed to have been made again at and as of the
Closing with respect to the stated facts then existing and shall be true in all
material respects.
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7..1.2 Covenants Performed. All of the
obligations of URS and the Subsidiary to be performed at or before the Closing
pursuant to the terms of this Agreement shall be been duly performed.
7..1.3 Certificate. At the Closing, Greiner
shall have received a Certificate signed by the President of each of URS and
the Subsidiary to the effect that each of the conditions set forth in Section
7.1.1 and 7.1.2 have been satisfied.
7..1.4 Approval of Stockholders. This
Agreement and the Merger shall have been approved by the stockholders of
Greiner.
7..1.5 Opinion of Counsel. Sheppard,
Mullin, Richter & Hampton, counsel to URS, shall have issued an opinion of
counsel to Greiner, dated the Effective Time of the Merger, in form and
substance reasonably satisfactory to Greiner, to the effect that:
(i) URS is a corporation validly
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power to own, operate
and lease its properties and to carry on its business as it is
now being conducted;
(ii) URS has full corporate power to
enter into this Agreement and to carry out the transactions
provided for herein;
(iii) All corporate action required
to be taken on the part of URS to authorize it to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby have been duly and validly taken.
(iv) This Agreement has been duly
and validly authorized, executed and delivered by URS and,
assuming due authorization, execution, delivery and
performance by each of the other parties hereto, constitutes
the valid and binding obligation of URS, enforceable in
accordance with its terms, except as such enforceability may
be limited by bankruptcy or other laws relating to or
affecting creditors' rights generally and by equitable
principles; and
(v) The shares of URS Common Stock
issuable in connection with the Merger have been duly and
validly authorized and, upon issuance, such shares will be
fully paid and nonassessable.
In giving such opinions, such counsel shall be
entitled to rely upon certificates of officers of URS or any of its
subsidiaries and public officials with respect to factual matters upon which
their opinions may be based, provided that the extent of such reliance is set
forth in such opinion and such opinion states that it is reasonable for Greiner
to rely thereon.
7..1.6 Form S-4. The Form S-4 pertaining to
the URS Common Stock to be issued in connection with the Merger shall have
become effective under the 1933 Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
7..1.7 Merger Documents. The Merger
Documents shall have been filed with the Secretary of State of the State of
Nevada, as required by law.
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7..1.8 Material Adverse Changes. There
shall have been no URS Material Adverse Effect between the date of this
Agreement and the date of the Closing.
7..1.9 HSR Filing. Any waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated, and no action shall have been instituted by the
Department of Justice or Federal Trade Commission challenging or seeking to
enjoin the consummation of the transaction contemplated by this Agreement,
which action shall not have been withdrawn or terminated.
Section 7..2 Conditions to Obligations of URS and the
Subsidiary. The obligations of URS and the Subsidiary to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
Merger of the following conditions:
7..2.1 Representations and Warranties True
at Closing. The representations and warranties contained in this Agreement of
Greiner shall be deemed to have been made again at and as of the Closing with
respect to the stated facts then existing and shall be true in all material
respects.
7..2.2 Covenants Performed. All of the
obligations of URS and the Subsidiary to be performed at or before the Closing
pursuant to the terms of this Agreement shall be been duly performed.
7..2.3 Certificate. At the Closing, URS and
the Subsidiary shall have received a Certificate signed by the President of
Greiner to the effect that each of the conditions set forth in Section 7.2.1
and 7.2.2 have been satisfied.
7..2.4 Approval of Stockholders. This
Agreement and the Merger shall have been approved by the stockholders of
Greiner.
7..2.5 Opinion of Counsel. Nossaman,
Guthner, Knox & Elliott, counsel to Greiner, shall have issued an opinion of
counsel to URS, dated the Effective Time of the Merger, in form and substance
reasonably satisfactory to URS, to the effect that:
(i) Greiner is a corporation
validly existing and in good standing under the laws of the
State of Nevada and has all requisite corporate power to own,
operate and lease its properties and to carry on its business
as it is now being conducted;
(ii) Greiner has full corporate
power to enter into this Agreement and to carry out the
transactions provided for herein;
(iii) All corporate action required
to be taken on the part of Greiner to authorize it to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby have been duly and validly taken; and
(iv) This Agreement has been duly
and validly authorized, executed and delivered by Greiner and,
assuming due authorization, execution, delivery and
performance by each of the other parties hereto, constitutes
the valid and binding obligation of Greiner, enforceable in
accordance with its terms, except as such enforceability may
be limited by bankruptcy or other laws relating to or
affecting creditors' rights generally and by equitable
principles.
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<PAGE> 169
In giving such opinions, such counsel shall be
entitled to rely upon certificates of officers of Greiner or any of its
subsidiaries and public officials with respect to factual matters upon which
their opinions may be based, provided that the extent of such reliance is set
forth in such opinion and such opinion states that it is reasonable for URS to
rely thereon.
7..2.6 Form S-4. The Form S-4 pertaining to
the URS Common Stock to be issued in connection with the Merger shall have
become effective under the 1933 Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
7..2.7 Merger Documents. The Merger
Documents shall have been filed with the Secretary of State of the State of
Nevada, as required by law.
7..2.8 Material Adverse Changes. There
shall have been no Greiner Material Adverse Effect between the date of this
Agreement and the date of the Closing.
7..2.9 HSR Filing. Any waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated, and no action shall have been instituted by the
Department of Justice or Federal Trade Commission challenging or seeking to
enjoin the consummation of the transaction contemplated by this Agreement,
which action shall not have been withdrawn or terminated.
7..2.10 Consents. Other than the filing of
the Merger Documents as contemplated in Section 1.2, the parties shall have
made such filings, and obtained all consents of Governmental Entities, required
to consummate the transactions contemplated hereby.
7..2.11 No Litigation. There shall not be
pending any action, proceeding or other application before any court or
Government Entity brought by any Government Entity (i) challenging or seeking
to restrain or prohibit the consummation of the transactions contemplated by
this AGreement, or seeking to obtain any material damages, or (ii) seeking to
prohibit or impose any material limitations on URS's ownership or operation of
all or any portion of the combined business of URS and Greiner.
7..2.12 Credit Agreement. The conditions set
forth in Sections 4.2, 4.3 and 4.4 of the Credit Agreement shall have been
satisfied.
ARTICLE 8.
ADDITIONAL AGREEMENTS
Section 8..1 Public Announcements. URS, the Subsidiary and
Greiner agree that they will not issue any press release or otherwise make any
public statement or respond to any press inquiry with respect to this Agreement
or the transactions contemplated hereby without the prior approval of the other
party (which approval will not be unreasonably withheld), except as may be
required by applicable law.
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Section 8..2 Confidentiality. No party to this Agreement
shall use or disclose any non-public information obtained from another party
for any purpose unrelated to the Merger, and, if this Agreement is terminated
for any reason whatsoever, each party shall return to the other all originals
and copies of all documents and papers containing all information furnished to
such party pursuant to this Agreement, or during the negotiations which
preceded this Agreement, and shall neither use nor disclose any such
information except to the extent that such information is available to the
public, is rightfully obtained from third parties, or is independently
developed.
Section 8..3. Additional Agreements. In case at any time
after the Effective Time of the Merger any further action is reasonably
necessary or desirable to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the constituent corporations, the proper officers and directors of each
corporation which is a party to this Agreement shall take all such necessary
corporate action.
Section 8..4. Use of Name. Without limiting the right of URS
to conduct its business in such manner as it deems appropriate, URS intends,
following the Closing Date, and for the foreseeable period thereafter, to
maintain Greiner as a separate subsidiary operating under its own existing
name.
Section 8..5. Employee Matters. After the Closing Date, URS
will use reasonable efforts to maintain the business of Greiner and, in
particular, without limitation, URS will use best efforts to maintain health,
medical, dental and other benefits for Greiner employees for a reasonable
period after the Closing Date which, in the aggregate, are reasonably
comparable to benefits provided to Greiner employees prior to the Closing Date,
subject to reasonable business practices and changing conditions.
Section 8..6. Non-Liability of Agents and Stockholders. No
stockholder, director, officer or employee of any party hereto shall be
individually liable for any breach of the representations, warranties or
covenants of any party hereto contained herein in the absence of fraud or
willful misconduct on the part of such stockholder, director, officer or
employee.
Section 8.7 The Performance Plan and Stock Ownership Plan of
Greiner Engineering, Inc. URS, the Greiner Subsidiaries and Greiner agree that
as soon as practical following the execution of this Agreement, effective as of
the Closing Date and contingent on closing the Merger, The Performance Plan and
Employees Stock Ownership Plan of Greiner Engineering, Inc. (the "Plan") will
be amended to cease to be an employee stock ownership plan within the meaning
of Section 4975(e)(7) of the Code ("ESOP"), but will be continued as a profit
sharing plan, subject to the terms of the Plan document regarding amendment
and/or termination. Such Plan amendment will provide that the cash proceeds
received by the Plan pursuant to this Agreement will not be reinvested in URS
or Greiner stock, but shall be reinvested in the various investment options
available under the non-ESOP portion of the Plan, as directed by Plan
Participants, and that employer stock will no longer be one of the investment
options offered under the Plan. URS stock received pursuant to this Agreement
shall continue to be held by the Plan, subject to the investment discretion of
the Plan's trustee, but no additional investments in URS stock shall be
permitted, and, unless URS agrees otherwise, Plan Participants shall not have
investment discretion with respect to the URS stock so held. In addition, in
the event that as of the Closing Date, the aggregate value of the unvested ESOP
portion of the Plan accounts shall be less than $1,000,000 (for purposes of
this Section 8.7, unvested shares of Greiner
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<PAGE> 171
stock shall be valued at an amount equal to the closing price of the Greiner
stock as reported on the New York Stock Exchange on the trading day immediately
preceding the Closing Date, as listed in The Wall Street Journal), URS, the
Greiner Subsidiaries and Greiner agree that as soon as practical following the
execution of this Agreement, effective as of the Closing Date and contingent on
the closing of the Merger, the Plan will be amended so that Plan Participants
will be fully vested in the ESOP portion of their accounts as of the Closing
Date. The parties shall cooperate and take all steps as may be reasonably
necessary to effect the foregoing.
ARTICLE 9.
TERMINATION
Section 9..1. Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after the approval
by the stockholders of Greiner (the "Stockholder Approval") has been obtained:
9..1.1 by mutual written consent of URS and Greiner;
9..1.2 by either Greiner or URS if (i) the
Stockholder Approval shall not be obtained by reason of stockholders holding a
majority of the Greiner Common Stock failing to vote in favor of approval of
this Agreement at a meeting of stockholders or any adjournment thereof; (ii) a
Governmental Entity of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable; or (iii) the Merger shall not have been consummated before
September 30, 1996 (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or agreement contained in this
Agreement);
9..1.3 By URS if there has been a breach by Greiner
of any representation, warranty, covenant or other agreement in this Agreement
which has a Greiner Material Adverse Effect, and such breach has not been
cured, or Greiner has not commenced reasonable efforts to cure such breach,
within thirty (30) days after written notice of such breach is given by URS to
Greiner;
9..1.4 By URS if Greiner shall enter into any
discussions, negotiations or any letter of intent, understanding or other
agreement relating to an Acquisition Proposal, provided that no such
termination shall effect the rights of URS to reimbursement of expenses and the
Termination Fee as provided in Section 6.2.3; or
9..1.5 By Greiner if there has been a breach by URS
or the Subsidiary of any material representation, warranty, covenant or other
agreement, and such breach has not been cured, or URS and the Subsidiary have
not commenced reasonable efforts to cure such breach, within thirty (30) days
after written notice of such breach is given by Greiner to URS.
9..1.6 By Greiner if any of the conditions set forth
in Section 7.1 hereof shall not have been fulfilled on or prior to the date
specified for fulfillment thereof, or shall have become impossible to fulfill
for reasons beyond the control of Greiner, and such condition shall not have
been waived.
9..1.7 By URS if any of the conditions set forth in
Section 7.2 hereof shall not have been fulfilled on or prior to the date
specified for fulfillment thereof, or shall have become impossible to
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<PAGE> 172
fulfill for reasons beyond the control of URS, and such condition shall not
have been waived.
Where action is taken to terminate this Agreement pursuant to this Section 9.1,
it shall be sufficient for such action to be authorized by the Board of
Directors of the party taking such action without any requirement to submit
such action to the stockholders of such party.
Section 9..2. Effect of Termination and Abandonment. In the
event of termination of the Agreement by either Greiner or URS as provided in
Section 9.1, this Agreement shall forthwith become void and have no effect, and
there shall be no liability or obligation on the part of Greiner, URS or the
Subsidiary, or their respective officers and directors, except that (i) the
provisions of Section 6.2.3, this Section 9.2, and the Confidentiality
Agreement shall survive any such termination, and (ii) no party whose breach of
its representations, warranties, covenants or agreements set forth in this
Agreement was the basis of the other party's termination of this Agreement
shall be relieved from liability for damages occasioned by such breach,
including any expenses incurred by the other party in connection with this
Agreement and the transactions contemplated hereby; provided, however, that in
the event such breach is the result of negligence, such damages shall not
exceed the sum of $500,000; but, provided, further, that in the event that such
breach is the result of recklessness or willful conduct, the amount of damages
shall not be limited hereby.
Section 9..3. Amendment. This Agreement may be amended by
the parties hereto, by action taken by their respective Boards of Directors at
any time before or after the approval of the stockholders of Greiner (the
"Stockholder Approval"), but after the Stockholder Approval, no amendment shall
be made which by law requires the further approval of stockholders without
obtaining such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9..4. Extension; Waiver. At any time prior to the
Effective Time of the Merger, any party hereto, by action taken by its Board of
Directors may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements, covenants, or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement shall not constitute
a waiver of these rights.
ARTICLE 10.
MISCELLANEOUS
Section 10..1 Survival of Representations and Warranties. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive beyond the Effective Time of the
Merger. This Section 10.1 shall not limit any covenant or agreement after the
Effective Time of the Merger.
Section 10..2 Entire Agreement; Modification; Waiver. This
Agreement constitutes the entire agreement among the parties pertaining to the
subject matter contained herein and supersedes all prior and
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contemporaneous agreements, representations and undertakings of the parties.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by
any party making the waiver.
Section 10..3 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed in
original, but all of which together shall constitute one and the same
instrument.
Section 10..4 Assignment. This Agreement shall be binding
on, and shall inure to the benefit of, the parties to it and their respective
heirs, legal representatives, successors and assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties hereto.
Section 10..5 Fees and Expenses. Each of the parties shall
pay their own fees, costs and expenses (including, without limitation, legal
and accounting expenses) incurred, or to be incurred, by them in negotiating
and preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
Section 10..6 Notices. All notices, requests, demands and
other communications under this Agreement shall be in writing and shall be
deemed to have been duly given on the date of service if served personally or
by facsimile on the party to whom notice is to be given, or on the fifth day
after mailing, if mailed to the party on whom notice is to be given, by
registered or certified mail, postage prepaid, and properly addressed as
follows:
If to URS and the Subsidiary:
URS Corporation
100 California Street, Suite 500
San Francisco, CA 94111-5239
Attn: Kent P. Ainsworth
Facsimile: (415) 398-1905
Confirmation: (415) 774-2700
with a copy to:
Sheppard, Mullin, Richter & Hampton
Four Embarcadero Center, Suite 1700
San Francisco, CA 94111
Attn: Samuel M. Livermore, Esq.
Facsimile: (415) 434-3947
Confirmation: (415) 434-9100
If to Greiner:
Greiner Engineering, Inc.
909 E. Las Colinas Blvd.,
Suite 1900, LB 44
Irving, TX 75039-3907
Attn: Patrick J. McColpin
Facsimile: (214) 869-3111
Confirmation: (214) 869-1001
with a copy to:
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<PAGE> 174
Nossaman, Guthner, Knox & Elliott
445 S. Figueroa Street, 31st Floor
Los Angeles, CA 90071-1602
Attn: William E. Guthner
Facsimile: (213) 612-7814
Confirmation: (213) 612-7800
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
Section 10..7 Governing Law. This Agreement shall be
construed in accordance with, and governed by, the laws of the State of
California, United States of America, without giving effect to provisions
thereof relating to conflicts of law.
Section 10..8 Further Action. Each of the parties hereto
shall use such party's best efforts to take such action as may be necessary or
reasonably requested by the other party hereto to carry out and consummate the
transactions contemplated by this Agreement.
Section 10..9 No Third Party Beneficiary. Nothing herein is
intended to create rights in any third party.
Section 10..10 Effect of Headings. The subject headings of
the Articles and Sections of this Agreement are included for purposes of
convenience only, and shall not affect the construction or interpretation of
any of its provisions.
Section 10..11 Severability. If any term of this Agreement
or application thereof shall be invalid or unenforceable, the remainder of this
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties to this Agreement
have duly executed it on the day and year first above written.
GREINER: GREINER ENGINEERING, INC.
By: /s/ ROBERT COSTELLO
Title: President and Chief
Executive Officer
URS: URS CORPORATION
By: /s/ KENT AINSWORTH
Title: Vice President and
Chief Financial Officer
THE SUBSIDIARY: URS ACQUISITION CORPORATION
By: /s/ KENT AINSWORTH
Title: Vice President and
Chief Financial Officer
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<PAGE> 175
/X/ PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 1. The Board of Directors 2. The Board of Directors recommends a / / / / / /
Directors recommends a vote FOR vote FOR approval of the Merger of URS
these nominees: Acquisition Corporation with and into
William H. Bowen, Greiner Engineering, Inc.
For, except vote withheld Robert L. Costello,
from the following nominee(s): Russell Cleveland 3. In their discretion, the Proxies are authorized to vote
William E. Guthner, Jr. upon any other business that may properly come before
_______________________________ Patrick M. Sullivan the Annual Meeting or any adjournment thereof.
Change
of / /
Address
SIGNATURE(S)_______________________________________________________________________________ Date___________________
SIGNATURE(S)_______________________________________________________________________________ Date___________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
</TABLE>
================================================================================
GREINER ENGINEERING, INC.
ANNUAL MEETING OF STOCKHOLDERS MARCH 26, 1996
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby (1) acknowledges receipt of the Notice of Annual
P Meeting of Stockholders of Greiner Engineering, Inc. to be held on
March 26, 1996, and the Proxy Statement in connection therewith, and
R (2) constitutes and appoints Robert L. Costello and Melissa K. Holder
and each of them, attorneys and proxies of the undersigned, with full
O power of substitution and revocation to each, for and in the name,
place and stead of the undersigned, to vote, and act with respect to,
X all of the shares of Common Stock of Greiner Engineering, Inc. standing
in the name of the undersigned or with respect to which the undersigned
Y is entitled to vote and act, at said meeting and at any adjournment(s)
thereof, and especially to vote as designated herein.
(change of address)
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
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<PAGE> 176
/X/ PLEASE MARK YOUR SHARES IN YOUR ACCOUNT
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 1. The Board of Directors 2. The Board of Directors recommends a / / / / / /
Directors recommends a vote FOR vote FOR approval of the Merger of URS
these nominees: Acquisition Corporation with and into
William H. Bowen, Greiner Engineering, Inc.
For, except vote withheld Robert L. Costello,
from the following nominee(s): Russell Cleveland
William E. Guthner, Jr.
_______________________________ Patrick M. Sullivan
Change
of / /
Address
SIGNATURE(S)_______________________________________________________________________________ Date___________________
SIGNATURE(S)_______________________________________________________________________________ Date___________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
</TABLE>
================================================================================
I GREINER ENGINEERING, INC.
N ANNUAL MEETING OF STOCKHOLDERS MARCH 26, 1996
S THIS INSTRUCTION IS SOLICITED ON BEHALF
T OF THE TRUSTEES
R
U The undersigned hereby (1) acknowledges receipt of the Notice of Annual
C Meeting of Stockholders of Greiner Engineering, Inc. to be held on
T March 26, 1996, and the Proxy Statement in connection therewith, and
I (2) provides instruction to the trustees on how to vote shares of
O stock held by The Performance Plan and Employee Stock Ownership Plan
N on behalf of the undersigned participant.
T (change of address)
O
----------------------------------------
T
R ----------------------------------------
U
S ----------------------------------------
T
E ----------------------------------------
E (If you have written in the above space,
S please mark the corresponding box on the
reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
TRUSTEES WILL VOTE YOUR SHARES IF YOU DO NOT RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
