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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-9654
OHM CORPORATION
(Exact name of registrant as specified in its charter)
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OHIO 34-1503050
(State of Incorporation) (I.R.S. Employer Identification Number)
16406 U.S. ROUTE 224 EAST, FINDLAY, OH 45840
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (419)423-3529
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $0.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
8% Convertible Subordinated Debentures due October 1, 2006
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
registrant on March 15, 1995, was $94,399,784.
The number of shares of common stock outstanding on March 15, 1995, was
15,636,465 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of (i) the Annual Report to Shareholders for the year ended December
31, 1994 are incorporated by reference into Part II and (ii) the definitive
Proxy Statement for the 1995 Annual Meeting of Shareholders to be held on May
11, 1995 are incorporated by reference into Part III.
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OHM CORPORATION
1994 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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PART I
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ITEM 1. Business 1
ITEM 2. Properties 10
ITEM 3. Legal Proceedings 10
ITEM 4. Submission of Matters to a Vote of Security Holders 11
EXECUTIVE OFFICERS OF THE REGISTRANT 11
PART II
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ITEM 5. Market for the Registrant's Common Stock and Related Shareholder Matters 14
ITEM 6. Selected Financial Data 14
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 14
ITEM 8. Financial Statements and Supplementary Data 14
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 14
PART III
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ITEM 10. Directors and Executive Officers of the Registrant 15
ITEM 11. Executive Compensation 15
ITEM 12. Security Ownership of Certain Beneficial Owners and Management 15
ITEM 13. Certain Relationships and Related Transactions 15
PART IV
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ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 16
SIGNATURES 21
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PART I
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ITEM 1. BUSINESS
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OVERVIEW
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OHM Corporation (the "Company") is one of the largest providers, on
the basis of revenues, of technology-based, on-site hazardous waste remediation
services in the United States. The Company and its predecessors have been in
the environmental services business since 1969. Over time the Company
developed emergency response cleanup and planned remediation capabilities. The
Company has successfully completed over 19,000 projects involving contaminated
groundwater, soil and facilities.
The Company provides a wide range of environmental services, primarily
to large chemical, petroleum, transportation and industrial companies, and to
government agencies. The Company has worked for most of the Fortune 100
industrial companies, the Environmental Protection Agency (the "EPA"), the
Department of Defense (the "DOD") (including the U.S. Army Corp of Engineers
("USACE") and the U.S. Departments of the Air Force and Navy), the Department
of Energy ("DOE") and a number of state and local governments. The Company
specializes in applying a full spectrum of on-site technologies, including
biological, chemical, physical, soil vapor extraction and thermal technologies,
to remediate hazardous and industrial wastes on both a planned and an emergency
response basis. In 1994, planned services represented approximately 95% of net
revenues and emergency response services represented approximately 5% of net
revenues. Although the Company primarily performs technology-based, on-site
remediation services, it also offers a broad range of other services, including
site assessment, engineering, remedial design and analytical testing. Service
is provided through 29 regional offices, one fixed laboratory at its
headquarters in Findlay, Ohio, nine mobile laboratories, and more than 3,000
pieces of mobile treatment and related field equipment.
In response to what the Company perceived as increased opportunities
in the field of on-site hazardous waste remediation services, since 1990 the
Company has substantially completed a program to divest itself of or reduce its
ownership in its nonremediation businesses in order to focus on its core
remediation business. In 1991, the Company sold its three commercial testing
laboratories in September 1991 for $12.9 million and completed the write-off of
its investment in Concord Resources Group, Inc., a joint venture with
Consolidated Rail Corporation which owned and operated fixed-base hazardous
waste facilities. In 1993 the Company sold its fixed-base hazardous waste
treatment and storage facility for $14.6 million and the Company's investment
in NSC Corporation ("NSC") was reduced from 70% to 40% as a result of NSC's
purchase of the asbestos abatement division of The Brand Companies, Inc.
("Brand") in exchange for NSC's industrial cleaning and maintenance business
and the issuance of 4,010,000 shares of NSC's common stock.
As previously announced, the Company has entered into an Agreement and
Plan of Reorganization dated December 5, 1994 with Rust International Inc. and
certain of its subsidiaries ("Rust") pursuant to which the hazardous and
nuclear waste remediation businesses of Rust will be merged with and into the
Company's subsidiary, OHM Remediation Services Corp. in exchange for the
issuance to Rust of 10,368,000 shares of the Company's Common Stock. The
transaction is subject to the approval of the Company's shareholders which will
be considered at the Company's Annual Meeting of Shareholders to be held May
11, 1995.
OHM'S ENVIRONMENTAL REMEDIATION SERVICES
The Company assists its clients by providing comprehensive on-site
treatment of toxic materials and hazardous wastes. By applying a broad range
of biological, chemical, physical, soil vapor extraction and thermal treatment
technologies, the Company performs on-site treatment and remediation services
for the control, detoxification, decontamination, and volume reduction of
hazardous and toxic material. Accordingly, the Company has designed a wide
range of modular mobile treatment equipment, which can be used on-site, either
independently or in a system, for removing, detoxifying, reducing the volume
of, or stabilizing contaminants. This equipment includes thermal destruction
units, dewatering presses, filters, separators, ion exchangers, stripping
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systems and mobile process equipment which apply various physical, chemical and
biological technologies to remediate contaminants. Since 1970, the Company has
completed over 16,000 projects throughout the United States, cleaning up
hazardous wastes, removing toxic chemicals from groundwater, and cleaning
facilities of contaminants. Since the disposition by the Company in early 1993
of its interest in OHM Resource Recovery Corp., the operator of a hazardous
waste treatment and disposal facility, the Company does not own or operate any
hazardous waste disposal sites or other off-site waste treatment or disposal
facilities. The Company generally coordinates through licensed subcontractors
the transportation and disposal of any hazardous waste which is not remediated
on site.
The Company endeavors to offer clients an increasingly broad array of
on-site treatment services, either on a planned or emergency basis, from its 29
regional offices located throughout the country. On-site environmental
remediation services provided by the Company include:
. Treatment, stabilization or removal of contaminants;
. Decontamination of industrial facilities;
. Assessment, characterization and treatment of contaminated soil
and/or groundwater;
. Surface impoundment restoration, including volume reduction,
stabilization and closure of contaminated lagoons;
. Management of underground and aboveground storage tanks;
. Design, engineering, fabrication, installation and operation of
on-site treatment equipment; and
. Emergency response to virtually any kind of industrial or
transportation-related accident involving hazardous waste or
materials.
The Company undertakes these projects on both a planned basis, which
is scheduled in advance, and an emergency basis, which is performed in direct
response to spills, fires and industrial accidents. The Company places its
emphasis upon planned work because of its more predictable resource
requirements, and because of its larger potential market. In 1994, planned
projects accounted for 95% of the Company's net revenues.
The Company believes that professional project management and cost
accounting systems are key factors in ensuring that projects are accurately and
successfully completed on time and within prescribed cost estimates. The
Company's project management structure combines the various functional areas
performing work at the project, including technical, engineering,
administrative and accounting specialists, into a coordinated team, reporting
directly to the project manager. The project manager's responsibility for
scheduling and project completion allows technical and operations specialists
to operate efficiently with fewer distractions.
The Company also believes that professional project management is a
critical element in limiting the significant risks and potential liabilities
involved in environmental remediation projects due to the presence of hazardous
and toxic substances. The Company has adopted a number of risk management
policies and practices including special employee training and health
monitoring programs. The Company's health and safety staff establish a safety
plan for each project prior to the initiation of work, monitor compliance with
the plan and administer the Company's medical monitoring program to staff
involved. The Company believes that it has an excellent overall health and
safety record.
TREATMENT TECHNOLOGIES
Designing, developing and implementing solutions to environmental
hazards requires an interdisciplinary approach combining practical field
experience with remediation processes and technical skills in fields such as
chemistry, microbiology, hydrogeology, fluid mechanics, thermodynamics, and
geotechnical, biochemical and
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process engineering. The Company employs scientific and engineering
professionals in the environmental services field who enhance the Company's
ability to effectively participate in larger, more technically complex
remediation projects.
The Company has significant experience in the commercialization and
practical field application of new and existing technologies for the treatment
of hazardous wastes, with emphasis on the further development and application
of existing technologies. To provide direct support for its efforts to place
innovative technology in the field, in 1973, the Company built its own
equipment fabrication facility; in 1978, the Company built a laboratory
dedicated to developing commercial applications of biological treatment of
hazardous wastes; and in 1993, built a treatability laboratory to support
testing and enhancement of a broad range of innovative technology applications.
In 1986, the Company formally organized its technology application efforts
through the creation of its Technology Assessment and Commercialization ("TAC")
group. The TAC group studies emerging technologies in the laboratory and,
through pilot scale studies, provides scientific and engineering support for
full-scale commercial remediation. The Company also provides technology
development services under contract to its clients.
The following represent the principal technologies used by the Company
for remediation projects:
. BIOLOGICAL REMEDIATION: The Company's biological treatability
laboratory designs and tests bioremediation techniques for treating
hazardous waste. Biological treatment technologies generally
utilize enhanced microbiological activity to decompose and detoxify
contaminants, often using a site's natural flora to remediate a
problem. The Company's biological laboratories can "feed" the
microorganisms that destroy the pollutant so that they grow at a
faster rate than would occur in nature. The Company has developed
considerable expertise in transferring innovative bioremediation
techniques from the laboratory to the field, having performed more
than 40 full-scale bioremediation projects since 1976, and is
considered one of the country's most experienced providers of this
emerging technology. The Company utilizes the following biological
treatment technologies:
Anaerobic Digestion Vessel -- degradation of organic contaminants
in the absence of air.
Trickling Filters -- secondary treatment on large-scale treatment
applications to enhance the oxygenation process.
Activated Sludge Reactor -- treatment utilizing holding tanks to
enhance biological degradation.
Submerged Fixed Reactor Vessel -- combines a trickling filter and
an activated sludge reactor for more efficient degradation of
contaminants.
Aeration Lagoons -- secondary or tertiary treatment to remove
carbon, nitrogen or phosphorous.
. CHEMICAL TREATMENT: The Company's mobile chemical treatment
equipment utilizes the following technologies:
Carbon Adsorption -- passage of a liquid or vapor discharge
stream through a bed of activated carbon which adsorbs certain
contaminants.
Oxidation/Reduction -- conversion of complex components of the
wastestream into simpler, less toxic materials through addition
of oxidizing or reducing agents such as ozone, hydrogen peroxide
and sodium bisulfate.
Clarification/Flocculation -- addition of chemicals which bond
with dissolved metals to form insoluble products which separate
through settling techniques.
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Ion-Exchange -- ion-exchange resins used for the selective
removal of heavy metals and hazardous ions.
Ultra-Violet Treatment -- use of ultra-violet light to kill
pathogens and weaken strong bonds associated with some organic
chemicals.
. PHYSICAL TREATMENT: The Company's physical treatment technologies
generally involve removal of contaminants through osmosis,
settlement or filtration. The Company's mobile physical treatment
equipment utilizes the following technologies:
Heated Volatile Stripping -- removal of contaminants with low
boiling points by passage of air under pressure through the
wastestream.
Fume Scrubbing -- passage of a vaporized stream through an
aerosol spray to remove contaminant particles from the vapor
stream.
Immiscible Fraction Separation -- removal of a component of a
wastestream which is immiscible in water through settling
techniques.
Mixed Media Filtration -- removal of suspended particles by
passage through selected filter media.
. SOIL VAPOR EXTRACTION AND SOIL FLUSHING: The Company has applied
several innovative technologies, known generally as soil vapor
extraction and soil flushing, based on a patent granted in 1984 for
a portable method of soil decontamination above or below the
groundwater table. The technologies generally involve the use of a
system of pressurized injection and vacuum extraction wells to
induce a pressure gradient and a fluid flow to extract contaminants
and treat them in-situ or in an aboveground system. The
technologies can be used to remove contaminants in soils and
groundwater, in-situ or ex-situ, and can be combined with
bioremediation to treat mixtures of volatile and non-volatile
contaminants.
. THERMAL TREATMENT: The Company's thermal treatment technologies
include infrared incineration, rotary kiln technology and thermal
desorption. Infrared incineration uses electric powered resistance
heaters as a source of radiant heat for removal and destruction of
hazardous organic contaminants. Rotary kiln incineration is the
traditional incineration process for destroying organic hazardous
waste constituents in a refractory lined rotating kiln. Thermal
desorption is a thermal treatment technology which uses heat to
remove volatile compounds from a waste without oxidation of the
compounds. The Company has established a thermal treatment
engineering group to assess, develop and commercialize thermal
technologies for on-site remediation. The Company provides
incineration services through three thermal destruction units which
can be moved directly onto a project site involving PCBs or other
toxic organics. The Company has successfully completed five
large-scale, on-site incineration projects with its mobile infrared
unit. The Company has constructed a 30 tons per hour
state-of-the-art mobile treatment system that is being used for its
Baird & McGuire Superfund site remediation project.
FOCUS ON LARGER PROJECTS AND GOVERNMENT CONTRACTS
Recently, the Company has pursued larger projects as a method to
achieve a more predictable revenue stream, more consistent utilization of
equipment and personnel, and greater leverage of sales and marketing costs.
Historically, the Company relied most heavily on private sector remediation
projects in the Northeast and Midwest that typically involved planned cleanups
of sites that were contaminated in the normal course of manufacturing activity
and emergency cleanups of oil or chemical spills. Contract values typically
were less than $1 million in size and less than one year in duration. While
this type of remediation activity still comprises a majority of the work
performed by the Company, it now aggressively targets more complex,
multi-million dollar, multi- year private sector and government site-specific
and term contracts. As a result of its shift in project focus,
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since the beginning of 1991 the Company has been awarded a number of large,
site-specific contracts which, in some cases, may require several years to
complete. Larger site-specific projects may offer the Company the opportunity
to realize margins higher than on other types of contracts, but also impose
heightened risks of loss in the event that actual costs are higher than those
estimated at the time of bid due to unanticipated problems, inefficient project
management, or disputes over the terms and specifications of the contracted
performance.
Since the beginning of 1991, the Company has been awarded 18
government term contracts with potential values ranging from $10 million to
$250 million and terms ranging from three to ten years. Such government term
contracts typically are performed by completing remediation work under delivery
orders, issued by the contracting government entity, for a large number of
small- to medium-sized projects throughout the geographic area covered by the
contract. Such government term contracts do not represent commitments with
respect to the amount, if any, that will actually be expended pursuant to such
contracts, may generally be cancelled, delayed or modified at the sole option
of the government, and are subject to annual funding limitations and public
sector budget constraints. Accordingly, such government contracts represent
the potential dollar value that may be expended under such contracts, but there
is no assurance that such amounts, if any, will be actually spent on any
projects, or of the timing thereof.
For the fiscal year ended December 31, 1994, 64.5% of the Company's
gross revenues were derived from federal, state and local government contracts.
The Company expects that the percentage of its revenues attributable to such
government clients may continue to grow and represent a greater portion of its
revenues. In addition to its dependence on government contracts, the Company
also faces the risks associated with such contracting, which could include
substantial civil and criminal fines and penalties. As a result of its
government contracting business, the Company is, has been and may in the future
be subject to audits and investigations by government agencies. In addition to
potential damage to the Company's business reputation, the failure by the
Company to comply with the terms of any of its government contracts could also
result in the Company's suspension or debarment from future government
contracts for a significant period of time. The fines and penalties which
could result from noncompliance with appropriate standards and regulations, or
the Company's suspension or debarment, could have a material adverse effect on
the Company's business, particularly in light of the increasing importance to
the Company of work for various government agencies. See "Item 3, Legal
Proceedings."
ENVIRONMENTAL CONTRACTOR RISKS
Although the Company believes that it generally benefits from
increased environmental regulations, and from enforcement of those regulations,
increased regulation and enforcement also create significant risks for the
Company. The assessment, remediation, analysis, handling and management of
hazardous substances necessarily involve significant risks, including the
possibility of damages or injuries caused by the escape of hazardous materials
into the environment, and the possibility of fines, penalties or other
regulatory action. These risks include potentially large civil and criminal
liabilities for violations of environmental laws and regulations, and
liabilities to customers and to third parties for damages arising from
performing services for clients, which could have a material adverse effect on
the Company.
Potential Liabilities Arising Out of Environmental Laws and
Regulations. All facets of the Company's business are conducted in the context
of a rapidly developing and changing statutory and regulatory framework. The
Company's operations and services are affected by and subject to regulation by
a number of federal agencies including the EPA, the Occupational Safety and
Health Administration ("OSHA"), and, on limited occasions, the Nuclear
Regulatory Commission, as well as applicable state and local regulatory
agencies. (For a description of certain applicable laws and regulations, see
"Business--Regulation.")
Potential Liabilities Involving Clients and Third Parties. In
performing services for its clients, the Company could potentially be liable
for breach of contract, personal injury, property damage, and negligence,
including claims for lack of timely performance and/or for failure to deliver
the service promised (including improper or negligent performance or design,
failure to meet specifications, and breaches of express or implied
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warranties). The damages available to a client, should it prevail in its
claims, are potentially large and could include consequential damages.
Environmental contractors, in connection with work performed for
clients, also potentially face liabilities to third parties from various claims
including claims for property damage or personal injury stemming from a release
of hazardous substances or otherwise. Claims for damage to third parties could
arise in a number of ways, including through a sudden and accidental release or
discharge of contaminants or pollutants during the performance of services,
through the inability, despite reasonable care, of a remedial plan to contain
or correct an ongoing seepage or release of pollutants, through the inadvertent
exacerbation of an existing contamination problem, or through reliance on
reports prepared by the Company. Personal injury claims could arise
contemporaneously with performance of the work or long after completion of the
project as a result of alleged exposure to toxic substances. In addition,
increasing numbers of claimants assert that companies performing environmental
remediation should be adjudged strictly liable, i.e., liable for damages even
though its services were performed using reasonable care, on the grounds that
such services involved "abnormally dangerous activities."
Clients frequently attempt to shift various of the liabilities arising
out of remediation of their own environmental problems to contractors through
contractual indemnities. Such provisions seek to require the Company to assume
liabilities for damage or injury to third parties and property and for
environmental fines and penalties. The Company has adopted risk management
policies designed to address these problems, but cannot assure their adequacy.
In addition, the Company generally coordinates through subcontractors the
transportation of any hazardous waste which is not remediated on-site to a
licensed hazardous waste disposal or incineration facility.
Recently, the EPA has constricted significantly the circumstances
under which it will indemnify its contractors against liabilities incurred in
connection with CERCLA projects.
DEPENDENCE ON ENVIRONMENTAL REGULATION
Much of the Company's business is generated either directly or
indirectly as a result of federal and state laws, regulations and programs
related to environmental issues. Accordingly, a reduction in the number or
scope of these laws and regulations, or changes in government policies
regarding the funding, implementation or enforcement of such laws, regulations
and programs, could have a material adverse effect on the Company's business.
See "Business -- Regulation."
MARKETS AND CUSTOMERS
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The Company provides its services to a broad base of clients in both
the private and government sectors. Its private sector clients include large
chemical, petroleum, manufacturing, transportation, real estate, electronics,
automotive, aerospace and other industrial companies, as well as engineering
and consulting firms. The Company has worked for a majority of the Fortune 100
industrial companies. Historically, the majority of the Company's private
sector revenues were derived from projects with values typically less than $1
million in size and less than one year in duration. Net revenues from
industrial clients for 1994 were $78.3 million and constituted 35.5% of the
Company's net revenues.
In the government sector, the market for the Company's services
primarily consists of federal government agencies. The Company has been a
prime contractor to the EPA since 1984 under Emergency Response Cleanup
Services ("ERCS") contracts administered under the Superfund Removal Program.
In addition, through site specific and term contracts, the Company provides its
services to the DOD, including USACE, the U.S. Departments of the Navy, Air
Force and Army, at DOE facilities and to state and local governments. Net
revenues from government agencies in 1994 aggregated $142 million and accounted
for 64.5% of net revenues, of which the USACE and the Department of the Navy
accounted for approximately $56 million and 25.4% and $32.8 million and 14.9%
of net revenues, respectively.
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At December 31, 1994, the Company had 259 Environmental Service
Agreements in place with commercial customers and 14 with government customers.
Under these agreements, which generally have terms of one to five years, the
Company agrees to provide its services to customers upon request at stipulated
prices.
SEASONALITY AND FLUCTUATION IN QUARTERLY RESULTS
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Quarterly results are subject to fluctuation due to a number of
factors. The timing of the Company's revenues is dependent on its backlog,
contract awards and the performance requirements of each contract. The
Company's revenues are also affected by the timing of its clients' planned
remediation activities which generally increase during the third and fourth
quarters. Because of this change in demand, the Company's quarterly revenues
can fluctuate, and revenues for the first and second quarters of each year have
historically been lower than for the third and fourth quarters. Accordingly,
results for any one quarter should not be considered indicative of results to
be expected for any other quarter or for a full fiscal year.
COMPETITION
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The environmental services industry is highly competitive with
numerous companies of various size, geographic presence and capabilities
participating. The Company believes that it has approximately a dozen
principal competitors in the environmental remediation sector of the
environmental services industry and numerous smaller competitors. The Company
believes that the principal competitive factors in its business are operational
experience, technical proficiency, breadth of services offered, local presence
and price. In certain aspects of the Company's environmental remediation
business, substantial capital investment is required for equipment. Certain of
the Company's competitors have greater financial resources, which could allow
for greater investment in equipment and provide better access to bonding and
insurance markets to provide the financial assurance instruments which are
often required by clients. Additionally, the relatively recent entry of
several aerospace and defense contractors, as well as large construction and
engineering firms, into the environmental services industry has increased the
level of competition. The Company believes that the demand for environmental
services is still developing and expanding and, as a result, many small and
large firms will continue to be attracted to the industry.
INSURANCE
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The Company's insurance program in effect from November 1, 1994
through October 31, 1995 includes primary commercial general liability coverage
in the amount of $1,000,000 per occurrence/$2,000,000 aggregate, primary
automobile liability coverage in the amount of $1,000,000 combined single
limit, workers' compensation liability to statutory limits and employer's
liability insurance of $1,000,000. The Company's primary insurance is in a
deductible program with self-insured retentions equal to the limit of liability
and up to $500,000 per occurrence and $500,000 for the Company's workers'
compensation and employer's liability insurance coverage in most states. With
respect to certain other states, the Company's workers' compensation and the
Company's captive insurance subsidiary (the "Captive") reinsures such policies
and indemnifies the insurance carrier against all losses and costs of defense
up to a self insured retention of $500,000 per occurrence. With respect to the
Company's primary insurance coverages in effect prior to November 1, 1994, such
coverages were also provided under a reinsurance arrangement pursuant to which
the Captive reinsured the limits of each such policy (except for the worker's
compensation policy with a self-insured retention of $500,000 per occurrence.)
The Company supports the indemnity commitment of the Captive with letters of
credit provided under the Company's Revolving Credit Facility. The Company has
caused to be issued $7,030,000 in letters of credit to support the Captive's
existing or anticipated obligations to indemnify the insurance carrier, which
amount is adjusted from time to time. From a risk management perspective, the
deductible amounts under the Company's primary insurance policies and all
policies reinsured by the Captive are, in effect, a self-insurance layer.
Additionally, the Company has $40,000,000 of excess liability policies insuring
claims in excess of the primary insurance coverages described above. The
Company also has other insurance policies with various self-insured retentions,
including property coverage in the amount of $121,000,000, consultants'
environmental liability coverage in the amount of $30,000,000 per claim and in
the aggregate, and environmental impairment liability coverage in the amount of
$5,000,000 with respect to the Company's fixed base laboratory facility.
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Although the Company believes its insurance program to be appropriate
for the management of its risks, its insurance policies may not fully cover
risks arising from the Company's operations. The exclusion of certain
pollution and other liabilities from some insurance policies, or losses in
excess of the coverage, may cause all or a portion of one or more losses not to
be covered by such insurance. Further, the cost and limited availability of
insurance has resulted in the Company's use of deductible programs and
self-insurance through the Captive, thus exposing the Company to additional
liabilities.
EMPLOYEES
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The Company had approximately 2,168 employees at December 31, 1994.
The Company is not party to collective bargaining agreements. The Company
considers relations with its employees to be satisfactory.
PATENTS
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The Company currently owns two patents covering certain design
features of equipment employed in its on-site remediation business. The first
relates to a filtration system developed and used by the Company to remove
pollutants from flowing creeks and streams and the second, known as a Portable
Method for Decontaminating Earth, relates to a decontamination system used by
the Company to remove contaminants from the soil through a process, commonly
known as soil vapor extraction. Although the Company considers its patents to
be important, they are not a material factor in its business.
REGULATION
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The environmental services business, including the remediation
services segment of the industry, has benefited enormously from extensive
federal and state regulation of environmental matters. On the other hand, the
Company's environmental services are also subject to extensive federal and
state legislation as well as regulation by the EPA, the Occupational Safety and
Health Administration and applicable state and local regulatory agencies. All
facets of the Company's business are conducted in the context of a rapidly
developing and changing statutory and regulatory framework and an aggressive
enforcement and regulatory posture. The full impact of these laws and
regulations, and the enforcement thereof, on the Company's business is
difficult to predict, principally due to the complexity of the relatively new
legislation, new and changing regulations, and the impact of political and
economic pressures. The assessment, remediation, analysis, handling and
management of hazardous substances necessarily involve significant risks,
including the possibility of damages or injuries caused by the escape of
hazardous materials into the environment, and the possibility of fines,
penalties or other regulatory action.
The Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") addresses cleanup of sites at which there has been a
release or threatened release of hazardous substances into the environment.
CERCLA assigns liability for costs of cleanup of such sites and for damage to
natural resources to any person who, currently or at the time of disposal of a
hazardous substance, owned or operated any facility at which hazardous
substances were disposed of; to any person who by agreement or otherwise
arranged for disposal or treatment, or arranged with a transporter for
transport for disposal or treatment of hazardous substances owned or possessed
by such person for disposal or treatment by others; and to any person who
accepted hazardous substances for transport to disposal or treatment facilities
or sites selected by such persons from which there is a release or threatened
release of hazardous substances. CERCLA authorizes the federal government both
to clean up these sites itself and to order persons responsible for the
situation to do so. In addition, under the authority of Superfund and its
implementing regulations, detailed requirements apply to the manner and degree
of remediation of facilities and sites where hazardous substances have been or
are threatened to be released into the environment. CERCLA created the
Superfund to be used by the federal government to pay for the cleanup efforts.
Where the federal government expends money for remedial activities, it may seek
reimbursement from the "potentially responsible parties." CERCLA imposes
strict, joint and several retroactive liability upon such parties.
Increasingly, there are efforts to expand the reach of CERCLA to make
environmental contractors responsible for cleanup costs by claiming that
environmental contractors are owners or operators of hazardous waste facilities
or that they arranged for treatment, transportation or disposal of
8
<PAGE> 11
hazardous substances. Several recent court decisions have accepted these
claims. Should the Company be held responsible under CERCLA for damages caused
while performing services or otherwise, it may be forced to bear such liability
by itself, notwithstanding the potential availability of contribution or
indemnity from other parties. Although CERCLA's taxing authority expires
December 31, 1995, EPA and congressional analysts concur that a sufficient
surplus of unspent appropriated funds exist to run the program through
mid-1997. The Company believes Superfund reauthorization hearings will begin
this year and anticipates its reauthorization in 1995 or 1996.
The Resource Conservation and Recovery Act of 1976, as amended in 1984
("RCRA"), is the principal federal statute governing hazardous waste
generation, treatment, storage and disposal. RCRA, or EPA-approved state
programs at least as stringent, govern waste handling activities involving
wastes classified as "hazardous." Under RCRA, liability and stringent operating
requirements are imposed on a person who is either a "generator" or
"transporter" of hazardous wastes, or an "owner" or "operator" of a hazardous
waste treatment, storage or disposal facility. The EPA has issued regulations
under RCRA for hazardous waste generators, transporters and owners and
operators of hazardous waste treatment, storage or disposal facilities. These
regulations impose detailed operating, inspection, training, emergency
preparedness and response standards, and requirements for closure, continuing
financial responsibility, manifesting, recordkeeping and reporting. The
Company's clients remain responsible by law for the generation or
transportation of hazardous wastes or ownership or operation of hazardous waste
treatment, storage or disposal facilities. Although the Company does not
believe its conduct in performing environmental remediation services would
cause it to be considered liable as an owner or operator of a hazardous waste
treatment, storage or disposal facility, or a generator or transporter of
hazardous wastes under RCRA, RCRA and similar state statutes regulate the
Company's practices for the treatment, transportation and other handling of
hazardous materials, and substantial fines and penalties may be imposed for any
violation of such statutes and the regulations thereunder.
The Company's services are also utilized by its clients in complying
with, and the Company's operations are subject to regulation under, among
others, the following federal laws: the Toxic Substances Control Act, the
Clean Water Act, the Safe Drinking Water Act, the Occupational Safety and
Health Act and the Hazardous Materials Transportation Act. In addition, many
states have passed Superfund-type legislation and other statutes, regulations
and policies to cover more detailed aspects of hazardous materials management.
The Company, through its on-site treatment capabilities and the use of
subcontractors, attempts to minimize its transportation of hazardous substances
and wastes. However, there are occasions, especially in connection with its
emergency response activities, when the Company does transport hazardous
substances and waste. Such transportation activities are closely regulated by
the United States Department of Transportation, the Interstate Commerce
Commission, and transportation regulatory bodies in each state. The applicable
regulations include licensing requirements, truck safety requirements, weight
limitations and, in some areas, rate limitations and operating conditions.
BACKLOG AND POTENTIAL VALUE OF TERM CONTRACTS
--------------------------------------------------------------------------------
The following table lists at the dates indicated (i) the Company's
backlog, defined as the unearned portion of the Company's existing contracts
and unfilled orders, and (ii) the Company's term contracts, defined as the
potential value of government term contracts (in thousands):
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1994 1993 1992
---------- -------- --------
<S> <C> <C> <C>
Backlog . . . . . . . . . . . . . . . . . . . . $ 255,000 $201,000 $164,000
Term contracts . . . . . . . . . . . . . . . . 1,498,000 652,000 207,000
---------- -------- --------
Total contract backlog . . . . . . . . . . $1,753,000 $853,000 $371,000
========== ======== ========
</TABLE>
Backlog. In accordance with industry practice, substantially all of
the Company's contracts in backlog may be terminated at the convenience of the
client. In addition, the amount of the Company's backlog is subject to changes
in the scope of services to be provided under any given contract. The Company
has not historically
9
<PAGE> 12
experienced any material contract terminations and generally experiences
favorable changes in contract scope. The Company estimates that approximately
65% of the backlog at December 31, 1994 will be realized within the next year.
Term Contracts. The significant increase in the potential value of
term contracts since 1992 has resulted from the award of 18 government
contracts ranging in size from $10,000,000 to $250,000,000 and with terms
ranging from three to ten years. The majority of dollars awarded came from the
U.S. Departments of the Navy, Air Force and Army. Such government term
contracts typically are performed by completing remediation work under delivery
orders, issued by the contracting government entity, for a large number of
small- to medium-sized projects throughout the geographic area covered by the
contract. The Company's government term contracts generally may be cancelled,
delayed or modified at the sole option of the government, and typically are
subject to annual funding limitations and public sector budget constraints.
Accordingly, such government contracts represent the potential dollar value
that may be expended under such contracts, but there is no assurance that such
amounts, if any, will be actually spent on any projects, or of the timing
thereof.
EQUITY INVESTMENT
--------------------------------------------------------------------------------
NSC Corporation ("NSC"). NSC is the leading provider of asbestos
abatement services to a broad range of commercial and industrial clients and
government agencies throughout the United States. NSC provides services to
abate, primarily through removal, the hazards associated with asbestos
insulation and materials containing asbestos in large commercial and public
buildings, and in connection with large industrial facility decontamination and
decommissioning projects. In May 1993, the Company's investment in NSC was
reduced from 70% to 40% as a result of NSC's purchase of the asbestos abatement
division of Brand in exchange for its industrial cleaning and maintenance
business and the issuance of 4,010,000 shares of NSC common stock. As a part
of this acquisition, NSC repaid all of its intercompany indebtedness to the
Company, which amounted to $12.9 million, and replaced the letters of credit
extended on behalf of NSC by the Company through its revolving credit
agreement. The Company now owns 40% of NSC and accounts for NSC on the equity
method. Rust International, Inc., a subsidiary of Waste Management, Inc., owns
another 40% of NSC, and the remaining 20% is publicly held.
ITEM 2. PROPERTIES
--------------------------------------------------------------------------------
The Company currently owns property in four states and leases property
in 19 states and the District of Columbia. The property owned by the Company
includes approximately 26 acres in Findlay, Ohio, upon which are located the
Company's 31,200 square foot corporate headquarters, a 39,600 square foot
laboratory and technical facility, a 20,000 square foot support services
facility, as well as its fabrication, maintenance and remediation service
center facilities. The Company also owns remediation service centers in
Covington, Georgia (approximately ten acres of land and an 8,200 square foot
building), Clermont, Florida (approximately five acres of land and a 6,500
square foot building) and Baton Rouge, Louisiana (approximately ten acres of
land and a 52,500 square foot building).
The Company operates other offices and remediation service centers in
the following states: California, Colorado, the District of Columbia, Florida,
Hawaii, Illinois, Iowa, Georgia, Massachusetts, Minnesota, Missouri, New
Jersey, New York, Ohio, Pennsylvania, Tennessee, Texas, Virginia and
Washington. All of these offices and service center facilities are leased.
Under these leases, the Company is required to pay base rentals, real estate
taxes, utilities and other operating expenses. Annual rental payments for the
remediation service centers and office properties are approximately $2,600,000.
ITEM 3. LEGAL PROCEEDINGS
--------------------------------------------------------------------------------
In October 1993, the Company was retained by Citgo Petroleum
Corporation ("Citgo") for the removal of surface impoundment sludge at its Lake
Charles, Louisiana refinery. Based on information provided to the Company by
Citgo, the Company bid and was awarded a contract for approximately
$28,600,000. During April 1994, the Company submitted to Citgo a request for a
substantial equitable adjustment to the contract as a result
10
<PAGE> 13
of deficient project specifications provided by Citgo as well as other
unplanned events controlled by Citgo. On April 29, 1994, Citgo filed a
declaratory judgment action in the United States District Court for the Western
District of Louisiana requesting a declaratory judgment that the Company is not
entitled to additional compensation and requesting an order for specific
performance requiring the Company to perform the contract. The financial
statements of the Company as of December 31, 1994 reflect a claim receivable
and other accounts receivable relating to performance of the Citgo project
aggregating approximately $28,210,000. The Company's answer to the declaratory
judgment action was filed on July 29, 1994, together with counterclaims against
Citgo for negligent misrepresentation, breach of contract and quantum meruit
seeking damages in excess of $35,000,000. Subsequent to filing of the
Company's answer and counterclaim, Citgo amended its complaint seeking damages
under the contract, which the Company believes approximates the amount of
disputed accounts receivable that Citgo is currently withholding. In December
1994 Citgo filed a motion to allow it to file, and in January 1995 Citgo filed,
a third party complaint against Occidental Oil and Gas Corporation and OXY USA,
Inc. asserting various claims relating to their prior involvement with the
Citgo site and its contract specifications.
The Company was named in April 1994 as one of 33 third party
defendants in a case titled United States of America v. American Cyanamid
Company, Inc., et al., pending in the United States District Court for the
Southern District of Virginia. This litigation arises out of Superfund cost
recovery claims made against several potentially responsible parties ("PRPs")
by the EPA for amounts in excess of $24,000,000 for response costs arising out
of releases and threatened releases of hazardous wastes at the Fike Chemical,
Inc. Superfund site (the "Site") in Nitro, West Virginia. The Company was
retained as a response action contractor for the Site under contracts with the
EPA and USACE. The third party complaint alleges that the Company was an
operator of the Site during the remediation and that the Company caused
releases or threatened releases of hazardous substances at the Site as a result
of its negligent conduct, grossly negligent conduct or intentional misconduct.
The third party complaint seeks damages and contribution from the Company and
the other third party defendants. The Company has submitted claims for
indemnification related to this lawsuit under its contract with the USACE and
the EPA and has notified its contractors pollution liability insurance carrier.
The Company believes the lawsuit is without merit, intends to vigorously defend
against it and does not believe that it will have a material adverse effect on
the results of future operations and financial condition of the Company. In
May 1994 the Company learned a criminal and civil investigation has been
commenced by the government relating to the Company's billings to the EPA and
USACE for its work at the Site. The Company believes the investigation
followed certain allegations made by the PRPs in defense of the main cost
recovery action. The Company is cooperating fully with the investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------------------------------------
The executive officers of the Company are listed below:
<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<S> <C> <C>
James L. Kirk 45 Chairman of the Board, President and Chief Executive Officer
Joseph R. Kirk 43 Executive Vice President and a Director
Pamela K.M. Beall 38 Vice President, Treasurer and Assistant Secretary
Robert J. Blackwell 38 Vice President, Marketing and Strategic Planning
Daniel P. Buettin 42 Vice President, Finance and Chief Financial Officer
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C> <C>
Fred H. Halvorsen 53 Vice President, Health and Safety
Kris E. Hansel 37 Vice President and Controller
Frank A. McBride 45 Vice President
Phillip V. Petrocelli 36 Vice President, Western Operations
Michael A. Szomjassy 44 Vice President, Eastern Operations
Randall M. Walters 41 Vice President, General Counsel and Secretary
</TABLE>
------------------------------------------------------------------------------
James L. Kirk - Chairman of the Board, President and Chief Executive Officer.
Mr. Kirk was elected President and Chief Executive Officer of the Company in
July 1986, and was elected Chairman of the Board in January 1987. Mr. Kirk was
elected Chairman of the Board and Chief Executive Officer of OHM Remediation
Services Corp. ("OHM"), a wholly owned subsidiary of the Company, in April
1985. Mr. Kirk is a founder of OHM and has served in various capacities as an
officer and director of OHM. Mr. Kirk also serves as a director of NSC.
Joseph R. Kirk - Executive Vice President and Director. Mr. Kirk assumed his
current position in July 1986 and previously served as Vice Chairman of OHM.
He is a founder of OHM and has served in various capacities as an officer and
director of OHM.
Pamela K.M. Beall - Vice President, Treasurer and Assistant Secretary. Ms.
Beall assumed her current position in July 1986 and became Treasurer and
Assistant Secretary of OHM in September 1985, having joined OHM in June 1985 as
Director of Finance. Prior to joining OHM, Ms. Beall was General Manager,
Treasury Services for USX Corporation and previous to that with Marathon Oil
Company.
Robert J. Blackwell - Vice President, Marketing and Strategic Planning. Mr.
Blackwell joined the Company in July 1993. Prior to joining the Company, Mr.
Blackwell was Vice President for Federal Marketing and Legislative Affairs,
from January 1993 to July 1993, and Director of Marketing and Federal
Relations, from January 1989 to December 1992 of Ebasco Services Incorporated.
Daniel P. Buettin - Vice President, Finance and Chief Financial Officer. Mr.
Buettin joined the Company as Controller in January 1987 and served as Vice
President, Midwest Region from April 1992 until he assumed his current position
in November 1994. Prior to joining the Company, Mr. Buettin was a Senior
Manager with Arthur Andersen & Co.
Fred H. Halvorsen - Vice President, Health and Safety. Dr. Halvorsen joined
OHM in July 1984 as Director of Health and Safety and assumed his current
position in May 1987.
Kris E. Hansel - Vice President and Controller. Mr. Hansel joined the Company
as General Accounting Manager in November 1988, became Assistant Controller in
October 1991 and assumed his current position in April 1992. Prior to joining
the Company, Mr. Hansel was General Accounting Manager of
WearEver-ProctorSilex, Inc.
Frank A. McBride - Vice President. Mr. McBride joined the Company in May 1987.
Prior to joining the Company, Mr. McBride was Vice President, Product
Management for US Sprint Telephone Company. Mr. McBride also serves as a
director of NSC.
Phillip V. Petrocelli - Vice President, Western Operations. Mr. Petrocelli
joined the Company in August 1993. Prior to joining the Company, Mr.
Petrocelli was Regional Director and previous to that was Acting Vice President
- Analytical Labs, with IT Corporation.
12
<PAGE> 15
Michael A. Szomjassy - Vice President, Eastern Operations. Mr. Szomjassy
joined the Company in November 1989, as Vice President, Southeast Region of OHM
and assumed his current position with the Company in May 1993. Prior to
joining OHM, Mr. Szomjassy was Regional Manager, Remediation Services of Ebasco
Services, Inc.
Randall M. Walters - Vice President, General Counsel and Secretary. Mr.
Walters joined the Company in January 1987. Prior to joining the Company, Mr.
Walters was associated with the law firm of Jones, Day, Reavis & Pogue from
December 1984 to January 1987 and was previously associated with the law firm
of Vinson & Elkins, Houston, Texas. Mr. Walters also serves as a director of
NSC.
13
<PAGE> 16
PART II
--------------------------------------------------------------------------------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
--------------------------------------------------------------------------------
The information required by this item is set forth on page 44 of the Company's
Annual Report to Shareholders for the year ended December 31, 1994 and is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------------------------------------------------------
The information required by this item is set forth on pages 17 and 18 of the
Company's Annual Report to Shareholders for the year ended December 31, 1994
and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
The information required by this item is set forth on pages 19 through 26 of
the Company's Annual Report to Shareholders for the year ended December 31,
1994 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------------------------------
The Report of Independent Auditors and Consolidated Financial Statements set
forth on pages 27 through 45 of the Company's Annual Report to Shareholders for
the year ended December 31, 1994 is incorporated herein by reference. The
Quarterly Results of Operations set forth on page 44 of the Company's Annual
Report to Shareholders for the year ended December 31, 1994 is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
--------------------------------------------------------------------------------
Not applicable.
14
<PAGE> 17
PART III
--------------------------------------------------------------------------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------------------------------------
The information required by this item, in addition to that set forth above in
Part I under the caption "Executive Officers of the Registrant," is set forth
in the section entitled "Election of Directors" contained on pages 63 and 64 of
the Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission (the "Proxy Statement") in connection with the Company's
1995 Annual Meeting of Shareholders, and said information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
Remuneration of directors and officers and information related thereto is
included on pages 67 through 71 of the Proxy Statement under the caption
"Executive Compensation and Other Information," and said information is
incorporated herein by reference except for information included under the
subcaptions "Board Compensation and Stock Option Committee Report" and
"Performance Graph."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------
Security ownership of management and certain beneficial owners and information
related thereto is included on pages 65 and 66 of the Proxy Statement under the
caption "Voting Securities and Principal Holders Thereof," and said information
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------
Transactions with management and related parties and information related
thereto is included on page 72 of the Proxy Statement under the caption
"Certain Relationships and Related Transactions," and said information is
incorporated herein by reference.
15
<PAGE> 18
PART IV
--------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------
(a)(1) The following consolidated financial statements of the Company and its
subsidiaries, included in the Registrant's 1994 Annual Report to Shareholders,
have been incorporated herein by reference pursuant to Item 8:
Consolidated Balance Sheets
-As of December 31, 1994 and 1993
Consolidated Statements of Operations
-For the Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Shareholders' Equity
-For the Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows
-For the Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Report of Independent Auditors
(a)(2) The following consolidated financial statement information and schedule
of the Company and its subsidiaries are included in this Annual Report on Form
10-K:
Schedule II Valuation and Qualifying Accounts
-- For the Years Ended December 31, 1994, 1993 and 1992
16
<PAGE> 19
(a)(3) Exhibits
The following Exhibits are included in this Annual Report on Form 10-K:
<TABLE>
<CAPTION>
Exhibit Exhibit
Number Description
------- -----------
<S> <C>
2(a) Agreement of Merger dated as of May 6, 1994 by and between OHM Corporation, a Delaware corporation and the Registrant.
2(b) Agreement and Plan of Reorganization among OHM Corporation, Rust Remedial Services, Inc., Enclean Environmental Services
Group, Inc., Rust Environmental, Inc., and Rust International Inc. dated December 5, 1994 [incorporated by reference to
Appendix B to Registrant's Proxy Statement for its Annual Meeting of Shareholders to be held May 11, 1995].
3(i) Amended and Restated Articles of Incorporation of the Registrant dated May 19, 1994.
3(ii) Regulations of the Registrant.
4(a) Indenture dated as of October 1, 1986 between Registrant and United States Trust Company of New York, Trustee, relating to
the Registrant's 8% Convertible Subordinated Debentures due October 1, 2006 [incorporated by reference to Exhibit 4(a) to
Registrant's Annual Report on Form 10-K for the year ended December 31, 1986].
4(b) Specimen Debenture Certificate [incorporated by reference to Exhibit 4(b) to Registrant's Amendment No. 1 to Registration
Statement on Form S-1, No. 33-8296].
4(c) First Supplemental Indenture dated as of May 20, 1994 by and among the Registrant and United States Trust Company of New
York.
4(d) Specimen Common Stock Certificate.
*10(a) OHM Corporation 1986 Stock Option Plan, as amended and restated as of May 10, 1994 [incorporated by reference to Appendix 2
to Registrant's Proxy Statement for its Annual Meeting held May 10, 1994].
*10(b) OHM Corporation Nonqualified Stock Option Plan for Directors [incorporated by reference to Exhibit 10(c) to Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1992].
*10(c) OHM Corporation Retirement Savings Plan, as amended and restated as of January 1, 1994.
*10(d) OHM Corporation Retirement Savings Plan Trust Agreement between Registrant and National City Bank, as Trustee, as amended
and restated effective July 1, 1994.
*10(e) OHM Corporation Directors' Deferred Fee Plan.
*10(f) Form of Indemnification Agreements entered into between Registrant and its Directors and Executive Officers [incorporated
by reference to Exhibit 10(n) to Registration Statement on Form S-1, No. 33-8296].
</TABLE>
__________________________
* Indicates a management contract or compensatory plan or arrangement
required to be filed pursuant to Item 14(c) of Form 10- K.
17
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C>
*10(g) Form of Employment Agreements providing certain severance benefits in the event of a change of control entered
into between Registrant and certain of its executive officers [incorporated by reference to Exhibit 10(g) to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1988].
10(h) Revolving Credit Agreement dated as of May 11, 1993, among OHM Corporation, OHM Remediation Services Corp., the financial
institutions named therein, and Citibank USA, Inc., as Agent, and Continental Bank N.A., as Administrative Agent
[incorporated by reference to Exhibit 10(a) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1993].
10(i) Security Agreement dated as of May 11, 1993, among OHM Corporation, OHM Remediation Services Corp. and Continental Bank
N.A., as Administrative Agent [incorporated by reference to Exhibit 10(b) to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993].
10(j) Pledge Agreement dated as of May 11, 1993, executed by the Registrant in favor of Continental Bank N.A., as Administrative
Agent [incorporated by reference to Exhibit 10(c) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993].
10(k) Amendment to Revolving Credit Agreement dated as of September 30, 1993, among OHM Corporation, OHM Remediation Services
Corp., the financial institutions named therein, and Citibank USA, Inc., as Agent, and Continental Bank N.A., as
Administrative Agent [incorporated by reference to Exhibit 10(t) to the Registrant's Registration Statement on Form S-1,
No. 33-70130].
10(l) Second Amendment to Revolving Credit Agreement dated as of May 4, 1994 among OHM Corporation, OHM Remediation Services
Corp., the financial institutions named therein, Continental Bank N.A., as Administrative Agent and Citicorp USA, Inc., as
Agent. [incorporated by reference to Exhibit 10 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 1994].
10(m) Third Amendment to Revolving Credit Agreement dated as of July 29, 1994 among OHM Corporation, OHM Remediation Services
Corp., the financial institutions named therein, Continental Bank N.A., as Administrative Agent and Citicorp USA, Inc., as
Agent [incorporated by reference to Exhibit 10(a) to Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994].
10(n) Fourth Amendment to Revolving Credit Agreement dated as of January 18, 1995 among OHM Corporation, OHM Remediation Services
Corp., the financial institutions named therein, Continental Bank N.A., as Administrative Agent and Citicorp USA, Inc., as
Agent.
10(o) Master Loan and Security Agreement dated May 11, 1993, between OHM Remediation Services Corp. and BOT Financial Corporation
[incorporated by reference to Exhibit 10(d) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1993].
10(p) Amendment No. 1 to Master Loan and Security Agreement dated as of January 19, 1995 between BOT Financial Corporation and
OHM Remediation Services Corp.
10(q) Promissory Note dated December 23, 1993 executed by OHM Remediation Services Corp. in favor of BOT Financial Corporation
[incorporated by reference to Exhibit 10(m) to Registrant's Annual Report on Form 10-K for the year ended December 31,
1993].
</TABLE>
---------------------------
* Indicates a management contract or compensatory plan or arrangement
required to be filed pursuant to Item 14(c) of Form 10- K.
18
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C>
10(r) Promissory Note dated December 28, 1994 executed by OHM Remediation Services Corp. in favor of BOT Financial Corporation.
10(s) Loan and Security Agreement dated as of August 1, 1994 by and between OHM Remediation Services Corp. and Internationale
Nederlanden Lease Structured Finance B.V. [incorporated by reference to Exhibit 10(b) to Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994].
10(t) Promissory Note dated August 31, 1994 executed by OHM Remediation Services Corp. in favor of Internationale Nederlanden
Lease Structured Finance B.V. [incorporated by reference to Exhibit 10(c) to Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1994].
10(u) Continuing Corporate Guaranty dated as of August 1, 1994 executed by OHM Corporation in favor of Internationale Nederlanden
Lease Structured Finance B.V. [incorporated by reference to Exhibit10(d) to Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1994].
10(v) Purchase Agreement dated as of December 15, 1992, among OHM Corporation, NSC Corporation, NSC Industrial Services Corp.,
Waste Management, Inc., and The Brand Companies, Inc. [incorporated by reference to Exhibit 10(j) to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1992].
10(w) Stock Purchase Agreement dated December 17, 1992, among OHM Corporation and Chemical Waste Management, Inc. [incorporated
by reference to Exhibit 10(k) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1992].
11 Statement Re Computation of Per Share Earnings.
13 Registrant's 1994 Annual Report to Stockholders.
21 Subsidiaries of the Registrant.
23 Consent of Ernst & Young LLP.
24 Powers of Attorney of certain directors and officers of the Company.
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed during the three months ended December 31, 1994.
(c) The response to this portion of Item 14 is included as Exhibits to this report.
</TABLE>
19
<PAGE> 22
(d) The following consolidated financial statements of NSC Corporation and
its subsidiaries, which are consolidated under the equity method of
accounting in the Company's financial statements, are included in this
Annual Report on Form 10-K pursuant to the requirements of Rule 3-09
of Regulation S-X:
Consolidated Balance Sheets
-December 31, 1994 and 1993
Consolidated Statements of Operations
-Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Changes in Stockholders' Equity
-Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows
-Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Report of Independent Auditors
Financial Statement Information and Schedules
Schedule II Valuation and Qualifying Accounts
-Years Ended December 31, 1994, 1993 and 1992
Note: None of the Exhibits listed in this foregoing index is included with
this Annual Report on Form 10-K. A copy of these Exhibits may be
obtained without charge by writing to Pamela K.M. Beall, Vice
President, Treasurer and Assistant Secretary, OHM Corporation, 16406
U.S. Route 224 East, P.O. Box 551, Findlay, Ohio 45839-0551.
20
<PAGE> 23
SIGNATURES
--------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OHM CORPORATION
By * JAMES L. KIRK
-------------------------------------
James L. Kirk-Chairman of the Board,
President and Chief Executive Officer
March 30, 1995
Pursuant to the requirements of the securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on March 30, 1995.
* JAMES L. KIRK
-----------------------------------------------------------------------------
James L. Kirk-Chairman of the Board, President and
Chief Executive Officer
* DANIEL P. BUETTIN
-----------------------------------------------------------------------------
Daniel P. Buettin-Vice President, Finance and Chief Financial Officer
(Principal Financial Officer)
* KRIS E. HANSEL
-----------------------------------------------------------------------------
Kris E. Hansel-Vice President and Controller (Principal Accounting Officer)
* IVAN W. GORR
-----------------------------------------------------------------------------
Ivan W. Gorr-Director
* CHARLES D. HOLLISTER
-----------------------------------------------------------------------------
Charles D. Hollister-Director
* JOSEPH R. KIRK
-----------------------------------------------------------------------------
Joseph R. Kirk-Director
* RICHARD W. POGUE
-----------------------------------------------------------------------------
Richard W. Pogue-Director
* CHARLES W. SCHMIDT
-----------------------------------------------------------------------------
Charles W. Schmidt-Director
* The undersigned, by signing his name hereto does sign and execute this report
pursuant to Powers of Attorney executed on behalf of the above-named
directors and contemporaneously herewith filed with the Securities and
Exchange Commission.
/s/ RANDALL M. WALTERS March 30, 1995
------------------------------------
Randall M. Walters, Attorney-in-Fact
21
<PAGE> 24
OHM CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
-------------------------------------------------------------------------------------------------------------------
Additions
Classification Balance at Charged to Charged to (1) Balance at
Beginning Costs and Other Deductions End
of Period Expenses Accounts Describe of Period
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994
----------------------------
Allowance for Uncollectible Accounts $2,776 $25,522 -- $2,235 $26,063
Year ended December 31, 1993
----------------------------
Allowance for Uncollectible Accounts $1,601 $1,210 -- $35 $2,776
Year ended December 31, 1992
----------------------------
Allowance for Uncollectible Accounts $1,221 $550 -- $170 $1,601
</TABLE>
(1) Uncollectible accounts charged against the valuation reserve.
<PAGE> 1
EXHIBIT 2(a)
AGREEMENT OF MERGER
AGREEMENT OF MERGER ("Merger Agreement") dated as of May 6, 1994 by
and between OHM CORPORATION, a Delaware corporation ("OHM DELAWARE") and OHM
CORPORATION, an Ohio corporation ("OHM OHIO"). OHM DELAWARE and OHM OHIO are
hereinafter sometimes collectively referred to as the "Constituent
Corporations."
The authorized capital stock of OHM OHIO consists of 750 shares of
common stock, par value $0.10 per share, and all shares issued and outstanding
are owned by OHM Delaware. At the Effective Time (as defined in Section 1.07
hereof) the authorized capital stock of OHM OHIO will consist of Fifty Million
(50,000,000) shares of common stock, par value $0.10, One Million (1,000,000)
shares of Class A Preferred Stock and One Million (1,000,000) shares of Class B
Preferred Stock.
OHM DELAWARE, as the sole shareholder of OHM OHIO, desires to effect a
merger of OHM DELAWARE with and into OHM OHIO pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "DGCL") and the General
Corporation Law of the State of Ohio (the "OGCL").
The respective Boards of Directors of OHM DELAWARE and OHM OHIO have
determined that it is advisable and in the best interests of each corporation
that OHM DELAWARE merge with and into OHM OHIO upon the terms and subject to
the conditions herein provided.
The Board of Directors of OHM OHIO has, by resolution duly adopted,
approved this Merger Agreement and directed that it be exercised by the
undersigned officers.
The Board of Directors of OHM DELAWARE has, by resolution duly
adopted, approved this Merger Agreement and directed that it be executed by the
undersigned officers and that it be submitted to a vote of the stockholders of
OHM DELAWARE.
In consideration of the mutual agreements herein contained, the
parties agree that OHM DELAWARE shall be merged with and into OHM OHIO and that
the terms and conditions of the merger, the mode of carrying the merger into
effect, the manner of converting the shares of Constituent Corporations and
certain other provisions relating thereto shall be as hereinafter set forth.
ARTICLE I
THE MERGER
1.01 Surviving Corporation. Subject to the terms and provisions of
this Merger Agreement, and in accordance with the DGCL and the OGCL, at the
Effective Time (as defined in Section 1.07 hereof) OHM DELAWARE shall be merged
with and into OHM OHIO (the "Merger"). OHM OHIO shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") of the
Merger and shall continue its corporate existence under the laws of the State
of Ohio. At the Effective Time, the separate corporate existence of OHM
DELAWARE shall cease.
1.02 Effect of the Merger. At the Effective Time, the Merger shall
have the effects provided for herein and in Section 1701.82 of the OGCL and
Section 259 of the DGCL.
<PAGE> 2
1.03 Articles of Incorporation. As of the Effective Time, the
Articles of Incorporation of OHM OHIO, as in effect immediately prior to the
Effective Time, shall be amended and replaced in their entirety by the Amended
and Restated Articles of Incorporation attached hereto as Annex 1 which Amended
and Restated Articles of Incorporation will become, at the Effective Time, the
Articles of Incorporation of the Surviving Corporation until thereafter duly
altered, amended or repealed in accordance with the provisions thereof and
applicable law.
1.04 Regulations. As of the Effective Time, the Regulations of OHM
OHIO, as in effect immediately prior to the Effective Time, shall be amended
and replaced in their entirety by the Regulations attached hereto as Annex 2
which Regulations will become, at the Effective Time, the Regulations of the
Surviving Corporation until thereafter duly altered, amended or repealed in
accordance with the provisions thereof, the Articles of Incorporation of the
Surviving Corporation and applicable law.
1.05 Directors of the Surviving Corporation. At the Effective
Time, each person who is a director of OHM DELAWARE immediately prior to the
Effective Time shall become a director of the Surviving Corporation and each
such person shall serve as a director of the Surviving Corporation for the
balance of the term for which such person was elected a director of OHM
DELAWARE and until his successor is duly elected and qualified in the manner
provided in the Regulations or the Articles of Incorporation of the Surviving
Corporation or as otherwise provided by law or until his earlier death,
resignation or removal in the manner provided in the Regulations or the
Articles of Incorporation of the Surviving Corporation or as otherwise provided
by law. OHM OHIO shall secure the resignation as director, effective as of the
Effective Time, of each person who is a director of OHM OHIO immediately prior
to the Effective Time.
1.06 Officers of the Surviving Corporation. At the Effective Time,
each person who is an officer of OHM DELAWARE immediately prior to the
Effective Time shall become an officer of the Surviving Corporation with each
such person to hold the same office in the Surviving Corporation, in accordance
with the Regulations thereof, as he held in OHM DELAWARE immediately prior to
the Effective Time. OHM OHIO shall secure the resignation, effective as of the
Effective Time, of each person who is an officer of OHM OHIO immediately prior
to the Effective Time, except such officers who hold the same positions with
OHM OHIO as they do in OHM DELAWARE.
1.07 Effective Time. The Merger shall become effective in
accordance with the provisions of Section 1701.81 of the OGCL and Section 253
of the DGCL, upon the later to occur of (a) completion of the filing of a
certificate of merger with the Secretary of State of the State of Ohio, and (b)
the filing of a certificate of ownership and merger with the Secretary of State
of the State of Delaware. The date and time when the Merger shall become
effective is herein referred to as the "Effective Time."
1.08 Cumulative Voting. At and after the Effective Time, no holder
of shares of OHM OHIO will be entitled to vote cumulatively in the election of
directors. The shares of common stock of OHM Delaware, par value $0.10 per
share, ("Delaware Common Stock") shall continue to be publicly traded over the
NYSE prior to the Effective Time and the shares of common stock of OHM OHIO,
par value $0.10 per share, ("Ohio Common Stock") will be publicly traded over
the New York Stock Exchange after the Effective Time.
1.09 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further
assignments or assurances in law or any other acts are necessary or desirable
(a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, title to and possession of any property or right of OHM DELAWARE
acquired or to be acquired by reason of, or as a result of, the Merger, or (b)
otherwise to carry out the purpose of this Merger Agreement, OHM DELAWARE and
its proper officers and directors shall be deemed to have granted hereby to the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and the possession of
such property or rights in the Surviving Corporation and otherwise to carry out
the purposes of this Merger Agreement; and the proper officers and directors of
the Surviving Corporation are hereby fully authorized in the name of OHM
DELAWARE or otherwise to take any and all such action.
-2-
<PAGE> 3
ARTICLE II
MANNER, BASIS AND EFFECT OF CONVERTING SHARES
2.01 Conversion of Shares. At the Effective Time:
(a) Each share of "Delaware Common Stock", issued and
outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of the holder
thereof, be converted into one fully paid and nonassessable share of
Ohio Common Stock;
(b) Each share of Delaware Common Stock held in the treasury
of OHM DELAWARE immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of OHM
DELAWARE, be converted into one fully paid and nonassessable share of
Ohio Common Stock and shall be held in the treasury of the Surviving
Corporation;
(c) Each share of Ohio Common Stock, issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, be cancelled
and retired and shall cease to exist.
2.02 Effect of Conversion. At and after the Effective Time, each
share certificate which immediately prior to the Effective Time represented
outstanding shares of Delaware Common Stock ("Delaware Common Certificate")
shall be deemed for all purposes to evidence ownership of, and to represent,
the number of shares of Ohio Common Stock into which the shares of Delaware
Common Stock represented by such certificates immediately prior to the
Effective Time have been converted pursuant to Section 2.01 hereof. The
registered owner of any Delaware Common Certificate outstanding immediately
prior to the Effective Time, as such owner appears in the books and records of
OHM DELAWARE or its transfer agent immediately prior to the Effective Time,
shall, until such certificate is surrendered for transfer or exchange, have and
be entitled to exercise any voting and other rights with respect to and to
receive any dividends or other distributions on the shares of Ohio Common Stock
into which the shares represented by any such certificate have been converted
pursuant to Section 2.01 hereof.
2.03 Exchange of Certification. Each holder of a Delaware Common
Certificate shall, upon the surrender of such certificate to OHM OHIO or its
transfer agent for cancellation after the Effective Time, be entitled to
receive from OHM OHIO or its transfer agent a certificate representing the
number of shares of Ohio Common Stock into which the shares of Delaware Common
Stock represented by such certificate have been converted pursuant to Section
2.01 hereof.
2.04 Stock Option Plans. Each option to purchase shares of
Delaware Common Stock granted under any stock option plan as to which OHM
DELAWARE or any of its affiliates has assumed or incurred obligations
(hereinafter collectively referred to as the "Option Plans") which is
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder of any such option be
converted into and become an option to purchase the same number of shares of
Ohio Common Stock as the number of shares of Delaware Common Stock purchasable
under such option immediately prior to the Effective Time at the same option
price per share and upon the same terms and subject to the same conditions as
are in effect at the Effective Time. The Surviving Corporation shall reserve
for purposes of the Option Plans a number of shares of Ohio Common Stock equal
to the number of shares of Delaware Common Stock reserved by OHM DELAWARE for
issuance under the Option Plans as of the Effective Time. As of the Effective
Time, OHM OHIO hereby assumes the Option Plans and all obligations of OHM
DELAWARE under the Option Plans including the outstanding options or awards or
portions thereof granted or awarded pursuant thereto.
-3-
<PAGE> 4
ARTICLE III
APPROVAL; AMENDMENT; TERMINATION; MISCELLANEOUS
3.01 Approval. This Merger Agreement shall be submitted for
approval by the stockholders of OHM DELAWARE at its annual or at a special
meeting of stockholders.
3.02 Amendment. Subject to applicable law, this Merger Agreement
may be amended, modified or supplemented by written agreement of the
Constituent Corporations at any time prior to the Effective Time, except that
after the approval contemplated by Section 3.01 hereof, there shall be no
amendments that would (a) alter or change the amount or kind of shares to be
received by stockholders in the Merger, (b) alter or change any term of the
Articles of Incorporation or Regulations of OHM OHIO, as amended pursuant to
Section 1.03 hereof, or (c) alter or change any of the terms and conditions of
this Merger Agreement if such alteration or change would adversely affect the
holders of any class of stock of either of the Constituent Corporations.
3.03 Abandonment. At any time prior to the Effective Time, this
Merger Agreement may be terminated and the Merger may be abandoned by the Board
of Directors of either OHM OHIO or OHM DELAWARE, or both, notwithstanding
approval of this Merger Agreement by the sole shareholder of OHM OHIO or the
stockholders of OHM DELAWARE, or both.
3.04 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and the same
agreement.
3.05 Statutory Agent in Ohio. The name and address of the
statutory agent in Ohio upon whom any process, notice or demand against OHM
DELAWARE or the Surviving Corporation may be served is:
Randall M. Walters
OHM CORPORATION
16406 U.S. Route 224 East
Findlay, Ohio 45840
3.06 Designated Agent in Delaware. The Surviving Corporation
agrees that it may be served with process in the State of Delaware in any
proceeding for enforcement of any obligation of OHM DELAWARE, as well as for
enforcement of any obligation of the Surviving Corporation arising from the
Merger, and the Surviving Corporation irrevocably appoints the Delaware
Secretary of State as its agent to accept service of process in any such suit
or other proceedings; a copy of such process shall be mailed by the Delaware
Secretary of State to:
Randall M. Walters
OHM CORPORATION
16406 U.S. Route 224 East
Findlay, Ohio 45840
-4-
<PAGE> 5
IN WITNESS WHEREOF, OHM DELAWARE and OHM OHIO have caused this Merger
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
OHM CORPORATION
ATTEST: (an Ohio corporation)
By: /s/ RANDALL M. WALTERS By: /s/ SAMUEL H. IAPALUCCI
------------------------------- --------------------------------
Randall M. Walters, Secretary Samuel H. Iapalucci,
President
OHM CORPORATION
ATTEST: (a Delaware corporation)
By: /s/ RANDALL M. WALTERS By: /s/ SAMUEL H. IAPALUCCI
------------------------------- --------------------------------
Randall M. Walters, Secretary Samuel H. Iapalucci,
Vice President and
Chief Financial Officer
-5-
<PAGE> 1
EXHIBIT 3(i)
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
OHM CORPORATION
FIRST: The name of the Corporation (hereinafter called the
"Corporation") is OHM Corporation.
SECOND: The principal office of the Corporation is located in
Findlay, Hancock County, Ohio.
THIRD: The Corporation is formed for the purpose of engaging in any
lawful act or activity for which corporations may be formed under Sections
1701.01 to 1701.98, inclusive, of the Ohio Revised Code, the Ohio General
Corporation Law, as now in effect or hereafter amended.
FOURTH: The Corporation shall have authority to issue and have
outstanding capital stock in the total amount of Fifty-Two Million (52,000,000)
shares, consisting of Fifty Million (50,000,000) shares of Common Stock with a
par value of $0.10 per share, One Million (1,000,000) shares of Class A
Preferred Stock, par value $10.00 per share, and One Million (1,000,000) shares
of Class B Preferred Stock, par value $10.00 per share.
(A) EXPRESS TERMS OF THE COMMON STOCK
The shares of Common Stock shall be subject to the terms of
Class A Preferred Stock and Class B Preferred Stock (collectively, "Preferred
Stock") and the express terms of any series thereof. Each share of Common
Stock shall be equal to every other share of Common Stock and the holders
thereof shall be entitled to one vote for each share of such Stock on all
questions presented to the shareholders. Subject to any rights to receive
dividends to which the holders of the outstanding shares of Preferred Stock, if
any, may be entitled, the holders of shares of Common Stock shall be entitled
to receive dividends, if and when declared, payable from time to time by the
Board of Directors from funds legally available for the payment of such
dividends. In the event of voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, all assets and funds remaining after payment
to holders of the Preferred Stock of the full amount to which they are entitled
shall be divided and distributed among the holders of the Common Stock
according to their respective shares.
(B) EXPRESS TERMS OF CLASS A PREFERRED STOCK
The shares of Class A Preferred Stock may be issued from time
to time in one or more series of any number of shares, provided that the
aggregate number of shares issued and not cancelled of any and all such series
shall not exceed the total number of shares of Class A Preferred Stock
authorized in this Article FOURTH. All shares of Class A Preferred Stock shall
be of equal rank and shall be identical, except with respect to the matters
that may be fixed by the Board of Directors as hereinafter provided, and each
share of each series shall be identical to all other shares of such series,
except as to the date from which dividends are cumulative. Subject to the
provisions of this paragraph (B), which provisions shall apply to all Class A
Preferred Stock, the Board of Directors hereby is authorized to cause such
shares to be issued in one or more series and with respect to each such series
prior to the issuance thereof to fix:
(1) the designation of the series, which may be
distinguishing number, letter or title;
<PAGE> 2
(2) the number of shares of the series, which number the
Board of Directors may from time to time (except where otherwise
provided in the creation of the series) increase or decrease (but not
below the number of shares thereof then outstanding);
(3) the dividend rate of the series;
(4) the dates of payment of dividends and the dates from
which dividends of the series shall be cumulative;
(5) the redemption rights and price or prices for shares
of the series;
(6) sinking fund requirements, if any, for the purchase
or redemption of shares of the series;
(7) the liquidation price payable and the preference, if
any, on shares of the series in the event of any liquidation,
dissolution or winding up of the affairs of the Corporation;
(8) the designations, preferences, and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions on such Preferred Stock;
(9) whether the shares of the series shall be convertible
into Common Stock, and, if so, the conversion price or prices, any
adjustments thereof, and all other terms and conditions upon which
such conversion may be made; and
(10) such other terms as the Board of Directors may by law
from time to time be permitted to fix or change.
The Board of Directors is authorized to adopt from time to
time amendments to the Articles of Incorporation fixing or changing, with
respect to each such series, the matters described in the preceding clauses (1)
to (10) of this paragraph (B).
Shares of Class A Preferred Stock shall be entitled to voting
rights as follows:
(1) Except as otherwise required by law or the Articles
of Incorporation of the Corporation or this paragraph (B), holders of
the Class A Preferred Stock, voting together as one class with the
holders of the Common Stock and with the holders of any other class or
series of Preferred Stock who are similarly entitled to vote, shall be
entitled to vote for the election of directors and all other matters
submitted to a vote of shareholders of the Corporation.
(2) During any period in which dividends on the Class A
Preferred Stock are cumulatively in arrears in the amount of six or
more full quarterly dividends, the holders of the Class A Preferred
Stock, voting together as a class with the holders of any other class
or series of Preferred Stock who are similarly entitled to vote, will
have the right to elect two directors which two directorships shall be
in addition to that number of directors then determined as
constituting the number of members of the Board of Directors pursuant
to the Regulations of the Corporation.
(3) The approval of a majority of the outstanding shares
of Class A Preferred Stock voting together as a class shall be
required in order to amend the Articles of Incorporation of the
Corporation to affect adversely the rights of the holders of the Class
A Preferred Stock or to take any actions that would result in the
creation of or an increase in the number of authorized shares senior
or superior with respect to dividends or upon liquidation to the Class
A Preferred Stock.
-2-
<PAGE> 3
(C) EXPRESS TERMS OF CLASS B PREFERRED STOCK
The shares of Class B Preferred Stock may be issued from time
to time in one or more series. All shares of Class B Preferred Stock shall be
of equal rank and shall be identical, except in respect of the matters that may
be fixed by the Board of Directors as hereinafter provided, and each share of
each series shall be identical with all other shares of such series, except as
to the date from which dividends are cumulative. Subject to the provisions of
this paragraph (C), which provisions shall apply to all Class B Preferred
Stock, the Board of Directors hereby is authorized to cause such shares to be
issued in one or more series and with respect to each such series prior to the
issuance thereof to fix:
(1) the designation of the series, which may be
distinguishing number, letter or title;
(2) the number of shares of the series, which number the
Board of Directors may from time to time (except where otherwise
provided in the creation of the series) increase or decrease (but not
below the number of shares thereof then outstanding);
(3) the dividend rate of the series;
(4) the dates of payment of dividends and the dates from
which dividends of the series shall be cumulative;
(5) the redemption rights and price or prices for shares
of the series;
(6) sinking fund requirements, if any, for the purchase
or redemption of shares of the series;
(7) the liquidation price payable on shares of the series
in the event of any liquidation, dissolution or winding up of affairs
of the Corporation;
(8) whether the shares of the series shall be convertible
into Common Stock, and if so, the conversion price or prices, any
adjustments thereof, and all other terms and conditions upon which
such conversion may be made;
(9) restrictions on the issuance of shares of any class
or series; and
(10) such other terms as the Board of Directors may by law
from time to time be permitted to fix or change.
The Board of Directors is authorized to adopt from time to
time amendments to the Articles of Incorporation fixing or changing, with
respect to each such series, the matters described in the preceding clauses (1)
to (10) of this paragraph (C).
Shares of Class B Preferred Stock shall not be entitled to
voting rights except to the extent described in the following clauses (1) and
(2) of this paragraph (C).
(1) During any period in which dividends on the Class B
Preferred Stock are cumulatively in arrears in the amount of six or
more full quarterly dividends, the holders of the Class B Preferred
Stock, voting together as a class with the holders of any other class
or series of Preferred Stock who are similarly entitled to vote, will
have the right to elect two directors which two directorships shall be
in addition to that number of directors then determined as
constituting the number of members of the Board of Directors pursuant
to the regulations of the Corporation.
(2) The approval of a majority of the outstanding shares
of Class B Preferred Stock voting together as a class shall be
required in order to amend the Articles of Incorporation of the
Corporation
-3-
<PAGE> 4
to affect adversely the rights of the holders of the Class B Preferred
Stock or to take any action that would result in the creation of or an
increase in the number of authorized shares senior or superior with
respect to dividends or upon liquidation to the Class B Preferred
Stock.
FIFTH: Except as otherwise provided in these Articles of
Incorporation or in the Regulations, the holders of a majority of the
outstanding shares are authorized to take any action which, but for this
provision, would require the vote or other action of the holders of more than a
majority of such shares.
SIXTH: To the extent not prohibited by law, the Board of Directors
may authorize the purchase by the Corporation of shares of any class issued by
it.
SEVENTH: No holder of any class of shares of the Corporation shall,
as such holder, have any preemptive or preferential right to purchase or
subscribe to any shares of any class of stock of the Corporation, whether now
or hereafter authorized, whether unissued or in treasury, or to purchase any
obligations convertible into shares of any class of stock of the Corporation,
which at any time may be proposed to be issued by the Corporation or subjected
to rights or options to purchase granted by the Corporation.
EIGHTH: No holder of shares of any class of the Corporation shall
have the right to cumulate the voting power in the election of the Board of
Directors, and the right to cumulate voting described in Ohio Revised Code
Section 1701.55 is hereby specifically denied to the holders of shares of any
class of the Corporation.
NINTH: The Corporation may create and issue, whether or not in
connection with the issue and sale of any shares of stock or other securities
of the Corporation, rights or options entitling the holders thereof to purchase
from the Corporation any shares of its capital stock of any class or classes to
the extent such shares are authorized by these Articles, such rights or options
to be evidenced by or in such instrument or instruments as shall be approved by
the Board of Directors. The terms upon which any such shares may be purchased
upon the exercise of any such right or option, including without limitation the
time or times (which may be limited or unlimited in duration) at or within
which, and the price or prices at which, any such shares may be purchased,
shall be as determined as set forth or incorporated by reference in a
resolution adopted by the Board of Directors providing for the creation and
issue of such rights or options.
TENTH: No person shall make a Control Share Acquisition without the
prior authorization of the Corporation's shareholders.
(A) In order to obtain authorization of a Control Share
Acquisition by the Corporation's shareholders, a Person shall deliver a notice
(the "Notice") to the Corporation at its principal place of business that sets
forth the following information:
(1) The identity of the Person who is giving the Notice;
(2) A statement that the Notice is given pursuant to this
Article TENTH;
(3) The number and class of shares of the Corporation
owned, directly or indirectly, by the Person who gives the Notice;
(4) The range of voting power under which the proposed
Control Share Acquisition would, if consummated, fall;
(5) A description in reasonable detail of the terms of
the proposed Control Share Acquisition; and
(6) Representations, supported by reasonable evidence,
that the proposed Control Share Acquisition, if consummated, would not
be contrary to law and that the Person who is giving the Notice has
the financial capacity to make the proposed Control Share Acquisition.
-4-
<PAGE> 5
(B) (1) The Board of Directors of the Corporation shall,
within ten (10) days after receipt by the Corporation of a Notice that
complies with paragraph (A), call a special meeting of shareholders to
be held not later than fifty (50) days after receipt of the Notice by
the Corporation, unless the Person who delivered the Notice agrees to
a later date, to consider the proposed Control Share Acquisition;
provided that the Board of Directors shall have no obligation to call
such meeting if they make a determination within ten (10) days after
receipt of the Notice (i) that the Notice was not given in good faith,
(ii) that the proposed Control Share Acquisition would not be in the
best interests of the Corporation and its shareholders, or (iii) that
the Person who delivered the Notice has failed to adequately
demonstrate that such Person has the financial capacity to make the
proposed Control Share Acquisition or that the proposed Control Share
Acquisition would not be contrary to law if consummated. The Board of
Directors may adjourn such meeting if, prior to such meeting, (i) the
Corporation has received a Notice from any other Person or (ii) a
merger, consolidation or sale of assets of the Corporation has been
approved by the Board of Directors and the Board of Directors has
determined that the Control Share Acquisition proposed by such other
Person or the merger, consolidation or sale of assets of the
Corporation should be presented to shareholders at an adjourned
meeting or at a special meeting held at a later date.
(2) For purposes of making a determination that a special
meeting of shareholders should not be called pursuant to this
paragraph (B), no such determination shall be deemed void or voidable
with respect to the Corporation merely because one or more of its
directors or officers who participated in making such determination
may be deemed to be other than disinterested, if in any such case the
material facts of the relationship giving rise to a basis for
self-interest are known to the directors and the directors, in good
faith reasonably justified by the facts, make such determination by
the affirmative vote of a majority of the disinterested directors,
even though the disinterested directors constitute less than a quorum.
For purposes of this paragraph (B), "disinterested directors" shall
mean directors whose material contacts with the Corporation are
limited principally to activities as a director or shareholder.
Persons who have substantial, recurring business or professional
contracts with the Corporation shall not be deemed to be
"disinterested directors" for purposes of this provision. A director
shall not be deemed to be other than a "disinterested director" merely
because he would no longer be a director if the proposed Control Share
Acquisition were approved and consummated.
(C) The Corporation shall give notice of such special meeting to
all shareholders of record as of the record date set for such meeting as
promptly as practicable. Such notice shall include or be accompanied by a copy
of the Notice and by a statement of the Corporation, authorized by the Board of
Directors, of its position or recommendation, or that it is taking no position
or making no recommendation, with respect to the proposed Control Share
Acquisition.
(D) The Person who delivered the Notice may make the proposed
Control Share Acquisition if both of the following occur: (i) the shareholders
of the Corporation authorize such acquisition at the special meeting called by
the Board of Directors and held for that purpose, and at which a quorum is
present, by an affirmative vote of a majority of the Voting Shares (as defined
in Section 1.02 of the Company's Regulations) represented at such meeting in
person or by proxy and by a majority of the portion of such Voting Shares
represented at such meeting in person or by proxy excluding the votes of
Interested Shares; and (ii) such acquisition is consummated, in accordance with
the terms so authorized, not later than 360 days following such shareholder
authorization of the Control Share Acquisition.
(E) Shares issued or transferred to any Person in violation of
this Article TENTH shall be valid only with respect to such amount of shares as
does not result in a violation of this Article TENTH and such issuance or
transfer shall be null and void with respect to the remainder of such shares
(any such remainder of shares being hereinafter called "Excess Shares"). If
the second clause of the foregoing sentence is determined to be invalid by
virtue of any legal decision, statute, rule or regulation, any Person who holds
Excess Shares in violation of the Article TENTH shall be conclusively deemed to
have acted as an agent on behalf of the Corporation in acquiring such Excess
Shares and to hold such Excess Shares on behalf of the Corporation. While held
by any Person in violation of this Article TENTH, Excess Shares shall not be
entitled to any voting rights, shall not be
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considered to be outstanding for quorum or voting purposes, and shall not be
entitled to receive dividends or any other distribution with respect to such
Excess Shares. Any such Person who receives dividends or any other
distribution with respect to Excess Shares shall hold the same as agent for the
Corporation and, following a permitted transfer, for the transferee thereof.
Notwithstanding the foregoing, any holder of Excess Shares may transfer the
same (together with any distributions thereon) to any Person who, following
such transfer, would not own shares in violation of this Article TENTH. Upon
such permitted transfer, the Corporation shall pay or distribute to the
transferee any dividends or other distributions on the Excess Shares not
previously paid or distributed.
(F) As used in this Article TENTH:
(1) "Person" includes, without limitation, an individual,
a corporation (whether nonprofit or for profit), a partnership, an
unincorporated society or association, and two or more persons having
a joint or common interest.
(2)(a) "Control Share Acquisition" means the acquisition,
directly or indirectly, by any Person of shares of the Corporation
that, when added to all other shares of the Corporation in respect of
which such Person may exercise or direct the exercise of voting power
as provided in this paragraph (F)(2)(a), would entitle such Person,
immediately after such acquisition, directly or indirectly to exercise
or direct the exercise of voting power of the Corporation in the
election of directors within any of the following ranges of such
voting power:
(i) One-fifth or more but less than
one-third of such voting power;
(ii) One-third or more but less than a
majority of such voting power; or
(iii) A majority or more of such voting
power.
A bank, broker, nominee, trustee, or other Person who
acquires shares in the ordinary course of business for the
benefit of others in good faith and not for the purpose of
circumventing this Article TENTH shall, however, be deemed to
have voting power only of shares in respect of which such
Person would be able to exercise or direct the exercise of
votes without further instruction from others at a meeting of
shareholders called under this Article TENTH. For purposes of
this Article TENTH, the acquisition of securities immediately
convertible into shares of the Corporation with voting power
in the election of directors shall be treated as an
acquisition of such shares.
(b) The acquisition of any shares of the
Corporation does not constitute a Control Share Acquisition
for the purpose of this Article TENTH if the acquisition is
consummated in any of the following circumstances:
(i) By underwriters, in good faith and not
for the purpose of circumventing this Article TENTH,
in connection with an offering of the securities of
the Corporation to the public;
(ii) By bequest or inheritance, by operation
of law upon the death of any individual, or by any
other transfer without valuable consideration,
including a gift, that is made in good faith and not
for the purpose of circumventing this Article TENTH;
(iii) Pursuant to the satisfaction
of a pledge or other security interest created in
good faith and not for the purpose of circumventing
this Article TENTH;
(iv) Pursuant to a merger or consolidation
adopted, or a combination or majority share
acquisition authorized, by shareholder vote in
compliance with the
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provisions of Section 1701.78 or Section 1701.83 of
the Ohio Revised Code if the Corporation is the
surviving or new corporation in the merger or
consolidation or is the acquiring corporation in the
combination or majority share acquisition and if the
vote of shareholders of the surviving, new, or
acquiring corporation is required by the provisions of
Section 1701.78 or Section 1701.83 of the Ohio
Revised Code;
(v) Pursuant to a transaction which has
received the prior authorization of the Board of
Directors of the Corporation, which authorization
makes specific reference to this paragraph
(F)(2)(b)(v) and is determined to be in the best
interests of the Corporation and its shareholders; or
(vi) Prior to March 20, 1994; or
(vii) Pursuant to a contract existing prior to
March 20, 1994;
The acquisition by any Person of shares of the
Corporation in a manner described under this paragraph
(F)(2)(b) shall be deemed to be a Control Share Acquisition
authorized pursuant to this Article TENTH within the range of
voting power under paragraph (F)(2)(a)(i), (ii) or (iii) of
this Article TENTH that such Person is entitled to exercise
after such acquisition, provided that, in the case of an
acquisition in a manner described under paragraph
(F)(2)(b)(ii) or (iii), the transferor of such shares to such
Person had previously obtained any authorization of
shareholders required under this Article TENTH in connection
with such transferor's acquisition of shares of the
Corporation.
(c) The acquisition of shares of the Corporation
in good faith and not for the purpose of circumventing this
Article TENTH, the acquisition of which (i) had previously
been authorized by shareholders in compliance with this
Article TENTH or (ii) would have constituted a Control Share
Acquisition but for paragraph (F)(2)(b), does not constitute a
Control Share Acquisition for the purpose of this Article
TENTH unless such acquisition entitles any Person, directly or
indirectly, to exercise or direct the exercise of voting power
of the Corporation in the election of directors in excess of
the range of such voting power authorized pursuant to this
Article TENTH, or deemed to be so authorized under paragraph
(F)(2)(b).
(3) "Interested Shares" means Voting Shares with respect
to which any of the following Persons may exercise or direct the
exercise of the voting power:
(a) any Person whose Notice prompted the calling
of the meeting of shareholders;
(b) any officer of the Corporation elected or
appointed by the directors of the Corporation; and
(c) any employee of the Corporation who is also a
director of the Corporation.
(G) No proxy appointed for or in connection with the shareholder
authorization of a Control Share Acquisition pursuant to this Article TENTH is
valid if it provides that it is irrevocable. No such proxy is valid unless it
is sought, appointed, and received both:
(1) In accordance with all applicable requirements of law;
and
(2) Separate and apart from the sale or purchase,
contract or tender for sale or purchase, or request or invitation for
tender for sale or purchase, of shares of the Corporation.
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<PAGE> 8
(H) Proxies appointed for or in connection with the shareholder
authorization of a Control Share Acquisition pursuant to this Article TENTH
shall be revocable at all times prior to the obtaining of such shareholder
authorization, whether or not coupled with an interest.
(I) Notwithstanding any other provisions of these Articles of
Incorporation or the Regulations of the Corporation, as the same may be in
effect from time to time, or any provisions of law that might otherwise permit
a lesser vote of the directors or shareholders, but in addition to any
affirmative vote of the directors or the holders of any particular class or
series of shares required by law, the Articles of Incorporation or the
Regulations of the Corporation, as the same may be in effect from time to time,
the affirmative vote of at least eighty-five percent (85%) of the Voting Shares
shall be required to alter, amend or repeal this Article TENTH or adopt any
provisions in the Articles of Incorporation or Regulations of the Corporation,
as the same may be in effect from time to time, that are inconsistent with the
provisions of this Article TENTH.
(J) Each certificate representing shares of the Corporation's
capital stock shall contain the following legend:
"Transfer of the shares represented by this Certificate is subject to
the provisions of Article TENTH of the Corporation's Articles of
Incorporation as the same may be in effect from time to time. Upon
written request delivered to the Secretary of the Corporation at its
principal place of business, the Corporation will mail to the holder
of this Certificate a copy of such provisions without charge within
five (5) days after receipt of written request therefor. By accepting
this Certificate the holder hereof acknowledges that it is accepting
same subject to the provisions of said Article TENTH as the same may
be in effect from time to time and covenants with the Corporation and
each shareholder thereof from time to time to comply with the
provisions of said Article TENTH as the same may be in effect from
time to time."
ELEVENTH: The provisions of Section 1701.831 of the Ohio Revised
Code, as amended from time to time, or any successor provision or provisions to
said section, shall only apply to this Corporation with respect to any
particular Control Share Acquisition attempt, as such is defined in Section
1701.831 of the Ohio Revised Code, in the event that there is a determination
by a court of competent jurisdiction with respect to which no appeal is pending
that the provisions of Article TENTH of these Articles of Incorporation shall
not be applicable to a particular Control Share Acquisition attempt or in the
event that Article TENTH of these Articles of Incorporation, as such Articles
of Incorporation may be amended from time to time, ceases to be an Article of
these Articles of Incorporation, disregarding any renumbering of such Article
TENTH resulting from any amendment of these Articles of Incorporation.
TWELFTH: The Corporation reserves the right to amend or repeal any
provision contained in these Articles of Incorporation in the manner prescribed
by the Ohio General Corporation Law. However, the provisions set forth in
Article EIGHTH, Article TENTH, Article ELEVENTH and this Article TWELFTH of
these Articles of Incorporation may not be altered, amended, superseded or
repealed in any respect, unless such action is approved by the affirmative vote
of the holders of shares representing at least 85% of the shares of the
Corporation entitled to vote for the election of directors, voting as a class.
All rights conferred in these Articles of Incorporation are granted subject to
the reservation set forth in this Article TWELFTH.
IN WITNESS WHEREOF, the undersigned has executed these Articles this
____ day of May, 1994.
OHM CORPORATION
/s/ RANDALL M. WALTERS
-----------------------------
Randall M. Walters, Secretary
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<PAGE> 1
EXHIBIT 3(ii)
REGULATIONS
OF
OHM CORPORATION
(THE "CORPORATION")
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.01. Annual Meeting. The annual meeting of shareholders of
the Corporation shall be held at such time and on such business day as the
directors may determine each year. The annual meeting shall be held at the
principal office of the Corporation, or at such other place within or without
the State of Ohio as the directors may determine. The directors shall be
elected thereat, and such other business transacted as may properly be brought
before the meeting.
SECTION 1.02. Special Meeting. Special meetings of the
shareholders may be called for any proper purpose or purposes at any time by
(i) the President or any Vice President; (ii) by the directors by action at a
meeting or a majority of the directors acting without a meeting; or (iii) by
shareholders holding 50% or more of the voting power of the then outstanding
shares entitled to vote in an election of directors, taken together as a single
class ("Voting Shares"). Such meetings may be held within or without the State
of Ohio at such time and place as may be specified in the notice thereof.
SECTION 1.03. Notice of Meetings. Written notice of every annual or
special meeting of the shareholders, stating the time, place and purposes
thereof, shall be given to each shareholder entitled to notice as provided by
law, not less than seven (7) nor more than ninety (90) days before the date of
the meeting. Such notice may be given by or at the direction of the Secretary
of the Corporation, or such other officer as is designated by the Board of
Directors, by personal delivery or by mail addressed to the shareholder at his
last address as it appears on the records of the Corporation. Any shareholder
may waive in writing notice of any meeting, either before or after the holding
of such meeting, and, by attending any meeting without protesting the lack of
proper notice, shall be deemed to have waived notice thereof.
SECTION 1.04. Persons Becoming Entitled by Operation of Law or
Transfer. Every person who, by operation of law, transfer or any other means
whatsoever, shall become entitled to any shares, shall be bound by every notice
in respect of such share or shares which previously to the entering of his name
and address on the records of the Corporation shall have been duly given to the
person from whom he derives title to such shares.
SECTION 1.05. Quorum and Adjournments. Except as may be otherwise
required by law or by the Articles of Incorporation or these Regulations, the
holders of a majority of the Voting Shares, present in person or by proxy,
shall constitute a quorum; provided that any annual meeting duly called,
whether a quorum is present or otherwise, may, by voting of the holders of the
majority of the Voting Shares represented thereat, adjourn from time to time,
in which case no further notice of any such adjourned meeting need be given.
SECTION 1.06. Organization of Meetings. The Board of Directors will
designate a chairman for each meeting of shareholders. The chairman will call
the meeting to order and act as chairman of the meeting. In the absence of
such a chairman, the highest ranking officer of the Corporation who is present
at the meeting will act as chairman of the meeting. Unless otherwise
designated by the Board of Directors, the Chief Executive Officer shall serve
as chairman of the meeting.
<PAGE> 2
The chairman of the meeting will appoint the secretary of the meeting,
an inspector or inspectors of elections for the meeting and such other
functionaries as the chairman deems necessary or appropriate. Unless otherwise
designated, the Secretary shall act as secretary of the meeting.
Any proposal to be brought before any meeting of shareholders by any
shareholder must be submitted in writing to the Secretary of the Corporation at
least thirty days prior to the date fixed for the meeting at which it is
intended that such proposal is to be presented.
SECTION 1.07. Proxies. Any shareholder entitled to vote may vote by
proxy, provided that the instrument authorizing such proxy to act shall have
been executed in writing (a telegram or cablegram is sufficient) by the
shareholder.
SECTION 1.08. Inspectors of Elections. The Board of Directors, in
advance of any meeting of the shareholders, may appoint inspectors of election
to act at such meeting or adjournment thereof. If no such appointment shall be
made, or if any of the inspectors so appointed shall fail to attend or refuse
or be unable to serve, then such appointment may be made by the chairman of the
meeting. The inspectors shall make determination as to the number of shares
outstanding, voting rights, the existence of a quorum, the validity of proxies,
the results of any vote, along with other acts that are proper to conduct an
election or vote with fairness to all shareholders.
SECTION 1.09. Action of Shareholders Without a Meeting. Any action
which might have been taken under these Regulations by a vote of the
shareholders at a meeting thereof may be taken without a meeting, with the
affirmative vote or approval of, and in a writing signed by all of the
shareholders who would be entitled to notice of a meeting of the shareholders
held for such purpose.
ARTICLE II
DIRECTORS
SECTION 2.01. Number. The number of directors which shall constitute
the whole Board of Directors shall be fixed from time to time by the vote of
the holders of a majority of the Voting Shares represented at any annual
meeting or special meeting called for the purpose of electing directors, or by
resolution adopted by affirmative vote of a majority of the directors then in
office. When so fixed, such number shall continue to be the authorized number
of directors until changed by the shareholders or directors.
SECTION 2.02. Nomination. Only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election as directors of the Corporation
may be made at a meeting of shareholders by or at the direction of the
directors by any committee or person appointed by the directors or by any
shareholder of the Corporation entitled to vote for the election of directors
at the meeting who complies with the notice procedures set forth in this
Section 2.02. Such nominations, other than those made by or at the direction
of the directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than sixty (60) days, nor more than ninety (90) days prior
to the meeting; provided, however, that in the event that less than
seventy-five (75) days notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be
timely must be so received not later than the close of business on the
fifteenth (15th) day following the earlier of the day on which such notice of
the date of the meeting was mailed or such public disclosure was made. Such
shareholder's notice shall set forth (a) as to each person who is not an
incumbent director whom the shareholder proposed to nominate for election as a
director (i) the name, age, business address and residence address of such
person; (ii) the principal occupation or employment of such person; (iii) the
class and number of shares of the Corporation which are beneficially owned by
such person; and (iv) any other information relating to such person that is
required to be disclosed in solicitations for proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended; and (b) as to the shareholder giving the notice, (i) the name and
record address of such shareholder and (ii) the class and
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<PAGE> 3
number of shares of the Corporation which are beneficially owned by such
shareholder. Such notice shall be accompanied by the written consent of each
proposed nominee to serve as a director of the Corporation, if elected. No
person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 2.02.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
provisions of this Section 2.02, and if he should so determine, the defective
nomination shall be disregarded.
SECTION 2.03. Election and Term of Office of Directors. A director
shall hold office until the annual meeting for the year in which his term
expires and until his successor shall be elected and shall qualify, subject,
however, to his prior death, resignation, or removal from office. Election of
Directors shall be by ballot whenever requested by any person entitled to vote
at the meeting but, unless so requested, such election may be conducted in any
way approved at such meeting.
SECTION 2.04. Vacancies. Whenever any vacancy shall occur among the
directors, the remaining directors shall constitute the directors of the
Corporation until such vacancy is filled or until the number of directors is
changed pursuant to Section 2.01 hereof. Except in cases where a director is
removed as provided by law and these Regulations, and his successor is elected
by the shareholders, the remaining directors may, by a vote of a majority of
their number, fill any vacancy for the unexpired term. A majority of the
directors then in office may also fill any vacancy that results from an
increase in the number of directors.
SECTION 2.05. Quorum and Adjournments. A majority of the directors
in office at the time shall constitute a quorum, provided that any meeting duly
called, whether a quorum is present or otherwise, may, by vote of a majority of
the directors present, adjourn from time to time and place to place within or
without the State of Ohio, in which case no further notice of the adjourned
meeting need be given. At any meeting at which a quorum is present, all
questions and business shall be determined by the affirmative vote of not less
than a majority of the directors present, except as otherwise provided in the
Articles of Incorporation or these Regulations, or as otherwise authorized by
the Ohio Revised Code.
SECTION 2.06. Organization Meeting. Immediately after each annual
meeting of the shareholders at which directors are elected, or each special
meeting held in lieu thereof, the directors, including those newly elected, if
a quorum of all such directors is present, shall hold an organization meeting
for the purpose of electing officers and transacting any other business.
Notice of such meeting need not be given. If for any reason such organization
meeting is not held at such time, a special meeting for such purpose shall be
held as soon thereafter as practicable.
SECTION 2.07. Regular Meetings. Regular meetings of the directors
may be held at such times and places within or without the State of Ohio as may
be provided for in by-laws or resolutions adopted by the directors and upon
such notice, if any, as shall be so provided for.
SECTION 2.08. Special Meetings. Special meetings of the directors
may be held at any time within or without the State of Ohio upon call by (i)
the President or any Vice President, or (ii) by the Board of Directors, or
(iii) any two members thereof. Written notice of the time and place of each
meeting shall be given to each director by personal delivery or by mail,
telecopy, cablegram or telegram at least two (2) days prior to such meeting, or
such shorter notice as the directors shall deem necessary and warranted under
the circumstances. Any director may waive in writing notice of any meeting,
and, by attending any meeting without protesting the lack of proper notice,
shall be deemed to have waived notice thereof. Unless otherwise limited in the
notice thereof, any business may be transacted at any organization, regular or
special meeting.
SECTION 2.09. Compensation. Directors shall receive such
compensation and expense reimbursement for attendance at each meeting of the
Board of Directors or of any committee thereof and/or such salary as may be
determined from time to time by the Board of Directors. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
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SECTION 2.10. Action of Board Without a Meeting. Any action which
might have been taken under these Regulations by vote of the directors at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting with the affirmative vote or approval of, and in a writing signed by
all of the directors who would be entitled to notice of a meeting of the Board
of Directors held for such purpose.
ARTICLE III
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
SECTION 3.01. Executive Committee. The directors, at any time, may
elect from their number an Executive Committee which shall consist of three (3)
or more directors of the Corporation. Except as its powers, duties and
functions may be limited or prescribed by the directors, during the intervals
between the meetings of the directors, the Committee shall possess and may
exercise all the powers of the directors; provided that the Committee shall not
be empowered to fill vacancies among the directors, the Executive Committee or
other Committee of the directors.
SECTION 3.02. Other Committees. The directors may elect other
committees from among the directors in addition to or in lieu of an Executive
Committee and give to them any of the powers which under Section 3.01 could be
vested in an Executive Committee.
SECTION 3.03. Conduct of Business. Except as otherwise required by
law or the Articles of Incorporation or these Regulations, each committee may
determine the procedural rules for meetings and conducting its business.
ARTICLE IV
OFFICERS
SECTION 4.01. Election. The officers of the Corporation shall
include a Chairman of the Board, if elected by the Board of Directors, a Chief
Executive Officer, a President, a Secretary, a Treasurer, and such number of
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers as are, in the judgment of the Board, required to transact the
business of the Corporation. All officers of the Corporation shall be elected,
and the compensation of all such officers shall be fixed by the Board of
Directors or the Compensation and Stock Option Committee thereof; provided,
however, that the Chief Executive Officer of the Corporation may appoint the
officers of the Corporation below the level of Vice President and fix their
salaries. Any two or more offices may be held by the same person. Any officer
may be chosen from among the Board of Directors. The officers of the
Corporation shall have the authority, perform the duties and exercise the
powers in the management of the Corporation usually incident to the offices
held by them respectively, and/or such other authority, duties and powers as
may be assigned to them from time to time by the Chief Executive Officer or the
Board of Directors.
SECTION 4.02. Term. The officers of the Corporation shall be elected
annually at the organizational meeting of the Board of Directors, and shall
hold office until the next organization meeting of the Board of Directors, or
for such shorter periods as may be designated by the Board of Directors. Any
officer may be removed at any time, with or without cause, by affirmative vote
of a majority of the Board of Directors. Any officer who was appointed by the
Chief Executive Officer, and who is either below the level of Vice President or
is neither the Secretary nor Treasurer of the Corporation, may be removed at
any time, with or without cause, by the Chief Executive Officer. A vacancy in
any office, however created, may be filled by the Board of Directors at any
regular or special meeting.
SECTION 4.03. Chief Executive Officer. The Chief Executive Officer
of the Corporation, who shall be a member of the Board of Directors, shall be
such officer who from time to time is so designated by the Board of Directors.
The Chief Executive Officer shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The
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<PAGE> 5
Chief Executive Officer shall have full right, authority and power to control
the personnel of the Corporation; to employ or direct the employment and
dismissal of such personnel, including the fixing of salaries (provided,
however, that this right shall not extend to officers elected by the Board of
Directors); and, except to the extent that the duties of an elected officer are
prescribed or otherwise limited by law, these Regulations, or the Board of
Directors, to prescribe the duties of all officers of the Corporation, with
such limitations thereon as he deems proper. The Chief Executive Officer shall
perform all duties incident to the office of Chief Executive Officer and such
other duties as are assigned to him by the Board of Directors.
SECTION 4.04. Chairman. The Chairman of the Corporation shall have
the authority, perform the duties, and exercise the powers usually incident to
the office of Chairman and/or assigned to him from time to time by the Chief
Executive Officer or the Board of Directors.
SECTION 4.05. President. The President of the Corporation shall have
the authority, perform the duties, and exercise the powers usually incident to
the office of President and/or assigned to him from time to time by the Chief
Executive Officer or the Board of Directors.
SECTION 4.06. Vice President. Each Vice President of the Corporation
shall have the authority to perform the duties and exercise the powers usually
incident to the office of Vice President and/or assigned to him by the Chief
Executive Officer or the Board of Directors.
SECTION 4.07. Secretary. The Secretary of the Corporation shall have
the authority, perform the duties, and exercise the powers usually incident to
the office of the Secretary of the Corporation and/or assigned to him from time
to time by the Board of Directors or the Chief Executive Officer. The
Secretary of the Corporation, or such other officer of the Corporation as is
designated by the Board of Directors, shall record the proceedings of the
meetings of the shareholders and of the directors in a minute book maintained
for such purpose.
SECTION 4.08. Treasurer. The Treasurer of the Corporation shall have
the authority, perform the duties and exercise the powers usually incident to
the office of Treasurer of the Corporation and/or assigned to him from time to
time by the Chief Executive Officer or the Board of Directors.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 5.01. Indemnification. The Corporation may indemnify any
director or officer, any former director or officer of the Corporation, and any
employee or other person who is or has served at the request of the Corporation
as a director, officer, trustee, fiduciary, agent or employee of another
corporation, partnership, joint venture, trust or other enterprise (and his
heirs, executors and administrators) against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him by reason of the fact that he is or was such director, officer,
trustee, fiduciary, agent or employee in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, to the full extent and according to the
procedures and requirements set forth in the Ohio General Corporation Law as
the same may be in effect from time to time. The indemnification provided for
herein shall not be deemed to restrict the right of the Corporation to (i)
indemnify employees, agents and others as permitted by such Law, (ii) purchase
and maintain insurance or provide similar protection on behalf of directors,
officers or such other persons against liabilities asserted against them, or
expenses incurred by them arising out of their service to the Corporation as
contemplated herein, and (iii) enter into agreements with such directors,
officers, employees, agents or others indemnifying them against any and all
liabilities (or such lesser indemnification as may be provided in such
agreements) asserted against them or incurred by them arising out of their
service to the Corporation as contemplated herein.
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ARTICLE VI
CAPITAL STOCK
SECTION 6.01. Stock Certificates. The shares of stock of the
Corporation shall be represented by certificates signed by the Chairman, the
President or a Vice President, and by a second officer who may be the
Treasurer, an Assistant Treasurer, the Secretary, or an Assistant Secretary of
the Corporation, certifying the number of shares evidenced thereby. Such
certificates may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the officers of the Corporation upon a certificate
may be facsimiles if the certificate is countersigned by a transfer agent or by
a registrar other than the Corporation itself or its employee. In case any
officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of issue. Each certificate shall set forth additional
material as is required by law.
SECTION 6.02. Transfers. The shares of stock of the Corporation
shall be transferable in the manner prescribed by laws of the State of Ohio.
Transfers of stock shall be made on the share transfer books of the Corporation
only by the person named in the certificate or by attorney lawfully constituted
in writing, and upon the surrender of the certificate therefor, which shall be
cancelled when the new certificate shall be issued.
SECTION 6.03. Registered Holders. The Corporation shall be entitled
to treat and shall be protected in treating the persons in whose names shares
or any warrants, rights or options stand on the record of shareholders, warrant
holders, right holders or option holders, as the case may be, as the owners
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, any such share, warrant, right or option on the
part of any other person, whether or not the Corporation shall have notice
thereof.
SECTION 6.04. New Certificates. The Corporation may issue a new
certificate of stock in the place of any certificate theretofore issued by it
alleged to have been lost, stolen or destroyed, and the Corporation may require
the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give the Corporation a bond sufficient to indemnify the
Corporation and any transfer agent and/or registrar against any claim that may
be made against it or them on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate. A new
certificate may be issued without requiring any bond when it is proper to do
so.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Provisions in Articles of Incorporation. These
Regulations are at all times subject to the provisions of the Articles of
Incorporation of the Corporation as the same may be in effect from time to
time.
SECTION 7.02. Record Dates. For any lawful purpose, including,
without limitation, the determination of the shareholders who are entitled to:
(i) receive notice of or to vote at a meeting of shareholders; (ii) receive
payment of any dividend or distribution; (iii) receive or exercise rights of
purchase of or subscription for, or exchange or conversion of, shares or other
securities, subject to contract rights with respect thereto; or (iv)
participate in the execution of written consents, waivers, or releases, the
directors may fix a record date, which shall not be a date earlier than the
date on which the record date is fixed and, in the cases provided for in
clauses (i), (ii) and (iii) above, shall not be more than sixty (60) nor fewer
than ten (10) days, unless the Articles of Incorporation specify a shorter or a
longer period for such purpose, preceding the date of the meeting of the
shareholders, or the date fixed for the payment of any dividend or
distribution, or the date fixed for the receipt or the exercise of rights, as
the case may be.
6
<PAGE> 7
SECTION 7.03. Amendments. These regulations may be altered, changed
or amended in any respect, or superseded by new Regulations in whole or in
part, by the affirmative vote of the holders of a majority of the Voting Shares
present in person or by proxy at an annual or special meeting called for such
purpose except that the provisions of Sections 1.02, 1.06, 2.02 and this 7.03
may not be altered, changed or amended in any respect or superseded by new
Regulations in whole or in part except by the affirmative vote of the holders
of 85% of such stock.
SECTION 7.04. Fiscal Year. Unless otherwise determined by the Board
of Directors by resolution, the fiscal year of the Corporation shall begin the
first day of January in each year, and shall end on the thirty-first day of
December of such year.
7
<PAGE> 1
Exhibit 4(c)
=======================================================================
OHM CORPORATION
AND
UNITED STATES TRUST COMPANY OF NEW YORK
TRUSTEE
_______________
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF MAY 20, 1994
_______________
$57,500,000
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE OCTOBER 1, 2006
=======================================================================
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE dated as of May 20, 1994 among
OHM CORPORATION, a Delaware corporation ("OHM Delaware"), UNITED STATES TRUST
COMPANY OF NEW YORK, a New York banking corporation (the "Trustee") and OHM
CORPORATION, an Ohio corporation (the "Company") (OHM Delaware, the Trustee,
and the Company are collectively referred to herein as the "Parties").
WHEREAS, OHM DELAWARE, f/k/a Environmental Treatment and
Technologies Corp., and the Trustee entered into an Indenture dated as of
October 1, 1986 (the "Indenture") relating to $57,500,000 of 8% Convertible
Subordinated Debentures due October 1, 2006 (the "Securities");
WHEREAS, contemporaneously herewith, OHM Delaware is merging
with and into the Company, (the "Merger") a wholly-owned subsidiary of OHM
Delaware, pursuant to an Agreement of Merger by and between OHM Delaware and
the Company, ("Agreement of Merger") pursuant to which each share of OHM
Delaware common stock, par value $0.10 per share, (the "Delaware Common Stock")
issued and outstanding immediately prior to the Effective Time (as defined in
the Agreement of Merger) shall be converted into one fully paid and
nonassessable share of common stock, par value $0.10 per share of the Company
("Company Common Stock");
WHEREAS, the stated purpose for such Merger is to change the
state of incorporation of OHM Corporation from Delaware to Ohio;
WHEREAS, Section 5.01 of the Indenture provides that OHM
Delaware shall not merge into any person unless the surviving
<PAGE> 3
entity is a corporation and assumes by supplemental indenture all of the
obligations of OHM Delaware under the Securities and the Indenture;
WHEREAS, Section 10.15 of the Indenture provides that the
supplemental indenture shall provide that the Holder of a Security may convert
it into the kind and amount of securities, cash or other assets which he would
have owned immediately after the merger if he had converted the Security
immediately before the effective date of the transaction; and
WHEREAS, defined terms used herein and not defined herein will
have the meanings as set forth in the Indenture.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the Parties hereby agree, for the benefit of the other
parties and for the equal and ratable benefit of the holders of the Securities,
as follows:
1. The Company hereby expressly assumes all obligations,
covenants and responsibilities incurred by OHM Delaware under the Indenture.
2. The Company hereby expressly assumes all of the
obligations of OHM Delaware under all outstanding Securities subject to the
terms and conditions in effect as of the date of execution of this First
Supplemental Indenture.
3. The Company hereby expressly assumes the obligations
of OHM Delaware under Article X of the Indenture relating to the conversion of
the Securities and a Holder of a Security may convert it into Company Common
Stock at the same
2
<PAGE> 4
conversion price and on the same terms and conditions as such Holder could
convert such Security into Delaware Common Stock.
4. Each reference in the Indenture to "Common Stock" is
hereby amended to refer to the common stock, par value $0.10 per share, of the
Company.
5. Each occurrence in the Indenture of Environmental
Treatment and Technologies Corp. is hereby amended to read "OHM Corporation";
and each occurrence of the term "Company" in the Indenture shall hereinafter
refer to OHM Corporation, an Ohio corporation, as successor to OHM Corporation,
a Delaware corporation.
6. Except as amended hereby, all of the provisions of
the Indenture shall remain in full force and effect; and the amendments set
forth herein are effective as of the Effective Time of the Merger (as defined
in the Agreement of Merger).
3
<PAGE> 5
IN WITNESS WHEREOF, the Company, the Trustee and OHM Delaware
have executed this Supplemental Indenture as of the date first written above.
<TABLE>
<CAPTION>
OHM CORPORATION
Attest: An Ohio Corporation
<S> <C>
By: /s/ RANDALL M. WALTERS By: /s/ SAMUEL H. IAPALUCCI
------------------------ ---------------------------
Randall M. Walters, Samuel H. Iapalucci,
Secretary President
OHM CORPORATION
Attest: An Delaware Corporation
By: /s/ RANDALL M. WALTERS By: /s/ SAMUEL H. IAPALUCCI
------------------------ ---------------------------
Randall M. Walters, Samuel H. Iapalucci,
Secretary Vice President and Chief
Financial Officer
UNITED STATES TRUST COMPANY
Attest: OF NEW YORK
By: /s/ PATRICIA STERMER By: /s/ CYNTHIA CHANEY
------------------------ ---------------------------
Patricia Stermer, Cynthia Chaney,
Assistant Vice President Assistant Vice President
</TABLE>
<PAGE> 1
Exhibit 4(d)
<TABLE>
<S> <C>
COMMON STOCK COMMON STOCK
THIS CERTIFICATE IS TRANSFERABLE SHARES
IN EDISON, NEW JERSEY OR IN
NEW YORK, NEW YORK
INCORPORATED UNDER THE LAWS SEE REVERSE FOR ABBREVIATIONS
OF THE STATE OF OHIO AND STATEMENT OF RIGHTS
GRANTED TO EACH CLASS OF SHARES
CUSIP 670839 10 9
OHM CORPORATION
This is to certify that
is the owner of
FULL-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF THE PAR VALUE OF $.10 PER SHARE OF
OHM CORPORATION, transferable on the share register of the
Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated James L. Kirk
Countersigned and registered: President
Midlantic National Bank
(Edison, New Jersey) Randall M. Walters
Transfer agent Secretary
and Registrar
by
Authorized Officer
</TABLE>
<PAGE> 2
OHM CORPORATION
The Corporation will furnish to any stockholder upon request and
without charge a full statement of the powers, designations, preferences and
relative, participating, optional or other special rights of each authorized
class of stock or series thereof and the qualifications, limitations or
restrictions of such preference and/or rights, to the extent that the same have
been fixed, and of the authority of the Board of Directors to designate the
same with respect to other series. Such request may be made to the Corporation
or to its Transfer Agent.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT-...........Custodian...........
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT TEN -as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act....................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the
above list.
For Value Received, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
of the Common Stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
______________________________________________________________________Attorney
to transfer the said shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated_____________________________________
__________________________________________________________________
NOTICE: The signature to this assignment must correspond with
the name as written upon the face of the certificate
in every particular, without alteration or
enlargement or any change whatever.
Transfer of the shares represented by this Certificate is subject to the
provisions of Article TENTH of the Corporation's Articles of Incorporation as
the same may be in effect from time to time. Upon written request delivered to
the Secretary of the Corporation at its principal place of business, the
Corporation will mail to the holder of this Certificate a copy of such
provisions without charge within five (5) days after receipt of written request
therefor. By accepting this Certificate the holder hereof acknowledges that it
is accepting same subject to the provisions of said Article TENTH as the same
may be in effect from time to time and covenants with the Corporation and each
shareholder thereof from time to time to comply with the provisions of said
Article TENTH as the same may be in effect from time to time.
<PAGE> 1
EXHIBIT 10(c)
OHM CORPORATION
RETIREMENT SAVINGS PLAN
Amended and Restated
as of
January 1, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1 Eligibility to Participate . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Commencement of Participation . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Exclusions from Participation . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 Reemployment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3 BEFORE-TAX AND AFTER-TAX CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Amount of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Payments to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Changes in Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Suspension and Resumption of Contributions . . . . . . . . . . . . . . . . . . 18
3.5 Excess Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.6 Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . 20
3.7 Excess Matching and After-Tax Contributions . . . . . . . . . . . . . . . . . 24
3.8 Multiple Use of the Alternative Limitation . . . . . . . . . . . . . . . . . . 28
3.9 Monitoring Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.10 Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 4 EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.1 Amount of Matching Employer Contributions . . . . . . . . . . . . . . . . . . 32
4.2 Time of Matching Employer Contributions . . . . . . . . . . . . . . . . . . . 32
4.3 Allocation of Matching Employer Contributions . . . . . . . . . . . . . . . . 33
4.4 Amount of Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . 35
4.5 Time of Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . 36
4.6 Allocation of Profit Sharing Contributions . . . . . . . . . . . . . . . . . . 36
4.7 Classification of Employer Contributions . . . . . . . . . . . . . . . . . . . 36
4.8 Return of Contributions to the Employer . . . . . . . . . . . . . . . . . . . 36
4.9 Limitation on Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 5 INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Account; Sub-Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.4 Valuation of Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . 38
5.5 Investment Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.6 Change of Investment Option . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.7 Directions to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.8 No Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 6 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.1 Determination of Vested Interest . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Forfeiture of Nonvested Amounts . . . . . . . . . . . . . . . . . . . . . . . 42
6.3 Allocation of Forfeited Amounts . . . . . . . . . . . . . . . . . . . . . . . 43
6.4 Unclaimed Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.5 Reemployment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 7 DISTRIBUTIONS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Timing of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
7.2 Form of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.3 Direct Rollover Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.4 Withdrawal of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.5 Reemployment of Participant . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.6 Order of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.7 Valuation of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.8 Loans to Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.9 Distributions upon Plan Termination or Sale of Assets or a Subsidiary . . . . 52
7.10 Restrictions on Distributions . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 8 DISTRIBUTIONS TO BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.1 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.2 Consent of Spouse Required . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.3 Failure to Designate Beneficiary . . . . . . . . . . . . . . . . . . . . . . . 56
8.4 Distributions to Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . 56
8.5 Form of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.6 Restrictions on Distributions . . . . . . . . . . . . . . . . . . . . . . . . 58
8.7 Direct Rollover Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 9 RULES REGARDING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.1 Voting Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.2 Sale of Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.3 Tender Offer for Company Stock . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 10 ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT . . . . . . . . . . . . . . . . . . 61
10.1 Appointment of Committee Members . . . . . . . . . . . . . . . . . . . . . . . 61
10.2 Officers and Employees of the Committee . . . . . . . . . . . . . . . . . . . 62
10.3 Action of the Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.4 Expenses and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.5 General Powers and Duties of the Committee . . . . . . . . . . . . . . . . . . 63
10.6 Specific Powers and Duties of the Committee . . . . . . . . . . . . . . . . . 63
10.7 Allocation of Fiduciary Responsibility . . . . . . . . . . . . . . . . . . . . 64
10.8 Information to be Submitted to the Committee . . . . . . . . . . . . . . . . . 65
10.9 Notices, Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . 65
10.10 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.11 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.12 Correction of Participants' Accounts . . . . . . . . . . . . . . . . . . . . . 68
10.13 Payment to Minors or Persons Under
Legal Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.14 Uniform Application of Rules and Policies . . . . . . . . . . . . . . . . . . 69
10.15 Funding Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.16 The Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.17 Investment Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 11 LIMITATIONS ON ALLOCATIONS TO
PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.1 Priority over Other Allocation Provisions . . . . . . . . . . . . . . . . . . 71
11.2 Definitions Used in this Article . . . . . . . . . . . . . . . . . . . . . . . 71
11.3 General Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
11.4 Excess Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.5 Aggregate Benefit Limitation . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.6 Aggregation of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 12 RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . 82
12.1 Priority over Other Distribution Provisions . . . . . . . . . . . . . . . . . 82
12.2 Restrictions on Commencement of Distributions . . . . . . . . . . . . . . . . 82
12.3 Restrictions on Delay of Distributions . . . . . . . . . . . . . . . . . . . . 82
12.4 Limitation to Assure Benefits Payable to Beneficiaries are Incidental . . . . 83
12.5 Restrictions in the Event of Death . . . . . . . . . . . . . . . . . . . . . . 83
12.6 Compliance with Regulations . . . . . . . . . . . . . . . . . . . . . . . . 84
12.7 Delayed Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE 13 TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
13.1 Priority over Other Plan Provisions . . . . . . . . . . . . . . . . . . . . . 84
13.2 Definitions Used in this Article . . . . . . . . . . . . . . . . . . . . . . . 85
13.3 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.4 Modification of Aggregate Benefit Limit . . . . . . . . . . . . . . . . . . . 91
13.5 Minimum Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE 14 ADOPTION OF PLAN BY CONTROLLED GROUP MEMBERS . . . . . . . . . . . . . . . . . . . 93
14.1 Adoption Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.2 Effect of Adoption by Controlled Group Member . . . . . . . . . . . . . . . . 94
ARTICLE 15 AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.1 Right of Company to Amend Plan . . . . . . . . . . . . . . . . . . . . . . . . 94
15.2 Amendment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
15.3 Effect on Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE 16 TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 95
16.1 Continuance of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
16.2 Complete Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
16.3 Disposition of the Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . 96
16.4 Withdrawal by a Controlled Group Member . . . . . . . . . . . . . . . . . . . 97
ARTICLE 17 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
17.1 Reversion Prohibited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
17.2 Bonding, Insurance and Indemnity . . . . . . . . . . . . . . . . . . . . . . . 99
17.3 Merger, Consolidation or Transfer of Assets . . . . . . . . . . . . . . . . . 100
17.4 Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
17.5 Rights of Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
17.6 Gender, Tense and Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 101
17.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
</TABLE>
iii
<PAGE> 5
OHM Corporation
RETIREMENT SAVINGS PLAN
OHM Corporation, a Delaware corporation, previously adopted
this profit sharing plan effective November 16, 1988. The Plan is intended to
qualify under Code sections 401(a) and 401(k). The Company and National City
Bank have executed the OHM Corporation Retirement Savings Plan Trust Agreement,
which provides for the investment and reinvestment of the assets of the Plan.
Words and phrases with initial capital letters used throughout
the Plan are defined in Article 1.
<PAGE> 6
ARTICLE 1
DEFINITIONS
1.1 "Account" and "Sub-Account" means the records
maintained by the Trustee in the manner provided in Article 5 to determine the
interest of each Participant in the assets of the Plan.
1.2 "After-Tax Contributions" means the contributions
described as such in Section 3.1.
1.3 "Annuity Starting Date" means the first day of the
first period for which an amount is payable as an annuity, or in the case of a
benefit not payable in the form of an annuity (except for payments made
pursuant to Section 7.3 of the Plan), the first day on which all events have
occurred which entitle the Participant to such benefit.
1.4 "Before-Tax Contributions" means the contributions
described as such in Section 3.1.
1.5 "Beneficiary" means the one or more persons or
entities entitled to receive distribution of a Participant's interest in the
Plan in the event of the Participant's death as provided in Article 8.
1.6 "Board of Directors" or "Board" means the Board of
Directors of the Company.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.8 "Committee" or "Administrative Committee" means the
Committee appointed under Article 10.
<PAGE> 7
1.9 "Company" means OHM Corporation, a Delaware
corporation.
1.10 "Company Stock" means the voting common stock of the
Company.
1.11 "Company Stock Fund" means one of the Investment
Funds which shall be invested in Company Stock.
1.12 "Compensation" means the earnings paid to an Employee
by the Employer which are subject to reporting on Internal Revenue Service Form
W-2, excluding, however, except as provided in the next sentence, contributions
to or amounts paid to the Employee from this Plan or any other employee benefit
plan. In addition, Compensation includes any Before-Tax Contributions or any
other contributions made by the Employer on behalf of an Employee pursuant to a
deferral election under an employee benefit plan containing a cash or deferred
arrangement under Code section 401(k) or any amounts which would have been
received as cash but for an election to receive benefits under a cafeteria plan
meeting the requirements of Code section 125. For Plan Years beginning on or
after January 1, 1989, and before January 1, 1994, the annual Compensation of
each Participant taken into account for determining all benefits provided under
the Plan for any Plan Year shall not exceed $200,000. This limitation shall be
adjusted by the Secretary at the same time and in the same manner as under
section 415(d) of the Code, except that the dollar increase in effect on
January 1 of any calendar year is effective for Plan Years beginning in such
calendar year and the first adjustment to the $200,000 limitation
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<PAGE> 8
is effective on January 1, 1990. For Plan Years beginning on or after January
1, 1994, the annual Compensation of each Participant taken into account for
determining all benefits provided under the Plan for any Plan Year shall not
exceed $150,000, as adjusted for increases in the cost-of-living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any determination period
beginning in such calendar year. If a determination period consists of fewer
than 12 months the annual Compensation limit is an amount equal to the
otherwise applicable annual Compensation limit multiplied by a fraction, the
numerator of which is the number of months in the short determination period,
and the denominator of which is 12. If Compensation for any prior
determination period is taken into account in determining a Participant's
allocations for the current Plan Year, the Compensation for such prior
determination period is subject to the applicable annual Compensation limit in
effect for that period. For this purpose, in determining allocations in Plan
Years beginning on or after January 1, 1989, the annual Compensation limit in
effect for determination periods beginning before that date is $200,000. In
addition, in determining allocations in Plan Years beginning on or after
January 1, 1994, the annual Compensation limit in effect for determination
periods beginning before that date is $150,000. For purposes of the preceding
sentence, in the case of a Highly Compensated Employee who is a 5-percent owner
(as defined in Code section 416(i)(1)) or one of the ten most Highly
Compensated
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<PAGE> 9
Employees, (a) such Highly Compensated Employee and the members of his or her
family (as such term is hereinafter defined) will be treated as a single
Employee and the Compensation of each member of the family will be aggregated
with the Compensation of such Highly Compensated Employee, and (b) the
limitation on Compensation shall be allocated among the Highly Compensated
Employee and his or her family members in proportion to each individual's
Compensation. For purposes of this Section, the term "family" will mean an
Employee's spouse and lineal descendants who have not attained age 19 before
the close of the year in question.
1.13 "Controlled Group" means the Company and any and all
other corporations, trades and businesses, the employees of which, together
with employees of the Company, are required, by the first sentence of
subsection (b), by subsection (c), by subsection (m) or by subsection (o) of
Code section 414 to be treated as if they were employed by a single employer.
1.14 "Controlled Group Member" means each corporation or
unincorporated trade or business that is or was a member of the Controlled
Group including the Company, but only during such period as it is or was such a
member.
1.15 "Disability" or "Disabled" means disability for
purposes of an Employee's eligibility to receive disability benefits under the
long term disability plan of his or her Employer. An Employee who for any
reason is not eligible to receive disability benefits under such Employer's
long term disability plan will not be Disabled for purposes of this Plan.
4
<PAGE> 10
1.16 "Effective Date" for this amended and restated Plan
means January 1, 1994. The original effective date of the Plan was November
16, 1988.
1.17 "Election Period" means the period ending on the
Annuity Starting Date and beginning not less than 30 days and not more than 90
days before the Annuity Starting Date.
1.18 "Eligibility Computation Period" means the period of
12 consecutive months beginning on the date an Employee first performs an Hour
of Service and on each anniversary of that date.
1.19 "Employee" means any person who is employed by the
Employer if their relationship is, for federal income tax purposes, that of
employer and employee. "Employee" includes a "leased employee" of the Employer
but only for purposes of the requirements of Code section 414(n)(3). For
purposes of the preceding sentence, "leased employee" means any person who,
pursuant to an agreement between the Employer and any other person ("leasing
organization"), has performed services for the Employer on a substantially full
time basis for a period of at least one year, and such services are of a type
historically performed by employees in the business field of the Employer.
Contributions or benefits provided to a leased employee by the leasing
organization which are attributable to services performed for the Employer will
be treated as provided by the Employer. A leased employee will not be
considered an Employee of the Employer, however, if (a) leased employees do not
constitute more than 20 percent of the Employer's nonhighly compensated work
force (within the meaning of Code section 414(n)(5)(C)(ii)) and
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<PAGE> 11
(b) such leased employee is covered by a money purchase pension plan maintained
by the leasing organization that provides (1) a nonintegrated employer
contribution rate of at least 10 percent of Compensation (2) immediate
participation and (3) full and immediate vesting.
1.20 "Employer" means the Company and any Controlled Group
Member which is designated as the Employer under the Plan by the Board of
Directors.
1.21 "Enrollment Date" means the first day of each
January, April, July and October. Effective January 1, 1995, Enrollment Date
shall be the first day of each month.
1.22 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.23 Highly Compensated Employee" means:
(a) Unless the Company elects one of the simplified
methods contained in Code Section 414(q)(12) or Revenue Procedure 93-42, for a
particular Plan Year, any Employee (1) who, during the preceding Plan Year, (A)
was at any time a 5-percent owner (as such term is defined in section 416(i)(1)
of the Code), (B) received compensation from the Controlled Group in excess of
$75,000 (as such amount may be adjusted for increases in the cost of living
pursuant to regulations prescribed by the Secretary of the Treasury), (C)
received compensation from the Controlled Group in excess of $50,000 (as such
amount may be adjusted for increases in the cost of living pursuant to
regulations prescribed by the Secretary of the Treasury) and was in the
top-paid group of Employees for such Year, or (D) was at
6
<PAGE> 12
any time an officer (limited to no more than 50 Employees or, if lesser, the
greater of 3 Employees or 10 percent of the Employees) and received
compensation greater than 50 percent of the amount in effect under section
415(b)(1)(A) of the Code for such year, or (2) who during the particular Plan
Year (but not the prior Plan Year) (A) was at any time a 5-percent owner (as
such term is defined in section 416(i)(l) of the Code) or (B) was included in
the foregoing clauses (a)(1)(B), (a)(1)(C) or (a)(1)(D) and was in the group
consisting of the 100 Employees paid the greatest compensation by the
Controlled Group during such Plan Year.
(b) "Highly Compensated Employee" includes any
former Employee whose employment with the Controlled Group terminated prior to
the relevant Plan Year and who was a Highly Compensated Employee for the Plan
Year in which such employment terminated or for any Plan Year ending on or
after the Employee's 55th birthday.
(c) For the purposes of this Subsection, (1) the
term "compensation" shall mean an Employee's compensation within the meaning of
section 415(c)(3) of the Code (determined without regard to sections 125,
402(a)(8) and 402(h)(1)(B) of the Code) and (2) the term "top-paid group of
Employees" shall mean the group consisting of the top 20 percent of Employees
when ranked on the basis of compensation paid by the Controlled Group during
the Plan Year.
1.24 "Hours of Service" means each hour credited in
accordance with the following rules:
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<PAGE> 13
(a) Credit for Services Performed. An Employee
shall be credited with one Hour of Service for each hour for which he or she is
paid, or entitled to payment, by one or more Controlled Group Members for the
performance of duties.
(b) Credit for Periods in Which No Services Are
Performed. An Employee shall be credited with one Hour of Service for each
hour for which he or she is paid, or entitled to payment, by one or more
Controlled Group Members on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated); except that (i) no more than 501 Hours of Service shall be
credited under this Subsection (b) to an Employee on account of any single
continuous period during which he or she performs no duties (whether or not
such period occurs in a single Plan Year), (ii) an hour for which an Employee
is directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed shall not be credited to the Employee if
the payment is made or due under a plan maintained solely for the purpose of
complying with applicable workers" compensation or unemployment compensation or
disability insurance laws, (iii) Hours of Service shall not be credited for a
payment which solely reimburses an Employee for medical or medically related
expenses incurred by the Employee. For purposes of this Subsection (b), an
Employee shall be credited with Hours of Service on the basis of his or her
regularly scheduled working hours per week (or per day if he or she is paid on
a daily basis) or, in the case of an Employee without a regular work schedule,
on the basis of 40
8
<PAGE> 14
Hours of Service per week (or 8 Hours of Service per day if he or she is paid
on a daily basis) for each week (or day) during the period of time during which
no duties are performed; except that an Employee shall not be credited with a
greater number of Hours of Service for a period during which no duties are
performed than the number of hours for which he or she is regularly scheduled
for the performance of duties during the period or, in the case of an Employee
without a regular work schedule, on the basis of 40 Hours of Service per week
(or 8 Hours of Service per day if he or she is paid on a daily basis).
(c) Credit for Back Pay. An Employee shall be
credited with one Hour of Service for each hour for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to by
one or more Controlled Group Members; except that an hour shall not be credited
under both Subsection (a) or (b), as the case may be, and this Subsection (c),
and Hours of Service credited under this Subsection (c) with respect to periods
described in Subsection (b) shall be subject to the limitations and provisions
under Subsection (b).
(d) Credit for Certain Absences. If an Employee is
absent from work for any period by reason of the pregnancy of the Employee, by
reason of the birth of a child of the Employee, by reason of the placement of a
child with the Employee, or for purposes of caring for a child for a period
beginning immediately following the birth or placement of that child, the
Employee shall be credited with Hours of Service (solely for the purpose of
determining whether the Employee has a One Year Break in
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<PAGE> 15
Service under the Plan) equal to (i) the number of Hours of Service which
otherwise would normally have been credited to the Employee but for his or her
absence, or (ii) if the number of Hours of Service under clause (i) is not
determinable, 8 Hours of Service per normal workday of the absence, provided,
however, that the total number of Hours of Service credited to an Employee
under this Subsection (d) by reason of any pregnancy, birth or placement shall
not exceed 501 Hours of Service. Hours of Service shall not be credited to an
Employee under this Subsection (d) unless the Employee furnishes to the
Committee such timely information as the Committee may reasonably require to
establish that the Employee's absence from work is for a reason specified in
this Subsection (d) and the number of days for which there was such an absence.
(e) Manner of Counting Hours. No hour shall be
counted more than once or be counted as more than one Hour of Service even
though the Employee may receive more than straight-time pay for it. With
respect to Employees whose compensation is not determined on the basis of
certain amounts for each hour worked during a given period and for whom hours
are not required to be counted and recorded by any federal law (other than
ERISA), Hours of Service shall be credited on the basis of 10 Hours of Service
daily, 45 Hours of Service weekly, 95 Hours of Service semi-monthly, or 190
Hours of Service monthly, if the Employee's compensation is determined on a
daily, weekly, semi-monthly or monthly basis, respectively, for each period in
which the Employee would be credited with at least one Hour of
10
<PAGE> 16
Service under this Section. Except as otherwise provided in Subsection (d),
Hours of Service shall be credited to Eligibility Computation Periods and Plan
Years in accordance with the provisions of 29 C.F.R. Section 2530.200b-2,
which provisions are incorporated in this Plan by reference.
(f) If the Employer maintains the plan of a
predecessor employer, service with such predecessor employer will be treated as
service for the Employer.
1.25 "Investment Funds" means the Funds described in
Section 5.1.
1.26 "Matching Employer Contributions" means the
contributions described in Section 4.1.
1.27 "Net Profits" means the amount of the Employer's
current and accumulated earnings as determined under accounting principles
adopted by the Employer and consistently applied, without regard to whether the
Employer has current or accumulated earnings and profits for federal income tax
purposes, and determined before the deduction of federal or state income taxes
and contributions to the Plan.
1.28 "One Year Break in Service" means an Eligibility
Computation Period in which an Employee fails to complete more than 500 Hours
of Service.
1.29 "Participant" means an Employee or former Employee
who has met the applicable eligibility requirements of Article 2 and who has
not yet received a distribution of the entire amount of his or her vested
interest in the Plan.
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<PAGE> 17
1.30 "Plan" means the OHM Corporation Retirement Savings
Plan, the terms of which are set forth herein, as amended or restated from time
to time.
1.31 "Plan Year" means the period with respect to which
the records of the Plan are maintained, which shall be the 12-month period
beginning on January 1 and ending on December 31.
1.32 "Profit Sharing Contributions" means the
contributions described in Section 4.4.
1.33 "Qualified Plan" means an employee benefit plan that
is qualified under Code section 401(a).
1.34 "Rollover Contribution" means a contribution to the
Plan by an Employee of all or part of the amounts distributed to such Employee
from a Qualified Plan, but only if such contribution qualifies as a rollover
contribution described in sections 402(a)(5), 403(a)(4) or 408(d)(3) of the
Code.
1.35 "Salary Reduction Agreement" means an arrangement
made under the Plan pursuant to which an Employee agrees to reduce, or to
forego an increase in, his or her Compensation and the Employer agrees to
contribute to the Trust the amount so reduced or foregone as a Before-Tax
Contribution.
1.36 "Trust Agreement" means the agreement or agreements
executed by the Company and the Trustee which establishes a trust fund to
provide for the investment, reinvestment, administration and distribution of
contributions made under the Plan and the earnings thereon, as amended from
time to time.
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<PAGE> 18
1.37 "Trust Fund" means the assets of the Plan held by the
Trustee pursuant to the Trust Agreement.
1.38 "Trustee" means the one or more individuals or
organizations who have entered into the Trust Agreement as Trustee(s), and any
duly appointed successor.
1.39 "Valuation Date" means the date with respect to which
the Trustee determines the fair market value of the assets comprising the Trust
Fund or any portion thereof. The Valuation Dates shall be the last business
day of each month.
1.40 "Year of Service" means an Eligibility Computation
Period in which an Employee completes at least 1,000 Hours of Service.
ARTICLE 2
PARTICIPATION
2.1 Eligibility to Participate. Each Employee who is
eligible to be a Participant in the Plan as of the Effective Date of this
amended and restated Plan shall remain eligible to be a Participant in the Plan
as of the Effective Date. Each Employee who is not a Participant in the Plan
as of the Effective Date will be eligible to become a Participant in the Plan
on the Enrollment Date following the date the Employee both attains age 21 and
completes one Year of Service, provided the Employee is employed by the
Employer on that date.
2.2 Commencement of Participation. An Employee eligible
to participate under Section 2.1 will be notified of his or her eligibility for
participation in the Plan by the Committee. Any Employee so notified may
enroll as a Participant
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<PAGE> 19
in the Plan as of the Enrollment Date coinciding with the date of the
Employee's initial eligibility (or on any subsequent Enrollment Date) by filing
with the Committee at least 15 days before the Enrollment Date an enrollment
form prescribed by the Committee, which form shall include (i) the desired
effective date of participation in the Plan, (ii) the Employee's agreement,
commencing on or after the effective date of participation in the Plan, to have
his or her Employer make Before-Tax Contributions for the Employee to the Trust
Fund and/or the Employee's election, commencing on or after the effective date
of participation in the Plan, to make After-Tax Contributions to the Trust
Fund, (iii) the Employee's authorization to his or her Employer to reduce his
or her Compensation for each pay period, commencing on or after the effective
date of participation in the Plan, by the amount of any designated Before-Tax
and/or After-Tax Contributions and to pay the same to the Trust Fund, and (iv)
the Employee's direction that the Before-Tax Contributions and After-Tax
Contributions made by or for the Employee be invested in any one or more of the
Investment Funds in the manner permitted under Section 5.5.
2.3 Exclusions from Participation.
(a) Ineligible Employees. An Employee who is
otherwise eligible to participate in the Plan will not become or continue as an
active Participant if (i) the Employee is covered by a collective bargaining
agreement that does not expressly provide for participation in the Plan,
provided that the representative of the Employees with whom the collective
14
<PAGE> 20
bargaining agreement is executed has had an opportunity to bargain concerning
retirement benefits for those Employees; (ii) the Employee is a nonresident
alien who receives no earned income (within the meaning of Code section
911(d)(2)) from the Employer which constitutes income from sources within the
United States (within the meaning of Code section 861(a)(3)); (iii) the
Employee is a leased employee required to be treated as an Employee under Code
section 414(n); (iv) the Employee is employed by a Controlled Group Member that
has not been designated as an Employer by the Board; or (v) the Employee is
then on an approved leave of absence without pay or in the service of the armed
forces of the United States.
(b) Exclusion after Participation. A Participant
who becomes ineligible under Subsection (a) will continue to receive credit for
Hours of Service for purposes of determining the Participant's vested interest
in his or her Account, but during the period of ineligibility will not be
eligible to have Before-Tax Contributions, After Tax Contributions, Matching
Employer Contributions, or Profit Sharing Contributions made to the Trust Fund.
(c) Participation after Exclusion. An Employee
or Participant who is excluded from active participation will be eligible to
participate in the Plan on the first day the Employee is no longer described in
Subsection (a) and is credited with one or more Hours of Service by the
Employer, provided that the Employee has otherwise met the requirements of
Section 2.1. Such an Employee or Participant may commence or resume
participation
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<PAGE> 21
in the Plan on the first Enrollment Date following the date the Employee
becomes eligible to participate provided that the Employee files with the
Committee at least 15 days before such Enrollment Date an enrollment form
described in Section 2.2. This Subsection will apply to an Employee who
returns from an approved leave of absence or from military leave only if the
Employee returns to employment with the Employer immediately following the
expiration of the leave of absence or, in the case of an Employee on military
leave, during the period in which reemployment rights are guaranteed by law.
2.4 Reemployment Provisions. If an Employee who has
satisfied the eligibility requirements of Section 2.1 terminates employment and
is later reemployed by the Employer, the Employee will again be eligible to
become a Participant in the Plan on the first Enrollment Date after his or her
reemployment. If an Employee terminates employment prior to satisfying the
eligibility requirements contained in Section 2.1, the Employee will be
eligible to participate in the Plan on the Enrollment Date following the date
such eligibility requirements are satisfied.
ARTICLE 3
BEFORE-TAX AND AFTER-TAX CONTRIBUTIONS
3.1 Amount of Contributions. Upon enrollment pursuant to
Section 2.2, a Participant will (i) agree pursuant to a Salary Reduction
Agreement to have his or her Employer make Before-Tax Contributions to the
Trust through equal pay period reductions of up to 15% of the Participant's
compensation (in 1% increments)
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<PAGE> 22
and/or (ii) elect to make After-Tax Contributions to the Trust through equal
percentage payroll deductions of up to that percentage of compensation (in 1%
increments) that does not exceed 15% of the Participant's compensation minus
the percentage of compensation that the Participant elected to contribute to
the Plan as a Before-Tax Contribution. If a Participant's Before-Tax
Contributions and/or After-Tax Contributions must be reduced to comply with the
requirements of Sections 3.6, 3.7 or 3.8 of the Plan or the requirements of
applicable law, the Participant's Before-Tax Contributions and/or After-Tax
Contributions as so reduced will be the maximum percentage of the Participant's
compensation permitted by such Section or law notwithstanding the foregoing
provisions of this Section requiring that Before-Tax Contributions and
After-Tax Contributions be made in 1% increments of compensation. For purpose
of this Section, the term compensation shall mean a Participant's total wages
from the controlled Group determined without regard to contributions made to
this Plan or amounts withheld from wages under any other plan subject to
sections 401(k) or 125 of the Code.
3.2 Payments to Trustee. Before Tax Contributions and/or
After-Tax Contributions that are to be made through payroll deductions will be
withheld from a Participant's Compensation each pay period pursuant to the
Participant's authorization and will be transmitted to the Trustee as soon as
practicable, but in any event not later than 30 days after the end of the
calendar month in which the pay period for which such Contributions are
withheld ends.
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<PAGE> 23
3.3 Changes in Contributions. The percentage or
percentages designated by a Participant pursuant to Section 3.1 shall continue
in effect, notwithstanding any changes in the Participant's Compensation. A
Participant may, however, in accordance with the percentages permitted by
Section 3.1, change the percentage of his or her Before-Tax Contributions
and/or his or her After-Tax Contributions effective as of any Enrollment Date
upon at least 15 days prior written notice filed with the Committee.
3.4 Suspension and Resumption of Contributions.
(a) Suspension of Before-Tax Contributions. A
Participant may suspend his or her Before-Tax Contributions effective as of any
date upon at least 15 days prior written notice filed with the Committee. A
Participant who has suspended his or her Before-Tax Contributions may, upon at
least 15 days prior written notice filed with the Committee, resume making such
Before-Tax Contributions as of any Enrollment Date if the Participant is then
employed by the Employer and has again enrolled pursuant to Sections 2.2 and
3.1.
(b) Suspension of After-Tax Contributions. A
Participant may suspend his or her After-Tax Contributions effective as of any
date upon at least 15 days prior written notice filed with the Committee. A
Participant who has suspended his or her After-Tax Contributions may, upon at
least 15 days prior written notice filed with the Committee, resume making such
After-Tax Contributions as of any Enrollment Date if the
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<PAGE> 24
Participant is then employed by the Employer and has again enrolled pursuant to
Sections 2.2 and 3.1.
3.5 Excess Deferrals.
(a) Limit on Before-Tax Contributions.
Notwithstanding the foregoing provisions of this Article III, a Participant's
Before-Tax Contributions for any taxable year of such Participant shall not
exceed the maximum amount permitted as a Before-Tax Contribution under Code
section 402(g). Except as otherwise provided in this Section, a Participant's
Before-Tax Contributions for purposes of this Section shall include (i) any
employer contribution made under any qualified cash or deferred arrangement as
defined in Code section 401(k) to the extent not includable in gross income for
the taxable year under Code section 402(a)(8) (determined without regard to
Code section 402(g)), (ii) any employer contribution to the extent not
includable in gross income for the taxable year under Code section 402(h)(1)(B)
(determined without regard to Code section 402(g)) and (iii) any employer
contribution to purchase an annuity contract under Code section 403(b) under a
salary reduction agreement within the meaning of Code section 3121(a)(5)(D).
(b) Distribution of Excess Deferrals. In the
event that a Participant's Before-Tax Contributions exceed the amount described
in Subsection (a) of this Section (hereinafter called the "excess deferrals"),
such excess deferrals (and any income allocable thereto) will be distributed to
the Participant by April 1 following the close of the taxable year in which
such
19
<PAGE> 25
excess deferrals occurred if (and only if), by March 1 following the close of
such taxable year the Participant (i) allocates the amount of such excess
deferrals among the plans under which the excess deferrals were made and (ii)
notifies the Committee of the portion allocated to this Plan.
(c) Return of Matching Employer Contributions.
In the event that a Participant's Before-Tax Contributions under this Plan
exceed the amount described in Subsection (a) of this Section, or in the event
that a Participant's Before-Tax Contributions made under this Plan do not
exceed such amount but the Participant allocates a portion of his or her excess
deferrals to Before-Tax Contributions made to this Plan, Matching Employer
Contributions, if any, made with respect to such Before-Tax Contributions (and
any income applicable thereto) shall be forfeited and reallocated pursuant to
Section 6.3 of the Plan.
3.6 Excess Before-Tax Contributions.
(a) Actual Deferral Percentage Test.
Notwithstanding the foregoing provisions of this Article, for any Plan Year,
(i) the actual deferral percentage (as defined in
Subsection (b) of this Section) for the group of eligible
Highly Compensated Employees (as defined in Subsection (c) of
this Section) for such Plan Year shall not exceed the actual
deferral percentage for all other eligible Employees (as
defined in
20
<PAGE> 26
Subsection (c) of this Section) for such Plan Year multiplied
by 1.25, or
(ii) the excess of the actual deferral percentage for
the group of eligible Highly Compensated Employees for such
Plan Year over the actual deferral percentage for all other
eligible Employees for such Plan Year shall not exceed 2
percentage points, and the actual deferral percentage for the
group of eligible Highly Compensated Employees for such Plan
Year shall not exceed the actual deferral percentage for all
other eligible Employees for such Plan Year multiplied by 2.
If two or more plans which include cash or deferred arrangements are treated as
one plan for purposes of Code section 410(b), such arrangements included in
such plans shall be treated as one arrangement for the purposes of this
Subsection; and if any eligible Highly Compensated Employee is a participant
under two or more cash or deferred arrangements of the Controlled Group, all
such arrangements shall be treated as one cash or deferred arrangement for
purposes of determining the deferral percentage with respect to such eligible
Highly Compensated Employee.
(b) Definition of Actual Deferral Percentage. For
the purposes of this Section, the actual deferral percentage for a specified
group of eligible Employees for a Plan Year shall be the average of the ratios
(calculated separately for each eligible Employee in such group) of (i) the
amount of Before-Tax
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Contributions and, at the election of the Employer, any qualified matching
contributions or qualified nonelective contributions (within the meaning of
Code Section 401(k)(3)(D)(ii) and Treasury Regulations issued thereunder)
actually paid to the Trust Fund for each such eligible Employee for such Plan
Year (including any "excess deferrals" described in Section 3.5) to (ii) the
eligible Employee's Compensation for such Plan Year. In the case of a Highly
Compensated Employee who is either a 5-percent owner (as such term is defined
in section 416(i)(1) of the Code) or one of the ten Highly Compensated
Employees paid the greatest Compensation during the Plan Year, (1) the
Before-Tax Contributions and compensation of such Highly Compensated Employee
will include the Before-Tax Contributions and Compensation of all members of
the family group (as such term is hereinafter defined) for purposes of
determining the actual deferral percentage of such Highly Compensated Employee,
and (2) the Before-Tax Contributions and Compensation of all members of the
family group shall be disregarded in determining the actual deferral
percentages for all other eligible Employees. For purposes of this Section and
Section 3.7, the term "family group" shall mean an Employee's spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants and
descendants.
(c) Definition of Eligible Employee. For the
purposes of this Section and Section 3.7, the term "eligible" Employee or
"eligible" Highly Compensated Employee means an Employee eligible to become a
Participant under the provisions of
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Article 2, and the phrases "group of eligible Highly Compensated Employees" and
"all other eligible Employees" apply separately with respect to the relevant
Employees of the Controlled Group.
(d) Treatment of Excess Contributions. In the event
that excess contributions (as such term is hereinafter defined) are made to the
Trust for any Plan Year, then, prior to March 15 of the following Plan Year,
(i) such excess contributions (and any income allocable thereto) shall be
distributed to the eligible Highly Compensated Employees on the basis of the
respective portions of the excess contributions attributable to each such
eligible Employee, or (ii) such excess contributions shall be treated as
After-Tax Contributions, provided that (A) the eligible Highly Compensated
Employee elects such treatment, and (B) the excess contributions to be so
treated in combination with the After-Tax Contributions actually made by the
eligible Highly Compensated Employee for the Plan Year for which the excess
contributions were made do not exceed the maximum amount of After-Tax
Contributions permitted to be made by such Employee under the terms of the Plan
(without regard to the provisions of Section 3.7). For the purposes of this
Subsection, the term "excess contributions" shall mean, for any Plan Year, the
excess of (i) the aggregate amount of Before-Tax Contributions actually paid to
the Trust on behalf of eligible Highly Compensated Employees for such Plan Year
over (ii) the maximum amount of such Before-Tax Contributions permitted for
such Plan Year under Subsection (a) of this Section, determined by reducing
Before-Tax Contributions made on behalf of eligible
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Highly Compensated Employees in order of the actual deferral percentages (as
defined in Subsection (b) of this Section) beginning with the highest of such
percentages.
(e) Excess Contributions Under Family Aggregation
Rules. Notwithstanding the provisions of Subsection (d) of this Section, in
the case of a Highly Compensated Employee whose actual deferral percentage is
determined under the family aggregation rules set forth in Subsection (b) of
this Section, the actual deferral percentage shall be reduced in accordance
with the leveling method and by allocating the excess contributions for the
family group among the family group members in proportion to the Before-Tax
Contributions of each family group member that is combined to determine the
actual deferral percentage.
(f) Return of Matching Employer Contributions.
Matching Employer Contributions made with respect to a Participant's excess
contributions (and any income allocable thereto) shall be forfeited and
reallocated pursuant to Section 6.3 of the Plan.
3.7 Excess Matching and After-Tax Contributions.
(a) Contribution Percentage Test. Notwithstanding
the foregoing provisions of this Article, for any Plan Year, the contribution
percentage (as defined in Subsection (b) of this Section) for the group of
eligible Highly Compensated Employees for such Plan Year shall not exceed the
greater of:
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(i) 125 percent of the contribution percentage for
all other eligible Employees, or
(ii) the lesser of 200 percent of the contribution
percentage for all other eligible Employees, or the
contribution percentage for all other eligible Employees plus
2 percentage points.
If two or more plans to which matching contributions, employee
after-tax contributions or before-tax contributions are made are treated as one
plan for purposes of Code section 410(b), such plans shall be treated as one
plan for purposes of this Subsection; and if any eligible Highly Compensated
Employee participates in two or more plans of the Controlled Group to which
such plans are made, all such plans shall be aggregated for purposes of this
Subsection.
(b) Definition of Contribution Percentage. For the
purposes of this Section, the contribution percentage for a specified group of
eligible Employees for a Plan Year shall be the average of the ratios
(calculated separately for each eligible Employee in such group) of (i) the sum
of the Matching Employer Contributions and After-Tax Contributions and, at the
election of the Employer, any qualified nonelective contributions (within the
meaning of Code section 401(m)(4)(C) and Treasury Regulations issued
thereunder) paid under the Plan by or on behalf of each such eligible Employee
for such Plan Year to (ii) the eligible Employee's Compensation for such Plan
Year. In the
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case of a Highly Compensated Employee who is either a 5-percent owner (as such
term is defined in section 416(i)(1) of the Code) or one of the ten Highly
Compensated Employees paid the greatest Compensation during the Plan Year, (i)
the Matching Employer Contributions and After-Tax Contributions and
Compensation of such Highly Compensated Employee will include the Matching
Employer Contributions and After-Tax Contributions and Compensation of all
members of the family group (as such terms are defined in Section 3.6(b)) for
purposes of determining the contribution percentage of such Highly Compensated
Employee, and (ii) the Matching Employer and After-Tax Contributions and
Compensation of all family members shall be disregarded in determining the
contribution percentages for the groups of eligible Highly Compensated
Employees and all other eligible Employees.
(c) Treatment of Excess Aggregate Contributions. In
the event that excess aggregate contributions (as such term is hereinafter
defined) are made to the Trust for any Plan Year, then, prior to March 15 of
the following Plan Year, such excess aggregate contributions (and any income
allocable thereto) shall be distributed to the eligible Highly Compensated
Employees on the basis of the respective portions of the excess aggregate
contributions attributable to each such eligible Employee. For purposes of the
preceding sentence, distributions of excess aggregate contributions will be
made first from After-Tax Contribution for the Plan Year during which the
excess aggregate contributions arise and second from Matching Employer
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<PAGE> 32
Contributions for such Plan Year. For the purposes of this Subsection, the
term "excess aggregate contributions" shall mean, for any Plan Year, the excess
of (i) the aggregate amount of the Matching Employer Contributions and
After-Tax Contributions actually paid to the Trust Fund by or on behalf of
eligible Highly Compensated Employees for such Plan Year over (ii) the maximum
amount of such Matching Employer Contributions and After-Tax Contributions
permitted for such Plan Year under Subsection (a) of this Section, determined
by reducing Matching Employer Contributions and After-Tax Contributions made by
or on behalf of eligible Highly Compensated Employees in order of their
contribution percentages (as defined in Subsection (b) of this Section)
beginning with the highest of such percentages. Excess aggregate contributions
of Participants who are subject to the family member aggregation rules shall be
allocated among the family members in proportion to the contributions of each
family member that is combined to determine the combined contribution
percentage or deferral percentage.
(d) Excess Aggregate Contributions Under Family
Aggregation Rules. Notwithstanding the provisions of Subsection (c) of this
Section, in the case of a Highly Compensated Employee whose contribution
percentage is determined under the family aggregation rules set forth in
Subsection (b) of this Section, the contribution percentage shall be reduced in
accordance with the leveling method and by allocating the excess aggregate
contributions for the family group among family group members in proportion to
the Matching Employer Contributions and After-Tax
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<PAGE> 33
Contributions of each family group member that is combined to determine the
contribution percentage.
(e) Order of Determination. The determination of
excess aggregate contributions under this Section shall be made after (i) first
determining the excess deferrals under Section 3.5 and (ii) then determining
the excess contributions under Section 3.6.
3.8 Multiple Use of the Alternative Limitation.
(a) General Rule. Notwithstanding the foregoing
provisions of this Article 3 or the provisions of Article 4, if, after the
application of Sections 3.5, 3.6 and 3.7, the sum of the actual deferral
percentage and the contribution percentage for the group of eligible Highly
Compensated Employees exceeds the aggregate limit (as defined in Subsection (b)
of this Section), then the contribution percentage of the group of eligible
Highly Compensated Employees will be reduced (beginning with such Highly
Compensated Employee whose contribution percentage is the highest) so that the
aggregate limit is not exceeded. The amount by which each such Highly
Compensated Employee's contribution percentage amount is reduced shall be
treated as an excess aggregate contribution under Section 3.7(c). For purposes
of this Section, the actual deferral percentage and contribution percentage of
the eligible Highly Compensated Employees are determined after any reductions
required to meet those tests under Sections 3.6 and 3.7. Notwithstanding the
foregoing provisions of this Section, no reduction shall be required by this
Subsection if either (i) the actual deferral
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<PAGE> 34
percentage of the eligible Highly Compensated Employees does not exceed 1.25
multiplied by the actual deferral percentage of the eligible non-Highly
Compensated Employees, or (ii) the contribution percentage of the eligible
Highly Compensated Employees does not exceed 1.25 multiplied by the
contribution percentage of the eligible non-Highly Compensated Employees.
(b) Definition of Aggregate Limit. For purposes of
this Section, the term "aggregate limit" means the sum of (i) 125% of the
greater of (A) the actual deferral percentage of the eligible non-Highly
Compensated Employees for the Plan Year, or (B) the contribution percentage of
the eligible non-Highly Compensated Employees for the Plan Year, and (ii) the
lesser of (A) 200%, or (B) two plus the lesser of such actual deferral
percentage or contribution percentage. If it would result in a larger
aggregate limit, the word "lesser" is substituted for the word "greater" in
part (i) of this Subsection, and the word "greater" is substituted for the word
"lesser" in part (ii) of this Subsection.
(c) The multiple use of the alternative test
contained in Subsection (b) of this Section will be restricted as provided in
Treasury Regulation 1.401(m)-2(b), which regulation is incorporated herein by
reference.
3.9 Monitoring Procedures.
(a) Monitoring Actual Deferral Percentages and
Contribution Percentages. In order to ensure that at least one of the actual
deferral percentages specified in Section 3.6, at least one of the contribution
percentages specified in Section
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3.7, and the aggregate limit specified in Section 3.8 are satisfied for each
Plan Year, the Company will monitor (or cause to be monitored) the amount of
Before-Tax Contributions, Matching Employer Contributions and After-Tax
Contributions being made to the Plan by or for each eligible Employee during
each Plan Year. In the event that the Company determines that neither of such
actual deferral percentages or neither of such contribution percentages will be
satisfied for a Plan Year, and if the Company in its sole discretion determines
that it is necessary or desirable, the Before-Tax Contributions and/or the
Matching Employer Contributions and After-Tax Contributions made thereafter by
or for each eligible Highly Compensated Employee may be reduced (pursuant to
non-discriminatory rules adopted by the Company) to the extent necessary to
decrease the actual deferral percentage and/or the contribution percentage for
eligible Highly Compensated Employees for such Plan Year to a level which
satisfies either of the actual deferral percentages, either of the contribution
percentages, and/or the aggregate limit. In the case of Section 3.7, such
reductions will be made first in the After-Tax Contributions, if any, to be
made by the eligible Highly Compensated Employees.
(b) Preventing Excess Deferrals. In order to
prevent excess deferrals (as such term is defined in Section 3.5(b) to the Plan
for any taxable year for any Participant, the Company will monitor (or cause to
be monitored) the amount of Before-Tax Contributions being made to the Plan for
each Participant during each taxable year and will take action
30
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(pursuant to non-discriminatory rules adopted by the Company) to prevent
Before-Tax Contributions made for any Participant under the Plan for any
taxable year from exceeding the maximum amount applicable under Section 3.5(a).
(c) Coordination of Actions. The actions permitted
by this Section are in addition to, and not in lieu of, any other actions that
may be taken pursuant to Sections 3.5, 3.6, 3.7 or 3.8 or that may be permitted
by applicable law or regulation in order to ensure that the limitations
described in Sections 3.5, 3.6, 3.7 or 3.8 are met.
3.10 Rollover Contribution. Any Employee may make a Rollover
Contribution to the Plan if such contribution is $1,000 or more. A Rollover
Contribution must be designated as such by the Employee at the time it is made
and must be made in cash. An Employee who makes a Rollover Contribution to the
Plan shall not otherwise become a Participant in the Plan until the Employee
has satisfied the eligibility requirements contained in Section 2.1. An
Employee who makes a Rollover Contribution to the Plan must select an
investment option pursuant to Section 5.5 and the Rollover Contribution shall
be so invested as of the next Enrollment Date. Thereafter, the Rollover
Contribution shall be subject to the transfer provisions of Section 5.6 and the
distribution and withdrawal provisions of Articles 7 and 8 of the Plan. Until
a Rollover Contribution is invested as directed by the Employee, the Trustee
will invest such amounts in a fixed income fund or its equivalent maintained
pursuant to Section 3.1.
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ARTICLE 4
EMPLOYER CONTRIBUTIONS
4.1 Amount of Matching Employer Contributions. Subject
to the provisions of the Plan and Trust Agreement, the Employer may, in its
discretion, contribute an amount (the "Matching Employer Contributions") to the
Trust, on account of each contribution period, out of its Net Profits during
such contribution period for its Employees who are entitled to participate in
the Employer's Matching Employer Contributions for such period pursuant to
Section 4.3; provided, however, that if the Employer does not have Net Profits
for a contribution period, the Employer may make a contribution to the Plan
without regard to the current or accumulated profits of the Employer for the
contribution period. Notwithstanding any provision of the Plan to the
contrary, the Employer's Matching Employer Contributions to the Trust on
account of any Plan Year shall not exceed the amount that would be deductible
for such Year for purposes of Federal taxes on income under applicable
provisions of the Code and shall be made on the condition that such
Contributions are deductible under applicable provisions of the Code. For
purposes of this Article, contribution period shall mean each calendar month.
4.2 Time of Matching Employer Contributions. The
Employer will make its Matching Employer Contributions to the Trust for the
contribution periods occurring within any Plan Year no later than the time
prescribed by law (including extensions thereof) for filing the Employer's
Federal income tax return for
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the fiscal year of the Employer in which ends the Plan Year for which the
contributions are made. Matching Employer Contributions shall be applied to
the contribution period or periods designated by the Employer at the time such
Matching Employer Contributions are made.
4.3 Allocation of Matching Employer Contributions.
(a) Each Participant in the Plan shall be
eligible to share in the allocation of Matching Employer Contributions made by
the Employer to the Plan for any contribution period and also will be eligible
to share in the allocation of any forfeitures of Matching Employer
Contributions that occur during such contribution period. Subject to the
provisions of Section 3.5(c), 3.6(f) and 3.7(c), the Employer's Matching
Employer Contributions will be allocated and credited to the Accounts of
Participants in the following manner:
(i) Matching Employer Contributions and forfeitures
of Matching Employer Contributions, if any, first shall be
allocated and credited to the Account of each Participant in
the Plan according to each Participant's respective Before-Tax
Contributions to the Plan for the contribution period, until
each Participant has received an amount equal to sixty percent
(60%) of the first two percent (2%) of Compensation that such
Participant
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contributed to the Plan as a Before-Tax Contribution for the
contribution period;
(ii) Any additional Matching Employer Contributions
and forfeitures of Matching Employer Contributions, if any,
next shall be allocated and credited to the Account of each
Participant in the Plan according to each such eligible
Employee's respective Before-Tax Contributions to the Plan for
the contribution period, until each Participant has received
an amount equal to fifty percent (50%) of the Before-Tax
Contributions contributed to the Plan in excess of two percent
(2%) but not in excess of six percent (6%) of the
Participant's Compensation contributed to the Plan for the
contribution period.
(iii) Any additional Matching Employer Contributions
and forfeitures of Matching Employer Contributions, if any,
next shall be allocated and credited to the Account of each
eligible Employee of the Employer, with each such Employee
being credited with a portion of such Employer's Matching
Employer Contributions equal to the respective Before-Tax
Contributions of all such eligible Employees for the
contribution period.
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(b) The Board may from time to time pass a
resolution changing the method of allocation contained in this Section to any
other method of allocation that does not discriminate in favor of Highly
Compensated Employees and is permitted by relevant sections of the Code and
regulations promulgated thereunder. Such resolution, if passed, shall be
treated as an amendment to the Plan and shall be attached to and included as a
part of the Plan. Such resolution, if passed, shall apply only to allocations
of Matching Employer Contributions that are made in the specified calendar
quarter or calendar quarters which begin after the date on which the resolution
is passed.
4.4 Amount of Profit Sharing Contributions. Subject to
the provisions of the Plan and Trust Agreement, the Employer may, in its
discretion contribute an amount (the "Profit Sharing Contributions") to the
Trust on account of each Plan Year, out of its Net Profits during such Plan
Year for its Employees who are eligible to participate in the Plan pursuant to
Section 2.1; provided, however, that if the Employer does not have Net Profits
for a Plan Year, the Employer may make a contribution to the Plan without
regard to the current or accumulated profits of the Employer for the Plan Year.
Notwithstanding any provision of the Plan to the contrary, the Employer's
Profit Sharing Contributions to the trust for any Plan Year shall in no event
exceed the amount that would be deductible for such year for purposes of
federal taxes on income under applicable provisions of the Code.
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4.5 Time of Profit Sharing Contributions. The Employer
will make its Profit Sharing Contributions to the Trust no later than the time
prescribed by law (including extensions thereof) for filing the Employer's
Federal income tax return for the fiscal year of the Employer in which ends the
Plan Year for which the contributions are made.
4.6 Allocation of Profit Sharing Contributions. The
Employer's Profit Sharing Contributions and any forfeitures of Employer Profit
Sharing Contributions will be allocated and credited to the Account of each
Employee of the Employer who is eligible to participate in the Plan pursuant to
Section 2.1, with a portion of such Employer's Profit Sharing Contribution
equal to the respective Compensation of each such Employee for the Plan Year or
part of the Plan Year in which they are eligible Employees.
4.7 Classification of Employer Contributions. At the
time the Employer makes a contribution to the Plan pursuant to this Article,
the Employer shall specify whether such contribution is an Employee Matching
Contribution or a Profit Sharing Contribution.
4.8 Return of Contributions to the Employer. Except as
provided in Section 17.1, the Trust Fund shall never inure to the benefit of
the Employer and shall be held for the exclusive purposes of providing benefits
to Employees, Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan.
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4.9 Limitation on Allocations. Article 11 sets forth
certain rules under Code section 415 that limit the amount of contributions
that may be allocated to a Participant's Account for a Plan Year.
ARTICLE 5
INVESTMENTS
5.1 Investment Funds. The Trust Fund will be divided
into Investment Funds, which shall include a Company Stock Fund and other funds
to be chosen by the Trustee with the consent of the Committee. Subject to the
provisions of the Plan and Trust Agreement, the Trustee will hold, manage,
administer, value, invest, reinvest, account for and otherwise deal with each
Investment Fund separately. The Trustee will invest and reinvest the principal
and income of each such Fund and will keep each such Fund invested, without
distinction between principal and income, as required under the terms of the
Plan and Trust Agreement. Dividends, interest and other distributions received
by the Trustee in respect of each Investment Fund will be reinvested in the
same Fund. The Trustee in its sole discretion may keep such portion of each
Investment Fund in cash or cash equivalents pending the selection and purchase
of suitable investments under each such Fund or as the Trustee may from time to
time deem to be advisable to maintain sufficient liquidity to meet the
obligations of the Plan or for other reasons, and the Trustee will not be
liable for interest on uninvested funds.
5.2 Account; Sub-Account. The Committee will establish
and maintain, or cause to be established and
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maintained, an Account for each Participant, which Account will reflect,
pursuant to Sub-Accounts established and maintained thereunder, the amount, if
any, of the Participant's (i) Before-Tax Contributions, (ii) After-Tax
Contributions, (iii) Matching Employer Contributions and (iv) Profit-Sharing
Contributions and (v) Rollover Contributions. The Committee will also
maintain, or cause to be maintained, separate records which will show (A) the
portion of each such Sub-Account invested in each Investment Fund and (B) the
amount of contributions thereto, payments and withdrawals therefrom and the
amount of income, expenses, gains and losses attributable thereto. The
interest of each Participant in the Trust Fund at any time shall consist of the
Participant's Account balance as of the last preceding Valuation Date plus
credits and minus debits to such Account since that Date.
5.3 Reports. The Committee shall cause reports to be
made quarterly to each Participant and to the Beneficiary of each deceased
Participant as to the value of his or her Account and the amount of his or her
vested interest therein.
5.4 Valuation of Investment Funds.
(a) Time and Manner of Valuation. The Trustee
will, as of the close of business on each Valuation Date, determine the value
of each Investment Fund. Each such valuation will be made on the basis of the
market value (as determined by the Trustee) of the assets of each Fund, except
that property which the Trustee determines does not have a readily determinable
market value will be valued at fair market value as determined by
38
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the Trustee in such manner as it deems appropriate, and the Trustee's
determination of such value will be conclusive on all interested persons for
all purposes of the Plan. A similar valuation will be made at any other time
upon the written direction of the Committee to the Trustee or when the Trustee
deems it appropriate to make such a valuation.
(b) Determining Net Gain or Loss. The Trustee
will determine, from the change in value of each Investment Fund between the
current Valuation Date and the then last preceding Valuation Date, the net gain
or loss of each such Fund during such period resulting from expenses and
realized and unrealized earnings, profits and losses of the Fund during such
period. For this purpose, the transfer of funds to or from an Investment Fund
pursuant to Sections 5.5 and 5.6, Before-Tax Contributions, After-Tax
Contributions, Matching Employer Contributions, Profit Sharing Contributions
and Rollover Contributions allocated to an Investment Fund, and payments,
distributions and withdrawals from an Investment Fund to provide benefits under
the Plan for Participants or Beneficiaries will not be deemed to be earnings,
profits, expenses or losses of the Investment Fund.
(c) Allocating Net Gain or Loss. After each
Valuation Date, the net gain or loss of each Investment Fund determined
pursuant to Subsections (a) and (b) of this Section shall be allocated as of
such Valuation Date to the Accounts of Participants and Beneficiaries of
deceased Participants in proportion to the amounts of such Accounts invested in
each Fund on such Valuation Date. In determining the amounts of Accounts
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<PAGE> 45
on a Valuation Date for the purposes of this Subsection (c), the Committee will
adopt rules to the effect that in determining the allocation of the net gain or
loss of each Investment Fund for any such period there will be counted, on a
proportionate basis, contributions to or distributions from, or other credits
or debits to, the Accounts of Participants and Beneficiaries since the
beginning of such period to the extent the amounts so distributed or debited
were in such Fund during such period. Such rules will be uniform in their
application to all persons who are similarly situated.
5.5 Investment Options. All Profit Sharing Contributions
will be invested by the Trustee at the direction of the Committee. Each
Participant will, by written direction to the Committee, direct that all
Before-Tax Contributions, After-Tax Contributions, Matching Employer
Contributions and Rollover Contributions made by or for the Participant be
invested in one or more of the Investment Funds in multiples of 5%. An
investment option selected by a Participant will remain in effect and be
applicable to all subsequent Before-Tax Contributions, After-Tax Contributions,
Matching Employer Contributions and Rollover Contributions made by or for the
Participant unless and until an investment change is made by the Participant
and becomes effective pursuant to Section 5.6. In the absence of an effective
investment direction, Before-Tax Contributions, After-Tax Contributions,
Matching Employer Contributions and Rollover Contributions made to the Trust by
or for a Participant
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will be invested in a fixed income fund or its equivalent maintained pursuant
to Section 5.1.
5.6 Change of Investment Option. Subject to any
limitation imposed by the terms of an Investment Fund, a Participant may, as of
any Enrollment Date, upon at least 15 days prior written notice filed with the
Committee, change his or her investment option to any other option specified in
Section 5.5 with respect to all subsequent Before-Tax Contributions, After-Tax
Contributions, Matching Employer Contributions and Rollover Contributions made
by or for the Participant. In addition, subject to any limitation imposed by
the terms of an Investment Fund, a Participant may, as of any Enrollment Date,
upon at least 15 days prior written notice filed with the Committee, change his
or her investment option to any other option specified in Section 5.5 with
respect to all previous Before-Tax Contributions, After-Tax Contributions,
Matching Employer Contributions and Rollover Contributions made by or for the
Participant.
5.7 Directions to Trustee. The Committee shall give
appropriate and timely directions to the Trustee in order to permit the Trustee
to give effect to the investment choice and investment change elections made
under Sections 5.5 and 5.6 and to provide funds for distributions pursuant to
Articles 7 and 8.
5.8 No Guarantee. Neither the Employer, nor the
Committee nor the Trustee guarantees the Participants or their Beneficiaries
against loss or depreciation or fluctuation of the value of the assets of the
Trust Fund.
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ARTICLE 6
VESTING
6.1 Determination of Vested Interest.
(a) Before-Tax Contributions Sub-Account, After Tax
Contributions Sub-Account and Rollover Sub-Account. The interest of each
Participant in his or her Before-Tax Contributions Sub-Account, After-Tax
Contributions Sub-Account and Rollover Sub-Account will be 100% vested and
nonforfeitable at all times.
(b) Matching Contributions Sub-Account and Profit
Sharing Sub-Account. Effective January 1, 1994, the interest of each
Participant in his or her Matching Employer Contributions Sub-Account and
Profit Sharing Sub-Account shall become fully vested and nonforfeitable upon
the completion of two Years of Service.
(c) Accelerated Vesting. A Participant's interest in
his or her Matching Employer Contributions Sub-Account and Profit Sharing
Contributions Sub-Account will become 100% vested and nonforfeitable without
regard to Years of Service (i) on the Participant's 65th birthday, (ii) on the
Participant's death while the Participant is an Employee, or (iii) upon the
Participant's Disability.
6.2 Forfeiture of Nonvested Amounts. The nonvested amount
in a Participant's Matching Employer Contributions Sub-Account will be
forfeited on the last day of the month in which the Participant incurs the
fifth of five consecutive One Year Breaks in Service. The nonvested amount in
a Participant's
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Profit Sharing Contribution Sub-Account will be forfeited on the last day of
the Plan Year in which the Participant incurs the fifth of five consecutive One
Year Breaks in Service. Prior to such time, if a terminated Participant
receives a distribution of his or her vested Account, the Participant shall
provisionally forfeit the nonvested portion of his or her Matching Employer
Contributions Sub-Account and the nonvested portion of his or her Profit
Sharing Contributions Sub-Account. Provisional forfeitures of Matching
Employer Contributions shall be allocated to other Plan Participants pursuant
to Section 6.3 of the Plan as of the last day of the contribution period in
which such forfeiture occurs. Provisional forfeitures of Profit Sharing
contributions shall be allocated to other Plan Participants pursuant to Section
6.3 of the Plan as of the last day of the Plan Year in which such forfeitures
occur. If a terminated Participant whose nonvested Account has been
provisionally forfeited is reemployed prior to the time the terminated
Participant incurs five consecutive One Year Breaks in Service, his or her
nonvested Account shall be reinstated, unadjusted by any subsequent gains or
losses of the Trust Fund, as of the date of reemployment. If a Participant's
Account is reinstated pursuant to the provisions of the preceding sentence, the
source for such reinstatement shall be, at the discretion of the Company,
forfeitures occurring in the year of reinstatement or a special contribution by
the Employer.
6.3 Allocation of Forfeited Amounts. The amount of a
Participant's Matching Employer Contribution Account which is
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forfeited for a Plan Year will be treated as a Matching Employer Contribution
and will be allocated as provided in Section 4.3 for the contribution period in
which such forfeiture occurs. The amount of a Participant's Profit Sharing
Contribution Account which is forfeited for a Plan Year will be treated as a
Profit Sharing Contribution and will be allocated as provided in Section 4.6 of
such Plan Year.
6.4 Unclaimed Distribution. If the Committee cannot locate
a person entitled to receive a benefit under the Plan within a reasonable
period (as determined by the Committee in its discretion), the amount of the
benefit will be treated as a forfeiture during the Plan Year in which the
period ends. If, before final distributions are made from the Trust Fund
following termination of the Plan, a person who was entitled to a benefit which
has been forfeited under this Section makes a claim to the Committee or the
Trustee for his or her benefits, the person will be entitled to receive, as
soon as administratively feasible, a benefit in an amount equal to the value of
the forfeited benefit on the date of forfeiture. This benefit will be
reinstated first from forfeitures that would otherwise be allocated for the
Plan Year in which the benefit is reinstated and then from Employer
contributions for that Plan Year.
6.5 Reemployment Provisions. If a Participant who has a
vested and nonforfeitable right to all or a portion of his or her Matching
Employer Contributions Sub-Account balance and Profit Sharing Sub-Account
balance terminates employment and again becomes an Employee, Years of Service
completed before
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reemployment will be included in determining his or her vested and
nonforfeitable interest after the Participant again becomes an Employee. If
any other Employee or Participant terminates employment and again becomes an
Employee before incurring five consecutive One Year Breaks in Service, Years of
Service completed before reemployment will be included in determining his or
her vested and nonforfeitable interest in the Plan after he or she again
becomes an Employee; but if he or she is reemployed after incurring five
consecutive One Year Breaks in Service, Years of Service completed before
reemployment will be disregarded for purposes of determining his or her vested
and nonforfeitable interest after he or she again becomes an Employee.
ARTICLE 7
DISTRIBUTIONS TO PARTICIPANTS
7.1 Timing of Distributions. Distribution of a
Participant's vested Account balance shall be made or commence within 60 days
after the Valuation Date coinciding with or immediately following the
Participant's termination of employment, provided, however, that if the
Participant's vested Account balance exceeds, or ever exceeded as of any prior
distribution, $3,500, distribution of the Participant's vested Account balance
will not be made or commence prior to attainment of age 65 unless the
Participant consents in writing to the distribution.
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7.2 Form of Distributions.
(a) Unless a Participant elects otherwise pursuant to
Subsection (b) or Subsection (c) of this Section, distribution of a
Participant's vested account balance will be paid in a single lump sum payment.
(b) A Participant may elect to receive his or her
benefit in quarterly installments over a period not to exceed ten years.
(c) A Participant may elect to receive his or her
benefit in the form of a qualified joint and survivor annuity. A qualified
joint and survivor annuity is (1) in the case of an unmarried Participant, an
annuity which provides for the payment to the Participant of a monthly annuity
for the Participant's life and which is the actuarial equivalent of the value
of the Participant's vested interest and, (2) in the case of a married
Participant, an annuity which is the actuarial equivalent of the single life
annuity to which the Participant would be entitled if the Participant was
unmarried and which provides for payment to the Participant of a monthly
annuity in a reduced amount for the Participant's life, and, after the
Participant's death, payments during the surviving lifetime of the
Participant's spouse at the rate of 50 percent of the reduced amount payable to
the Participant.
(d) The Employer shall provide the Participant
with the application form (which shall contain a general description of the
optional forms of benefit available under the Plan) and such other information
required to be provided under
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Section 402(f) of the Code no less than 30 days and no more than 90 days before
a distribution or withdrawal is to be made. Notwithstanding the foregoing,
such distribution or withdrawal may commence less than 30 days after such form
and information are provided to the Participant provided that: (1) the
Employer clearly informs the recipient that he has the right to a period of at
least 30 days after receiving the information to consider whether or not to
elect a distribution or withdrawal (and, if applicable, a particular form of
benefit), and (2) the recipient, after receiving the information, affirmatively
elects the distribution of withdrawal.
(e) Shares of Company Stock allocated to a
Participant's Account will be distributed in the form of whole shares plus cash
for any fractional share, unless the Participant elects to receive the cash
value of the shares.
7.3 Direct Rollover Provisions.
(a) General. Notwithstanding any provision of the
Plan to the contrary, effective January 1, 1993, a Participant, or a
Participant's former spouse who is an alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code, who is
otherwise eligible to receive a distribution from the Plan shall be entitled to
elect, at the time and in the manner prescribed by the Committee, to have any
portion of an "Eligible Rollover Distribution" paid directly to an "Eligible
Retirement Plan" specified by the Participant in a direct rollover.
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(b) Eligible Rollover Distributions. For purposes of
this Section, an Eligible Rollover Distribution is any distribution from the
Plan other than (1) a distribution that is required under section 409(a)(9) of
the Code and Section 12.3 of the Plan, and/or (2) the portion of any
distribution that is not included in gross income as determined pursuant to the
Code and Treasury Regulations.
(c) Eligible Retirement Plan. For purposes of this
Section, Eligible Retirement Plan means an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section 401(a) of the
Code, that will accept the Participant's Eligible Rollover Distribution.
7.4 Withdrawal of Contributions.
(a) Order of Withdrawals. Upon not less than 30
days prior written notice filed with the Committee, effective as of the
immediately following Valuation Date, a Participant who is an Employee may
withdraw in cash all or a part of his or her Account as provided and in the
order set forth below. To the extent required by law, the spouse of a
Participant must consent to a withdrawal pursuant to this Section. A
Participant may make only one withdrawal pursuant to this Section 7.4 per Plan
Year.
(i) A Participant may withdraw all or a part of his
or her After-Tax Contributions Sub-Account or Rollover
Sub-Account at any time.
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(ii) A Participant who has withdrawn 100% of his or
her After-Tax Contributions Sub-Account and Rollover Sub-Account
and who has been a Participant for at least five years may
withdraw all or a part of his or her Profit-Sharing Contribution
Sub-Account.
(iii) A Participant who has withdrawn 100% of his or
her After-Tax Contributions Sub-Account, Rollover Sub-Account
and Profit Sharing Contributions Sub-Account and who has been a
Participant for at least five years may withdraw all or a part
of his or her Matching Employer Contributions Sub-Account.
(iv) A Participant who is at least 59 1/2 years old
who has withdrawn 100% of his or her After-Tax Contributions
Sub-Account, Rollover Sub-Account, Matching Employer
Contributions Sub-Account and Profit-Sharing Contributions
Sub-Account may withdraw all or a part of his or her Before-Tax
Contributions Sub-Account.
7.5 Reemployment of Participant. If a Participant who
terminated employment again becomes an Employee before receiving a distribution
of his or her Account balance, no distribution from the Trust Fund will be made
or continued while the Participant is an Employee, and amounts distributable to
him or her on account of such termination will be held in the Trust Fund
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until the Participant is again entitled to a distribution under the Plan.
7.6 Order of Distributions. Unless the Participant
otherwise directs in writing on a form provided by the Committee, distributions
(including withdrawals) will be made by the Trustee from the Investment Funds
on a pro rata basis.
7.7 Valuation of Accounts. A Participant's distributable
Account balance will be valued as of the Valuation Date immediately preceding
the date the Account is to be distributed, except that there will be added to
the value of the Participant's Account the fair market value of any amounts
allocated to the Participant's Account after that Valuation Date and subtracted
from the value of the Participant's Account the amount of any distributions
made from the Participant's Account after that Valuation Date.
7.8 Loans to Participants.
(a) Subject to the provisions of this Section and to
the loan procedures adopted by the Committee, a Participant may borrow an
amount from his or her Before-Tax Contributions Sub-Account, After-Tax
Contributions Sub-Account, Vested Matching Contributions Sub-Account, and/or
Rollover Sub-Account in the Trust Fund which, when added to the outstanding
balance of all other loans to the Participant from all qualified employer plans
(as defined in Code section 72(p)(4)) of the Controlled Group does not exceed
the lesser of (1) $50,000 reduced by the excess, if any, of (A) the highest
outstanding balance of all other loans from qualified employer plans of the
Controlled Group during the
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1 year period ending on the day before the date on which such loan was made,
over (B) the outstanding balance of loans from qualified employer plans of the
Controlled Group on the date on which such loan was made, or (2) one-half of
such Sub-Accounts. All such loans shall be secured by the borrowing
Participant's interest in the Trust Fund and unless the Participant elects
otherwise will be made pro rata from each Sub-Account.
(b) A Participant desiring to make a loan hereunder
shall file an application with the Committee specifying the type of loan and
amount desired. The Participant shall also furnish the Committee such
additional information as it may request in order to be able to determine
whether such loan should be granted. The Committee shall have complete
discretion as to whether or not to grant a loan hereunder and as to the terms
thereof, provided that its decisions shall be made on a uniform,
non-discriminatory basis and in accordance with Subsection (c) below. No loan
will be made hereunder unless, within the ninety day period prior to the making
of the loan, the Participant consents in writing to the loan and to the
possible reduction in his or her accrued benefit due to the use of his or her
interest in the Trust Fund to secure the loan. If the Committee decides that a
loan should be granted and that the requirements hereof have been met, the
Committee shall direct the Trustee to make such loan, specifying to the
Participant and the Trustee (A) the type of loan which has been granted, (B)
the amount thereof, (C) the interest rate to be paid, (D) the time (and
schedule of installments, if any) for repayment and (E) whether any
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additional security beyond the Participant's interest in the Trust Fund shall
be required. No loan hereunder shall be for a term of longer than five years
unless the loan proceeds are used to acquire a dwelling unit which within a
reasonable time is to be used (determined at the time the loan is made) as the
principal residence of the Participant.
(c) Loans under this Section, (1) shall be made
available to all Participants on a reasonably equivalent basis, (2) shall not
be available to highly-compensated Employees, officers or shareholders in an
amount greater than the amount made available to other Employees, (3) shall be
made in accordance with the provisions of this Section and in accordance with
loan procedures adopted by the Committee, (4) shall bear a reasonable rate of
interest, (5) shall provide for repayment within a specified period of time,
and, in any event, upon termination (by death or otherwise) of the
Participant's employment with the Controlled Group, (6) shall provide for
substantially level amortization with payments not less frequently than
quarterly and (7) shall be made only upon receipt of adequate security
therefor.
7.9 Distributions upon Plan Termination or Sale of Assets or a
Subsidiary.
(a) General Rule. Notwithstanding any other
provision of this Plan, distribution of a Participant's vested Account Balance
may be made or commence (as soon as administratively feasible) after the
Valuation Date coinciding with or immediately following any of the following
events,
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provided that the requirements of Subsection (b) of this Section are met:
(i) a termination of the Plan without establishment
or maintenance of a successor plan (within the meaning of
Treasury Regulation section 1.401(k)-1(d)(3) and interpretations
thereof);
(ii) a sale or other disposition by a Controlled
Group Member of substantially all of the assets (within the
meaning of Treasury Regulation section 1.401(k)-1(d)(4)(iv)(A)
and interpretations thereof) used in a trade or business to a
purchaser that is not related to the seller; or
(iii) a sale or other disposition by a Controlled
Group Member of the interest of such entity in a subsidiary
(within the meaning of Code section 409(d)(3) and
interpretations thereof) to a purchaser that is not related to
the seller.
(b) Limitations on Distributions in Connection with
the Sale of Assets or Subsidiary. A Participant's vested Account Balance may
not be distributed under Subsections (a)(2) or (a)(3) of this Section unless
such distribution:
(i) is made in connection with a sale or other
distribution that results in the transfer of the Participant's
employment to the
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purchaser, and such distribution may be made only with respect to a
Participant who continues employment with the purchaser;
(ii) except in unusual circumstances, is made by the
end of the second calendar year after the calendar year in which
the sale or other disposition occurred; and
(iii) is made in the form of a lump sum distribution
(within the meaning of Code section 402(e)(4), without regard to
subparagraphs (A)(i) through (iv), (B) and (H) thereof).
In addition, a Participant's vested Account Balance may not be distributed
under Subsections (a)(2) and (a)(3) of this Section unless the Controlled Group
Member continues to maintain the Plan after the sale or other disposition and
the purchaser does not maintain the Plan after the sale or other disposition
(within the meaning of Treasury Regulation section 1.401(k)-1(d)(4)(i) and
interpretations thereof).
(c) Timing of Distributions. Distributions made
pursuant to Subsections (a)(2) and (a)(3) of this Section shall be made by the
end of the second calendar year after the end of the calendar year in which the
disposition occurred. To the extent that a Participant's Account balance
exceeds, or ever exceeded $3,500, a distribution pursuant to this Section will
not be made unless the Participant consents in writing to the distribution.
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7.10 Restrictions on Distributions. Article 12 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Participants.
ARTICLE 8
DISTRIBUTIONS TO BENEFICIARIES
8.1 Designation of Beneficiary. Each Participant will
have the right to designate a Beneficiary or Beneficiaries to receive his or
her vested Account balances upon the Participant's death. The designation will
be made on forms prescribed by the Committee and will be effective upon receipt
by the Committee. A Participant will have the right to change or revoke any
designation by filing a new designation or notice of revocation with the
Committee, but the revised designation or revocation will be effective only
upon receipt by the Committee.
8.2 Consent of Spouse Required. A Participant who is
married may not designate a Beneficiary other than, or in addition to, the
Participant's spouse unless his or her spouse consents to the designation by
means of a written instrument that is signed by the spouse, identifies the
specific Beneficiary (including any class of Beneficiaries or any contingent
Beneficiaries) elected, contains an acknowledgement by the spouse of the effect
of the consent, and is witnessed by a member of the Committee (other than the
Participant) or by a notary public. The designation will be effective only
with respect to the consenting spouse, whose consent will be irrevocable. A
Beneficiary designation to which a spouse has consented under this Section will
be effective only if its states that it may not
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be changed by the Participant, other than to designate the spouse as the
Beneficiary, without spousal consent, unless the spouse's prior consent
expressly permits Beneficiary designations by the Participant without any
further consent of the spouse, in which case the prior consent will be
effective as to subsequent changes only if it acknowledges that the spouse has
the right to limit consent to a specific Beneficiary, and states that the
spouse voluntarily elects to relinquish such right.
8.3 Failure to Designate Beneficiary. In the event a
Participant has not designated a Beneficiary, or in the event no Beneficiary
survives a Participant, the distribution of the Participant's vested Account
balances upon the Participant's death will be made (a) to the Participant's
spouse, if living, (b) if the Participant's spouse is not then living, to the
Participant's then living issue by right of representation, (c) if neither the
Participant's spouse nor the Participant's issue are then living, to the
Participant's then living parents, and (d) if none of the above are then
living, to the Participant's estate.
8.4 Distributions to Beneficiaries. Distribution of a
Participant's vested Account balances to the Participant's Beneficiary will be
made as soon as practicable after the Participant's death. The Participant's
Account balances will be valued as of the Valuation Date immediately preceding
the date the Accounts are to be distributed to the Participant's Beneficiary,
except that there will be added to the value of the Participant's Accounts the
fair market value of any amounts
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allocated to the Participant's Accounts under Article 3 and Article 4 after
that Valuation Date.
8.5 Form of Distributions.
(a) Unless a Beneficiary elects otherwise
pursuant to Subsection (b) or Subsection (c) of this Section, distribution of a
deceased Participant's vested Account balance will be paid to the Participant's
Beneficiary in a single lump sum payment.
(b) A Beneficiary may elect to receive the
distribution of the Participant's vested Account balance in quarterly
installments over a period not to exceed ten years.
(c) The Employer shall provide the Beneficiary
with the application form (which shall contain a general description of the
optional forms of benefit available under the Plan) and such other information
required to be provided under Section 402(f) of the Code no less than 30 days
and no more than 90 days before a distribution or withdrawal is to be made.
Notwithstanding the foregoing, such distribution or withdrawal may commence
less then 30 days after such form and information are provided to the
Beneficiary, provided that: (1) the Employer clearly informs the recipient
that he has the right to a period of at least 30 days after receiving the
information to consider whether or not to elect a distribution or withdrawal
(and, if applicable, a particular form of benefit), and (2) the recipient,
after receiving the information, affirmatively elects the distribution or
withdrawal.
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8.6 Restrictions on Distributions. Notwithstanding any
of the foregoing, distributions to Beneficiaries shall be subject to various
restrictions under the Code set forth in Article 12.
8.7 Direct Rollover Provisions.
(a) General. Notwithstanding any provision of
the Plan to the contrary, effective January 1, 1993, a Participant's surviving
spouse who is otherwise eligible to receive a distribution from the Plan shall
be entitled to elect, at the time and in the manner prescribed by the
Committee, to have any portion of an "Eligible Rollover Distribution" paid
directly to an "Eligible Retirement Plan" specified by the Participant's
surviving spouse in a direct rollover.
(b) Eligible Rollover Distributions. For
purposes of this Section, an Eligible Rollover Distribution is any distribution
from the Plan other then (1) a distribution that is required under section
409(a)(9) of the Code and Section 12.3 of the Plan, and/or (2) the portion of
any distribution that is not included in gross income as determined pursuant to
the Code and Treasury Regulations.
(c) Eligible Retirement Plan. For purposes of
this Section, Eligible Retirement Plan means an individual retirement account
described in section 408(a) of the Code or an individual retirement annuity
described in section 408(b) of the Code.
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ARTICLE 9
RULES REGARDING COMPANY STOCK
9.1 Voting Company Stock. Before each annual or special
meeting of its shareholders, the Company will cause to be sent to each
Participant and Beneficiary who has Company Stock allocated to his or her
Account on the record date of such meeting a copy of the proxy solicitation
material therefor, together with a form requesting confidential instructions on
how to vote the shares of Company Stock allocated to his or her Account. Upon
receipt of such instructions, the Trustee shall vote the shares allocated to
such Participant's or Beneficiary's Accounts as instructed. The Trustee shall
vote shares of Company Stock for which it does not receive instructions in the
manner directed by the Committee. A Participant's right to instruct the
Trustee with respect to voting shares of Company Stock will not include rights
concerning (i) the exercise of any appraisal rights, dissenters" rights or
similar rights granted by applicable law to the registered or beneficial
holders of Company Stock or (ii) the choice of consideration to be received by
shareholders in any transaction involving Company Stock. These matters will be
decided by the Trustee in its discretion.
9.2 Sale of Company Stock. Subject to the rights of
Participants in a tender offer as described in Section 9.3, the Trustee shall
not sell shares of Company Stock, provided that the Committee may direct the
Trustee to sell shares of Company Stock to any person, including the Company,
provided that any sale to the Company or other "disqualified person" within the
meaning of
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Code section 4975 or "party in interest" within the meaning of ERISA section
3(14) is made at a price which is not less than adequate consideration as
defined in ERISA section 3(18) and no commission is charged with respect to the
sale.
9.3 Tender Offer for Company Stock. In the event of a
tender offer for shares of Company Stock subject to section 14(d)(1) of the
Securities Exchange Act of 1934 or subject to Rule 13e-4 promulgated under that
Act (as those provisions may from time to time be amended or replaced by
successor provisions of Federal securities laws), the Committee will advise
each Participant who has shares of Company Stock credited to his or her Account
in writing of the terms of the tender offer as soon as practicable after its
commencement and will furnish each Participant with a form by which he or she
may instruct the Trustee confidentially to tender shares credited to his or her
Account. The Trustee will tender those shares it has been properly instructed
to tender, and will not tender those shares which it has been properly
instructed not to tender or for which no instructions are properly received.
The Committee's advice to Participants will include notice that allocated
shares for which no instructions are received will not be tendered and such
related documents as are prepared by any person and provided to the
shareholders of the Company pursuant to the Securities Exchange Act of 1934.
The Committee may also provide Participants with such other material concerning
the tender offer as the Committee in its discretion determines to be
appropriate. A Participant's instructions to the Trustee to tender shares will
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not be deemed a withdrawal or suspension from the Plan or a forfeiture of any
portion of the Participant's interest in the Plan. The number of shares to
which a Participant's instructions apply will be the total number of shares
credited to the Participant's Account, whether or not the shares are vested, as
of the close of business on the day preceding the date on which the tender
offer commences. The Committee will advise the Trustee of the commencement
date of any tender offer and, until receipt of that advice, the Trustee will
not be obligated to take any action under this Section. Funds received in
exchange for tendered stock will be credited to the Account of the Participant
whose stock was tendered and will be used by the Trustee to purchase Company
Stock, if available on a national securities exchange, commencing on the
earlier of the following dates: (i) the trading day following the first date
on which the closing price of the Company Stock on a national securities
exchange on which the Company Stock is then traded is within 20% of the closing
price on the tenth trading day preceding the commencement date of the tender
offer or (ii) the thirtieth trading day after the expiration date of the tender
offer, of which date the Committee will advise the Trustee. In the interim,
the Trustee will invest such funds in short term investments permitted under
the Trust Agreement.
ARTICLE 10
ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
10.1 Appointment of Committee Members. The Board will
appoint an Administrative Committee consisting of at least three
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or more members, to hold office at the pleasure of the Board. Members of the
Committee are not required to be Employees or Participants. Any member may
resign by giving notice, in writing, filed with the Board.
10.2 Officers and Employees of the Committee. The
Committee will choose from its members a Chairman and a Secretary. The
Secretary will keep a record of the Committee's proceedings and all dates,
records and documents pertaining to the Committee's administration of the Plan.
The Committee may employ and suitably compensate such persons or organizations
to render advice with respect to the duties of the Committee under the Plan as
the Committee determines to be necessary or desirable.
10.3 Action of the Committee. Action of the Committee may
be taken with or without a meeting of Committee members, provided that action
will be taken only upon the vote or other affirmative expression of a majority
of the Committee's members qualified to vote with respect to such action. The
Chairman or the Secretary of the Committee may execute any certificate or other
written direction on behalf of the Committee. In the event the Committee
members qualified to vote on any question are unable to determine such question
by a majority vote or other affirmative expression of a majority of the
Committee members qualified to vote on such question, such question will be
determined by the Board. A member of the Committee who is a Participant may
not vote on any question relating specifically to
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himself or herself unless he or she is the sole member of the Committee.
10.4 Expenses and Compensation. The expenses of the
Committee properly incurred in the performance of its duties under the Plan
will be paid from the Trust Fund, unless the Employer in its discretion pays
such expenses. The members of the Committee will not be compensated for their
services as Committee members.
10.5 General Powers and Duties of the Committee. The
Committee will have the full power and responsibility to administer the Plan
and the Trust Agreement and to construe and apply their provisions. For
purposes of ERISA, the Committee will be the named fiduciary with respect to
the operation and administration of the Plan and the Trust Agreement. In
addition, the Committee will have the powers and duties granted by the terms of
the Trust Agreement. The Committee, and all other persons with discretionary
control respecting the operation, administration, control, and/or management of
the Plan, the Trust Agreement, and/or the Trust Fund, will perform their duties
under the Plan and the Trust Agreement solely in the interests of Participants
and their Beneficiaries.
10.6 Specific Powers and Duties of the Committee. The
Committee will administer the Plan and have all powers necessary to accomplish
that purpose, including the following: (i) resolving all questions relating to
the eligibility of Employees to become Participants, (ii) determining the
amount of benefits payable to Participants or their Beneficiaries, and
determining
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the time and manner in which such benefits are to be paid, (iii) authorizing
and directing all disbursements by the Trustee from the Trust Fund, (iv)
engaging any administrative, legal, medical, accounting, clerical, or other
services it deems appropriate in administering the Plan or the Trust Agreement,
(v) construing and interpreting the Plan and the Trust Agreement and adopting
rules for administration of the Plan and the Trust Agreement which are not
inconsistent with the terms of such documents, (vi) compiling and maintaining
all records it determines to be necessary, appropriate or convenient in
connection with the administration of the Plan and the Trust Agreement, (vii)
determining the disposition of assets in the Trust Fund in the event the Plan
is terminated, and (viii) reviewing the performance of the Trustee with respect
to the Trustee's administrative duties, responsibilities and obligations under
the Plan and the Trust Agreement, reporting to the Board regarding such
administrative performance of the Trustee, and recommending to the Board, if
necessary, the removal of the Trustee and the appointment of a successor
Trustee.
10.7 Allocation of Fiduciary Responsibility. The
Committee from time to time may allocate to one or more of its members and may
delegate to any other persons or organizations any of its rights, powers,
duties and responsibilities with respect to the operation and administration of
the Plan and the Trust Agreement that are permitted to be delegated under
ERISA. Any such allocation or delegation will be made in writing, will be
reviewed periodically by the Committee, and will be terminable
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upon such notice as the Committee in its discretion deems reasonable and proper
under the circumstances. Whenever a person or organization has the power and
authority under the Plan or the Trust Agreement to delegate discretionary
authority respecting the administration of the Plan or the Trust Fund to
another person or organization, the delegating party's responsibility with
respect to such delegation is limited to the selection of the person to whom
authority is delegated and the periodic review of such person's performance and
compliance with applicable law and regulations. Any breach of fiduciary
responsibility by the person to whom authority has been delegated which is not
proximately caused by the delegating party's failure to properly select or
supervise, and in which breach the delegating party does not otherwise
participate, will not be considered a breach by the delegating party.
10.8 Information to be Submitted to the Committee. To
enable the Committee to perform its functions, the Employer will supply full
and timely information to the Committee on all matters relating to Employees
and Participants as the Committee may require and will maintain such other
records required by the Committee to determine the benefits due to Participants
or their Beneficiaries under the Plan.
10.9 Notices, Statements and Reports. The Company will
be the "administrator" of the Plan as defined in ERISA section 3(16)(A) for
purposes of the reporting and disclosure requirements imposed by ERISA and the
Code. The Committee will
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assist the Company, as requested, in complying with such reporting and
disclosure requirements.
10.10 Claims Procedure.
(a) Filing Claim for Benefits. If a
Participant or Beneficiary does not receive the benefits which the Participant
believes he or she is entitled to receive under the Plan, the Participant may
file a claim for benefits with the Committee. All claims will be made in
writing and will be signed by the claimant. If the claimant does not furnish
sufficient information to determine the validity of the claim, the Committee
will indicate to the claimant any additional information which is required.
(b) Notification by the Committee. Each claim
will be approved or disapproved by the Committee within 90 days following the
receipt of the information necessary to process the claim. In the event the
Committee denies a claim for benefits in whole or in part, the Committee will
notify the claimant in writing of the denial of the claim. Such notice by the
Committee will also set forth, in a manner calculated to be understood by the
claimant, the specific reason for such denial, the specific Plan provisions on
which the denial is based, a description of any additional material or
information necessary to perfect the claim with an explanation of why such
material or information is necessary, and an explanation of the Plan's claim
review procedure as set forth in Subsection (c). If no action is taken by the
Committee on a claim within 90 days, the claim will be deemed to be denied for
purposes of the review procedure.
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(c) Review Procedure. A claimant may appeal a
denial of his or her claim by requesting a review of the decision by the
Committee or a person designated by the Committee, which person will be a named
fiduciary under ERISA section 402(a)(2) for purposes of this Section. An
appeal must be submitted in writing within six months after the denial and must
(i) request a review of the claim for benefits under the Plan, (ii) set forth
all of the grounds upon which the claimant's request for review is based and
any facts in support thereof, and (iii) set forth any issues or comments which
the claimant deems pertinent to the appeal. The Committee or the named
fiduciary designated by the Committee will make a full and fair review of each
appeal and any written materials submitted in connection with the appeal. The
Committee or the named fiduciary designated by the Committee will act upon each
appeal within 60 days after receipt thereof unless special circumstances
require an extension of the time for processing, in which case a decision will
be rendered as soon as possible but not later than 120 days after the appeal is
received. The claimant will be given the opportunity to review pertinent
documents or materials upon submission of a written request to the Committee or
named fiduciary, provided the Committee or named fiduciary finds the requested
documents or materials are pertinent to the appeal. On the basis of its
review, the Committee or named fiduciary will make an independent determination
of the claimant's eligibility for benefits under the Plan. The decision of the
Committee or named fiduciary on any claim for benefits will be final and
conclusive upon all
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parties thereto. In the event the Committee or named fiduciary denies an
appeal in whole or in part, it will give written notice of the decision to the
claimant, which notice will set forth in a manner calculated to be understood
by the claimant the specific reasons for such denial and which will make
specific reference to the pertinent Plan provisions on which the decision was
based.
10.11 Service of Process. The Committee may from time to
time designate an agent of the Plan for the service of legal process. The
Committee will cause such agent to be identified in materials it distributes or
causes to be distributed when such identification is required under applicable
law. In the absence of such a designation, the Company will be the agent of
the Plan for the service of legal process.
10.12 Correction of Participants' Accounts. If an error
or omission is discovered in the Accounts of a Participant, or in the amount
distributed to a Participant, the Committee will make such equitable
adjustments in the records of the Plan as may be necessary or appropriate to
correct such error or omission as of the Plan Year in which such error or
omission is discovered. Further, the Employer may, in its discretion, make a
special contribution to the Plan which will be allocated by the Committee only
to the Account of one or more Participants to correct such error or omission.
10.13 Payment to Minors or Persons Under Legal Disability.
If any benefit becomes payable to a minor or to a person under a legal
disability, payment of such benefit will be made only to the conservator or the
guardian of the estate of
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such person appointed by a court of competent jurisdiction or such other person
or in such other manner as the Committee determines is necessary to ensure that
the payment will legally discharge the Plan's obligation to such person.
10.14 Uniform Application of Rules and Policies. The
Committee in exercising its discretion granted under any of the provisions of
the Plan or the Trust Agreement will do so only in accordance with rules and
policies established by it which will be uniformly applicable to all
Participants and Beneficiaries.
10.15 Funding Policy. The Plan is to be funded through
Employer contributions and earnings on such contributions; and benefits will be
paid to Participants and Beneficiaries as provided in the Plan.
10.16 The Trust Fund. The Trust Fund will be held by the
Trustee for the exclusive benefit of Participants and Beneficiaries. The
assets held in the Trust Fund will be invested and reinvested in accordance
with the terms of the Trust Agreement, which is hereby incorporated into and
made a part of the Plan. All benefits will be paid solely out of the Trust
Fund, and no Employer will be otherwise liable for benefits payable under the
Plan.
10.17 Investment Managers. The Committee may, and shall
have exclusive authority to, appoint, continue or discharge an Investment
Manager of Investment Managers to manage all or any specified portion of the
assets of the Plan subject to the following conditions:
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(a) The appointment of any person to serve in the
capacity of Investment Manager shall be by written agreement between such
person and the Committee and such written agreement shall set forth the terms
and conditions of such person's appointment, including, without limitation, the
portion or portions of the Plan assets which such person is to manage;
(b) No person shall be appointed to serve (or
continue to serve) as an Investment Manager who is not qualified (or who at any
time during the period of his or her appointment is no longer qualified) under
the terms of applicable law to serve in such capacity;
(c) Upon appointment of a person as an Investment
Manager, the Committee shall promptly notify the Trustee in writing of the fact
of the terms and conditions of such appointment and the Trustee may rely upon
such appointment continuing in effect until the Trustee receives written notice
from the Committee of the discharge of the Investment Manager or modification
or amendment of the terms and conditions of the appointment of the Investment
Manager;
(d) During the period when the appointment of an
Investment Manager is in effect, the Investment Manager (and not the Trustee)
shall, with respect to the investments over which the Investment Manager has
control, have the applicable powers and be subject to the applicable duties and
limitations conferred or imposed upon the Trustee by the Trust Agreement,
except as such powers, duties and limitations may be altered by any agreement
as to investment management entered into between the
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Committee and the Investment Manager, but the Trustee shall make and accept
such deliveries of securities and disburse and receive such funds to or from
the Trust Fund as the Investment Manager may direct in writing; and
(e) The Investment Manager shall receive such
reasonable compensation as may be agreed upon by it and the Committee, and upon
the receipt of written instructions from the Committee as to any amount so
approved, the Trustee shall make payment thereof to the Investment Manager from
the Trust Fund held by it.
ARTICLE 11
LIMITATIONS ON ALLOCATIONS TO
PARTICIPANTS' ACCOUNTS
11.1 Priority over Other Allocation Provisions. The
provisions set forth in this Article will supersede any conflicting provisions
of the Plan.
11.2 Definitions Used in this Article. The following
words and phrases, when used with initial capital letters, will have the
meanings set forth below.
(a) "Annual Addition" means the sum of the
following amounts with respect to all Qualified Plans and Welfare Benefit Funds
maintained by the Controlled Group Members:
(i) the amount of Controlled Group Member
contributions with respect to the Limitation Year allocated to
the Participant's account;
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(ii) the amount of any forfeitures for the
Limitation Year allocated to the Participant's account;
(iii) the amount, if any, carried forward pursuant
to Section 11.4 or a similar provision in another Qualified Plan
and allocated to the Participant's account;
(iv) the amount of a Participant's voluntary
nondeductible contributions for the Limitation Year, provided,
however, that the Annual Addition for any Limitation Year
beginning before January 1, 1987 will not be recomputed to treat
all of the Participant's nondeductible voluntary contributions
as part of the Annual Addition;
(v) the amount allocated after March 31, 1984 to an
individual medical benefit account (as defined in Code section
415(1)(2)) which is part of a pension or annuity plan; and
(vi) the amount derived from contributions paid or
accrued after December 31, 1985 in taxable years ending after
such date that are attributable to post-retirement medical
benefits allocated to the separate account of a key employee (as
defined in Code section 4l9A(d)(3)) under a Welfare Benefit
Fund.
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A Participant's Annual Addition will not include any nonvested amounts restored
to his or her account following reemployment before incurring five consecutive
One Year Breaks in Service, and a corrective allocation pursuant to Section
10.12 will be considered an Annual Addition for the Limitation Year to which it
relates.
(b) "Defined Benefit Dollar Limitation" means for
any Limitation Year, $90,000 or such amount as determined by the Commissioner
of Internal Revenue under Code section 415(d)(1) as of the January 1 falling
within such Limitation Year.
(c) "Defined Benefit Fraction" means a fraction,
the numerator of which is the Projected Annual Benefit of a Participant under
all Defined Benefit Plans maintained by a Controlled Group Member determined as
of the close of the Limitation Year and the denominator of which is the lesser
of (i) 140% of the Participant's average Includable Compensation that may be
taken into account for the Limitation Year under Code section 415(b)(1)(B), or
(ii) 125% of the Defined Benefit Dollar Limitation, determined as of the close
of the Limitation Year. If the Participant was a participant in a Defined
Benefit Plan maintained by a Controlled Group Member in existence on July 1,
1982, or on May 6, 1986, the denominator of the Defined Benefit Fraction will
not be less than 125% of the greater of the Participant's accrued Projected
Annual Benefit under such plan as of the end of the last Limitation Year
beginning before January 1, 1983, or the Participant's accrued Projected Annual
Benefit of the end of the last Limitation Year beginning
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January 1, 1987. The preceding sentence applies only if the Defined Benefit
Plan satisfied the requirements of Code section 415 as in effect at the end of
such Limitation Year.
(d) "Defined Benefit Plan" means a Qualified Plan
other than a Defined Contribution Plan.
(e) "Defined Contribution Dollar Limitation"
means for any Limitation Year, $30,000 or, if greater, 25% of the Defined
Benefit Dollar Limitation for the same Limitation Year. If a short Limitation
Year is created because of a Plan amendment changing the Limitation Year to a
different 12-consecutive month period, the Defined Contribution Dollar
Limitation for the short Limitation Year shall not exceed the amount determined
in the preceding sentences multiplied by a fraction, the numerator of which is
the number of months in the short Limitation Year and the denominator of which
is 12.
(f) "Defined Contribution Fraction" means a
fraction, the numerator of which is the sum of the Annual Additions allocated
to the Participant's accounts for the applicable Limitation Year and each prior
Limitation Year, and the denominator of which is the sum of the lesser of the
following products for each Limitation Year in which the Participant was an
Employee (regardless of whether a Defined Contribution Plan was in existence
for such Limitation Year) (i) the Defined Contribution Dollar Limitation
(determined for this purpose without regard to the provisions of Code section
415(c)(6)) effective for the Limitation Year multiplied by 125%,
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or (ii) 35% of the Participant's Includable Compensation for such Limitation
Year.
(g) "Defined Contribution Plan" means a Qualified
Plan described in Code section 414(i).
(h) "Includable Compensation" means an Employee's
total wages from the Controlled Group as determined for purposes of Internal
Revenue Service Form W-2, excluding, however: (i) moving expense
reimbursements that are deductible by the Employee under Code section 217, (ii)
contributions of Controlled Group Members to a simplified employee pension plan
to the extent such contributions are deductible by the Employee and
contributions of Controlled Group Members to any other plan of deferred
compensation that are not includable in the Employee's gross income, (iii)
distributions to the Employee from any plan of deferred compensation other than
an unfunded, nonqualified plan of deferred compensation, (iv) amounts realized
from the exercise of a nonqualified stock option, (v) amounts realized under
Code section 83 with respect to restricted property that becomes freely
transferable or is no longer subject to a substantial risk of forfeiture, (vi)
amounts realized from the disposition of stock acquired under a qualified stock
option within the meaning of Code section 422, and (g) any other amounts that
receive special tax benefits within the meaning of section 1.415-2(d)(2) of the
Treasury Regulations.
(i) "Limitation Year" means the
12-consecutive-month period used by a Qualified Plan for purposes of computing
the limitations on benefits and annual additions
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under Code section 415. The Limitation Year for this Plan is the Plan Year.
(j) "Maximum Annual Addition" means with respect
to a Participant for any Limitation Year an amount equal to the lesser of (i)
the Defined Contribution Dollar Limitation or (ii) 25% of the Participant's
Includable Compensation.
(k) "Projected Annual Benefit" means the annual
benefit (as defined in Code section 415(b)(2)) to which a Participant would be
entitled under the terms of a Defined Benefit Plan maintained by a Controlled
Group Member, assuming that the Participant will continue employment until his
or her normal retirement age under the Defined Benefit Plan (or current age, if
later) and that the Participant's Includable Compensation for the current
Limitation Year and all other relevant factors used to determine benefits under
the Defined Benefit Plan will remain constant for all future Limitation Years.
(l) "Welfare Benefit Fund" means an organization
described in paragraph (7), (9), (17) or (20) of Code section 501(c), a trust,
corporation or other organization not exempt from federal income tax, or to the
extent provided in Treasury Regulations, any account held for an employer by
any person, which is part of a plan of an employer through which the employer
provides benefits to employees or their beneficiaries, other than a benefit to
which Code sections 83(h), 404 (determined without regard to section 404(b)(2))
or 404A applies, or to which an election under Code section 463 applies.
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11.3 General Limitation. The Annual Addition of a
Participant for any Limitation Year shall not exceed the Maximum Annual
Addition. If, except for the application of this Section, the Annual Addition
of a Participant for any Limitation Year would exceed the Maximum Annual
Addition, the excess Annual Addition attributable to this Plan will not be
allocated to the Participant's Account for the Plan Year included in such
Limitation Year, but will be subject to the provisions of Section 11.4. The
limitations contained in this Article will apply on an aggregate basis to all
Defined Contribution Plans and all Defined Benefit Plans (whether or not any of
such plans have terminated) established by the Controlled Group Members. If
there is an excess Annual Addition for any Limitation Year, such excess shall
be deemed to arise first from After-Tax Contributions made to the Plan during
the Limitation Year. To the extent that the excess Annual Additions exceed the
After-Tax Contributions made to the Plan during the Limitation Year, the excess
shall be deemed to arise from unmatched Before-Tax Contributions made to the
Plan during the Limitation Year. To the extent that the excess Annual
Additions exceed the sum of the After-Tax Contributions and unmatched
Before-Tax Contributions made to the Plan during the Limitation Year, the
excess shall be deemed to arise from Matching Employer Contributions, if any,
made to the Plan during the Limitation Year and then from Profit Sharing
Contributions, if any, made to the Plan for the Limitation Year.
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11.4 Excess Allocations.
(a) Participants Covered by One Defined
Contribution Plan. If the Participant is not covered under another Defined
Contribution Plan or a Welfare Benefit Fund maintained by a Controlled Group
Member during the Limitation Year and the amount otherwise allocable to the
Participant's Account would exceed the Maximum Annual Addition, the
contributions and forfeitures which would cause the Participant's Annual
Addition to exceed the Maximum Annual Addition will be reduced by first
returning any After-Tax Contributions and unmatched Before-Tax Contributions to
the affected Participants. Any remaining excess will be successively allocated
in the manner described in Section 4.3 (if such amounts are derived from
Matching Employer Contributions) and Section 4.6 (if such amounts are derived
from Profit Sharing Contributions) among the Accounts of eligible Participants
whose Annual Additions do not exceed the Maximum Annual Addition. If, after
such allocations have been made, there remain Employer contributions or
forfeitures which cannot be allocated without causing the Annual Addition of a
Participant to exceed the Maximum Annual Addition, the forfeitures which cause
the Annual Addition to exceed the Maximum Annual Addition and the Employer
contributions which result from a reasonable error in estimating the
Participant's Includable Compensation or from any other limited facts and
circumstances which the Commissioner of Internal Revenue finds justifiable
under section 1.415-6(b)(6) of the Treasury Regulations and which cause the
Participant's Annual Addition to exceed the Maximum
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Annual Addition will be held in a suspense account in the Trust Fund to be
carried forward and allocated in subsequent Limitation Years as provided in
Section 4.3 (if such excess is attributable to Matching Employer Contributions)
or allocated in subsequent Limitation Years as provided in Section 4.6 (if such
excess is attributable to Profit Sharing Contributions). Such suspense account
will not participate in the allocation of the net income or net loss of the
Trust Fund.
(b) Participants Covered by Two or More Defined
Contribution Plans. If, in addition to this Plan, the Participant is covered
under another Defined Contribution Plan or a Welfare Benefit Fund maintained by
a Controlled Group Member during the Limitation Year, the following provisions
will apply. The Annual Addition which may be credited to a Participant's
Account under this Plan for any such Limitation Year will not exceed the
Maximum Annual Addition reduced by the Annual Addition credited to a
Participant's accounts under the other Defined Contribution Plans and Welfare
Benefit Funds for the same Limitation Year. If the Annual Addition with
respect to the Participant under the other Defined Contribution Plans and
Welfare Benefit Funds maintained by a Controlled Group Member is less than the
Maximum Annual Addition and the Employer contribution that would otherwise be
contributed or allocated to the Participant's Account under this Plan would
cause the Annual Addition for the Limitation Year to exceed the Maximum Annual
Addition, the amount to be contributed or allocated to the Participant's
Account under this Plan will be reduced so that the
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Annual Addition under all such Defined Contribution Plans and Welfare Benefit
Funds for the Limitation Year will equal the Maximum Annual Addition. If the
aggregate Annual Addition with respect to the Participant under such other
Defined Contribution Plans and Welfare Benefit Funds is equal to or greater
than the Maximum Annual Addition, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year. An excess
Annual Addition will be reduced in the manner described in Subsection (c).
(c) Reduction of Excess Allocations. As soon as
is administratively feasible after the end of the Limitation Year, the Maximum
Annual Addition for the Limitation Year will be determined on the basis of the
Participant's Includable Compensation for the Limitation Year. If a
Participant's Annual Addition under this Plan and the other Defined
Contribution Plans and Welfare Benefit Funds maintained by Controlled Group
Members would result in the Annual Addition exceeding the Maximum Annual
Addition for the Limitation Year, the excess amount will be deemed to consist
of the Annual Addition last allocated. In making this determination, the
Annual Addition attributable to a Welfare Benefit Fund will be deemed to have
been allocated first regardless of the actual date of allocation. If an excess
amount was allocated to a Participant on an allocation date of this Plan that
coincides with an allocation date of another plan, the excess amount attributed
to this Plan will be the product of (i) the total excess amount allocated as of
such date and (ii) the ratio of the Annual Addition allocated to the
Participant for the
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Limitation Year as of such date under this Plan to the total Annual Addition
allocated to the Participant for the Limitation Year as of such date under this
and all the other Defined Contribution Plans. Any excess amount attributed to
this Plan will be disposed of in the manner described in Subsection (a).
11.5 Aggregate Benefit Limitation. If a Controlled Group
Member maintains, or at any time maintained, one or more Defined Benefit Plans
covering any Participant in this Plan, the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction for any Limitation Year will equal no
more than one (1.0). The provisions of the Defined Benefit Plans will govern
the order of reduction of Annual Additions or benefit accruals necessary to
meet this limitation. If the provisions of the Defined Benefit Plans are
silent, the current Annual Addition under this Plan will be reduced first, and
then the rate of accrual under the Defined Benefit Plans will be reduced, if
necessary to meet this limitation. If the Defined Contribution Plans taken
into account in determining the Participant's Annual Addition under this
Article satisfied the requirements of Code section 415 as in effect for all
Limitation Years beginning before January 1, 1987, an amount will be subtracted
from the numerator of the Defined Contribution Fraction (not exceeding such
numerator) as prescribed by the Secretary of the Treasury so that the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction does not
exceed 1.0. For purposes of this Section, a Participant's voluntary
nondeductible contributions to
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a Defined Benefit Plan will be treated as being part of a separate Defined
Contribution Plan.
11.6 Aggregation of Plans. For purposes of this Article,
all Defined Benefit Plans ever maintained by a Controlled Group Member will be
treated as one Defined Benefit Plan, and all Defined Contribution Plans ever
maintained by a Controlled Group Member will be treated as one Defined
Contribution Plan.
ARTICLE 12
RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES
12.1 Priority over Other Distribution Provisions. The
provisions set forth in this Article will supersede any conflicting provisions
of Article 7 or Article 8.
12.2 Restrictions on Commencement of Distributions. The
provisions of this Section will apply to restrict the Committee's ability to
delay the commencement of distributions. Distribution of the Participant's
vested interest in his or her Account will begin no later than the 60th day
after the close of the Plan Year in which occurs the latest of (i) the date on
which the Participant attains age 65, (ii) the tenth anniversary of the Plan
Year in which the Participant began participation in the Plan, or (iii) the
Participant's termination of employment.
12.3 Restrictions on Delay of Distributions. The
following provisions will apply to limit the delay of distribution of a
Participant's benefits. Distribution of a Participant's entire vested and
nonforfeitable interest will be made or commence not later than April 1 of the
calendar year
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following the calendar year in which the Participant attains age 70-1/2.
12.4 Limitation to Assure Benefits Payable to
Beneficiaries are Incidental. Under any distribution option, the present value
of payments projected to be paid to a Participant (or to the Participant and
his or her spouse, if his or her spouse is the Beneficiary) will be more than
50% of the present value of the total benefit.
12.5 Restrictions in the Event of Death. Upon the death
of a Participant, the following distribution provisions will apply to limit the
delay of distribution to a Beneficiary. If the Participant dies after
distribution of his or her benefit has begun, the remaining portion of such
benefit will be distributed to his or her Beneficiary at least as rapidly as
under the method of distribution being used prior to the Participant's death;
but if the Participant dies before distribution of his or her benefit
commences, the entire benefit will be distributed to his or her Beneficiary no
later than five years after the Participant's death, unless an individual who
is a designated Beneficiary receives distributions in substantially equal
installments over the Beneficiary's life or life expectancy beginning no later
than one year after the Participant's death. If the designated Beneficiary is
the Participant's surviving spouse, the date distributions are required to
begin will not be earlier than the date on which the Participant would have
attained age 70-1/2, and, if the spouse dies before payments begin, subsequent
distributions will be made as if the spouse had
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been the Participant. Any amount paid to a child of the Participant will be
treated as if it had been paid to the surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches the age of majority.
12.6 Compliance with Regulations. Distributions under the
Plan to Participants or Beneficiaries shall be made in accordance with Treasury
Regulations issued under Code section 401(a)(9).
12.7 Delayed Payments. If the amount of a distribution
required to begin on a date determined under the applicable provisions of the
Plan cannot be ascertained by such date, or if it is not possible to make such
payment on such date because the Committee has been unable to locate a
Participant or Beneficiary after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than 60 days after the earliest
date on which the amount of such payment can be ascertained or the date on
which the Participant or Beneficiary is located (whichever is applicable).
ARTICLE 13
TOP-HEAVY PROVISIONS
13.1 Priority over Other Plan Provisions. If the Plan is
or becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article
will supersede any conflicting provisions of the Plan. However, the provisions
of this Article will not operate to increase the rights or benefits of
Participants under the Plan except to the extent required by Code section 416
and other provisions of law applicable to Top-Heavy Plans.
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13.2 Definitions Used in this Article. The following
words and phrases, when used with initial capital letters, will have the
meanings set forth below.
(a) "Defined Benefit Dollar Limitation" means the
limitation described in Section 11.2(b).
(b) "Defined Benefit Plan" means a Qualified Plan
described in Section 11.2(d).
(c) "Defined Contribution Dollar Limitation"
means the limitation described in Section 11.2(e).
(d) "Defined Contribution Plan" means a Qualified
Plan described in Section 11.2(g).
(e) "Determination Date" means for the first Plan
Year of the Plan the last day of the Plan Year and for any subsequent Plan Year
the last day of the preceding Plan Year.
(f) "Determination Period" means the Plan Year
containing the Determination Date and the four preceding Plan Years.
(g) RESERVED.
(h) "Key Employee" means any Employee or former
Employee who, at any time during the Determination Period was (i) an officer of
a Controlled Group Member (limited to no more than 50 Employees, or, if lesser,
the greater of 3 or 10 percent of the Employees) having an annual compensation
greater than 50 percent of the dollar amount in effect under section
415(b)(1)(A) of the Code for any such Plan Year, (ii) one of the 10 Employees
owning (or considered as owning within the meaning of section 318 of the Code)
the largest interests in a Controlled Group Member
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and having annual compensation of more than the dollar amount in effect under
section 415(c)(1)(A) of the Code, (iii) a 5-percent owner (as such term is
defined in section 416(i)(1)(B)(i) of the Code) of a Controlled Group Member,
or (4) a 1-percent owner (as such term is defined in Section 416(i)(1)(B)(ii)
of the Code) of a Controlled Group Member having an annual compensation of more
than $150,000. For purposes of clause (ii) of this Subsection, if two
Employees have the same interest in a Controlled Group Member, the Employee
having greater annual compensation from such Controlled Group Member shall be
treated as having a larger interest. For purposes of determining the number of
officers taken into account under clause (i) of this Subsection, Employees
described in section 414(q)(8) of the Code shall be excluded. Effective for
Plan Years beginning on or after January 1, 1989, for purposes of this
Subsection, compensation has the meaning given such term by Code section
414(q)(7). The term "Key Employee" shall also include such Employee's
Beneficiary in the event of the Employee's death.
(i) "Minimum Allocation" means the allocation
described in the first sentence of Section 13.3(a).
(j) "Permissive Aggregation Group" means the
Required Aggregation Group of Qualified Plans plus any other Qualified Plan or
Qualified Plans of a Controlled Group Member which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the requirements
of Code sections 401(a)(4) and 410 (including simplified employee pension
plans).
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(k) "Present Value" means present value based
only on the interest and mortality rates specified in a Defined Benefit Plan.
(l) "Required Aggregation Group" means the group
of plans consisting of (i) each Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member in which at least one Key Employee
participates, and (ii) any other Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member which enables a Qualified Plan to
meet the requirements of Code sections 401(a)(4) or 410.
(m) "Top-Heavy Plan" means the Plan for any Plan
Year in which any of the following conditions exists: (i) if the Top-Heavy
Ratio for the Plan exceeds 60% and the Plan is not a part of any Required
Aggregation Group or Permissive Aggregation Group of Qualified Plans; (ii) if
the Plan is a part of a Required Aggregation Group but not part of a Permissive
Aggregation Group of Qualified Plans and the Top-Heavy Ratio for the Required
Aggregation Group exceeds 60%; or (iii) if the Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation Group of Qualified Plans
and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
(n) "Top-Heavy Ratio" means a fraction, the
numerator of which is the sum of the Present Value of accrued benefits and the
account balances (as required by Code section 416) of all Key Employees with
respect to such Qualified Plans as of the Determination Date (including any
part of any accrued benefit or account balance distributed during the five-year
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period ending on the Determination Date including distributions under a
terminated plan which if it had not been terminated would have been a member of
the Required Aggregation Group that includes the Plan), and the denominator of
which is the sum of the Present Value of the accrued benefits and the account
balances (including any part of any accrued benefit or account balance
distributed in the five-year period ending on the Determination Date including
distributions under a terminated plan which if it had not been terminated would
have been a member of the Required Aggregation Group that includes the Plan) of
all Employees with respect to such Qualified Plans as of the Determination
Date. The value of account balances and the Present Value of accrued benefits
will be determined as of the most recent Top-Heavy Valuation Date that falls
within or ends with the 12-month period ending on the Determination Date,
except as provided in Code section 416 for the first and second Plan Years of a
Defined Benefit Plan. The account balances and accrued benefits of a
participant who is not a Key Employee but who was a Key Employee in a prior
year will be disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, transfers and contributions unpaid as
of the Determination Date are taken into account will be made in accordance
with Code section 416. Employee contributions described in Code section
219(e)(2) will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the Determination
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Dates that fall within the same calendar year. The accrued benefit of any
Employee other than a Key Employee will be determined under the method, if any,
that uniformly applies for accrual purposes under all Qualified Plans
maintained by all Controlled Group Members and included in a Required
Aggregation Group or a Permissive Aggregation Group or, if there is no such
method, as if the benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional accrual rate of Code section 411(b)(1)(C).
Notwithstanding the foregoing, the account balances and accrued benefits of any
Employee who has not performed services for an employer maintaining any of the
aggregated plans during the five-year period ending on the Determination Date
will not be taken into account for purposes of this Subsection.
(o) Top-Heavy Valuation Date means the last day
of each Plan Year.
13.3 Minimum Allocation.
(a) Calculation of Minimum Allocation. For any
Plan Year in which the Plan is a Top-Heavy Plan, each Participant who is not a
Key Employee will receive an allocation of Employer contributions and
forfeitures of not less than the lesser of 3% of his or her Compensation for
such Plan Year or, in the event that the Controlled Group Members maintain no
Defined Benefit Plan which covers a Participant in this Plan, the percentage of
Compensation that equals the largest percentage of Employer contributions and
forfeitures allocated to a Key Employee expressed as a percentage of
Compensation received by such Key
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<PAGE> 95
Employee in that Plan Year. The Minimum Allocation is determined without
regard to any Social Security contribution. Compensation for this purpose
shall be limited as provided in Section 1.12 of the Plan. The Minimum
Allocation applies even though under other Plan provisions the Participant
would not otherwise be entitled to receive an allocation, or would have
received a lesser allocation for the Plan Year because (i) the non-Key Employee
fails to make mandatory contributions to the Plan, (ii) the non-Key Employee's
Compensation is less than a stated amount, or (iii) the non-Key Employee fails
to complete 1,000 Hours of Service in the Plan Year.
(b) Limitation on Minimum Allocation. No Minimum
Allocation will be provided pursuant to Subsection (a) to a Participant who is
not employed by a Controlled Group Member on the last day of the Plan Year.
(c) Minimum Allocation When Participant is
Covered by Another Qualified Plan. If a Controlled Group Member maintains one
or more other Defined Contribution Plans covering Employees who are
Participants in this Plan, the Minimum Allocation will be provided under this
Plan, unless such other Defined Contribution Plans make explicit reference to
this Plan and provide that the Minimum Allocation will not be provided under
this Plan, in which case the provisions of Subsection (a) will not apply to any
Participant covered under such other Defined Contribution Plans. If a
Controlled Group Member maintains one or more Defined Benefit Plans covering
Employees who are Participants in this Plan, and such Defined Benefit Plans
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<PAGE> 96
provide that Employees who are participants therein will accrue the minimum
benefit applicable to top-heavy Defined Benefit Plans notwithstanding their
participation in this Plan (making explicit reference to this Plan), then the
provisions of Subsection (a) will not apply to any Participant covered under
such Defined Benefit Plans. If a Controlled Group Member maintains one or more
Defined Benefit Plans covering Employees who are Participants in this Plan, and
the provisions of the preceding sentence do not apply, then each Participant
who is not a Key Employee and who is covered by such Defined Benefit Plans will
receive a Minimum Allocation determined by applying the provisions of
Subsection (a) with the substitution of "5%" in each place that "3%" occurs
therein.
(d) Nonforfeitability. The Participant's Minimum
Allocation required under this Section, to the extent required to be
nonforfeitable under Code section 416(b) and the special vesting schedule
provided in this Article, may not be forfeited under Code section 411(a)(3)(B)
(relating to suspension of benefits on reemployment) or 411(a)(3)(D) (relating
to withdrawal of mandatory contributions).
13.4 Modification of Aggregate Benefit Limit.
(a) Modification. Subject to the provisions of
Subsection (b), in any Plan Year in which the Top-Heavy Ratio exceeds 60%, the
aggregate benefit limit described in Article 11 will be modified by
substituting "100%" for "125%" in Sections 11.2(c) and (f).
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<PAGE> 97
(b) Exception. The modification of the aggregate
benefit limit described in Subsection (a) will not be required if the Top-Heavy
Ratio does not exceed 90% and one of the following conditions is met: (i)
Employees who are not Key Employees do not participate in both a Defined
Benefit Plan and a Defined Contribution Plan which are in the Required
Aggregation Group, and the Minimum Allocation requirements of Section 13.4(a)
are met when such requirements are applied with the substitution of "4%" for
"3%"; (ii) The Minimum Allocation requirements of Section 13.3(c) are met when
such requirements are applied with the substitution of "7-1/2%" for "5%".
13.5 Minimum Vesting.
(a) Required Vesting. For any Plan Year in which
this Plan is a Top-Heavy Plan, the minimum vesting schedule set forth in
Subsection (b) will automatically apply to the Plan to the extent it provides a
higher vested percentage than the regular vesting schedule set forth in Article
6. The minimum vesting schedule applies to all Account balances including
amounts attributable to Plan Years before the effective date of Code section
416 and amounts attributable to Plan Years before the Plan became a Top-Heavy
Plan. Further, no reduction in vested Account balances may occur in the event
the Plan's status as a Top-Heavy Plan changes for any Plan Year, and any change
in the effective vesting schedule from the schedule set forth in Subsection (b)
to the regular schedule set forth in Article 6 will be treated as an amendment
subject to Section 15.1(iii). However, this Subsection does not apply to the
Account balances
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<PAGE> 98
of any Employee who does not have an Hour of Service after the Plan has
initially become a Top-Heavy Plan, and such Employee's Account balances will be
determined without regard to this Section.
(b) Minimum Vesting Schedule.
<TABLE>
<CAPTION>
Percentage Vested
Years of Service and Nonforfeitable
---------------- ------------------
<S> <C>
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
</TABLE>
ARTICLE 14
ADOPTION OF PLAN BY
CONTROLLED GROUP MEMBERS
14.1 Adoption Procedure. Any Controlled Group Member may
become an Employer under the Plan provided that (i) the Board approves the
adoption of the Plan by the Controlled Group Member and designates the
Controlled Group Member as an Employer; (ii) the Controlled Group Member adopts
the Plan and Trust Agreement together with all amendments then in effect by
appropriate resolutions of the board of directors of the Controlled Group
Member; and (iii) the Controlled Group Member by appropriate resolutions of its
board of directors agrees to be bound by any other terms and conditions which
may be required by the Board, provided that such terms and conditions are not
inconsistent with the purposes of the Plan.
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<PAGE> 99
14.2 Effect of Adoption by Controlled Group Member. A
Controlled Group Member that adopts the Plan pursuant to this Article will be
deemed to be an Employer for all purposes hereunder, unless otherwise specified
in the resolutions of the Board designating the Controlled Group Member as an
Employer. In addition, the Board may provide, in its discretion and by
appropriate resolutions, that the Employees of the Controlled Group Member will
receive credit for their employment with the Controlled Group Member prior to
the date it became a Controlled Group Member for purposes of determining either
or both the eligibility of such Employees to participate in the Plan and the
vested and nonforfeitable interest of such Employees in their Account balances
provided that such credit will be applied in a uniform and nondiscriminatory
manner with respect to all such Employees.
ARTICLE 15
AMENDMENT OF THE PLAN
15.1 Right of Company to Amend Plan. The Company
reserves the right to amend the Plan at any time and from time to time to the
extent it may deem advisable or appropriate, provided that (i) no amendment
will increase the duties or liabilities of the Trustee without its written
consent; (ii) no amendment will cause a reversion of Plan assets to the
Employer not otherwise permitted under the Plan; (iii) no amendment will have
the effect of reducing the percentage of the vested and nonforfeitable interest
of any Participant in his or her Account nor will the vesting provisions of the
Plan be amended unless each Participant
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<PAGE> 100
with at least three Years of Service is permitted to elect to continue to have
the prior vesting provisions apply to him or her, within 60 days after the
latest of the date on which the amendment is adopted, the date on which the
amendment is effective, or the date on which the Participant is issued written
notice of the amendment; and (iv) no amendment will be effective to the extent
that it has the effect of decreasing a Participant's Account balance or
eliminating an optional form of distribution as it applies to an existing
Account balance.
15.2 Amendment Procedure. Any amendment to the Plan will
be made only pursuant to action of the Board. A certified copy of the
resolutions adopting any amendment and a copy of the adopted amendment as
executed by the Company will be delivered to the Committee and to the Trustee.
Upon such action by the Board, the Plan will be deemed amended as of the date
specified as the effective date by such Board action or in the instrument of
amendment. The effective date of any amendment may be before, on or after the
date of such Board action.
15.3 Effect on Employers. Unless an amendment expressly
provides otherwise, all Employers will be bound by any amendment to the Plan.
ARTICLE 16
TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS
16.1 Continuance of Plan. The Employer expects to
continue the Plan indefinitely, but they do not assume an individual or
collective contractual obligation to do so, and the right is reserved to the
Company, by action of the Board, to
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<PAGE> 101
terminate the Plan or to completely discontinue contributions thereto at any
time.
16.2 Complete Vesting. If the Plan is terminated, or if
there is a complete discontinuance of contributions to the Plan by the
Employer, the amounts allocated or to be allocated to the Accounts of all
affected Participants will become 100% vested and nonforfeitable without regard
to their Years of Service. For purposes of this Section, a Participant who has
terminated employment and is not again an Employee at the time the Plan is
terminated or there is a complete discontinuance of Employer contributions will
not be an affected Participant entitled to full vesting if the Participant had
no vested interest in his or her Account balance attributable to Employer
contributions at his or her termination of employment. In the event of a
partial termination of the Plan, the amounts allocable to the Accounts of those
Participants who cease to participate on account of the facts and circumstances
which result in the partial termination will become 100% vested and
nonforfeitable without regard to their Years of Service. In the event of a
transaction described in Section 7.8(a)(2) or 7.8(a)(3) of the Plan, the
amounts allocable to the Accounts of all Plan Participants who could receive a
distribution from the Plan as a result of such transaction will become 100%
vested and nonforfeitable without regard to their Years of Service.
16.3 Disposition of the Trust Fund. If the Plan is
terminated, or if there is a complete discontinuance of contributions to the
Plan, the Committee will instruct the
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<PAGE> 102
Trustee either (i) to continue to administer the Plan and pay benefits in
accordance with the Plan until the Trust Fund has been depleted, or (ii) to
distribute the assets remaining in the Trust Fund. If the Trust Fund is to be
distributed, the Committee will make, after deducting estimated expenses for
termination of the Trust Fund and distribution of its assets, the allocations
required under the Plan as though the date of completion of the Trust Fund
termination were a Valuation Date. The Trustee will distribute to each
Participant the amount credited to his or her Account as of the date of
completion of the Trust Fund termination.
16.4 Withdrawal by a Controlled Group Member. A
Controlled Group Member may withdraw from participation in the Plan or
completely discontinue contributions to the Plan only with the approval of the
Board. If any Controlled Group Member withdraws from the Plan or completely
discontinues contributions to the Plan, a copy of the resolutions of the board
of directors of the Controlled Group Member adopting such action, certified by
the secretary of such board of directors and reflecting approval by the Board,
will be delivered to the Committee as soon as it is administratively feasible
to do so, and the Committee will communicate such action to the Trustee and to
the Employees of the Controlled Group Member.
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<PAGE> 103
ARTICLE 17
MISCELLANEOUS
17.1 Reversion Prohibited.
(a) General Rule. Except as provided in
Subsections (b), (c) and (d), it will be impossible for any part of the Trust
Fund either (i) to be used for or diverted to purposes other than those which
are for the exclusive benefit of Participants and their Beneficiaries (except
for the payment of taxes and administrative expenses), or (ii) to revert to a
Controlled Group Member.
(b) Disallowed Contributions. Each
contribution of the Employer under the Plan is expressly conditioned upon the
deductibility of the contribution under Code section 404. If all or part of an
Employer's contribution is disallowed as a deduction under Code section 404,
such disallowed amount (reduced by any Trust Fund losses attributable thereto)
may be returned by the Trustee to the Employer with respect to which the
deduction was disallowed (upon the direction of the Committee) within one year
after the disallowance.
(c) Mistaken Contributions. If a contribution
is made by an Employer by reason of a mistake of fact, then so much of the
contribution as was made as a result of the mistake (reduced by any Trust Fund
losses attributable thereto) may be returned by the Trustee to the Employer
(upon direction of the Committee) within one year after the mistaken
contribution was made.
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<PAGE> 104
(d) Failure to Qualify. In the event the
Internal Revenue Service determines that the Plan and the Trust Agreement, as
amended by amendments acceptable to the Company, initially fail to constitute a
qualified plan and establish a tax-exempt trust under the Code, then
notwithstanding any other provisions of the Plan or the Trust Agreement, the
contributions made by the Employer prior to the date of such determination
shall be returned to the Employer and the Plan and Trust Agreement shall
terminate.
17.2 Bonding, Insurance and Indemnity.
(a) Bonding. To the extent required under
ERISA, the Employer will obtain, pay for and keep current a bond or bonds with
respect to each Committee member and each Employee who receives, handles,
disburses, or otherwise exercises custody or control of, any of the assets of
the Plan.
(b) Insurance. The Employer, in its
discretion, may obtain, pay for and keep current a policy or policies of
insurance, insuring the Committee members, the members of the board of
directors of the Employer and other Employees to whom any fiduciary
responsibility with respect to the administration of the Plan has been
delegated against any and all costs, expenses and liabilities (including
attorneys" fees) incurred by such persons as a result of any act, or omission
to act, in connection with the performance of their duties, responsibilities
and obligations under the Plan and any applicable law.
(c) Indemnity. If the Employer does not
obtain, pay for and keep current the type of insurance policy or policies
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<PAGE> 105
referred to in Subsection (b), or if such insurance is provided but any of the
parties referred to in Subsection (b) incur any costs or expenses which are not
covered under such policies, then the Employer will indemnify and hold
harmless, to the extent permitted by law, such parties against any and all
costs, expenses and liabilities (including attorneys fees) incurred by such
parties in performing their duties and responsibilities under this Plan,
provided that such party or parties were acting in good faith within what was
reasonably believed to have been the best interests of the Plan and its
Participants.
17.3 Merger, Consolidation or Transfer of Assets. There
will be no merger or consolidation of all or any part of the Plan with, or
transfer of the assets or liabilities of all or any part of the Plan to, any
other Qualified Plan unless each Participant who remains a Participant
hereunder and each Participant who becomes a participant in the other Qualified
Plan would receive a benefit immediately after the merger, consolidation or
transfer (determined as if the other Qualified Plan and the Plan were then
terminated) which is equal to or greater than the benefit they would have been
entitled to receive under the Plan immediately before the merger, consolidation
or transfer if the Plan had then terminated.
17.4 Spendthrift Clause. The rights of any Participant
or Beneficiary to and in any benefits under the Plan will not be subject to
assignment or alienation, and no Participant or Beneficiary will have the power
to assign, transfer or dispose of such rights, nor will any such rights to
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<PAGE> 106
benefits be subject to attachment, execution, garnishment, sequestration, the
laws of bankruptcy or any other legal or equitable process. This Section will
not apply to a "qualified domestic relations order". A "qualified domestic
relations order" means a judgment, decree or order made pursuant to a state
domestic relations law which satisfies the requirements of Code section 414(p).
17.5 Rights of Participants. Participation in the Plan
will not give any Participant the right to be retained in the employ of a
Controlled Group Member or any right or interest in the Plan or the Trust Fund
except as expressly provided herein.
17.6 Gender, Tense and Headings. Whenever any words are
used herein in the masculine gender, they will be construed as though they were
also used in the feminine gender in all cases where they would so apply.
Whenever any words used herein are in the singular form, they will be construed
as though they were also used in the plural form in all cases where they would
so apply. Headings of Articles, Sections and Subsections as used herein are
inserted solely for convenience and reference and constitute no part of the
Plan.
17.7 Governing Law. The Plan will be construed and
governed in all respects in accordance with applicable federal law and, to the
extent not preempted by such federal law, in accordance with the laws of the
State of Ohio.
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<PAGE> 107
Executed this 20th day of December, 1994.
OHM CORPORATION
By: /s/ Pamela K.M. Beall
------------------------------------
Treasurer
By: /s/ Randall M. Walters
------------------------------------
V.P. General Counsel & Secretary
102
<PAGE> 1
EXHIBIT 10(d)
OHM CORPORATION
RETIREMENT SAVINGS PLAN
TRUST AGREEMENT
(as Amended and Restated
Effective July 1, 1994)
<PAGE> 2
OHM CORPORATION
RETIREMENT SAVINGS PLAN
TRUST AGREEMENT
OHM Corporation, a Delaware corporation, and National City Bank,
Cleveland, Ohio, as Trustee, by execution of this Trust Agreement, hereby
amends the OHM Corporation Retirement Savings Trust which holds assets of the
OHM Corporation Retirement Savings Plan (hereinafter referred to as the
"Plan"), effective as of July 1, 1990. The Plan and this Trust Agreement shall
be deemed to be and construed as a single document.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1 Definitions 1
Article 2 Establishment of Trust and Certain
Primary Conditions of its Operation 2
Article 3 Investment of the Trust Fund 4
Article 4 Powers of the Trustee 7
Article 5 Duties and Obligations of the
Trustee 10
Article 6 Compensation, Rights and Indemnities
of the Trustee 13
Article 7 Resignation or Removal of the Trustee 18
Article 8 Amendment of the Trust Agreement or
Termination of the Plan 20
Article 9 Miscellaneous 22
</TABLE>
<PAGE> 4
Article 1
Definitions
1.1 Incorporation of Definitions Used in Plan
The definitions stated in Article 1 of the Plan are hereby
incorporated by reference into this Trust Agreement.
1.2 Definitions of Terms Used Exclusively in Trust Agreement
(a) "Bank" means (1) a banking institution organized
under the laws of the United States; (2) a member bank of the Federal Reserve
System; or (3) any other banking institution, whether or not incorporated,
doing business under the laws of any state or the United States, a substantial
portion of the business of which consists of receiving deposits or exercising
fiduciary powers similar to those permitted to national banks under the
authority of the Comptroller of the Currency, and which is supervised and
examined by state or federal authority having supervision over banks.
(b) "Fiduciary" means a person or organization that is
a fiduciary with respect to the Plan or the Trust Fund within the meaning of
ERISA section 3(21).
<PAGE> 5
Article 2
Establishment of Trust and
Certain Primary Conditions of its Operation
2.1 Establishment of Trust
This Trust Agreement establishes an employees' trust
pursuant to the Plan that is intended to be a tax-exempt organization under
Code section 501(a). The Company and the Trustee hereby agree that the Trust
Fund shall be held in trust and administered, invested and distributed for the
benefit of Participants and their Beneficiaries under the terms and conditions
of this Trust Agreement.
2.2 Designation of Trust
The employees' trust established hereunder shall be known
as the OHM Corporation Retirement Savings Trust.
2.3 Trust Fund
The Trust Fund shall consist of the cash, Company Stock and
other property, if any, held by the Trustee which shall represent at any time
the total of the Company Stock acquired by the Trustee and the contributions
made to the Trust Fund under the provisions of the Plan, plus the earnings and
less the losses thereupon, without distinction between principal and income,
less the payments and distributions which at the time of reference have been
made by the Trustee as authorized herein.
2.4 Exclusive Benefit Rule
The employees' trust established by this Trust Agreement is
expressly declared to be irrevocable, subject to the provisions of Article 8.
It shall be impossible, at any time prior to the satisfaction of all
liabilities with respect to Participants and their Beneficiaries, for any part
of the principal or income of the Trust Fund to be used for, or diverted to,
any purpose which is not for the exclusive benefit of Participants and their
Beneficiaries. The preceding sentence shall not be construed in such a way as
to prohibit the use of assets of the Trust Fund to pay fees and other expenses
and obligations incurred in the maintenance, administration and investment of
the Trust Fund in accordance with the provisions of this Trust Agreement.
2.5 Reversion Prohibited
Except as permitted in the Plan, it shall be impossible for
any part of the Trust Fund to revert to the Company or any Controlled Group
Member or any Related Company Controlled Group Member.
-2-
<PAGE> 6
2.6 Spendthrift Clause
The rights of any Participant or Beneficiary to and in any
benefits under the Plan shall not be subject to assignment or alienation, and
no Participant or Beneficiary shall have the power to assign, transfer or
dispose of such rights, nor shall any such rights to benefits be subject to
attachment, execution, garnishment, sequestration, the laws of bankruptcy or
any other legal or equitable process. This Section shall not apply with
respect to qualified domestic relations orders as defined in Code section
414(p) and ERISA section 206(d)(3).
-3-
<PAGE> 7
Article 3
Investment of the Trust Fund
3.1 General Responsibility and Authority for Investment of Trust
Fund Assets
Pursuant to the terms of the Plan, the Participant's have
the right to direct the Committee as to the investment of certain amounts in
their Accounts. To the extent the Committee receives such directions, the
Committee shall direct the Trustee to make the directed investments. The
assets of the Trust Fund shall be invested and reinvested by the Trustee as
directed by the Committee, in accordance with the terms of this Trust
Agreement. For purposes of ERISA, the Committee shall be the "Named Fiduciary"
with respect to the operation and administration of the Plan and the Trust
Fund. The Committee may delegate to the Trustee the sole responsibility for
investing any portion of the Trust Fund other than Company Stock.
3.2 ERISA Requirements
(a) In investing and managing the assets of the Trust
Fund, the Fiduciary who has investment responsibility and authority shall
exercise the care, skill, prudence and diligence, under the circumstances then
prevailing, which prudent men, acting in like capacity and familiar with such
matters, would use in the conduct of an enterprise of like character and with
like aims.
(b) Except as authorized by regulations promulgated by
the Department of Labor, no Fiduciary may maintain the indicia of ownership of
any assets of the Trust Fund outside the jurisdiction of the district courts of
the United States.
(c) In investing and managing the assets of the Trust
Fund, the Fiduciary shall take into consideration the funding policy of the
Plan.
3.3 Investment in Company Stock
The Trustee shall, as directed by the Committee, (a)
acquire shares of Company Stock with assets of the Trust Fund, (b) hold shares
of Company Stock which have been otherwise purchased by the Trustee or which
have been contributed by an Employer and (c) distribute to former Participants
or their Beneficiaries under the terms of the Plan the shares of Company Stock
which have been allocated to the Accounts of such Participants pursuant to the
terms of the Plan and cash in lieu of fractional shares in accordance with the
terms of the Plan. The Trustee is expressly authorized, if so directed by the
Committee, to hold 100% of the assets of the Trust Fund in shares of Company
Stock.
-4-
<PAGE> 8
The Trustee may purchase Company Stock for the Trust Fund,
as directed by the Committee either (a) directly or indirectly from the Company
or any shareholder of the Company, including any person deemed to be a "party
in interest" within the meaning of ERISA section 3(14) or a "disqualified
person" within the meaning of Code section 4975 or (b) if the shares of Company
Stock are traded on a national securities exchange, through "blind"
transactions on such securities exchange in which neither the purchaser nor the
seller knows the identity of the other party to the transaction. In purchasing
any securities on a national securities exchange, the Trustee shall give due
regard to the trading volume, if any, of Company Stock at the time of each
purchase and accordingly regulate the amount and timing of such purchases so as
to minimize the effect on market price fluctuations which may be caused by such
purchases. The Trustee shall comply with all federal and state securities laws
and with all applicable provisions of ERISA when purchasing Company Stock,
including, if required, the condition that no commission be charged when a
purchase of Company Stock is made from a "party in interest" or a "disqualified
person."
In the event that the Trustee purchases or sells shares of
Company Stock from or to a "party in interest" or a "disqualified person," the
terms of such purchase or sale shall provide that in the event that there is a
final determination by the Internal Revenue Service or court of competent
jurisdiction that the Trustee paid more than "adequate consideration" (as
defined in ERISA section 3(18)) to the seller or received less than adequate
consideration from the purchaser for such shares of Company Stock as of the
date of purchase or sale, the seller or purchaser, as the case may be, shall be
required to pay to the Trustee an amount in cash equal to the difference
between the purchase or sale price and the amount determined to be adequate
consideration plus interest at a reasonable rate from the date of purchase or
sale to the date of payment.
The voting rights of all shares of Company Stock held in
the Trust Fund shall be exercisable by the Trustee in accordance with the
provisions of the Plan. The Trustee shall not be required to vote any shares
of Company Stock unless it has received voting instructions pursuant to the
provisions of the Plan.
3.4 Other Trust Fund Investments
As directed by the Committee, the Trustee may deposit or
invest any assets of the Trust Fund other than shares of Company Stock in
Investments Funds which may consist of (a) short-term cash-equivalent
investments, such as Treasury Notes, Treasury Bills or other similar short-term
obligations of the United States Government or any instrumentality thereof,
savings accounts, bankers' acceptances, certificates of deposit, commercial
paper or other interest bearing accounts in a Bank (including those of the
Trustee, if the Trustee is a Bank and
-5-
<PAGE> 9
such instruments or accounts bear a reasonable rate of interest), or in a
non-interest bearing checking account as the Committee may deem advisable for
the purpose of meeting contemplated payments under the Plan, (b) other
securities or investments determined by the Committee to be desirable for the
Trust, or (c) any common or collective trust fund or pooled investment fund
maintained by the Trustee. The instrument establishing any such common or
collective trust fund or pooled investment fund, including all amendments
thereto, shall be deemed to have been adopted and made a part of this Trust
Agreement.
3.5 Segregation of Trust Fund Assets
(a) Subject to the other provisions of this Section,
the assets of the Trust Fund shall be managed, invested and reinvested as a
single fund without distinction between principal and income, and the Trustee
shall not be required to earmark or keep separate the assets specifically
attributable to contributions by or on behalf of each Employer.
(b) If requested to do so by the Committee, the
Trustee shall establish one or more subaccounts or subtrusts for each
Participant.
(c) If requested to do so by the Committee, the
Trustee shall establish a separate subtrust segregating the assets of the Trust
Fund that are attributable to each of the Employers.
(d) The Trustee may establish one or more subtrusts
segregating the assets of the Trust Fund that are allocable to specific
Accounts or segregating the assets of the Trust Fund that are attributable to
each of the Employers.
-6-
<PAGE> 10
Article 4
Powers of the Trustee
4.1 Scope of Powers
The Trustee has whatever powers are required to discharge
its obligations and exercise its rights under this Trust Agreement, including
(but not limited to) the powers specified in the following Sections of this
Article, and the powers and authority granted to the Trustee under other
provisions of this Trust Agreement.
4.2 Powers Exercisable by the Trustee
In Its Sole Discretion
The Trustee is authorized and empowered to exercise the
following powers in its sole discretion:
(a) To register any investment held in the Trust Fund
in its own name or in the name of a nominee and to hold any investment in
bearer form, but the books and records of the Trustee shall show that all such
investments are part of the Trust Fund and the Trustee shall be liable for all
acts of its nominees.
(b) Except with respect to shares of Company Stock, to
vote upon any stocks, bonds, or other securities in the Trust Fund and to give
general or special proxies or powers of attorney with or without power of
substitution, to exercise any conversion privileges, subscription rights or
other options and to make any payments incidental thereto, to consent to or
otherwise participate in corporate reorganizations or other changes affecting
corporate securities in the Trust Fund and to exercise rights of appraisal and
similar rights and make decisions with respect to choice of consideration
relating thereto, and to delegate discretionary powers and to pay any
assessments or charges in connection therewith.
4.3 Powers Exercisable by the Trustee Only Upon
the Direction of the Committee
The Trustee shall exercise the following powers only upon
the direction of the Committee:
(a) To employ suitable agents, including such public
accountants as shall be necessary and appropriate, and to employ counsel (which
may be counsel for the Committee or the Company), and to pay their reasonable
expenses and compensation.
(b) To sell, exchange, convey, transfer or otherwise
dispose of any portion of the assets of the Trust Fund, by private contract or
at public auction, provided, however, that shares of
-7-
<PAGE> 11
Company Stock may not be sold, exchanged, transferred or disposed of other than
in accordance with the provisions of the Plan.
(c) To make commitments either alone or in company
with others to purchase at any future date any property, investments or
securities authorized by Section 3.3 or Section 3.4 of this Agreement.
(d) To accept, compromise or otherwise settle any
obligations or liability due to or from it as Trustee hereunder, including any
claim that may be asserted for taxes under present or future laws, or to
enforce or contest the same by appropriate legal proceedings. Notwithstanding
the foregoing, if the Trustee recommends to the Committee the acceptance,
compromise or settlement of any matter described in this subsection (d), the
Committee shall not unreasonably withhold its consent to, or refuse to provide
the Trustee with directions to take, such action.
(e) To vote Company Stock held in the Trust Fund
and exercise any other rights or privileges associated with such Stock in
accordance with the terms of the Plan.
The Committee may authorize the Trustee to exercise any power with respect to
which direction from the Committee is called for in this Trust Agreement
without specific directions or other instructions from the Committee.
4.4 Tender Offer for Company Stock
In the event of a tender offer for shares of Company
Stock subject to section 14(d)(1) of the Securities Exchange Act of 1934 or
subject to Rule 13e-4 promulgated under that Act (as those provisions may from
time to time be amended or replaced by successor provisions of federal
securities laws), the Committee will advise each Participant who has shares of
Company Stock credited to his Account in writing of the terms of the tender
offer as soon as practicable after its commencement and will furnish each
Participant with a form by which he may instruct the Trustee confidentially to
tender shares credited to his Account. The Trustee will tender those shares it
has been properly instructed to tender, and will not tender those shares which
it has been properly instructed not to tender or for which no instructions are
properly received. The Committee's advice to Participants will include notice
that allocated shares for which no instructions are received will not be
tendered and such related documents as are prepared by any person and provided
to the shareholders of the Company pursuant to the Securities Exchange Act of
1934. The Committee may also provide Participants with such other material
concerning the tender offer as the Committee in its discretion determines to be
appropriate. A Participant's instructions to the Trustee to tender shares will
not be deemed a withdrawal or suspension from the Plan or a forfeiture of any
portion of the Participant's interest in the Plan. The number of shares to
which a Participant's instructions apply will be the total number of shares
credited to his Account,
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<PAGE> 12
whether or not the shares are vested, as of the close of business on the day
preceding the date on which the tender offer commences. The Committee will
advise the Trustee of the commencement date of any tender offer and, until
receipt of that advice, the Trustee will not be obligated to take any action
under this section. Funds received in exchange for tendered stock will be
credited to the Account of the Participant whose stock was tendered and will be
used by the Trustee to purchase Company Stock, if available on a national
securities exchange, commencing on the earlier of the following dates: (i) the
trading day following the first day on which the closing price of the Company
Stock on a national securities exchange on which the Company Stock is then
traded is within 20% of the closing price on the tenth trading day preceding
the commencement date of the tender offer or (ii) the thirtieth trading day
after the expiration date of the tender offer, of which date the Committee will
advise the Trustee. In the interim, the Trustee will invest such funds in
short term investments permitted under the Trust Agreement.
4.5 Documents, Instruments and Facilities
(a) In order to effectuate the specific powers and
authority herein granted to the Trustee, the Trustee may make, execute,
acknowledge and deliver any and all documents of transfer and conveyance and
any and all other instruments that may be necessary or appropriate.
(b) The Trustee may use its own facilities in
effecting any transaction involving assets of the Trust Fund, unless such
use is prohibited by ERISA section 406.
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<PAGE> 13
Article 5
Duties and Obligations of the Trustee
5.1 Scope of Duties and Obligations
The Trustee agrees to perform the duties and
obligations imposed by this Trust Agreement. No duties or obligations shall be
imposed upon the Trustee with respect to the Trust Fund unless undertaken by
the Trustee under the express terms of this Trust Agreement or unless imposed
upon the Trustee by statute or at common law. The Trustee shall have no duty
or obligation to advise Participants or Beneficiaries as to the effect of
federal or state securities laws on the Plan, the Trust Fund or any
distributions therefrom.
5.2 General Duties and Obligations
(a) The Trustee shall hold all property received by
it and any income and gains thereupon. The Trustee shall manage, invest and
reinvest the Trust Fund, shall collect the income therefrom, and shall make
payments as provided in the Plan and in this Trust Agreement. The Trustee may
utilize depositories to hold assets of the Trust Fund, provided however that
the Trustee shall not be relieved of any fiduciary responsibility with respect
to the assets so held.
(b) The Trustee is responsible only for money or
assets that it actually receives. The Trustee has no duty to compute amounts
to be paid to it by an Employer or to enforce collection of any contribution
due from an Employer. The Trustee is not responsible for the correctness of
the computation of the amount of any contribution made or to be made by an
Employer.
(c) The Trustee shall make payments and
disbursements from the Trust Fund to or on the order of the Committee,
including, when the Committee shall so order, distributions to Participants or
their Beneficiaries as provided in the Plan. Orders of the Committee with
respect to disbursements from the Trust Fund shall specify the application to
be made of such funds, and the Trustee may (to the extent permitted by law)
rely on the Committee's instructions regarding disbursements from the Trust
Fund.
(d) Subject to the provisions of Section 8.2(c),
the Trustee shall comply with any directive issued by the Company to withdraw
and transfer all or any part of the Trust Fund to another trustee or another
successor funding agent.
5.3 Valuation
(a) The Trustee shall determine, and report to the
Committee, the current fair market value of the assets and
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<PAGE> 14
liabilities of the Trust Fund, and Participants' and Beneficiaries' interests
therein, as of the regular Valuation Date and as of any interim Valuation Date
that may be fixed by the Committee.
(b) The fair market value of assets of the Trust
Fund shall be determined by the Trustee on the basis of such sources of
information as it may deem reliable, including (but not limited to) information
reported in: (1) newspapers of general circulation, (2) standard financial
periodicals or publications, (3) statistical and valuation services, (4)
records of securities exchanges, (5) reports of any brokerage firm deemed
reliable by the Trustee, or (6) any combination of the foregoing. If the
Trustee is unable to value assets from such sources, it may rely on information
from any Employer, the Committee, appraisers or other sources, and will not be
liable for inaccurate valuation based in good faith on such information.
Notwithstanding the foregoing, the fair market value of shares of Company Stock
shall be (i) if the Stock is readily tradeable on an established securities
market, the fair market value of such stock on such market on the Valuation
Date or (ii) if the Stock is not readily tradeable on an established securities
market, the value determined by an independent appraiser meeting requirement
similar to the requirements of Code section 170(a)(1).
(c) Reasonable costs incurred in valuing the Trust
Fund shall be a charge against the Trust Fund.
5.4 Records
The Trustee shall keep complete accounts of all
investments, receipts and disbursements, other transactions hereunder, and
gains and losses resulting from same. Such accounts shall be sufficiently
detailed to meet the Trustee's duties of reporting and disclosure required
under applicable federal or state law as shall exist from time to time. All
accounts, books, contracts and records relating to the Trust Fund shall be open
to inspection and audit at all reasonable times by any person designated by the
Committee.
5.5 Reports
(a) Within 90 days following the close of each Plan
Year, and as otherwise directed by the Committee, and within 60 days following
the Trustee's resignation or removal under Article 7 of this Trust Agreement,
the Trustee shall furnish the Committee with a written report setting forth the
transactions effected by the Trustee during the period since it last furnished
such a report and any gains or losses resulting from same, any payments or
disbursements made by the Trustee during such period, the assets of the Trust
Fund as of the last day of such period (at cost and at fair market value), and
any other information about the Trust Fund that the Committee may request. The
Trustee shall certify the accuracy of the report if such certification is
required by any applicable federal or state law or regulation.
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<PAGE> 15
(b) Each report submitted pursuant to subsection
(a) shall be promptly examined by the Committee. If the Committee approves of
such report, the Trustee shall be forever released from any liability of
accountability with respect to the propriety of any of its accounts or
transactions so reported, as if such account had been settled by judgment or
decree of a court of competent jurisdiction in which the Trustee, the
Committee, the Company, and all persons having or claiming any interest in the
Trust Fund were made parties. The foregoing, however, is not to be construed
to deprive the Trustee of the right to have its account judicially settled if
it so desires.
(c) The Committee may approve of any report
furnished by the Trustee under subsection (a) either by written statement of
approval furnished to the Trustee or by failure to file a written objection to
the report with the Trustee within 90 days of the date on which the Committee
receives such report. The Committee shall not be liable to any person for its
approval, disapproval or failure to approve any such report rendered by the
Trustee.
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<PAGE> 16
Article 6
Compensation, Rights and Indemnities
of the Trustee
6.1 Compensation and Reimbursement
(a) The Trustee shall receive for its services
reasonable compensation as agreed upon in writing from time to time between the
Company and the Trustee, unless the Trustee is an Employee, in which case the
Trustee shall serve without compensation.
(b) The Trustee shall be reimbursed for all
reasonable expenses it incurs in the performance of its duties under this Trust
Agreement. In this regard, reasonable expenses include (but are not limited
to) accounting, consulting, actuarial and, subject to Section 6.3, legal fees
for professional services related to the administration of the Plan and this
Trust Agreement.
(c) Compensation and expenses payable under this
Section 6.1 shall be paid from the Trust Fund (and may be charged, if
applicable, to an appropriate subaccount or subtrust), unless the Employers pay
such compensation and expenses directly. In addition, the Employers in their
discretion may reimburse the Trust Fund for any such compensation and expenses
paid from the Trust Fund.
6.2 Rights of the Trustee
(a) Whenever in the administration of the Plan a
certification or direction is required to be given to the Trustee, or the
Trustee deems it necessary that a matter be proved prior to taking, suffering
or omitting any action hereunder, such certification or direction shall be
fully made, or such matter may be deemed to be conclusively proved, by delivery
to the Trustee of an instrument signed either:
(1) in the name of the Company by an
officer of the Company; or
(2) unless the matter concerns the
authority of the Committee, in the name of the Committee by the Chairman or
Secretary of the Committee;
and the Trustee may rely upon such instrument to the extent permitted by law.
Notwithstanding the foregoing, the Trustee may in its sole discretion accept
such other evidence of a matter or require such further evidence as may seem
reasonable to it, in lieu of such instrument. Generally, the Trustee shall be
protected in acting upon any notice, resolution, order, certificate, opinion,
telegram, letter or other document believed by the Trustee to be genuine and to
have been signed by the proper party or parties, and
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<PAGE> 17
may act thereon without notice to a Participant or Beneficiary and without
considering the rights of any Participant or Beneficiary.
(b) The Trustee may make any payment which it is
required to make hereunder by mailing a check for the amount of such payment
and any other necessary papers by first class mail in a sealed envelope
addressed to the person to whom such payment is to be made, according to the
certification of the Committee. In this respect, the Trustee shall recognize
only instructions given to it by the Committee and has the right to act thereon
without notice to any person and without considering the rights of any
Participant or Beneficiary. The Trustee is not required to determine or to
make any investigation to determine, the identity or mailing address of any
person entitled to benefits under the Plan, and is entitled to withhold payment
of benefits or directions to issuing companies with respect to such payment
until the identity and mailing address of the Participant or Beneficiary
entitled to receive such benefits is certified by the Committee. The Trustee
shall not be responsible for the determination or computation of any benefit
due to a Participant or Beneficiary.
(c) In the event that any dispute arises as to the
identity or rights of any person or persons to whom the Trustee is to make
payment or delivery of any funds or property, the Trustee may withhold payment
or delivery of such funds or property without liability until the dispute is
resolved by arbitration, adjudicated by a court of competent jurisdiction, or
settled by written stipulation of the parties concerned. The Trustee shall not
be liable for the payment of and interest or income on the cash or other
property held by it under such circumstances.
(d) The Trustee may consult with legal counsel (who
may be counsel for the Committee, the Company, a Controlled Group Member or a
Related Company Controlled Group Member) with respect to the construction of
the Plan or this Trust Agreement or its duties thereunder, or with respect to
any legal proceeding or any question of law, and shall be fully protected (to
the extent permitted by law) with respect to any action it takes or omits in
good faith upon the advice of such counsel.
(e) The Trustee shall be provided with specimen
signatures of the current members of the Committee. The Trustee shall be
entitled to rely in good faith upon any directions signed by a majority of the
members of the Committee or their appointed delegate, and shall incur no
liability for following such directions.
(f) The Trustee may accept communications by
photostatic teletransmissions with duplicate or facsimile signatures as a
delivery of such communications in writing until notified in writing by the
Committee that the use of such devices is no longer authorized.
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<PAGE> 18
(g) If the whole or any part of the Trust Fund, or
the proceeds thereof, becomes liable for the payment of any estate,
inheritance, income or other tax, charge or assessment which the Trustee is
required to pay, the Trustee shall have full power and authority to pay such
tax, charge or assessment out of any money or other property in its hand for
the account of the person whose interests hereunder are so liable, but at least
10 days prior to the making of any such payment the Trustee must mail notice to
the Committee of its intention to make such payment. Prior to making any
transfers or distributions of any of the proceeds of the Trust Fund, the
Trustee may require such releases or other documents from any lawful taxing
authority as it deems necessary.
(h) If it is determined by a final judicial
decision or by agreement with the Internal Revenue Service that the equitable
share of the Trust Fund attributable to an Employer fails to satisfy the
requirements of Code section 501(a), the Trustee shall be so notified by the
Committee or the Employer. If such failure has not been corrected to the
satisfaction of the Internal Revenue Service within 30 days of such
determination, or within such longer time as the Internal Revenue Service may
allow, the Trustee, in its discretion, may segregate the assets allocable to
the equitable share of the Trust Fund attributable to such Employer and may
distribute such assets to a successor trustee or funding agent.
6.3 Limitation of Liability of Trustee
(a) If the Trustee makes a written request for
directions from the Committee, the Trustee may await such directions without
incurring liability. The Trustee has no duty to act in the absence of such
requested directions, but may in its discretion take such action as it deems
appropriate to carry out the purposes of this Trust Agreement.
(b) The Trustee shall not be liable to any person
for making any distribution, failing to make any distribution, or discontinuing
any distribution on the direction of the Committee, or for failing to make any
distribution by reason of the Committee's failure to direct that such
distribution be made. The Trustee has no duty to inquire whether any direction
or absence of direction is in conformity with the provisions of the Plan.
(c) The Trustee is not responsible for determining
the adequacy of the Trust Fund to meet liabilities under the Plan, and is not
liable for any obligations of the Plan or the Trust Fund in excess of the
assets of the Trust Fund.
(d) The Trustee shall not be liable for the acts or
omissions of any other fiduciary or person with respect to the Plan or the
Trust Fund except to the extent required under Section 405(a) of ERISA.
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<PAGE> 19
(e) The Trustee is not responsible for any matter
affecting the administration of the Plan by the Company, the Committee, or any
other person or persons to whom responsibility for administration of the Plan
is delegated pursuant to the terms of the Plan.
6.4 Necessary Parties to Legal Actions
Except as required by ERISA section 502(h), only the
Employers, the Committee and the Trustee shall be considered necessary parties
in any legal action or proceeding with respect to the Trust Fund, and no
Participant, Beneficiary or other person having an interest in the Trust Fund
shall be entitled to notice. Any judgment entered on any such action or
proceeding shall be binding on all persons claiming under the Trustee. Nothing
in this Section 6.5 is intended to preclude a Participant or Beneficiary from
enforcing his legal rights.
6.5 Investment Manager. The Committee shall have the right
at any time or from time to time to appoint (and revoke the appointment of) an
individual, firm or corporation who or which qualifies as an "investment
manager" under section 3(38) of ERISA as Investment Manager hereunder. The
Committee shall notify the Trustee of any such appointment (or revocation
thereof) in writing, and the Trustee may rely upon any such appointment
continuing in effect until it receives written notice from the Committee of its
revocation.
Unless otherwise specified in such notice of
appointment or in an agreement between the Committee and the Investment
Manager, the Investment Manager shall have sole control over the assets in the
Trust Fund except the Company Stock Fund; provided, however, that such amounts
of cash and short-term obligations as the Trustee deems advisable to meet the
current requirements of the Trust Fund for cash (such as for making
distributions to Participants) shall remain under the control of the Trustee.
During the period when the appointment of an Investment Manager is in effect,
the Investment Manager (and not the Trustee) shall, with respect to the
investments over which the Investment Manager has control and to the extent
delegated to such Investment Manager in writing and permitted by law have the
applicable powers and be subject to the applicable duties and limitations
conferred or imposed upon the Trustee, but the Trustee shall make and accept
such deliveries of securities and disburse and receive such funds to or from
the Trust Fund as the Investment Manager may direct in writing or through the
facilities of an institutional delivery system of a depository. In addition to
the foregoing powers, the Investment Manager may designate the broker or
brokers through which sales and purchases are to be made, provided that no
greater brokerage fees are incurred than those chargeable by other brokers in
the community for like or comparable services. The Employer shall indemnify
and hold the Trustee or its nominee harmless against any and all claims,
actions, demands, liabilities, losses, damages or expenses of whatsoever kind
or
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<PAGE> 20
nature which may arise (a) from the failure by the Trustee to pay for property
purchased by the Investment Manager or the Committee by reason of the
insufficiency of funds in the Trust Fund, (b) from the actions of the Trustee
in following investment directions of the Investment Manager or the Committee
or inaction in the absence of such directions, unless the Trustee's action or
inaction constitutes or results from its fraud, bad faith, negligence or
willful misconduct or (c) from trading activities of the Investment Manager or
the Committee.
The Investment Manager shall receive such reasonable
compensation as may be agreed upon by it and the Committee, and upon the
receipt of written instructions from the Committee as to any amount so
approved, the Trustee shall make payment thereof to the Investment Manager from
the Trust Fund.
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<PAGE> 21
Article 7
Resignation or Removal of the Trustee
7.1 Resignation
The Trustee may resign at any time by delivering to the
Company a written notice of resignation, to take effect not less than 30 days
after delivery, unless such notice is waived.
7.2 Removal
The Company may remove the Trustee at any time by
delivering to the Trustee a written notice of removal.
7.3 Successor Trustee
Upon the resignation or removal of the Trustee, the
Company shall appoint a successor Trustee, which may accept such appointment by
execution of this Trust Agreement. In the event that no successor Trustee is
appointed, the Trustee may apply to a court of competent jurisdiction for the
appointment of a successor Trustee or for instructions. Any expenses incurred
by the Trustee in connection with said application shall be paid from the Trust
Fund as an expense of administration.
7.4 Settlement
After delivery of notice of the Trustee's resignation
or removal, the Trustee is entitled to a settlement of its account, which may
be made at the option of the Trustee either: (a) by judicial settlement in an
action instituted by the Trustee in a court of competent jurisdiction or (b) by
agreement of settlement between the Trustee and the Company.
7.5 Transfer to Successor Trustee
Upon settlement of the Trustee's account, the Trustee
shall transfer to the successor Trustee the Trust Fund as it is then
constituted and true copies of its records relating to the Trust Fund. Upon
the completion of this transfer, the Trustee's responsibilities under this
Trust Agreement shall cease and the Trustee shall be discharged from further
accountability for all matters embraced in its settlement; provided however
that the Trustee executes and delivers all documents and written instruments
which are necessary to transfer and convey the right, title and interest in the
Trust Fund assets, and all rights and privileges with respect to such assets,
to the successor Trustee. Notwithstanding the foregoing, the Trustee is
authorized to reserve such amount as it may deem advisable for payment of its
fees and expenses in connection with the settlement of its account. Any
balance of such reserve remaining after the payment of such fees and expenses
shall be paid over to the successor Trustee.
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<PAGE> 22
Notwithstanding any provision of Trust Agreement to the contrary, the Trustee
may invest and reinvest such reserves in any investment or investment vehicle
appropriate for the temporary investment of cash reserves of trusts.
7.6 Duties of the Trustee Prior to Transfer
to Successor Trustee
The Trustee's powers, duties, rights and
responsibilities under this Trust Agreement shall continue until the date on
which the transfer of the Trust Fund assets and delivery of the related
documents to the successor Trustee under Section 7.5 is completed. Nothing
contained herein shall relieve the Trustee of its duties under Section 5.5.
The successor Trustee shall neither be liable or responsible for any act or
omission to act with respect to the operation or administration of the Trust
Fund under this Trust Agreement prior to such date, nor be under any duty or
obligation to audit or otherwise inquire into or take any action concerning the
acts or omissions of the Trustee or any predecessor Trustee.
7.7 Powers, Duties and Rights of the Successor
Trustee
Upon its receipt of all the assets of the Trust Fund
and all of the documents related thereto, the successor Trustee shall become
vested with all the estate, powers, duties, rights and discretion of the
Trustee under this Trust Agreement with the same effect as though the successor
Trustee were originally named as Trustee hereunder.
7.8 Merger or Consolidation Involving
Corporate Trustee
Any corporation into which a corporation acting as
Trustee hereunder may be merged or with which it may be consolidated, or any
corporation resulting from any merger, reorganization or consolidation to which
such Trustee may be a party, shall be the successor of the Trustee hereunder
without the necessity of any appointment or other action, provided it does not
resign and is not removed.
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<PAGE> 23
Article 8
Amendment of the Trust Agreement
or Termination of the Plan
8.1 Amendment of the Trust Agreement
(a) The Company reserves the right to amend this
Trust Agreement in the manner set forth in subsection (b) at any time and to
any extent that it may deem advisable or appropriate, provided however that:
(1) No amendment may affect the duties,
rights, responsibilities or liabilities of the Trustee without its written
consent;
(2) No amendment may have the effect of
vesting in the Company or any Controlled Group Member or Related Company
Controlled Group Member any interest in or control over any property subject to
the terms of this Trust Agreement; and
(3) No amendment may contravene the
provisions of Section 2.4.
(b) Any amendment to this Trust Agreement shall be
made only pursuant to action of the Board of Directors of the Company. A
certified copy of the resolutions adopting any amendment and a copy of the
adopted amendment as executed by the Company shall be delivered to the Trustee.
Upon such action by the Company, the Trust Agreement shall be deemed amended as
of the date specified as the effective date by such action or in the instrument
of the amendment. The effective date of any amendment may be before, on or
after the date of such action.
(c) Unless an amendment expressly provides
otherwise, all Employers shall be bound by any amendment adopted pursuant to
this Article 8.
8.2 Termination of the Plan
(a) In the event that the Plan is terminated, the
Committee shall notify the Trustee as to whether the Trust Fund is to be
distributed or is to be maintained by the Trustee in accordance with the
provisions of the Plan and this Trust Agreement. If the Committee directs that
the Trust Fund is to be distributed, the Trustee shall establish the fair
market value of the Trust Fund as of such interim Valuation Date as is
designated by the Committee, and, after paying the reasonable expenses involved
in the termination of the Plan, shall distribute all or a part of the assets of
the Trust Fund (converting such assets into cash, as necessary) in accordance
with the written directions of the Committee (including, without limitation, a
direct distribution to one or more Participating Companies of any excess assets
of the
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<PAGE> 24
Trust Fund remaining after all liabilities of the Plan and the Trust Fund to
the Participants and Beneficiaries have been satisfied).
(b) In the event of the withdrawal of any Employer
from the Plan, the Trustee shall distribute the assets of the Trust Fund
attributable to the Participants employed by the Employer, and their
Beneficiaries, in accordance with the written directions of the Committee.
(c) Notwithstanding the provisions of subsections
(a) and (b):
(1) The Trustee may pay from the assets of
the Trust Fund the reasonable expenses involved in the termination of the Trust
Fund prior to distributing the assets of the Trust Fund as directed by the
Committee;
(2) The Trustee shall not comply with any
instruction to transfer assets of the Trust Fund to the funding agent of any
other employee benefit plan unless the Trustee determines that such transfer of
assets will comply with the requirements of the Code, and that any required
actuarial statement of valuation has been properly filed; and
(3) The Trustee may condition the
delivery, transfer or distribution of any or all assets of the Trust Fund upon
its receipt of assurance satisfactory to it that the approval of appropriate
governmental or other authorities has been secured (including, if the Trustee
so requests, a favorable determination letter issued by the Internal Revenue
Service to the effect that the termination of the Plan will not adversely
affect the Plan's qualified status) and that there has been proper compliance
with all notices and other procedures required by applicable law.
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<PAGE> 25
Article 9
Miscellaneous
9.1 Gender, Tense and Headings
Whenever any words are used herein in the masculine
gender, they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply. Whenever any words used herein
are in the singular form, they shall be construed as though they were also used
in the plural form in all cases where they would so apply.
Headings of Articles, Sections and subsections as used
herein are inserted solely for convenience and reference and constitute no part
of this Trust Agreement.
9.2 Governing Law
This Trust Agreement shall be construed and governed in
all respects in accordance with applicable federal law, and, to the extent not
preempted by such federal law, in accordance with the laws of the State of
Ohio.
IN WITNESS WHEREOF, the Company and the Trustee have executed
this Trust Agreement on this day of , 1994.
----- -------------
"Company" "Trustee"
OHM Corporation National City Bank,
Cleveland, Ohio
By /s/ PAMELA K.M. BEALL By
--------------------------- ---------------------------
By /s/ RANDALL M. WALTERS By
--------------------------- ---------------------------
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<PAGE> 1
EXHIBIT 10(e)
OHM CORPORATION
DIRECTORS' DEFERRED FEE PLAN
ARTICLE I
PURPOSE
The purpose of the OHM Corporation Directors' Deferred Fee Plan (the
"Plan") is to provide benefits upon termination of service or death for
Directors of OHM Corporation or their beneficiaries. It is intended that the
Plan will assist in attracting and retaining qualified individuals to serve as
Directors.
ARTICLE II
DEFINITIONS
For the purposes of the Plan, the following words and phrases shall
have the meanings indicated:
2.1 BENEFICIARY. Beneficiary means the person or persons
designated or deemed to be designated by the Participant pursuant to Article
VII to receive benefits payable under the Plan in the event of the
Participant's death.
2.2 BOARD. Board means the Board of Directors of the Company.
2.3 COMMITTEE. Committee has the meaning set forth in Section 8.1
hereof.
2.4 COMMON STOCK. Common Stock means the Company's common stock,
par value $.10 per share, or such other security as may at the applicable time
be represented by the Units.
2.5 COMPANY. Company means OHM Corporation, an Ohio corporation,
and any successor thereto.
2.6 DECLARED RATE. Declared Rate means the interest rate payable
on 1-year U.S. Treasury Bills issued on the specified date or, if not then
issued, on the next date of issue, or such other rate as may from time to time
be established by the Committee; provided, however that in no event shall the
Declared Rate be more than five percent (5%) higher than the rate payable on
such Bills.
2.7 DEFERRAL BENEFIT. Deferral Benefit means the benefit payable
to a Participant or his or her Beneficiary pursuant to Article VI hereof.
2.8 DEFERRED BENEFIT ACCOUNT. Deferred Benefit Account means the
account maintained on the books of the Company for each Participant pursuant to
Article V hereof.
2.9 DIRECTOR. Director means a member of the Board.
<PAGE> 2
2
2.10 FEE. Fee or Fees means any compensation payable in cash to a
Director for his or her services as a member of the Board or any Committee
thereof.
2.11 MARKET VALUE. Market Value means the closing price of the
Common Stock on the New York Stock Exchange on the specified date (or, if
Common Stock was not traded on such date, on the next preceding date on which
it was traded) as reported in THE WALL STREET JOURNAL.
2.12 PARTICIPANT. Participant means any eligible Director who
elects to participate by filing a Participation Agreement as provided in
Section 3.2 hereof.
2.13 PARTICIPATION AGREEMENT. Participation Agreement means the
agreement filed by a Participant, in the form prescribed by the Committee,
pursuant to Section 3.2 hereof.
2.14 PLAN YEAR. Plan Year means a 12-month period commencing
January 1 and ending the following December 31, except that the first Plan Year
shall commence January 1, 1995 and end December 31, 1995.
2.15 RULE 16B-3. Rule 16b-3 means Rule 16b-3 under the Securities
Exchange Act of 1934 or any successor rule.
2.16 UNIT. Unit means an accounting unit equal in value to one
share of Common Stock. The maximum number of Units that may be allocated to
the Deferred Benefit Accounts of all participants under the Plan in the
aggregate shall be 100,000 Units. Such maximum number and the number of Units
included in any Deferred Benefit Account shall be adjusted as appropriate to
reflect any stock dividend, stock split, recapitalization, merger or other
similar event affecting the Common Stock.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Eligibility to participate in the Plan is
limited to those Directors who are not employees of the Company or any of its
subsidiaries.
3.2 PARTICIPATION. Participation in the Plan shall be limited to
eligible Directors who elect to participate in the Plan by filing a
Participation Agreement with the Committee. A properly completed and executed
Participation Agreement must be filed on or prior to the December 31
immediately preceding the Plan Year in which the Participant's participation in
the Plan will commence, and the election to participate shall be effective on
the first day of the Plan Year following receipt by the Company of the
Participation Agreement. In the event that a director first becomes eligible
to participate during the course of a Plan Year, such Participation Agreement
must be filed no later than 30 days following election or appointment to the
Board, and such Participation Agreement shall be effective only with regard to
Fees earned or payable following the filing of the Participation Agreement with
the Committee.
<PAGE> 3
3
3.3 TERMINATION OF PARTICIPATION. A Participant may elect to
terminate his or her participation in the Plan by filing a written notice
thereof with the Committee, which termination shall be effective at any time
specified by the Participant in the notice, but not earlier than the first day
of the Plan Year immediately succeeding the Plan Year in which such notice is
filed with the Committee. Amounts credited to such Participant's Deferred
Benefit Account with respect to periods prior to the effective date of such
termination shall continue to be payable pursuant to, and otherwise governed
by, the terms of the Plan.
ARTICLE IV
DEFERRAL OF FEES
4.1 DEFERRAL. A Participant may elect to defer all, or a
specified percentage of his or her Fees, and a Participant may elect to have
his or her deferred Fees credited to his or her Deferred Benefit Account either
in dollar amounts or Units. A Participant may not change the percentage of his
or her Fees to be deferred, or the form in which fees are to be credited.
4.2 CREDITING OF DEFERRED FEES. Deferred Fees that a Participant
elects to have credited in dollar amounts shall be credited to the
Participant's Deferred Benefit Account as they become payable to the Director.
Deferred Fees payable to a Director during a Plan Year that a Participant
elects to have credited in Units, plus an amount equal to 25% of such Deferred
Fees for such calendar year, shall be credited to the Participant's Deferred
Benefit Account annually after the end of such Plan Year on the basis of the
average of the Market Values of the Common Stock on the last trading day in
each calendar month during such Plan Year.
ARTICLE V
DEFERRED BENEFIT ACCOUNT
5.1 DETERMINATION OF ACCOUNT. On any particular date, a
Participant's Deferred Benefit Account shall consist of the aggregate amount of
dollars and Units credited thereto pursuant to Section 4.2 hereof, plus any
interest credited pursuant to Section 5.2 hereof, plus any dividend equivalents
credited pursuant to Section 5.3 hereof, minus the aggregate amount of
distributions, if any, made from such deferred Benefit Account.
5.2 CREDITING OF INTEREST. As of the last day of each Plan Year,
each Deferred Benefit Account to which Fees have been credited in dollar
amounts shall be increased by the amount of interest earned during the Plan
Year. Interest shall be credited at the Declared Rate as of the last day of
the Plan Year based on the average daily balance of the Participant's Deferred
Benefit Account since the beginning of the Plan Year, but after the Deferred
Benefit Account has been adjusted for any contributions or distributions to be
credited or deducted for such period. Until a Participant or his or her
Beneficiary receives his or her entire Deferred Benefit Account, the unpaid
balance thereof credited in dollar amounts shall bear interest as provided in
this Section 5.2
<PAGE> 4
4
5.3 CREDITING OF DIVIDEND EQUIVALENTS. Each Deferred Benefit
Account to which Fees have been credited in Units shall be credited annually
after the end of each Plan Year with additional Units equal in value to the
amount of cash dividends paid by the Company during such Plan Year on Common
stock equivalent to the average daily balance of Units in such Deferred Benefit
Account during such Plan Year. Such dividend equivalents shall be valued on
the basis of the average Market Value computed pursuant to Section 4.2 hereof.
Until a Participant or his or her Beneficiary receives his or her entire
Deferred Benefit Account, the unpaid balance thereof credited in Units shall
earn dividend equivalents as provided in this Section 5.3.
5.4 STATEMENT OF ACCOUNTS. The Committee shall provide to each
Participant, within 120 days after the close of each Plan Year, a statement
setting forth the balance of such Participant's Deferred Benefit Account as of
the last day of the preceding Plan Year and showing all adjustments made
thereto during such Plan Year.
5.5 VESTING OF DEFERRED BENEFIT ACCOUNT. A Participant shall be
100 percent vested in his or her Deferred Benefit Account at all times.
ARTICLE VI
PAYMENT OF BENEFITS
6.1 TERMINATION OF SERVICE AS A DIRECTOR OR DEATH. Upon (i) the
termination of service of the Participant as a Director of the Company, for any
reason or (ii) if the Participant shall so elect, only upon his or her death,
the Company shall pay to the Participant or his Beneficiary, as the case may
be, a Deferral Benefit equal to the balance of his or her Deferred Benefit
Account, less any amounts previously distributed.
6.2 FORM OF PAYMENT. Amounts credited to the Deferred Benefit
Account of a Participant in dollars shall be paid in cash, and amounts credited
in Units shall be paid in full shares of Common Stock (with any fractional
share to be paid in cash based on the then current Market Value). The Deferral
Benefit shall be paid in one of the following forms, as elected by the
Participant in his or her Participant Agreement:
(a) Equal annual installments over a period of 5 years
(together, in the case of deferred compensation credited in dollar
amounts, with interest thereon credited after the payment commencement
date pursuant to Section 5.2 hereof and, in the case of deferred
compensation credited in Units, with dividend equivalents thereon
credited after the payment commencement date pursuant to Section 5.3
hereof).
(b) A lump sum.
(c) A combination of (a) and (b) above. The Participant
shall designate the percentage payable under each option.
<PAGE> 5
5
For the purposes of this Section 6.2, each distribution of Common
Stock from Deferred Benefit Accounts including Units shall be made on the basis
of one share of Common Stock for each Unit.
6.3 COMMENCEMENT OF PAYMENTS. Commencement of payments under
Section 6.1 hereof shall begin within 60 days following receipt of notice by
the Committee of an event which entitles a Participant (or a Beneficiary) to
payments under the Plan, or at such earlier date as may be determined by the
Committee, provided, however, that the payments to be made to a former Director
in Common Stock during his or her lifetime shall not commence until 6 months
after he or she has ceased to be a Director.
ARTICLE VII
BENEFICIARY DESIGNATION
7.1 BENEFICIARY DESIGNATION. Each Participant shall have the
right, at any time, to designate any person or persons as his Beneficiary to
whom payment under the Plan shall be made in the event of his or her death
prior to complete distribution to the Participant of his or her Deferral
Benefit. Any Beneficiary designation shall be made in a written instrument
filed with the Committee and shall be effective only when received in writing
by the Committee.
7.2 AMENDMENTS. Any Beneficiary designation may be changed by a
Participant by the filing of a new Beneficiary designation, which will cancel
all Beneficiary designations previously filed.
7.3 NO DESIGNATION. If a Participant fails to designate a
Beneficiary as provided above, or if all designated Beneficiaries predecease
the Participant, then the Participant's designated Beneficiary shall be deemed
to be the Participant's estate.
7.4 EFFECT OF PAYMENT. Payment to a Participant's Beneficiary
(or, upon the death of a beneficiary, to his or her estate) shall completely
discharge the Company's obligations under the Plan.
<PAGE> 6
6
ARTICLE VIII
ADMINISTRATION
8.1 COMMITTEE; DUTIES. The administrative committee for the Plan
(the "Committee") shall consist of the Chairman of the Board (provided he is
not a nonemployee Director) and two Company officers or Directors who are not
nonemployee Directors who shall be appointed by the Chairman of the Board. The
Committee shall supervise the administration of the Plan, may from time to time
adopt procedures governing the Plan and shall have authority to give
interpretive rulings with respect to the Plan.
8.2 AGENTS. The Committee may appoint an individual, who may be
an employee of the Company, to be the Committee's agent with respect to the
day-to-day administration of the Plan. In addition, the Committee may, from
time to time, employ other agents and delegate to them such administrative
duties as it sees fit, and may from time to time consult with counsel who may
be counsel to the Company.
8.3 BINDING EFFECT OF DECISIONS. Any decision or action of the
Committee with respect to any questions arising out of or in connection with
the administration, interpretation and application of the Plan shall be final
and binding upon all persons having any interest in the Plan.
8.4 INDEMNITY OF COMMITTEE. The Company shall indemnify the
members of the Committee against claims, loss, damage, expense and liability
arising from any action or failure to act with respect to the Plan to the
extent provided in the Regulations of the Company and any applicable
indemnification agreement between the Company and such member.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
The Board may at any time amend, suspend, terminate or reinstate any
or all of the provisions of the Plan, provided that no such amendment,
suspension or termination may adversely affect any Participant's Deferred
Benefit Account as it existed as of the effective date of such amendment,
suspension or termination without such Participant's consent and provided
further that no amendment or modification shall be made more than once every
six months, other than to comport with changes in the Internal Revenue Code,
the Employment Retirement Security Act, or the rules promulgated thereunder.
No amendment shall become effective without approval by all Participants if
such amendment would cause transactions under the Plan to cease to be exempt
under Rule 16b-3.
<PAGE> 7
7
ARTICLE X
MISCELLANEOUS
10.1 FUNDING. Neither Participants, nor their Beneficiaries, nor
their heirs, successors or assigns, shall have any secured interest or claim in
any property or assets of the Company. the Company's obligation under the Plan
shall be merely that of an unfunded and unsecured promise of the Company to pay
money in the future. It is the intention of the Company that the Plan be
unfunded for tax purposes and for purposes of Title I or ERISA. The Company
may create a trust to hold funds, Common Stock or other securities to be used
in payment of its obligation under the Plan, and may fund such trust; provided,
however, that any funds contained therein shall remain liable for the claims of
the Company's general creditors.
10.2 NON-ASSIGNABILITY. No right or interest under the Plan of a
Participant or his or her Beneficiary (or any person claiming through or under
any of them), shall be (i) assignable or transferable in any manner, (ii)
subject to alienation, anticipation, sale, pledge, encumbrance, attachment,
garnishment or other legal powers or (iii) in any manner liable for or subject
to the debts or liabilities of the Participant or Beneficiary. If any
Participant or Beneficiary (other than the surviving spouse of any deceased
Participant) shall attempt to or shall transfer, assign, alienate, anticipate,
sell, pledge or otherwise encumber his or her benefits hereunder or any part
thereof, or if by reason of his or her bankruptcy or other event happening at
any time such benefits would devolve upon anyone else or would not be enjoyed
by him or her, then the Committee, in its discretion, may terminate his or her
interest in any such benefit to the extent the Committee consider necessary or
advisable to prevent or limit the effects of such occurrence. Termination
shall be effected by filing a written "termination declaration" with the
Secretary of the Company and making reasonable efforts to deliver a copy to the
Participant or Beneficiary whose interest is adversely affected (the
"Terminated Participant").
As long as the Terminated Participant is alive, any benefits affected
by the termination shall be retained by the Company and, in the Committee' s
sole and absolute judgment, may be paid to or expended for the benefit of the
Terminated Participant, his or her spouse, his or her children or any other
person or persons in fact dependent upon him or her in such a manner as the
Committee shall deem proper. Upon the death of the Terminated Participant, all
benefits withheld from him or her and not paid to others in accordance with the
preceding sentence shall be disposed of according to the provisions of the Plan
that would apply if he or she died prior to the time that all benefits to which
he or she was entitled were paid to him or her.
10.3 CAPTIONS. The captions contained herein are for convenience
only and shall not control or affect the meaning or construction hereof.
10.4 GOVERNING LAW. The provisions of the Plan shall be construed
and interpreted according to the internal substantive laws of the State of
Ohio.
<PAGE> 8
8
10.5 SUCCESSORS. The provisions of the Plan shall bind and inure
to the benefit of the Company and its successors and assigns. The term
successors as used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or otherwise, acquire
all or substantially all of the business and assets of the Company and
successors of any such corporation or other business entity.
10.6 EFFECTIVE DATE. The Plan shall be effective on the first day
of the first Plan Year, subject to approval by the shareholders of the Company.
10.7 RIGHT TO CONTINUED SERVICE. Nothing contained herein shall be
construed to confer upon any Director the right to continue to serve as a
Director of the Company or in any other capacity.
10.8 RULE 16B-3. This Plan is intended to comply with Rule 16b-3
as in effect prior to May 1, 1991. If at any time Rule 16b-3 as effective on
May 1, 1991 or at any later date shall become applicable to the Plan, (a) if
necessary for acquisition of Units under the Plan to continue to be exempt
under Rule 16b-3, no election to have Deferred Fees credited to Units shall
become effective pursuant to Section 4.2 hereof until 6 months after such
election is made and (b) the Committee may make such other changes in the terms
or operation of the Plan as may then be necessary or appropriate to comply with
such Rule, including, without limitation, by eliminating any restriction
originally included in the Plan to comply with rule 16b-3 that may no longer be
required.
<PAGE> 1
EXHIBIT 10(n)
FOURTH AMENDMENT
Dated as of January 18, 1995
TO
REVOLVING CREDIT AGREEMENT
Dated as of May 11, 1993
THIS FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT dated as
of January 18, 1995 (this "Amendment") is entered into by and among OHM
Corporation ("OHM"), OHM Remediation Services Corp. ("Remediation", and
together with OHM, the "Borrowers"), the financial institutions listed on the
signature pages hereto (collectively, the "Banks"), Bank of America Illinois
(formerly known as Continental Bank), as administrative agent (in such
capacity, the "Administrative Agent") and as the "Issuing Bank", and Citicorp
USA, Inc., as agent (in such capacity, the "Agent") and Arranger.
PRELIMINARY STATEMENT:
A. The Borrowers, the Banks, the Issuing Bank, the
Administrative Agent and the Agent have entered into that certain Revolving
Credit Agreement dated as of May 11, 1993, as previously amended pursuant to
that certain First Amendment to Revolving Credit Agreement dated as of
September 30, 1993, that certain Second Amendment to Revolving Credit Agreement
dated as of May 4, 1994 and that certain Third Amendment dated as of July 29,
1994 (as so amended, the "Credit Agreement"; capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement as amended by this Amendment), pursuant to which, among other things,
the Banks and the Issuing Bank have agreed to make certain loans, issue certain
letters of credit and make certain other financial accommodations to the
Borrowers upon the terms and conditions set forth therein.
B. Subject to the terms and conditions set forth below,
the Borrowers, the Banks, the Issuing Bank, the Administrative Agent and the
Agent have, among other things, agreed to amend the Credit Agreement as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT. Subject
to the satisfaction of the conditions precedent set forth
<PAGE> 2
in SECTION 4 below, the Credit Agreement shall be amended as follows:
1.01. SECTION 1.01 of the Credit Agreement is amended by
adding the following definition to be inserted in such Section in the
appropriate place by alphabetical order:
"ACCOUNTS RECEIVABLE RESERVE" means the charge taken
by the Borrowers in either the fiscal quarter ending December
31, 1994 or the fiscal quarter ending March 31, 1995, not to
exceed $25,000,000, in connection with certain accounts
receivable or other amounts due from clients of the Borrowers,
primarily related to certain litigation between the Borrowers
and CITGO Petroleum Corporation.
1.02. SECTION 1.01 of the Credit Agreement is amended by
amending and restating the following definitions:
"EBITDA" means, for any period, on a Consolidated
basis for the Borrowers and their Subsidiaries, gross revenues
MINUS direct subcontract costs MINUS costs of services MINUS
selling, general and administration expenses PLUS depreciation
expense and amortization expense for such period (in each case
to the extent such items were included in selling, general and
administration expenses and other costs of services), PLUS, in
the case of any period which includes the fiscal quarter in
which the Accounts Receivable Reserve was established, the
amount of the Accounts Receivable Reserve.
"FACILITY B TERMINATION DATE" means September 30,
1995.
"NET INCOME" means, with respect to any fiscal period
of the Borrowers and their Consolidated Subsidiaries, the
Consolidated net income of the Borrowers and their
Consolidated Subsidiaries after provision for income taxes for
such fiscal period, as determined in accordance with generally
accepted accounting principles and reported on the
Consolidated financial statements of the Borrowers and their
Subsidiaries for such fiscal period, less any gain arising
from (and plus any loss arising from) extraordinary items or
any other non-recurring transaction, as determined in
accordance with generally accepted accounting principles;
PLUS, in the case of any period which includes the fiscal
quarter in which the Accounts Receivable Reserve was
established, the amount of the Accounts Receivable Reserve.
-2-
<PAGE> 3
"NET WORTH" means as at any date of determination, an
amount equal to (i) total assets of the Borrowers and their
Subsidiaries (on a Consolidated basis) as at such date, MINUS
(ii) total liabilities of the Borrowers and their Subsidiaries
(on a Consolidated basis) as at such date; PROVIDED, HOWEVER,
that the Accounts Receivable Reserve shall not be reflected in
the calculation of Net Worth for the purposes of this
Agreement.
"TOTAL B COMMITMENT" means (a) from January 18, 1995
through the Facility B Termination Date, $35,000,000, and (b)
from and after the Facility B Termination Date, $0.
1.03. SECTION 1.01 of the Credit Agreement is amended further
to delete "$10,000,000" in clause (c) of the definition of "Permitted
Other Indebtedness" therein, and to substitute therefor "$15,000,000".
1.04. SECTION 5.02(D) of the Credit Agreement is amended by
deleting "$8,000,000" in clause (ii) thereof and substituting therefor
"$10,000,000".
1.05. SECTION 5.02(O) of the Credit Agreement is amended by
amending and restating the table set forth therein as
follows:
<TABLE>
<CAPTION>
Minimum EBITDA
to
"Fiscal Quarter Ending Interest Expense Ratio
--------------------- ----------------------
<S> <C>
December 31, 1994 3.00 to 1.0
March 31, 1995 3.00 to 1.0
June 30, 1995 3.00 to 1.0
September 30, 1995 and
on the last day of
each fiscal quarter
ending thereafter 3.25 to 1.0"
</TABLE>
1.06. SECTION 5.02(Q) of the Credit Agreement is amended by
amending and restating the table set forth therein as follows:
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Maximum Funded Debt
"Fiscal Quarter Ending to EBITDA Ratio
--------------------- --------------------
<S> <C>
December 31, 1994 5.00 to 1.0
March 31, 1995 5.20 to 1.0
June 30, 1995 5.20 to 1.0
September 30, 1995 and
on the last day of
each fiscal quarter
ending thereafter 4.00 to 1.0"
</TABLE>
SECTION 2. MERGERS. (a) The Banks and the Issuing Bank
acknowledge that Analytical has merged with and into Remediation (the
"Analytical Merger"), and they hereby (i) consent to the Analytical Merger and
(ii) waive the application of SECTION 5.02(B) of the Credit Agreement to the
Analytical Merger.
(b) The Banks and the Issuing Bank acknowledge that Rust
Environmental Inc. proposes to merge with and into Remediation or another
wholly-owned subsidiary of OHM (the "Rust Merger") pursuant to the terms of
that certain Agreement and Plan of Reorganization dated December 5, 1994 (the
"Reorganization Agreement") among OHM, Rust Remedial Services Inc., Enclean
Environmental Services Group, Inc., Rust Environmental Inc. and Rust
International Inc. The Banks and the Issuing Bank waive the Event of Default
which would otherwise occur under SECTION 6.01(N) of the Credit Agreement upon
the consummation of the Rust Merger, but do not by such waiver waive any other
Event of Default which might occur or exist as a result of the Rust Merger.
SECTION 3. AMENDMENT FEE. The Borrowers jointly and
severally agree to pay to the Administrative Agent on the date hereof for the
account of each Bank an amendment fee equal to 0.125% of each such Bank's
Commitment.
SECTION 4. CONDITIONS PRECEDENT. This Amendment shall become
effective on the first Business Day (the "Amendment Effective Date") upon which
all of the following conditions shall be satisfied:
(i) the representations and warranties contained in the
Credit Agreement are true and correct as though made on such date;
(ii) no Default or Event of Default has occurred and is
outstanding as of such date, unless the same shall be waived or cured
hereby;
-4-
<PAGE> 5
(iii) the Agent shall have received, on or before such date,
thirteen original counterparts of this Amendment, executed by each of
the Borrowers, each of the Banks, the Issuing Bank and the
Administrative Agent;
(iv) the Borrowers shall have paid the fees provided for in
Section 3 of this Amendment; and
---------
(v) the Agent shall have received a certificate of the
Secretary or an Assistant Secretary of each Borrower dated the
Amendment Effective Date certifying (a) the corporate authority of
each Borrower to enter into this Amendment, (b) the names and true
signatures of the officers of such Borrower authorized to execute this
Amendment on behalf of such Borrower, and (c) the by-laws and
articles/certificate of incorporation of such Borrower.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER;
REAFFIRMATION OF COVENANTS. Each of the Borrowers hereby represents and
warrants that this Amendment has been duly authorized by all necessary
corporate action on the part of such Borrower and constitutes a legal, valid
and binding obligation of such Borrower, enforceable against it in accordance
with its terms.
Each of the Borrowers hereby reaffirms all representations,
warranties and covenants made by it in the Credit Agreement, as amended hereby,
except to the extent any of such representations or warranties expressly speak
as of a prior date, and hereby agrees that, subject to the terms hereof, all
such representations, warranties and covenants shall be deemed to have been
re-made as of the effective date of this Amendment.
SECTION 6. EFFECT ON THE CREDIT AGREEMENT.
6.1 Upon the effectiveness of this Amendment, each reference
in the Credit Agreement and in each of the other Transaction Documents to "this
Agreement," "hereunder," "hereof," "herein," or words of like import shall mean
and be a reference to the Credit Agreement as amended hereby, and each
reference to the Credit Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Credit Agreement
shall mean and be a reference to the Credit Agreement as amended hereby.
6.2 Except as specifically set forth herein, the Credit
Agreement, each of the other Transaction Documents and all other documents,
amendments, instruments and agreements executed and/or delivered in connection
therewith shall remain in full force and effect and are hereby ratified and
confirmed.
-5-
<PAGE> 6
6.3 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of any of
the Banks, the Issuing Bank or the Co-Agents under the Credit Agreement or any
other document, instrument or agreement executed in connection therewith, nor
constitute a waiver of any provision contained therein, except as specifically
set forth herein.
SECTION 7. COST, EXPENSES, FEES. The Borrowers each hereby
jointly and severally agrees to pay, on demand, all costs, fees and expenses
(including, without limitation, attorneys' fees, court costs, filing charges
and taxes) incurred by, or required to be paid by the Agent in connection with
the preparation, negotiation, execution, delivery and administration of this
Amendment and all other instruments, documents and agreements executed and/or
delivered pursuant to or in connection herewith.
SECTION 8. EXECUTION IN COUNTERPARTS. This Amendment may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
-6-
<PAGE> 7
SECTION 10. SECTION TITLES. Section titles in this Amendment
are included herein for convenience of reference only and shall not affect in
any way the interpretation of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized
as of the day and year first written above.
BORROWERS:
OHM CORPORATION
Attest: By /s/ Pamela K. M. Beall
----------------------
/s/ Randall M. Walters Title: Treasurer
----------------------
Secretary
OHM REMEDIATION SERVICES CORP.
By /s/ Pamela K. M. Beall
----------------------
Title: Treasurer
BANKS:
CITICORP USA, INC., Individually,
as Agent, as Co-Agent and as
Arranger
By /s/ Edward Letteiri
-------------------
Vice President
BANK OF AMERICA ILLINOIS,
Individually and as
Administrative Agent, Co-Agent
and Issuing Bank
By /s/ Timothy J. Pepowski
-----------------------
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Ann E. Howard
------------------
Vice President & Managing Director
-7-
<PAGE> 8
NATIONAL WESTMINSTER BANK USA
By /s/ Kathleen Weiss
--------------------------
Title: Vice President
BHF BANK
By /s/ John Sykes
--------------------------
Title: AVP
BANK ONE, LIMA, N.A.
By /s/ Mark B. Malone
--------------------------
Title: Vice President
COMERICA BANK
By /s/ Dan M. Roman
--------------------------
Title: Vice President
NBD BANK, N.A.
By /s/ Daniel J. Pienta
--------------------------
Title: 2nd Vice President
NATIONAL CITY BANK
By /s/ Terri L. Cable
------------------
Title: Vice President
-8-
<PAGE> 1
EXHIBIT 10(p)
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of January 19, 1995, to the Master Loan and
Security Agreement dated as of May 11, 1993 (herein, together with all
exhibits, amendments, supplements and schedules thereto, called the "Loan
Agreement") between BOT FINANCIAL CORPORATION, a Delaware corporation (herein
called "Lender"), having its principal place of business at 125 Summer Street,
Boston, MA 02110, and OHM REMEDIATION SERVICES CORP., an Ohio corporation
(herein called "Debtor"), having its principal place of business at 16406 US
Route 224 East, Findlay, Ohio 45840. Capitalized terms used herein without
definition shall have the meaning set forth in the Loan Agreement.
WHEREAS, Lender and Debtor have heretofore entered into the Loan
Agreement in connection with the financing of certain High Performance Mobile
Treatment System; and
WHEREAS, the Loan Agreement requires that the Kirk family continue to
own at least 20% (on a fully-diluted basis) of the aggregate voting stock and
other voting securities of the Guarantor; and
WHEREAS, the parties desire to amend the terms and conditions of the
Loan Agreement relating to the ownership of the Guarantor by the Kirk family.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lender and Debtor hereby agree as follows:
1. LOAN AGREEMENT. Section 6(i)(b) of the Loan Agreement is
hereby stricken in its entirety.
2. REPRESENTATIONS. Debtor hereby certify to Lender that
(a) the representations and warranties of the Debtor contained in the Loan
Agreeement are true and correct in all material respects with the same effect
as if made on and as of the date hereof; and (b) no Event of Default is
existence on the date hereof, nor shall any Event of Default occur as a result
of the amendment contemplated hereby.
3. EFFECTIVE DATE. This Amendment No. 1 shall be effective
immediately before the opening of business on January 19, 1995.
4. MISCELLANEOUS. Except as may be expressly provided herein,
the Loan Agreement shall remain unaltered, shall continue to be, and shall
remain, in full force and effect in accordance with their respective terms and
shall be ratified and confirmed in all respects. This Amendment may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
1
<PAGE> 2
IN WITNESS WHEREOF, the Lender and the Debtor have each caused this
Amendment No. 1 to be executed by their respective authorized officers as of
the date first above written.
BOT FINANCIAL CORPORATION (Lender)
By: \S\Gary L. Christensen
-----------------------
Title: Senior Vice President
OHM REMEDIATION SERVICES CORP. (Debtor)
By: \s\Pamela K.M. Beall
-----------------------
Title:Treasurer
2
<PAGE> 1
EXHIBIT 10(r)
PROMISSORY NOTE
$1,425,000.00 December 28, 1994
FOR VALUE RECEIVED, OHM REMEDIATION SERVICES CORP., ("Debtor") an Ohio
corporation, with its principal place of business at 16406 US Route 224 East,
Findlay, Ohio 45840 hereby promises to pay to the order of BOT FINANCIAL
CORPORATION ("Lender") at its office at 125 Summer Street, Boston, MA 02110
(or as Lender may otherwise designate) the principal sum of One Million Four
Hundred Twenty Five Thousand and 00/100 Dollars ($1,425,000.00), together with
interest on the principal balance from time to time remaining unpaid at the
rate of Nine and one-quarter percent (9.25%) per annum (computed on the basis
of a 360-day year of twelve 30-day months). Principal and interest shall be
payable in forty-eight (48) consecutive equal monthly installments of Thirty
Five Thousand Three Hundred Fifty Eight and 53/100 Dollars ($35,358.53) each
(except that the last installment shall be in an amount sufficient to discharge
in full the accrued interest on, and the entire unpaid principal of, this
Note), with each installment to be due and payable on the first day of each
month, in advance, commencing on January 1, 1995. Each such installment shall
be applied first to the payment of any unpaid interest on the principal sum and
then to the payment of principal. After the maturity of any installment of
principal, such installment shall bear interest at a rate per annum equal to
the higher of two percent (2%) over the Prime Rate or Eleven and one-quarter
percent (11.25%) (but not to exceed the highest rate permitted by applicable
law) until such installment is paid in full. Any payment received after the
maturity of any installment of principal shall be applied first to the payment
of interest on said principal.
If this Note is dated other than the first day of a calendar month,
Debtor shall, on the first day of the next succeeding month, pay to Lender an
installment of interest in an amount equal to the sum obtained by multiplying
$366.15 by the number of days then remaining in the calendar month in which
this Note is dated, including the date hereof.
This Note is a Permanent Note referred to in the Master Loan and
Security Agreement dated as of May 11, 1993 between Debtor and Lender (herein,
as the same may from time to time be amended, supplemented or otherwise
modified, called the "Agreement"), is secured by, and entitled to the benefits
of, the Agreement and a Supplemental Security Agreement of even date herewith
between Debtor and Lender, and is subject to prepayment only as provided in the
Agreement.
1
<PAGE> 2
Debtor hereby waives presentment, demand for payment, notice of
dishonor, and any and all other notices or demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note and
hereby consents to any extensions of time, renewals, releases of any party to
this Note, waivers or modifications that may be granted or consented to by the
holder of this Note.
Upon the occurrence of any one or more of the Events of Default
specified in the Agreement, the amounts then remaining unpaid on this Note
together with any interest accrued may be declared to be (or, with respect to
certain Events of Default, automatically shall become) immediately due and
payable as provided therein.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges, and all
costs and expenses of such action, including attorneys' fees. Debtor hereby
waives the right to interpose any setoff, counterclaim or defense of any nature
or description whatsoever to the obligations evidenced by this Note.
Debtor agrees that its liability hereunder is absolute and
unconditional without regard to the liability of any other party and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right. This Note is not
assignable by Debtor, but may be assigned by Lender or any other holder hereof.
All capitalized terms used in this Note which are not otherwise defined
in this Note shall have the respective meanings given to such term in the
Agreement.
This Note shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Massachusetts.
OHM REMEDIATION SERVICES CORP.
By: \s\Pamela K.M. Beall
--------------------
Title:Treasurer
---------
<PAGE> 1
<TABLE>
EXHIBIT 11
Statement Re Computation of Per Share Earnings
OHM CORPORATION
COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Per Share Data)
<CAPTION>
Years Ended December 31,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
PRIMARY:
Average Shares Outstanding 15,582 12,261 12,051
Net effect of dilutive stock options and warrants--
based on the treasury stock method - 245 -
--------- --------- ---------
Total 15,582 12,506 12,051
======= ====== =======
Net Income (loss) ($7,616) $4,407 ($4,269)
======= ====== =======
Per Share Amount $ (0.49) $ 0.35 $ (0.35)
======== ======= ========
FULLY DILUTED:
Average Shares Outstanding 15,582 12,261 12,051
Net effect of dilutive stock options and warrants--
based on the treasury stock method - (1) 426 (2) - (1)
---------- --------- ---------
Total 15,582 12,687 12,051
====== ====== ======
Net Income (loss) ($7,616) $4,407 ($4,269)
======= ====== =======
Per Share Amount $ (0.49) $ 0.35 $ (0.35)
======== ======= ========
<FN>
(1) Fully dilutive effect of stock options and warrants on per share amounts for the year ended December 31, 1994 and 1992 were
antidilutive. Accordingly, fully diluted per share amounts were not presented in the Company's consolidated statements of
operations.
(2) Fully dilutive effect of stock options and warrants on per share amounts for the year ended December 31, 1993 has not
been presented in the statement of operations since any reduction of less than 3% in the aggregate need not be considered
as dilution.
</TABLE>
<PAGE> 1
EXHIBIT 13
OHM CORPORATION
FIVE YEAR SUMMARY OF RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Gross Revenues....................... $323,381 $242,401 $221,370 $189,137 $189,624
Less direct subcontract costs... 103,114 66,661 59,461 51,467 48,573
-------- -------- -------- -------- --------
Net Revenues......................... 220,267 175,740 161,909 137,670 141,051
Cost of services................... 193,045 135,680 126,246 112,073 104,195
-------- -------- -------- -------- --------
Gross Profit......................... 27,222 40,060 35,663 25,597 36,856
Selling, general and administrative
expenses........................ 32,281 27,110 30,845 25,204 22,065
-------- -------- -------- -------- --------
Operating Income (Loss).............. (5,059) 12,950 4,818 393 14,791
-------- -------- -------- -------- --------
Other (Income) Expenses:
Investment income.................. (28) (28) (31) (30) (109)
Interest expense................... 9,177 7,748 7,106 7,423 8,115
Gain on sale of common stock of
subsidiary...................... -- -- -- -- (9,225)
Equity in net (earnings) loss of
affiliates' continuing
operations...................... (1,032) (1,600) 1,121 2,443 (2,741)
Miscellaneous expense.............. 898 341 966 789 2,654
-------- -------- -------- -------- --------
9,015 6,461 9,162 10,625 (1,306)
-------- -------- -------- -------- --------
Income (Loss) From Continuing
Operations Before Income Taxes
(Benefit).......................... (14,074) 6,489 (4,344) (10,232) 16,097
Income taxes (benefit).......... (6,458) 2,082 (1,230) (3,369) 1,703
-------- -------- -------- -------- --------
Income (Loss) From Continuing
Operations......................... (7,616) 4,407 (3,114) (6,863) 14,394
Discontinued Operations, Net of
Income Taxes (Benefit):
Income (Loss) from operations...... -- -- 122 -- (2,271)
Provision for loss on
disposition..................... -- -- (420) -- (6,195)
-------- -------- -------- -------- --------
Income (Loss) Before Cumulative
Effect of Accounting Change........ (7,616) 4,407 (3,412) (6,863) 5,928
Cumulative effect of accounting
change........................ -- -- (857) -- --
-------- -------- -------- -------- --------
Net Income (Loss).................... $ (7,616) $ 4,407 $ (4,269) $ (6,863) $ 5,928
========= ========= ========= ========= =========
Net Income (Loss) Per Share:
Continuing operations.............. $ (0.49) $ 0.35 $ (0.26) $ (0.57) $ 1.20
Discontinued operations:
From operations................. -- -- 0.01 -- (0.19)
From disposition................ -- -- (0.03) -- (0.52)
-------- -------- -------- -------- --------
Income (Loss) per share before effect
of cumulative accounting change.... (0.49) 0.35 (0.28) (0.57) 0.49
Cumulative effect of accounting
change........................ -- -- (0.07) -- --
-------- -------- -------- -------- --------
Net Income (Loss) Per Share.......... $ (0.49) $ 0.35 $ (0.35) $ (0.57) $ 0.49
========= ========= ========= ========= =========
Weighted Average Number Of Common And
Common Equivalent Shares
Outstanding........................ 15,582 12,506 12,051 12,042 12,015
========= ========= ========= ========= =========
</TABLE>
17
<PAGE> 2
NOTES:
(1) The results of operations for each of the four years ended December 31, 1993
have been presented to reflect the accounting for discontinued operations of
certain business units. See "Note 2 to the Consolidated Financial
Statements."
(2) The cumulative effect of accounting change of $857,000 or $0.07 per share
for the year ended December 31, 1992 is for adoption of Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes." See "Note
9 to the Consolidated Financial Statements."
(3) Special and nonrecurring charges include: (i) for the year ended December
31, 1994, the Company recorded a special charge of $15,000,000 (net of
income tax benefit of $10,000,000) to establish a reserve for accounts
receivable, primarily where such accounts are in litigation; (ii) for the
year ended December 31, 1992, special charges of $2,550,000 (net of income
tax benefit of $1,600,000) recorded by the Company, and $2,162,000 recorded
by NSC, both of which relate to the restructuring of the Company and NSC's
asbestos abatement operations in anticipation of NSC's acquisition of the
asbestos abatement division of Brand (completed on May 4, 1993), and which
include provisions for legal and insurance reserves, and for certain other
matters; (iii) for the year ended December 31, 1991, charges of $3,950,000
for equity losses in Concord Resources Group, Inc. ("Concord"); and (iv) for
the year ended December 31, 1990, a nonrecurring gain of $8,275,000 (net of
income tax of $950,000) which resulted from an initial public offering of
NSC's common stock, nonrecurring charges of $1,426,000 (net of income tax
benefit of $950,000) related to a pension agreement and certain
nonproductive assets, and a charge of $630,000 (net of income tax benefit of
$420,000) for equity losses in Concord.
FIVE YEAR SUMMARY OF FINANCIAL POSITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Working capital...................... $116,464 $ 69,985 $ 56,148 $ 43,919 $ 27,547
Total assets......................... 272,546 215,357 185,415 168,986 171,425
Long-term debt....................... 127,279 71,113 101,085 81,500 71,500
Shareholders' equity................. 76,920 82,743 43,833 48,253 54,743
</TABLE>
NOTE:
The Company has not declared any cash dividends on its common stock and is
restricted by bank covenants from the payment of cash dividends in the future.
See "Note 7 to the Consolidated Financial Statements."
18
<PAGE> 3
OHM CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
OHM Corporation ("the Company") provides a broad range of environmental and
hazardous waste remediation services to its clients located primarily in the
United States. The timing of the Company's revenues is dependent on its backlog,
contract awards and the performance requirements of each contract. The Company's
revenues are also affected by the timing of its clients' planned remediation
activities which generally increase during the third and fourth quarters.
Because of this change in demand, the Company's quarterly revenues can
fluctuate, and revenues for the first and second quarters of each year have
historically been lower than for the third and fourth quarters, although there
can be no assurance that this will occur in future years. Accordingly, quarterly
or other interim results should not be considered indicative of results to be
expected for any quarter or full fiscal year.
On December 5, 1994, the Company entered into a definitive agreement to
acquire substantially all of the assets and certain liabilities of the hazardous
and nuclear waste remediation services business units of Rust International Inc.
("Rust") in exchange for 10,368,000 shares of common stock of the Company, or
approximately 40% of the outstanding shares of the Company's common stock upon
completion of the transaction. In addition, Rust's parent company, WMX
Technologies, Inc. ("WMX"), will provide the Company with a credit enhancement
in the form of guarantees issued from time to time upon request of the Company,
of up to $75,000,000 of the Company's indebtedness outstanding during the five
years following the closing of the transaction. Such enhancement should enable
the Company to secure lower cost financing to fund its growth. The transaction
is subject to the approval of the shareholders of the Company. The required
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired in
January 1995. The anticipated closing date of such transaction is May 1995. The
Company is currently evaluating whether it will incur any significant costs for
restructuring its organization and operations upon consummation of the Merger.
Such costs would be recorded as a restructuring charge and may include the costs
of closing certain of the Company's offices and other non-recurring expenses
related to such restructuring.
During the fourth quarter of 1994, certain developments within and external
to the Company caused management to revaluate certain accounts receivable
recorded during 1994. As a result, the Company recorded a $25,000,000 pre-tax
charge, $15,000,000 after-tax or $0.96 per share, to establish a reserve for
accounts receivable, primarily where such accounts are in litigation, including
projects performed by the Company for Citgo Petroleum Company ("Citgo") and
Occidental Chemical Corporation ("Occidental"). The Company is in litigation
with Citgo over contract specifications in which the Company has asserted claims
for payment in excess of $35,000,000. Citgo has recently named Occidental Oil
and Gas Corporation and OXY USA, Inc. as third party defendants in such
litigation because of their prior involvement with the Citgo site and its
contract specifications. The Company has also become involved in litigation with
Occidental relating to a separate project it performed in 1994 for Occidental in
New York. While the Company believes its legal position in the litigation
remains strong, the establishment of the reserve provides the Company with
flexibility to pursue resolution of such matters. See "Note 15 to the
Consolidated Financial Statements."
19
<PAGE> 4
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage
relationship that items in the statement of operations bear to net revenues:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross revenues....................................................... 147 % 138 % 137 %
Less direct subcontract costs........................................ 47 38 37
---- ---- ----
Net revenues......................................................... 100 100 100
Cost of services..................................................... 88 77 78
---- ---- ----
Gross profit......................................................... 12 23 22
Selling, general and administrative expenses......................... 15 16 19
---- ---- ----
Operating income (loss).............................................. (3 ) 7 3
Net interest expense................................................. 4 4 4
Equity in net earnings (loss) of affiliates' continuing operations... 1 1 (1 )
Miscellaneous, net................................................... -- -- 1
---- ---- ----
Income (loss) from continuing operations before income taxes
(benefit).......................................................... (6 ) 4 (3 )
---- ---- ----
Income taxes (benefit)............................................... (3 ) 1 (1 )
---- ---- ----
Income (loss) from continuing operations............................. (3 )% 3 % (2 )%
==== ==== ====
</TABLE>
Twelve Months Ended December 31, 1994 vs. Twelve Months Ended December 31, 1993
Gross Revenues. The following table sets forth the Company's gross
revenues by client type for the twelve months ended December 31, 1994 and 1993
(in thousands, except percentages):
<TABLE>
<CAPTION>
1994 1993
---------------- ----------------
<S> <C> <C> <C> <C>
Federal, State, and Local Government........... $208,610 65% $113,346 47%
Industrial..................................... 114,771 35 129,055 53
-------- --- -------- ---
Total Gross Revenues......................... $323,381 100% $242,401 100%
======== === ======== ===
</TABLE>
Total gross revenues increased by $80,980,000 to $323,381,000 for the year
ended December 31, 1994 from $242,401,000 for 1993. Gross revenues reflect all
amounts to be billed by the Company to its clients for work performed and
include subcontract costs that are generally passed through to clients at a
minimal amount of mark-up. The Company's management believes that net revenues
are a better measurement of the Company's ability to generate profit from
activities performed by the Company and, accordingly, management's discussion
and analysis of revenues focuses on net revenues.
Direct Subcontract Costs. Direct subcontract costs for the year ended
December 31, 1994 increased $36,453,000 or 55% to $103,114,000 from $66,661,000
for 1993. Increases or decreases in direct subcontract costs generally result
from varying requirements for the use of subcontractors in the projects
performed by the Company during the year when compared to the projects performed
in the prior year. The increase in direct subcontract costs is primarily due to
the increase in gross revenues in 1994 over 1993. Direct subcontract costs as a
percentage of gross revenues was 32% in 1994 and 28% in 1993.
20
<PAGE> 5
Net Revenues. The following table sets forth the Company's consolidated
net revenues by client type for the years ended December 31, 1994 and 1993 (in
thousands, except percentages):
<TABLE>
<CAPTION>
1994 1993
---------------- ----------------
<S> <C> <C> <C> <C>
Federal, State, and Local Government........... $141,990 64% $ 82,996 47%
Industrial..................................... 78,277 36 92,744 53
-------- --- -------- ---
Total Net Revenues........................... $220,267 100% $175,740 100%
======== === ======== ===
</TABLE>
Total net revenues for the year ended December 31, 1994 increased 25% to
$220,267,000 from $175,740,000 in 1993. Such improvement resulted primarily from
increased net revenues from the Company's contracts with the United States Army
Corps of Engineers ("USACE"), the U.S. Navy, the Environmental Protection Agency
("EPA") and certain state and local governments.
The Company experienced a $14,467,000 or 16% decrease in net revenues from
industrial clients for the year ended December 31, 1994 as compared to 1993.
Industrial revenues were negatively impacted by the previously discussed
$25,000,000 accounts receivable reserve which was primarily related to
industrial clients. The Company's industrial sector revenues remain sluggish,
which the Company believes is due to anticipated changes in the Superfund law
which may result from its pending reauthorization and current economic
conditions in certain industry and geographic sectors. Industrial sector net
revenues as a percentage of total net revenues decreased to 36% for 1994 from
53% in 1993.
During 1994, the Company experienced a $58,994,000 or 71% increase in net
revenues from government agencies. This improvement resulted primarily from
increased activity under the Company's term contracts with USACE, the United
States Navy, the EPA, and certain state and local governments. The Company also
experienced a significant increase in net revenues from its USACE thermal
incineration project in Holbrook, Massachusetts. In addition, the Company
continues to experience a significant amount of proposal activity with the
various Department of Defense agencies.
During 1994, the Company's government revenues as a percent of total
revenues increased to 64% from 47% in 1993. The Company believes that this shift
in revenue mix toward the government sector will continue for the foreseeable
future in light of the Company's significant term contracts with the Department
of Defense, combined with continued increased spending by the federal government
for environmental remediation as well as other factors discussed above.
COST OF SERVICES AND GROSS PROFIT. Cost of services for the year ended
December 31, 1994 increased 42% to $193,045,000 from $135,680,000 in 1993. As a
percentage of net revenues, cost of services increased to 88% in 1994 from 77%
in 1993. The increase in cost of services as a percentage of net revenues was
primarily due to the aforementioned charge for accounts receivable. Gross profit
decreased 32% to $27,222,000 in 1994 from $40,060,000 in 1993. Gross profit
decreased primarily as a result of the recording of the accounts receivable
reserve and other factors discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SGA") expenses for the year ended December 31, 1994 increased
19% to $32,281,000 from $27,110,000 in 1993. The increase in SGA expense was due
primarily to the increase in gross revenues and the expansion of the Company's
Northeast and Western operations as a result of the award of certain significant
term contracts from the Department of Defense. SGA expense as a percent of net
revenues was 15% for both 1994 and 1993, and would have declined to 13% of net
revenues excluding the accounts receivable reserve discussed above.
OPERATING INCOME (LOSS). Operating income (loss) for 1994 decreased
$18,009,000 to $(5,059,000) from $12,950,000 in 1993, due primarily to the
recording of the accounts receivable reserve and the factors discussed above.
OTHER (INCOME) EXPENSES. Other (income) expenses, excluding the Company's
equity in net earnings of affiliate, increased $1,986,000 to $10,047,000 for
1994 compared to $8,061,000 in 1993. Such increase was primarily due to a
$1,429,000 increase in interest expense. Such increase was due to additional
borrowings as a result of the increased working capital requirements, including
accounts receivable, of certain of the
21
<PAGE> 6
Company's large remediation projects and its government contracts. In addition,
the Company experienced an increase in the interest rates charged under its
revolving credit facility. Miscellaneous expense increased $557,000 to $898,000
for 1994 compared to $341,000 in 1993 and was primarily due to losses incurred
on the disposal of certain of the Company's equipment and offices.
EQUITY IN NET EARNINGS (LOSS) OF AFFILIATES. The Company's equity interest
in NSC's net earnings from continuing operations decreased $568,000 to
$1,032,000 in 1994 from $1,600,000 in 1993. NSC'S
financial results for 1994 were negatively impacted by significant losses from
its New York City operations, which were closed in early 1994. The asbestos
abatement industry continues to experience competitive pressures in the
marketplace which have negatively impacted the gross margin on NSC's projects.
INCOME (LOSS) FROM CONTINUING OPERATIONS. The loss from continuing
operations for the year ended December 31, 1994 was $(7,616,000) or $(0.49) per
share compared to income of $4,407,000 or $0.35 per share in 1993. Excluding the
charge to establish the accounts receivable reserve discussed above, income from
continuing operations for the year ended December 31, 1994 would have been
$7,384,000 or $0.47 per share.
Twelve Months Ended December 31, 1993 vs. Twelve Months Ended December 31, 1992
GROSS REVENUES. The following table sets forth the Company's gross revenue
by client type for the twelve months ended December 31, 1993 and 1992 (in
thousands, except percentages):
<TABLE>
<CAPTION>
1993 1992
---------------- ----------------
<S> <C> <C> <C> <C>
Federal, State, and Local Government........... $113,346 47% $ 64,798 29%
Industrial..................................... 129,055 53 156,572 71
-------- --- -------- ---
Total Gross Revenues......................... $242,401 100% $221,370 100%
======== === ======== ===
</TABLE>
Total gross revenues increased by $21,031,000 to $242,401,000 for the year
ended December 31, 1993 from $221,370,000 for 1992. Gross revenues reflect all
amounts to be billed by the Company to its clients for work performed and
include subcontract costs that are generally passed through to clients at a
minimal amount of mark-up. The Company's management believes that net revenues
are a better measurement of the Company's ability to generate profit from
activities performed by the Company and, accordingly, management's discussion
and analysis of revenues focuses on net revenues.
DIRECT SUBCONTRACT COSTS. Direct subcontract costs for the year ended
December 31, 1993 increased $7,200,000 or 12% to $66,661,000 from $59,461,000
for 1992. Increases or decreases in direct subcontract costs generally result
from varying requirements for the use of subcontractors in the projects
performed by the Company during the year when compared to the projects performed
in the prior year. The increase in direct subcontract costs is primarily due to
the increase in gross revenues in 1993 over 1992. Direct subcontract costs as a
percentage of gross revenues was 28% in 1993 and 27% in 1992.
NET REVENUES. The following table sets forth the Company's consolidated
net revenues by client type for the years ended December 31, 1993 and 1992 (in
thousands, except percentages):
<TABLE>
<CAPTION>
1993 1992
---------------- ----------------
<S> <C> <C> <C> <C>
Federal, State, and Local Government........... $ 82,996 47% $ 47,415 29%
Industrial..................................... 92,744 53 114,494 71
-------- --- -------- ---
Total Net Revenues........................... $175,740 100% $161,909 100%
======== === ======== ===
</TABLE>
Total net revenues for the year ended December 31, 1993 increased 9% to
$175,740,000 from $161,909,000 in 1992. The Company experienced a $21,750,000 or
19% decrease in net revenues from industrial clients for the year ended December
31, 1993 when compared to 1992. Industrial sector net revenues as a percentage
of total net revenues decreased to 53% for 1993 from 71% in 1992.
During 1993, the Company also experienced a decrease in net revenues from
the Emergency Response Cleanup Services ("ERCS") program with the EPA when
compared to 1992. Such decline is primarily due to
22
<PAGE> 7
the expiration of certain of the Company's ERCS contracts in late 1991 and 1992
and delays in the procurement process relating to certain new ERCS contracts
which the Company was pursuing. In 1993, the Company was awarded three of the
EPA's outstanding ERCS procurements that it was pursuing and experienced a
significant increase in activity under the ERCS contracts during the fourth
quarter of 1993 when compared to the same period in 1992. The decrease in net
revenues from the Company's ERCS contracts were offset by an increase in net
revenues from government agencies other than the EPA. This improve-
ment resulted primarily from contracts with the USACE, the United States Navy,
and certain state and local governments. Net revenues from USACE increased
primarily due to the Company's thermal incineration project in Holbrook,
Massachusetts and its 32% owned joint venture at the Bayou Bonfouca site in
Slidell, Louisiana.
COST OF SERVICES AND GROSS PROFIT. Cost of services for the year ended
December 31, 1993 increased 8% to $135,680,000 from $126,246,000 in 1992. As a
percentage of net revenues, cost of services decreased to 77% in 1993 from 78%
in 1992. The decrease in cost of services as a percentage of net revenues was
primarily due to cost control measures, including reduction of certain personnel
costs and the realignment of certain regional administrative functions,
initiated during the fourth quarter of 1992 and the first quarter of 1993. Gross
profit increased 12% to $40,060,000 in 1993 from $35,663,000 in 1992. Gross
profit increased primarily as a result of the increase in net revenues and other
factors discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SGA expenses for the year
ended December 31, 1993 decreased 12% to $27,110,000 from $30,845,000 in 1992.
The decrease is primarily due to $3,500,000 of special and nonrecurring charges
recorded in 1992 for the restructuring of the Company in anticipation of NSC's
acquisition of the asbestos abatement division of Brand, provisions for
insurance and legal reserves, and certain other matters.
OPERATING INCOME. Operating income for 1993 increased $8,132,000 to
$12,950,000 from $4,818,000 in 1992, due primarily to the factors discussed
above.
OTHER (INCOME) EXPENSES. Other (income) expenses, excluding the Company's
equity in net earnings of affiliate and special charges, increased $670,000 to
$8,061,000 for 1993 compared to $7,391,000 in 1992. Such increase was primarily
due to a $642,000 increase in interest expense. Interest expense was negatively
impacted during 1993 by capital expenditure requirements on certain of the
Company's projects and increased working capital requirements (primarily
accounts receivable) resulting from the increase in revenues from government
agencies which resulted in increased borrowings by the Company.
Other (income) expenses for 1992 include a special charge of $650,000 or
$0.03 per share related to the write down of the Company's investment in NSC
resulting from the issuance of NSC common stock in connection with its
acquisition of the asbestos abatement division of Brand.
EQUITY IN NET EARNINGS (LOSS) OF AFFILIATES. The Company's equity interest
in NSC's net earnings from continuing operations, excluding special charges
recorded by NSC, increased $559,000 to $1,600,000 in 1993 from $1,041,000 in
1992. On May 4, 1993, NSC completed the acquisition of all of the assets and
certain liabilities of the asbestos abatement division of Brand, in exchange for
4,010,000 shares of NSC's common stock and NSC's industrial maintenance
business. The result of such acquisition reduced the Company's ownership and
significantly increased the size of NSC's business and operations.
Equity in NSC's net earnings for the year ended December 31, 1992 includes
special charges related to the restructuring of NSC's acquisition of the
asbestos abatement division of Brand. The Company's equity interest in such
special charges was $2,162,000 or $0.18 per share.
INCOME (LOSS) FROM CONTINUING OPERATIONS. Income (loss) from continuing
operations for the year ended December 31, 1993 was $4,407,000 or $0.35 per
share compared to losses of $(3,114,000) or $(0.26) per share in 1992. Income
from continuing operations for the year ended December 31, 1992, excluding the
nonrecurring and special charges discussed above, was $1,598,000 or $0.13 per
share.
23
<PAGE> 8
CONTRACT BACKLOG
The following table lists at the dates indicated (i) the Company's backlog,
defined as the unearned portion of the Company's existing contracts and unfilled
orders, and (ii) the Company's term contracts, defined as the potential value of
government term contracts (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1994 1993 1992
---------- -------- --------
<S> <C> <C> <C>
Backlog......................................... $ 255,000 $201,000 $164,000
Term contracts.................................. 1,498,000 652,000 207,000
---------- -------- --------
Total contract backlog........................ $1,753,000 $853,000 $371,000
========= ======== ========
</TABLE>
BACKLOG. In accordance with industry practice, substantially all of the
Company's contracts in backlog may be terminated at the convenience of the
client. In addition, the amount of the Company's backlog is subject to changes
in the scope of services to be provided under any given contract. The Company
has not historically experienced any material contract terminations and
generally experiences favorable changes in contract scope. The Company estimates
that approximately 65% of the backlog at December 31, 1994 will be realized
within the next year.
TERM CONTRACTS. The significant increase in the potential value of term
contracts since 1993 has resulted from the award of two $250,000,000 five-year
term contracts with the U.S. Navy and a $45,000,000 five-year term contract with
the Air Force. In addition, the Company was awarded three five-year term
contracts aggregating $210,000,000 from the U.S. Department of the Air Force
Center for Environmental Excellence and a ten year Total Environmental
Restoration Contract with the Tulsa District of USACE with an aggregate value of
$216,000,000. Term contracts are typically performed under delivery orders,
issued by the contracting government entity, for a large number of small- to
medium-sized remediation projects throughout the geographic area covered by the
contract. The Company's government term contracts generally may be cancelled,
delayed or modified at the sole option of the government, and typically are
subject to annual funding limitations and public sector budget constraints.
Accordingly, such government contracts represent the potential dollar value that
may be expended under such contracts, but there is no assurance that such
amounts, if any, will be actually spent on any projects or of the timing
thereof.
LIQUIDITY AND CAPITAL RESOURCES
The Company is a party to a $135,000,000 Revolving Credit Facility (as
amended on January 18, 1995) to provide letters of credit and cash borrowings
which has a three year term and is scheduled to expire on May 11, 1996. Under
the terms of the agreement, cash borrowings may not exceed $95,000,000 and bear
interest at either the prime rate plus a percentage ranging from .75% to 1.875%
or, at the Company's option, the Eurodollar market rate plus a percentage
ranging from 1.75% to 2.875%. The percentage over the prime rate or the
Eurodollar market rate is based on the aggregate amount borrowed under the
facility as well as the Company's financial performance as measured by an
interest coverage ratio and a total funded debt ratio. The agreement provides
the participating banks a security interest in the Company's equipment,
inventories, accounts receivable, general intangibles and in the Company's
investment in the common stock of NSC as well as the Company's other
subsidiaries. The agreement also imposes, among other covenants, a minimum
tangible net worth covenant and a restriction on all of the Company's retained
earnings which precludes the declaration and payment of cash dividends. The
amounts outstanding for cash borrowings under the Revolving Credit Facility at
December 31, 1994 and 1993 were $57,700,000 and $7,000,000, respectively, and
aggregate letters of credit outstanding at December 31, 1994 and 1993 were
$34,771,000 and $40,327,000, respectively.
Capital expenditures for the years ended December 31, 1994, 1993, and 1992
were $13,354,000, $15,783,000, and $8,859,000. The Company's capital
expenditures are primarily related to the purchase of heavy equipment and the
fabrication of custom equipment by the Company for the execution of remediation
projects. The Company expects capital expenditures for 1995 to approximate
$15,000,000 dependent upon the type and size of future remediation projects
awarded to the Company.
24
<PAGE> 9
During 1994, the Company derived 65% of its gross revenues from government
agencies compared to 47% for 1993, a trend which the Company expects to
continue. Revenues from government agencies historically have required greater
working capital, the major component of which is accounts receivable, than
revenues from industrial sector clients. During 1994, the Company completed a
large remediation project for Citgo, now in litigation, which resulted in a
large investment by the Company in accounts receivable from Citgo. In addition,
the Company is bidding on a number of large, long-term contract opportunities
which, if awarded to the Company, would also increase working capital needs and
capital expenditures. As a result of these factors, the Company believes it will
be required to supplement its cash flows from continuing operations with
additional external sources to finance its short and long-term capital
expenditure and working capital needs.
The Company believes it will be able to finance its increased working
capital needs and capital expenditures, in the short-term, through a combination
of cash flows from continuing operations, borrowings under its Revolving Credit
Facility and proceeds from permitted asset sales. In addition, the terms of the
agreement for the Company's pending acquisition of Rust's hazardous and nuclear
waste remediation business units provide that Rust's parent company, WMX will
provide the Company with a credit enhancement, in the form of guarantees, issued
from time to time upon request of the Company, of up to $75,000,000 of the
Company's indebtedness outstanding during the five years following the closing
of the transaction. Such guarantee should expand the Company's borrowing
capacity and lower its cost of capital after the completion of the acquisition.
The Company's identified long-term capital needs consist of payments upon
the maturity of the Company's Revolving Credit Facility in 1996 and sinking fund
payments commencing in 1996 as well as payments upon maturity of its Convertible
Debentures in 2006. The Company expects that it will be able to refinance this
indebtedness as necessary. The Company is currently actively negotiating a new
credit facility with a group of banks which it expects to become effective
concurrent with the consummation of the acquisition of Rust's hazardous and
nuclear waste remediation business units.
INFLATION
Historically, inflation has not been a significant factor to the Company or
to the cost of its operations.
RECENTLY ENACTED PRONOUNCEMENTS
The Company has recorded a valuation allowance for its deferred tax assets
to the extent that the Company believes such deferred tax assets may not be
realized. With respect to deferred tax assets for which a valuation allowance
has not been established, the Company believes it will realize the benefit of
these assets through the reversal of taxable temporary differences and future
income. The Company believes that future taxable income of approximately
$12,000,000 necessary to realize the deferred tax asset is reasonably assured
because of its substantial backlog and term contracts from which the Company has
historically realized sufficient margin to produce consolidated net income.
Exclusive of non-recurring special charges and the accounts receivable reserve
recorded in 1994, such deferred tax asset would have been realized during the
three years ended December 31, 1994. The principal uncertainty of realization of
the deferred tax asset is the Company's ability to convert its backlog to
revenues and margin. See "Contract Backlog" and "Environmental Matters and
Government Contracting" in other sections of Management's Discussion and
Analysis of Financial Condition and Results of Operations. The Company intends
to evaluate the realizability of its deferred tax assets quarterly by assessing
the need for an additional valuation allowance.
ENVIRONMENTAL MATTERS AND GOVERNMENT CONTRACTING
Although the Company believes that it generally benefits from increased
environmental regulations, and from enforcement of those regulations, increased
regulation and enforcement also create significant risks for the Company. The
assessment, remediation, analysis, handling and management of hazardous
substances necessarily involve significant risks, including the possibility of
damages or injuries caused by the escape of hazardous materials into the
environment, and the possibility of fines, penalties or other regulatory action.
These risks include potentially large civil and criminal liabilities for
violations of environmental laws and
25
<PAGE> 10
regulations, and liabilities to customers and to third parties for damages
arising from performing services for clients, which could have a material
adverse effect on the Company.
The Company does not believe there are currently any material environmental
liabilities which should be recorded or disclosed in its financial statements.
The Company anticipates that its compliance with various laws and regulations
relating to the protection of the environment will not have a material effect on
its capital expenditures, future earnings or competitive position.
Because of its dependence on government contracts, the Company also faces
the risks associated with such contracting, which could include civil and
criminal fines and penalties. As a result of its government contracting
business, the Company has been, is, and may in the future be subject to audits
and investigations by government agencies. The fines and penalties which could
result from noncompliance with the Company's government contracts or appropriate
standards and regulations, or the Company's suspension or debarment from future
government contracting, could have a material adverse effect on the Company's
business. See "Note 15 to the Consolidated Financial Statements."
26
<PAGE> 11
OHM CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1993
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................ $ 4,930 $ 5,039
Accounts receivable.............................................. 86,663 64,384
Costs and estimated earnings on contracts in process in excess of
billings...................................................... 65,437 45,744
Materials and supply inventory, at cost.......................... 10,099 6,883
Prepaid expenses and other assets................................ 7,252 5,548
Deferred income taxes............................................ 6,744 --
Refundable income taxes.......................................... 205 91
--------- ---------
181,330 127,689
--------- ---------
Property and Equipment, net........................................ 57,240 53,258
--------- ---------
Other Noncurrent Assets:
Deferred debt issuance and financing costs....................... 2,381 2,851
Investments in and advances to affiliated company................ 23,352 22,922
Deferred income taxes............................................ 336 617
Other assets..................................................... 7,907 8,020
--------- ---------
33,976 34,410
--------- ---------
Total Assets............................................. $ 272,546 $ 215,357
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................. $ 47,936 $ 42,130
Billings on contracts in process in excess of costs and estimated
earnings...................................................... 40 709
Accrued compensation and related taxes........................... 3,874 3,159
Federal, state and local taxes................................... 102 297
Deferred income taxes............................................ - 1,006
Other accrued liabilities........................................ 9,652 8,857
Current portion of noncurrent liabilities........................ 3,262 1,546
--------- ---------
64,866 57,704
--------- ---------
Noncurrent Liabilities:
Long-term debt................................................... 127,279 71,113
Capital leases................................................... 92 65
Pension agreement................................................ 906 917
--------- ---------
128,277 72,095
--------- ---------
Deferred Income Taxes.............................................. 2,483 2,815
--------- ---------
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $10.00 par value, 2,000,000 shares authorized;
none issued and outstanding................................... -- --
Common stock, $.10 par value, 50,000,000 shares authorized;
Shares issued: 1994 - 15,848,089; 1993 - 15,763,089........... 1,584 1,576
Additional paid-in capital....................................... 63,294 62,774
Retained earnings................................................ 14,598 22,222
--------- ---------
79,476 86,572
Less treasury stock, 1994 - 211,624; 1993 - 317,049, at cost....... (2,556) (3,829)
--------- ---------
76,920 82,743
--------- ---------
Total Liabilities and Shareholders' Equity............... $ 272,546 $ 215,357
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE> 12
OHM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Gross Revenues........................................ $ 323,381 $ 242,401 $ 221,370
Less direct subcontract costs....................... 103,114 66,661 59,461
--------- --------- ---------
Net Revenues.......................................... 220,267 175,740 161,909
Cost of services.................................... 193,045 135,680 126,246
--------- --------- ---------
Gross Profit.......................................... 27,222 40,060 35,663
Selling, general and administrative expenses........ 32,281 27,110 30,845
--------- --------- ---------
Operating Income (Loss)............................... (5,059) 12,950 4,818
--------- --------- ---------
Other (Income) Expenses:
Investment income................................... (28) (28) (31)
Interest expense.................................... 9,177 7,748 7,106
Equity in net (earnings) loss of affiliates'
continuing operations............................ (1,032) (1,600) 1,121
Miscellaneous expenses.............................. 898 341 966
--------- --------- ---------
9,015 6,461 9,162
--------- --------- ---------
Income (Loss) From Continuing Operations
Before Income Taxes (Benefit)....................... (14,074) 6,489 (4,344)
Income taxes (benefit)........................... (6,458) 2,082 (1,230)
--------- --------- ---------
Income (Loss) From Continuing Operations.............. (7,616) 4,407 (3,114)
Discontinued Operations of Investee, Net of Income
Taxes (Benefit):
Income from operations.............................. -- -- 122
Provision for loss on disposition................... -- -- (420)
--------- --------- ---------
Income (Loss) Before Cumulative Effect of
Accounting Change................................... (7,616) 4,407 (3,412)
Cumulative effect of accounting change.............. -- -- (857)
--------- --------- ---------
Net Income (Loss)..................................... $ (7,616) $ 4,407 $ (4,269)
========= ========= =========
Net Income (Loss) Per Share:
Continuing operations............................... $ (0.49) $ 0.35 $ (0.26)
Discontinued operations:
From operations.................................. -- -- 0.01
From disposition................................. -- -- (0.03)
--------- --------- ---------
(0.49) 0.35 (0.28)
Cumulative effect of accounting change.............. -- -- (0.07)
--------- --------- ---------
$ (0.49) $ 0.35 $ (0.35)
========= ========= =========
Weighted average number of common and common
equivalent shares outstanding....................... 15,582 12,506 12,051
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE> 13
OHM CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------- ADDITIONAL CUMULATIVE
NUMBER OF PAID-IN RETAINED TRANSLATION TREASURY
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENTS STOCK
----------- ------ ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991..... 12,398,089 $1,239 $ 28,948 $22,134 $129 $(4,197)
Deferred translation
adjustments................... (151)
Net loss........................ (4,269 )
----------- ------ ---------- -------- ---------- -----------
BALANCE AT DECEMBER 31, 1992..... 12,398,089 1,239 28,948 17,865 (22) (4,197)
Proceeds from sale of 3,365,000
shares of common stock, less
issuance expenses of
$705,000...................... 3,365,000 337 33,921
Stock options exercised, 30,480
reissued from treasury........ (95) 368
Deferred translation
adjustments................... (28)
Net income...................... 4,407
----------- ------ ---------- -------- ---------- -----------
BALANCE AT DECEMBER 31, 1993..... 15,763,089 1,576 62,774 22,272 (50) (3,829)
Proceeds from sale of 85,000
shares of common stock, less
issuance expenses of
$86,000....................... 85,000 8 789
Stock options exercised, 105,425
reissued from treasury........ (269) 1,273
Deferred translation
adjustments................... (8)
Net loss........................ (7,616 )
----------- ------ ---------- -------- ---------- -----------
BALANCE AT DECEMBER 31, 1994..... 15,848,089 $1,584 $ 63,294 $14,656 $(58) $(2,556)
=========== ====== ========== ======== ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE> 14
OHM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
-------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).............................................. $ (7,616) $ 4,407 $ (4,269)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization................................ 7,395 7,073 7,186
Amortization of other noncurrent assets...................... 2,418 1,698 1,279
Deferred income taxes........................................ (7,801) 1,456 (2,228)
Loss on sale of property and equipment....................... 764 55 218
Equity in net (earnings) loss of affiliates' continuing
operations, net of dividends received...................... (430) 3,212 1,121
Provision for loss on disposition of discontinued operations,
including deferred income tax benefit...................... -- -- 420
Cumulative effect of accounting change....................... -- -- 857
Deferred translation adjustments and other................... 90 255 486
Changes in current assets and liabilities:
Accounts receivable............................................ (22,279) (17,379) 541
Costs and estimated earnings on contracts in process in excess
of billings.................................................. (19,693) (24,742) (4,312)
Materials and supply inventory................................. (3,216) (426) (1,193)
Prepaid expenses and other assets.............................. (1,704) (85) 1,230
Refundable income taxes and other.............................. (114) 1,079 219
Accounts payable............................................... 5,263 20,549 1,973
Billings on contracts in process in excess of costs and
estimated earnings........................................... (669) (439) 130
Accrued compensation and related taxes......................... 715 227 (792)
Federal, state and local income taxes.......................... (195) (410) 662
Other accrued liabilities...................................... 795 (5,432) 1,715
-------- --------- ---------
Net cash flows provided by (used in) operating
activities.............................................. (46,277) (8,902) 5,243
-------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment............................ (13,354) (15,783) (8,859)
Proceeds from sale of property and equipment................... 1,847 126 2,458
Increase in other noncurrent assets............................ (1,835) (6,163) (2,450)
Proceeds from (advances to) affiliated companies, net.......... -- 14,850 (14,109)
Investment in discontinued operations, net..................... -- (146) (1,430)
Proceeds (adjustments) from sale of discontinued operations.... -- 14,613 (405)
-------- --------- ---------
Net cash provided by (used in) investing activities........ (13,342) 7,497 (24,795)
-------- --------- ---------
Cash flows from financing activities:
Increase in long-term debt..................................... 8,900 5,663 --
Payments on long-term debt and capital leases.................. (1,782) (212) (96)
Proceeds from borrowing under revolving credit agreement....... 147,200 99,500 109,000
Payments on revolving credit agreement......................... (96,500) (135,500) (90,000)
Payments on pension agreement.................................. (109) (105) (111)
Proceeds from public offering of common stock.................. 797 34,258 --
Reissuance of treasury stock................................... 1,004 273 --
-------- --------- ---------
Net cash provided by financing activities.................. 59,510 3,877 18,793
-------- --------- ---------
Net increase (decrease) in cash and cash equivalents....... (109) 2,472 (759)
Cash and cash equivalents at beginning of year................... 5,039 2,567 3,326
-------- --------- ---------
Cash and cash equivalents at end of year......................... $ 4,930 $ 5,039 $ 2,567
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
30
<PAGE> 15
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The accompanying
consolidated financial statements include the accounts of OHM Corporation (the
"Company") and its subsidiaries. The Company also includes its proportionate
share of joint ventures, in which the Company's ownership is less than 50%,
which were entered into for the purpose of performing large remediation
projects. The Company's investment in 40% of the outstanding common stock of NSC
Corporation ("NSC") is carried on the equity basis. All material intercompany
transactions and balances among the consolidated group have been eliminated in
consolidation.
REVENUES AND COST RECOGNITION The Company primarily derives its revenues
from providing environmental services under cost plus fee, time and materials,
fixed price and unit price contracts. The Company records revenues and related
income from its fixed and unit price contracts in process using the
percentage-of-completion method of accounting. Provisions for estimated losses
on uncompleted contracts are made in the period in which such losses are
determined. Changes in project performance, project conditions, and estimated
profitability may result in revisions to costs and income and are recognized in
the period in which the revisions are determined. An amount equal to contract
costs attributable to claims is included in revenues when realization is
probable and the amount can be reliably estimated. Revenues from time and
materials and cost plus fee type contracts are recorded based on performance and
efforts expended. Contract costs include all direct labor, material, per diem,
subcontract and other direct and indirect project costs related to contract
performance. Revenues derived from non-contract activities are recorded as the
services are performed.
DIRECT SUBCONTRACT COSTS The Company incurs a substantial amount of direct
subcontract costs which are passed through to its clients. These costs result
from the use of subcontractors on projects principally for transportation and
disposal of hazardous wastes, and in some cases for analytical and remediation
services, where contracts or other business conditions require the use of
subcontractors. The Company believes that net revenues, excluding direct
subcontract costs, more accurately reflect the amounts earned for activities
performed by the Company. Accordingly, the Company reports direct subcontract
costs as a reduction of gross revenues to arrive at net revenues.
PROPERTY AND EQUIPMENT Property and equipment are carried at cost and
include expenditures which substantially increase the useful lives of the
assets. Maintenance, repairs, and minor renewals are expensed as incurred.
Depreciation and amortization, including amortization of assets under capital
leases, are provided on a specific item basis net of salvage value over the
estimated useful lives of the respective assets, using primarily the
straight-line method.
CAPITALIZED INTEREST Interest expense incurred on capital expenditures for
assets constructed by the Company is capitalized and is included in the cost of
such assets. Total interest expense incurred by the Company was $10,127,000,
$8,447,000, and $7,191,000 for the years ended December 31, 1994, 1993 and 1992,
respectively. Total interest capitalized was $950,000, $699,000, and $85,000 for
the years ended December 31, 1994, 1993 and 1992, respectively.
OTHER ASSETS Other assets include goodwill and other intangible assets of
$370,000 and $460,000 at December 31, 1994 and 1993, respectively, resulting
primarily from acquisitions accounted for using the purchase method of
accounting. Goodwill is amortized using the straight-line method over forty
years. Other intangible assets relating to acquired businesses consist
principally of proprietary processes, and other deferred costs, and are
amortized on a
31
<PAGE> 16
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
straight-line basis over nine to ten years. The accumulated amortization of
intangible assets, including goodwill, relating to acquired businesses was
$919,000 and $828,000 at December 31, 1994 and 1993, respectively.
GAIN RECOGNITION ON SALE OF SUBSIDIARIES' STOCK It is the Company's policy
to record gains and losses from sale or issuance of previously unissued stock by
its subsidiaries. The Company recorded losses of $185,000 and $650,000 for the
issuance of stock by NSC for the years ended December 31, 1993 and 1992,
respectively.
INCOME TAXES The Company accounts for income taxes under the liability
method pursuant to Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under the liability method, deferred tax assets
and liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse.
STATEMENT OF CASH FLOWS The Company considers all short-term deposits and
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents. Cash paid for income taxes for the years ended
December 31, 1994, 1993 and 1992 was $550,000, $381,000 and $141,000,
respectively. Cash paid for interest was $9,171,000, $7,940,000 and $7,720,000
for each of the years ended December 31, 1994, 1993 and 1992, respectively.
With respect to non-cash investing and financing activities, the Company
acquired $91,000, $2,019,000 and $702,000 of fixed assets under financial
obligations for the years ended December 31, 1994, 1993 and 1992, respectively.
NET INCOME (LOSS) PER SHARE Net income (loss) per share amounts are based on
the weighted average common and common equivalent shares outstanding during the
respective periods. Shares of common stock issuable upon conversion of the 8%
Convertible Subordinated Debentures due 2006 are not considered to be common
stock equivalents and were antidilutive in each of the years presented;
therefore, they were excluded from the calculation of net income per share.
RECLASSIFICATION Certain amounts presented for the years ended December 31,
1993 and 1992 have been reclassified to conform to the 1994 presentation.
NOTE 2 -- DISCONTINUED OPERATIONS
In 1990, the Company adopted a plan to pursue the divestiture of its three
commercial testing laboratories and its fixed-base hazardous waste treatment
facility. These service areas of the Company's business have been accounted for
as discontinued operations and, accordingly, the accompanying consolidated
statements of operations for the years ended December 31, 1993 and 1992 have
been presented to report such businesses as discontinued operations. The Company
sold its three commercial testing laboratories in 1991. On February 22, 1993,
the Company completed the sale of all of the common stock of the Company's
fixed-base hazardous waste treatment facility for $14,613,000 in cash.
On December 23, 1992, NSC entered into a Purchase Agreement among the
Company, NSC and its wholly-owned subsidiary NSC Industrial Services Corp.
("NSCIS"), The Brand Companies, Inc. ("Brand") and Waste Management, Inc. to
acquire the asbestos abatement operations of Brand in exchange for 4,010,000
shares of NSC's common stock and the common stock of NSCIS which in turn owns
all of the common stock of Combined Plant Services Corp. and its affiliate
Gundersen/Viking Corp. (collectively, "CPS") acquired on February 5, 1992 and
Miami Valley Pressure Cleaning, Inc. and its affiliate M.V. Industrial Services,
Inc. (collectively, "MVIS") acquired on April 17, 1992 (see Note 18 -- Brand
32
<PAGE> 17
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Agreement). Accordingly, NSC's environmental cleaning and industrial maintenance
services business was accounted for as discontinued operations. The provision
for loss on disposition recorded by NSC at December 31, 1992 consisted of
estimated costs associated with the disposal and expected operating losses
through the date of disposition of CPS and MVIS. The Company's equity interest
in such provision for loss on disposition was $420,000.
NOTE 3 -- ACCOUNTS RECEIVABLE AND COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN
PROCESS
Accounts receivable are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Accounts billed and due currently............................. $ 49,560 $42,693
Unbilled receivables.......................................... 56,334 17,391
Retained...................................................... 6,832 7,076
-------- -------
112,726 67,160
Allowance for uncollectible accounts.......................... (26,063) (2,776)
-------- -------
$ 86,663 $64,384
======== =======
</TABLE>
The consolidated balance sheets include the following amounts:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1993
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Costs incurred on contracts in process..................... $ 203,742 $ 129,767
Estimated earnings......................................... 42,032 26,410
--------- ---------
245,774 156,177
Less billings to date...................................... (180,377) (111,142)
--------- ---------
$ 65,397 $ 45,035
========= =========
Costs and estimated earnings on contracts in process in
excess of billings....................................... $ 65,437 $ 45,744
Billings on contracts in process in excess of costs and
estimated earnings....................................... (40) (709)
--------- ---------
$ 65,397 $ 45,035
========= =========
</TABLE>
During the fourth quarter of 1994, the Company recorded a $25,000,000
reserve for accounts receivable, primarily where such accounts are in litigation
(see Note 15 -- Litigation and Contingencies).
Unbilled receivables and costs and estimated earnings on contracts in
process typically represent amounts earned under the Company's contracts but not
yet billable to clients according to contract terms, which usually consider
passage of time, achievement of certain project milestones or completion of the
project, and amounts equal to contract costs attributable to claims included in
revenues. In addition, unbilled receivables and costs and estimated earnings on
contracts in process include amounts relating to contracts with federal
government agencies which require services performed by the Company's
subcontractors to be paid prior to billing. The Company believes that its
accounts receivable at December 31, 1994 will be collected within one year.
33
<PAGE> 18
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The Company provides a broad range of environmental and hazardous waste
remediation services to industrial, federal government agencies, and state and
local government agencies located primarily in the United States and Canada. The
Company's industrial, federal government, and state and local government clients
constituted 34%, 56%, and 10%, respectively, of total accounts receivable and
costs and estimated earnings on contracts in process at December 31, 1994.
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Land.......................................................... $ 257 $ 257
Buildings and improvements.................................... 17,179 17,075
Machinery and equipment....................................... 74,270 62,413
Construction in progress...................................... 4,190 12,473
-------- -------
95,896 92,218
Less accumulated depreciation and amortization................ (38,656) (38,960)
-------- -------
$ 57,240 $53,258
======== =======
</TABLE>
NOTE 5 -- INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANY
On May 4, 1993, NSC, then a 70% owned subsidiary, acquired all the assets
and certain liabilities of the asbestos abatement division of Brand in exchange
for 4,010,000 shares of NSC's common stock and the common stock of NSCIS, NSC's
industrial maintenance subsidiary (see Note 18 -- Brand Agreement). As a result
of this transaction the Company's ownership interest in NSC was reduced to 40%.
The combined summarized financial information for NSC is set forth below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current assets................................................. $40,648 $44,876
Noncurrent assets.............................................. 47,639 50,293
Total assets................................................... 88,287 95,169
Current liabilities............................................ 18,505 22,608
Noncurrent liabilities......................................... 11,720 15,569
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Gross revenues..................................... $132,218 $110,254 $62,220
Gross profit....................................... 21,716 20,901 7,525
Operating income (loss)............................ 5,101 6,356 (2,420)
Income (loss) from continuing operations........... 2,566 3,373 (1,604)
Net income (loss).................................. 2,566 3,373 (3,030)
Company's interest in net income (loss)............ 1,032 1,600 (2,119)
</TABLE>
34
<PAGE> 19
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The Company's accumulated equity in the undistributed earnings of NSC
included in consolidated retained earnings was $6,169,000 at December 31, 1994.
The Company received cash dividends from NSC aggregating $602,000 and $4,812,000
for the years ended December 31, 1994 and 1993, respectively.
As a result of the Brand Agreement, NSC obtained a senior credit facility
and paid all of its indebtedness to the Company, which totaled $12,958,000 on
May 4, 1993, and replaced $16,697,000 of outstanding letters of credit issued on
behalf of NSC under the Company's revolving credit agreement.
NOTE 6 -- OTHER ACCRUED LIABILITIES
Other accrued liabilities are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1993
------ ------
(IN THOUSANDS)
<S> <C> <C>
Accrued interest................................................. $1,701 $1,439
Accrued insurance................................................ 2,041 2,057
Reserves for self-insurance...................................... 3,227 2,146
Other............................................................ 2,683 3,215
------ ------
$9,652 $8,857
====== ======
</TABLE>
NOTE 7 -- LONG-TERM DEBT
The long-term debt of the Company is summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- -------
(IN THOUSANDS)
<S> <C> <C>
8% Convertible Subordinated Debentures due October 1, 2006.... $ 57,500 $57,500
Revolving credit facility..................................... 57,700 7,000
Notes payable to financial institutions....................... 14,732 7,361
Notes payable................................................. 560 725
-------- -------
130,492 72,586
Less current portion.......................................... (3,213) (1,473)
-------- -------
$127,279 $71,113
======== =======
</TABLE>
The convertible subordinated debentures are convertible into 41.67 shares
of common stock per $1,000 unit with interest payable semiannually on April 1
and October 1, and are redeemable at the option of the Company. The convertible
subordinated debentures require annual mandatory sinking fund payments of 7.5%
of the principal amount which commence on October 1, 1996, and continue through
October 1, 2005. The fair value of the convertible subordinated debentures is
based on a quoted market price and approximates $45,138,000 at December 31,
1994. The amortization of debt issuance costs related to the convertible
subordinated debentures was $108,000 for each of the years ended December 31,
1994, 1993, and 1992.
On May 11, 1993, the Company entered into a $135,000,000 revolving credit
agreement, which was subsequently amended on January 18, 1995, with a group of
banks to provide letters of credit and cash borrowings. The agreement has a
three year term and is scheduled to expire on May 11, 1996. Under the terms of
the agreement, cash borrowings may not exceed $95,000,000 and bear interest at
either the prime rate plus a percentage ranging from .75% to 1.875% or, at the
Company's option, the Eurodollar market rate plus a
35
<PAGE> 20
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
percentage ranging from 1.75% to 2.875%. The percentage over the prime rate or
the Eurodollar market rate is based on the aggregate amount borrowed under the
facility as well as the Company's financial performance as measured by an
interest coverage ratio and a total funded debt ratio. The agreement provides
the participating banks a security interest in the Company's equipment,
inventories, accounts receivable, general intangibles and in the Company's
investment in the common stock of NSC as well as the Company's other
subsidiaries. The agreement also imposes, among other covenants, a minimum
tangible net worth covenant and a restriction on all of the Company's retained
earnings which precludes the declaration and payment of cash dividends.
The Company had $34,771,000 and $40,327,000 of letters of credit
outstanding under its revolving credit facility at December 31, 1994 and 1993,
respectively.
Notes payable to financial institutions consist of: (i) a $6,057,000 note
payable bearing interest at 7.24% payable in equal monthly installments of
$146,000 with the final payment due in May 1996, (ii) a $1,425,000 note payable
bearing interest at 9.25% payable in equal monthly installments of $35,000 with
the final payment due in May 1996, (iii) a $5,902,000 note payable bearing
interest at 8.58% payable in quarterly installments of $356,000 with the final
payment of $957,000 due in August 1999, and (iv) a $1,348,000 note payable
bearing interest at 8.72% payable in equal monthly installments of $43,000 with
the final payment due in January 1998. Each of the above agreements provides the
respective financial institution with a security interest in the equipment
financed with the proceeds from such notes.
Notes payable include: (i) a $457,000 interest bearing note at a rate of
8.75% payable in monthly installments of $14,000 with a final payment of
$320,000 due in December 1995, (ii) a $103,000 interest bearing note at a rate
of 9% payable in monthly installments of $4,000 with a final payment of $50,000
due in March 1996. Both notes are secured by certain machinery and equipment of
the Company.
The aggregate maturity of long-term debt for the five years ending December
31 is: 1995, $3,213,000; 1996, $65,658,000; 1997, $7,855,000; 1998, $7,617,000;
1999, $5,899,000; 1999 and thereafter, $40,250,000.
NOTE 8 -- LEASES
Future minimum lease payments under noncancelable operating leases total
$6,183,000, $5,190,000, $4,844,000, $4,233,000, and $2,974,000 for the years
ended December 31, 1995, 1996, 1997, 1998 and 1999, respectively. Lease payments
under noncancelable operating leases subsequent to the year ended December 31,
1999 aggregate $3,406,000.
Rental expense under operating leases totaled $5,906,000, $4,235,000, and
$2,791,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
NOTE 9 -- INCOME TAXES
Effective January 1, 1992, the Company elected to adopt SFAS No. 109. As
permitted by SFAS No. 109, prior year financial statements were not restated to
reflect the change in accounting method. The cumulative effect as of January 1,
1992 of adopting SFAS No. 109 decreased net income by $857,000, of which
$700,000 represents the Company's equity interest in NSC's adoption of SFAS No.
109.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
36
<PAGE> 21
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Significant components of the Company's deferred tax liabilities and assets as
of December 31, 1994 and 1993, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Long-term deferred tax liabilities:
Property and equipment............................................. $ 5,256 $ 7,048
Intangible assets.................................................. 1,768 2,008
Investments........................................................ 2,821 2,695
------- -------
Total long-term deferred tax liabilities........................ 9,845 11,751
Long-term deferred tax assets:
Net operating loss ("NOL") carryforwards........................... 3,156 5,612
Separate return limitation year ("SRLY") NOLs...................... -- 1,493
Research and development tax credits............................... 1,433 --
Other, net......................................................... 3,652 3,464
------- -------
Total long-term deferred tax assets............................. 8,241 10,569
Valuation allowance for deferred tax assets........................ (879) (1,633)
------- -------
Net long-term deferred tax asset................................ 7,362 8,936
------- -------
Net long-term deferred tax liabilities............................... $ 2,483 $ 2,815
======= =======
Long-term deferred tax assets:
Foreign tax NOLs................................................... $ 366 $ 693
Valuation allowance for deferred tax assets........................ (30) (76)
------- -------
Total long-term deferred tax assets............................. $ 336 $ 617
======= =======
Current deferred tax liabilities:
Revenue recognition................................................ $ 2,544 $ 3,244
Prepaid expenses................................................... 1,079 1,056
Tax reserves....................................................... 526 419
------- -------
Total current deferred tax liabilities.......................... 4,149 4,719
Current deferred tax assets:
Bad debt reserves.................................................. 10,049 --
Capital loss carryforwards......................................... -- --
NOL carryforwards.................................................. 1,928 2,892
Other, net......................................................... 155 1,260
------- -------
Total current deferred tax assets............................... 12,132 4,152
Valuation allowance for deferred tax assets.......................... (1,239) (439)
------- -------
Net current deferred tax assets................................. 10,893 3,713
------- -------
Net current deferred tax liabilities................................. $ 1,006
=======
Net current deferred tax assets...................................... $ 6,744
=======
</TABLE>
The net long-term deferred tax assets of $336,000 and $617,000 at December
31, 1994 and 1993, respectively, are attributable to the foreign operations of
the Company and cannot be offset with the net long-term deferred tax liabilities
resulting from the Company's domestic operations.
37
<PAGE> 22
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
For financial reporting purposes, income (loss) from continuing operations
before income taxes (benefit) includes the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
-------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
United States........................................ $(14,074) $6,489 $(4,813)
Foreign.............................................. -- -- 469
-------- ------ -------
$(14,074) $6,489 $(4,344)
======== ====== =======
</TABLE>
The provisions for income taxes (benefit) consist of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1994 1993 1992
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal...................................................... $ 244 $ 199 --
Foreign...................................................... -- -- $ 35
State........................................................ -- 75 --
------- ------ -------
244 274 35
Benefit of loss carryforwards.................................. (5,380) (3,816) --
Deferred:
Federal...................................................... (1,161) 5,189 (1,235)
Foreign...................................................... -- -- 200
State........................................................ (161) 435 (230)
------- ------ -------
(1,322) 5,624 (1,265)
------- ------ -------
$(6,458) $2,082 $(1,230)
======= ====== =======
</TABLE>
The reasons for differences between the provisions for income taxes and the
amount computed by applying the statutory federal income tax rate to income
(loss) from operations before income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate................................................ 34.0% 34.0% 34.0%
Add (deduct):
State income taxes, net of federal benefit.......................... 3.7 3.0 3.4
Research and development tax credits................................ 3.6 -- --
Equity in net earnings of affiliates................................ 2.0 (6.4) (8.8)
Other, net.......................................................... 2.6 1.5 (0.3)
---- ---- ----
45.9% 32.1% 28.3%
==== ==== ====
</TABLE>
38
<PAGE> 23
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Net operating loss, capital loss and tax credit carryforward amounts and
their respective expiration dates for income tax purposes are as follows (in
thousands):
<TABLE>
<CAPTION>
EXPIRATION
AMOUNT DATES
------- ------------------
<S> <C> <C>
Net operating loss............................................. $12,616 1997 through 2007
Foreign tax net operating loss................................. 949 1997 through 1998
State net operating losses in excess of federal................ 15,817 1997 through 2007
Research and development tax credits........................... 1,433 2005 through 2009
Alternative minimum tax credits................................ 1,209 Indefinite
Miscellaneous credits.......................................... 600 1997 through 2005
</TABLE>
The valuation allowance for deferred tax assets is $2,148,000 at December
31, 1994 and 1993. No change in the valuation allowance was recorded in 1994.
NOTE 10 -- RELATED PARTY TRANSACTIONS
The Company has a policy whereby transactions with directors, executive
officers and related parties require the approval of a disinterested majority of
the Board of Directors.
Prior to NSC's acquisition of the asbestos abatement division of Brand in
May 1993, the Company had an intercompany loan and management services
arrangement with NSC. Under the intercompany loan arrangement, the Company would
borrow from NSC its excess cash and advance to NSC funds for working capital
requirements and expansion of NSC's business. The Company charged NSC net
interest expense of $275,000 and $310,000 for the years ended December 31, 1993
and 1992, respectively. In addition, the Company and its subsidiaries furnished
to NSC management services for financial, administrative, legal and certain
other staff functions. The Company charged NSC $149,000 and $281,000 for the
years ended December 31, 1993 and 1992, respectively, for such services. The
Company believes the charges for such services have been made on a reasonable
basis and approximate what it would have cost NSC to obtain such services on its
own. Upon completion of the Brand asbestos abatement division acquisition, such
intercompany loan and management services agreements were terminated.
The Company has been reimbursed by NSC for certain third party charges paid
on NSC's behalf, such as letter of credit fees, insurance and bonding costs and
legal fees. The costs charged to NSC for general liability and other insurance
coverages were $363,000, $93,000 and $475,000 for the years ended December 31,
1994, 1993 and 1992, respectively. In addition, prior to NSC's acquisition of
Brand's asbestos abatement division, NSC employees were eligible to participate
in OHM's group insurance and other employee benefit plans. The costs charged to
NSC for such employee benefits were $242,000 and $540,000 for the years ended
December 31, 1993 and 1992, respectively.
In the normal course of business, NSC has provided the Company with
subcontract services on certain of its projects for asbestos abatement and
industrial maintenance services. The costs for such services were $689,000,
$3,469,000 and $3,961,000 for the years ended December 31, 1994, 1993 and 1992,
respectively.
The Company rents certain buildings and prior to 1993 rented aircraft from
an affiliated partnership. Rental expenses for these facilities and aircraft
totaled $38,000, $33,000 and $134,000 for the years ended December 31, 1994,
1993 and 1992, respectively.
39
<PAGE> 24
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The Company has purchased general contractor services and equipment from a
company which totaled $24,000, $166,000 and $460,000 for the years ended
December 31, 1994, 1993 and 1992, respectively. The principal shareholder of the
company is directly related to certain directors of the Company.
In the normal course of business, the Company has purchased subcontractor
services on certain of its projects from a company which totaled $2,055,000 for
the year ended December 31, 1994. The principal shareholder of the company is
directly related to certain directors of the Company.
NOTE 11 -- AGREEMENT WITH FORMER SHAREHOLDER
During 1985, the Company executed a pension agreement with a former
officer, directly related to certain directors of the Company, for an annual
pension commencing on June 1, 1990, of $96,000, subject to cost of living
adjustments, for the remainder of his life and that of his spouse if she
survives him. The Company made pension payments totaling $109,000, $105,000 and
$111,000 pursuant to this agreement during the years ended December 31, 1994,
1993 and 1992, respectively.
NOTE 12 -- CAPITAL STOCK
The Company has authorized 2,000,000 shares of preferred stock at a $10.00
par value. No shares of preferred stock have been issued at December 31, 1994.
The rights and preferences of the preferred stock will be fixed by the Board of
Directors at the time such shares are issued. The preferred stock, when issued,
will have dividend and liquidation preferences over those of the common
shareholders.
In December 1993, the Company completed a public offering of 3,365,000
shares of common stock at $11.00 per share. Total net proceeds to the Company
from such offering were $34,963,000, less issuance expenses of $705,000, and
were used to reduce the outstanding amounts under the Company's revolving credit
agreement. If the offering had occurred at the beginning of 1993, pro forma
income per share would have been $0.37. This pro forma per share data is
unaudited and not necessarily indicative of the results that would have been
obtained had this event actually occurred at the assumed date. In January 1994,
the Company issued an additional 85,000 shares of common stock at $11.00 per
share which resulted in $883,000 of net proceeds, less issuance expenses of
$86,000, to the Company.
NOTE 13 -- STOCK OPTION PLAN
In 1986, the Company adopted and the shareholders approved the 1986 Stock
Option Plan (the "1986 Plan") which provides for the granting of stock options
to directors, officers and key employees at prices not less than the fair market
value of the Company's common stock on the date of grant. A total of 1,850,000
shares of the Company's common stock had been reserved for issuance upon the
exercise of options granted under the 1986 Plan at December 31, 1993. The total
amount of shares reserved for issuance was subsequently increased to 2,850,000
by vote of the shareholders at the 1994 Annual Meeting. Substantially all
options presently issued under the 1986 Plan are exercisable in cumulative
annual installments ranging up to 20 percent commencing on the date of grant and
expiring ten years thereafter. The number of shares available for grants of
additional options under the 1986 Plan were 752,859 and 137,834 at December 31,
1994 and 1993, respectively.
On August 6, 1992, the Company's Board of Directors approved a stock option
plan for the Board of Directors (the "Directors' Plan"), which was subsequently
approved by the Company's shareholders at the 1993 Annual Meeting. The
Directors' Stock Option Plan provides for the immediate grant to each non-
employee director a stock option for 15,000 shares of the Company's common
stock, less the number of shares held by any such director under the 1986 Stock
Option Plan. Additionally, the Directors' Plan provides for additional grants of
stock options for 5,000 shares of the Company's common stock, at prices not less
than the fair value, to each non-employee director annually. Options granted
under the Directors' Plan may not be
40
<PAGE> 25
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
exercised for a period of six months following the date of grant and terminate
ten years after the date of grant or eighteen months after the holder ceases to
be a member of the Board of Directors, whichever occurs earlier. The total
number of shares available for grants of additional options under the Directors'
Plan at December 31, 1994 and 1993 was 915,000 and 940,000, respectively.
The following summarizes stock option activity in 1994:
<TABLE>
<CAPTION>
NUMBER OF PRICE RANGE
SHARES PER SHARE
--------- ---------------
<S> <C> <C>
1986 PLAN
Outstanding at December 31, 1993................................. 1,485,800 $6.38 to $11.88
Granted........................................................ 477,350 $9.75 to $16.25
Exercised...................................................... (105,425) $7.00 to $11.88
Cancelled...................................................... (92,375) $7.00 to $11.88
--------- ---------------
Outstanding at December 31, 1994................................. 1,765,350 $6.38 to $16.25
--------- ---------------
Exercisable at December 31, 1994................................. 907,725 $6.38 to $16.25
======== =============
DIRECTORS' PLAN
Outstanding at December 31, 1993................................. 60,000 $7.63 to $8.25
Granted........................................................ 25,000 $15.63
Exercised...................................................... -- --
Cancelled...................................................... -- --
--------- ---------------
Outstanding at December 31, 1994................................. 85,000 $7.63 to $15.63
--------- ---------------
Exercisable at December 31, 1994................................. 85,000 $7.63 to $15.63
======== =============
</TABLE>
NOTE 14 -- RETIREMENT AND PROFIT-SHARING PLANS
The Company has a Retirement Savings Plan (the "Plan") which allows each of
its eligible employees to make contributions, up to a certain limit, to the Plan
on a tax-deferred basis under Section 401(k) of the Internal Revenue Code of
1986, as amended. Eligible employees are those who are employed full-time, are
over twenty-one years of age, and have one year of service with the Company. The
Company may, at its discretion, make matching contributions and profit sharing
contributions to the Plan out of its profits for the plan year. The Company made
matching contributions of $1,225,000, $743,000 and $609,000 to the Plan for the
years ended December 31, 1994, 1993 and 1992, respectively.
NOTE 15 -- LITIGATION AND CONTINGENCIES
The Company's financial statements at December 31, 1994 include a claim
receivable aggregating approximately $22,829,000 in direct costs relating to a
major remediation project being performed by the Company for Citgo Petroleum
Corporation ("Citgo") at its Lake Charles, Louisiana refinery. This claim
receivable represents direct costs to date for activities which the Company's
management believes exceeded
41
<PAGE> 26
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
the scope of the existing contract due to deficient project specifications
provided by Citgo as well as other unplanned events controlled by Citgo. In
addition, at December 31, 1994, the Company has recorded in its financial
statements approximately $5,381,000 of accounts receivable that are in dispute
for work performed under the terms of the Company's base contract with Citgo.
During April 1994, the Company submitted to Citgo a request for equitable
adjustment and Citgo responded by filing an action in the U.S. District Court
for the Western District of Louisiana seeking a declaratory judgment that the
Company is not entitled to additional compensation under the contract and
certain other relief. The Company's answer to the declaratory judgment action
was filed in July 1994, together with counterclaims against Citgo for negligent
misrepresentation, breach of contract and quantum meruit seeking damages in
excess of $35,000,000. In August 1994, Citgo amended its complaint seeking
damages under the contract. In December, 1994 Citgo filed a motion to allow it
to file, and in January 1995, Citgo filed, a third party complaint against
Occidental Oil and Gas Corporation and OXY USA, Inc. as third party defendants
in such litigation because of their prior involvement with the Citgo site and
its contract specifications.
The Company has also become involved in litigation with Occidental Chemical
Corporation ("Occidental") relating to a separate project it performed in 1993
and 1994 for Occidental. The Company's financial statements at December 31, 1994
include a claim receivable of $8,114,000 in direct costs relating to this
project. The litigation arises from an October 1993 contract between the Company
and Occidental for work at a contaminated site in North Tonawanda, New York. The
Company's work was substantially delayed and its costs of performance were
substantially increased as a result of conditions at the site which the
Company's management believes were materially different than as represented by
Occidental. The Company believes that Occidental has implicitly acknowledged the
existence of differing conditions at the site through its previous execution and
partial payment of a change order relating to the Company's position. In October
1994, Occidental issued a deductive change order deleting substantially all
remaining work from the Company's contract. On December 30, 1994, while the
Company was in the process of developing a comprehensive claim document,
Occidental filed suit against the Company in the U.S. District Court for the
Western District of New York alleging damages in excess of $50,000, the
jurisdictional minimum. The Company will oppose Occidental's position vigorously
and will assert a counterclaim in excess of its direct costs relating to the
project.
During the fourth quarter of 1994, the Company recorded a $25,000,000
pre-tax charge, $15,000,000 after-tax or $0.96 per share, to establish a reserve
for accounts receivable, primarily where such accounts are in litigation.
Management believes that it has established adequate reserves should the
resolution of such accounts receivable be lower than the amounts recorded and
such resolution should not have a material adverse impact upon the Company's
consolidated results of future operations or financial condition.
The Company was named in April 1994 as one of 33 third party defendants in
a case titled UNITED STATES OF AMERICA V. AMERICAN CYANAMID COMPANY, INC., ET
AL., pending in the United States District Court for the Southern District of
West Virginia. This litigation arises out of claims made against several
potentially responsible parties ("PRPs") by the Environmental Protection Agency
("EPA") for amounts in excess of $24,000,000 for response costs arising out of
releases and threatened releases of hazardous wastes at the Fike Chemical, Inc.
Superfund site (the "Site") in Nitro, West Virginia. The Company was retained as
a response action contractor for the Site under contracts with the United States
Army Corps of Engineers ("USACE") and the EPA. The third party complaint alleges
that the Company was an operator of the Site during the remediation and that the
Company caused releases or threatened releases of hazardous substances at the
Site as a result of its negligent conduct, grossly negligent conduct or
intentional misconduct. The third party complaint seeks damages and contribution
from the Company and the other third party defendants. The Company has submitted
claims for indemnification related to this lawsuit under its contract with the
USACE and the EPA and has notified its contractor's pollution liability
insurance carrier. The Company believes the lawsuit is without merit, intends to
vigorously defend against it and does not believe that it will have a material
adverse effect on the results of future operations and financial condition of
the Company. The Company has
42
<PAGE> 27
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
learned a criminal and civil investigation has been commenced by the government
relating to the Company's billings to the EPA and USACE and for its work at the
Site. The Company believes the investigation followed certain allegations made
by the PRPs in defense of the main cost recovery action. The Company is
cooperating with the investigation.
In addition to the above, the Company is subject to a number of claims and
lawsuits in the ordinary course of its business. In the opinion of management,
the outcome of these actions, which are not clearly determinable at the present
time, are either adequately covered by insurance, or if not insured, will not,
in the aggregate, have a material adverse impact upon the Company's consolidated
financial position or the results of future operations.
The Company is self-insured for the initial $1,000,000 of certain
comprehensive general and automobile liability risks through its wholly-owned
insurance company subsidiary and through deductible programs. The Company is
insured through commercial sources for certain environmental impairment risks as
well
as for certain general and automobile liability umbrella coverages in excess of
primary coverages. The Company provides for losses when identified and
evaluated.
NOTE 16 -- MAJOR CUSTOMERS
Revenues from federal government agencies accounted for 55%, 40%, and 25%
of gross revenues from continuing operations for the years ended December 31,
1994, 1993 and 1992, respectively. Revenues from state and local government
agencies accounted for 10%, 7% and 4% of gross revenues from continuing
operations for the years ended December 31, 1994, 1993 and 1992, respectively.
There were no industrial customers which accounted for more than 10% of gross
revenues for the years ended December 31, 1994, 1993 and 1992.
NOTE 17 -- SPECIAL CHARGES
The Company's loss from continuing operations for the year ended December
31, 1992 included special charges of $2,550,000 (net of $1,600,000 income tax
benefit) or $0.21 per share recorded by the Company and $2,162,000 or $0.18 per
share, which represents the Company's interest in special charges recorded by
NSC. Such special charges primarily relate to the restructuring of the Company
and NSC's asbestos abatement operations in anticipation of the acquisition of
the asbestos abatement division of Brand (see Note 18 -- Brand Agreement),
provisions for legal and insurance reserves, and certain other matters.
As discussed in Note 15, the Company's loss from continuing operations
included a special charge of $15,000,000 (net of $10,000,000 income tax benefit)
or $0.96 per share, to establish a reserve for accounts receivable, primarily
where such accounts are in litigation.
NOTE 18 -- BRAND AGREEMENT
On May 4, 1993, NSC completed the acquisition of all the assets and certain
liabilities of the asbestos abatement division of Brand in exchange for
4,010,000 shares of NSC's common stock and the common stock of NSCIS which in
turn owns all of the common stock of CPS and MVIS (the "Brand Transaction").
Pursuant to the Brand Agreement, Brand guaranteed a minimum gross margin on
certain asbestos abatement contracts to be assumed by NSC and will provide NSC
with access to certain asbestos disposal facilities on favorable terms. As part
of the Brand Transaction, Brand has negotiated settlements of the agreements
which provided for contingent payments to the former shareholders of CPS and
MVIS and NSC has revised the exercise price of the warrant to purchase 150,000
shares of NSC's common stock which was issued in connection with the acquisition
of CPS from $10.00 per share to $6.00 per share. In addition, NSC received
bonding support and a $25,000,000 subordinated working capital facility from an
affiliate of Brand. The
43
<PAGE> 28
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Company and Brand each own 4,010,000 shares or approximately 40% of NSC's
outstanding common stock. See "Note 5 -- Investments in and Advances to
Affiliated Company."
NOTE 19 -- ACQUISITION
On December 6, 1994, the Company entered into a definitive agreement to
acquire substantially all of the assets and certain liabilities of the hazardous
and nuclear waste remediation services business units of Rust International Inc.
("Rust") in exchange for 10,368,000 shares of common stock of the Company, or
approximately 40% of the outstanding shares of the Company's common stock upon
completion of the transaction. In addition, Rust's parent company, WMX
Technologies, Inc., will provide the Company with a credit enhancement in the
form of guarantees issued from time to time upon request of the Company, of up
to $75,000,000 of the Company's indebtedness outstanding during the five years
following the closing of the transaction. The transaction is subject to the
approval of the shareholders of the Company. The required waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act expired during January 1995.
The anticipated closing date of such transaction is May 1995.
NOTE 20 -- QUARTERLY FINANCIAL INFORMATION AND MARKET PRICE INFORMATION
(UNAUDITED)
The following table sets forth the Company's condensed consolidated
statements of operations by quarter for 1994 and 1993.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1994
Gross revenues (1)................................. $75,031 $94,686 $91,308 $ 62,356
Net revenues....................................... 51,811 65,027 69,333 34,096
Gross profit (loss)................................ 10,384 13,691 15,033 (11,886)
Selling, general and administrative expenses....... 7,287 8,316 8,419 8,259
Operating income (loss)............................ 3,097 5,375 6,614 (20,145)
Net income (loss).................................. $ 805 $2,069 $2,615 $(13,105)
======= ======= ======= ========
Net income (loss) per share........................ $ 0.05 $ 0.13 $ 0.16 $ (0.84)
======= ======= ======= ========
Stock price range: (2)
High............................................. 17 1/4 18 1/2 13 1/2 11 3/8
Low.............................................. 11 3/8 10 5/8 11 6 7/8
1993
Gross revenues..................................... $43,840 $58,087 $62,063 $ 78,411
Net revenues....................................... 34,374 41,164 46,773 53,429
Gross profit....................................... 7,398 9,958 11,730 10,974
Selling, general and administrative expenses....... 5,977 6,593 7,351 7,189
Operating income................................... 1,421 3,365 4,379 3,785
Net income......................................... $ 331 $1,227 $1,749 $ 1,100
======= ======= ======= ========
Net income per share............................... $ 0.03 $ 0.10 $ 0.14 $ 0.08
======= ======= ======= ========
Stock price range: (2)
High............................................. 9 3/8 9 12 12 1/8
Low.............................................. 7 1/4 7 1/2 9 10 3/4
</TABLE>
OHM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
---------------
NOTE:
(1) During the fourth quarter of 1994, the Company recorded a $25,000,000
pre-tax charge, $15,000,000 after-tax or $0.96 per share, to establish a
reserve for accounts receivable, primarily where such accounts are in
litigation.
(2) Reflects the high and low closing prices of the Company's common stock on
the New York Stock Exchange as reported by The Wall Street Journal. As of
December 31, 1994, the Company has approximately 869 shareholders of record.
The Company has not declared any cash dividends on its common stock and does
not intend to pay cash dividends in the foreseeable future.
44
<PAGE> 29
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
OHM Corporation
We have audited the accompanying consolidated balance sheets of OHM
Corporation and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
OHM Corporation and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Columbus, Ohio
February 1, 1995
45
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
OHM CORPORATION
SUBSIDIARIES OF THE REGISTRANT
MARCH 15, 1995
<TABLE>
<CAPTION>
STATE OR OTHER
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
------------------ -----------------------------
<S> <C>
OHM Remediation Services Corp. Ohio
OHM Remediation Services of Canada, Ltd. Canada
Environmental Financial Services Corp. Delaware
Capital National Insurance Company Vermont
OHM Environmental Resource Management Corp. Ohio
OHM International, Inc. Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of OHM Corporation and subsidiaries of our report dated February 1, 1995,
included in the 1994 Annual Report to Shareholders of OHM Corporation and
subsidiaries.
Our audits also included the financial schedule of OHM Corporation and
subsidiaries listed in Item 14(a). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8 No. 33-28025 and No. 33-24953) pertaining to the OHM
Corporation Stock Option Plan and OHM Corporation Retirement Savings Plan and in
the related Prospectuses of our report dated February 1, 1995, with respect to
the consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
schedules included in this Annual Report (Form 10-K) of OHM Corporation and
subsidiaries.
ERNST & YOUNG LLP
Columbus, Ohio
March 30, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF OPERATIONS
OF OHM CORPORATION AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 4,930
<SECURITIES> 0
<RECEIVABLES> 178,123
<ALLOWANCES> 26,063
<INVENTORY> 10,099
<CURRENT-ASSETS> 181,330
<PP&E> 95,896
<DEPRECIATION> 38,656
<TOTAL-ASSETS> 272,546
<CURRENT-LIABILITIES> 64,866
<BONDS> 0
<COMMON> 1,584
0
0
<OTHER-SE> 77,892
<TOTAL-LIABILITY-AND-EQUITY> 272,546
<SALES> 0
<TOTAL-REVENUES> 323,381
<CGS> 0
<TOTAL-COSTS> 328,440
<OTHER-EXPENSES> 162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,177
<LOSS-PRETAX> (14,074)
<INCOME-TAX BENEFIT> (6,458)
<LOSS-CONTINUING> (7,616)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-LOSS> (7,616)
<EPS-PRIMARY> (0.49)
<EPS-DILUTED> (0.49)
</TABLE>
<PAGE> 1
Exhibit 99
<TABLE>
NSC CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 8,818 $ 5,775
Accounts receivable, net............................................. 23,188 26,131
Costs and estimated earnings on contracts in process in excess of
billings.......................................................... 5,537 4,489
Inventories.......................................................... 1,735 2,151
Prepaid expenses and other current assets............................ 1,245 2,604
Refundable income taxes.............................................. 125 2,234
Deferred income taxes................................................ -- 1,492
------- -------
40,648 44,876
Property and equipment:
Land................................................................. 998 998
Buildings and improvements........................................... 5,591 5,624
Machinery and equipment.............................................. 12,137 12,006
Construction-in-process.............................................. -- 4
------- -------
18,726 18,632
Less accumulated depreciation........................................ (9,063) (7,396)
------- -------
9,663 11,236
Other noncurrent assets:
Goodwill, net of accumulated amortization of $4,721 and $3,654 in
1994 and 1993, respectively....................................... 37,938 39,005
Other assets......................................................... 38 52
------- -------
37,976 39,057
------- -------
Total Assets......................................................... $88,287 $95,169
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-21
<PAGE> 2
<TABLE>
NSC CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 2,901 $ 4,578
Billings in excess of costs and estimated earnings on contracts in
process........................................................... 4,987 5,458
Accrued compensation and related costs............................... 4,674 2,937
Federal, state and local taxes....................................... 477 183
Other accrued liabilities............................................ 2,263 6,265
Current portion of noncurrent liabilities............................ 3,203 3,187
------- -------
18,505 22,608
Noncurrent liabilities:
Long-term debt....................................................... 7,385 10,588
Deferred income taxes................................................ 4,335 4,981
Commitments and Contingencies -- Note 12
Stockholders' equity:
Preferred stock $.01 par value, 10,000,000 shares authorized, none
issued and outstanding............................................ -- --
Common stock $.01 par value, 20,000,000 shares authorized; 9,971,175
shares issued and outstanding in both 1994 and 1993............... 100 100
Additional paid-in capital........................................... 56,079 56,079
Retained earnings.................................................... 1,883 813
------- -------
58,062 56,992
------- -------
Total Liabilities and Stockholders' Equity........................... $88,287 $95,169
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-22
<PAGE> 3
<TABLE>
NSC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
Gross revenues............................................ $132,218 $110,254 $62,220
Less direct subcontract costs............................. 23,672 23,751 14,987
-------- -------- -------
Net Revenues............................................ 108,546 86,503 47,233
Cost of services.......................................... 86,830 65,602 39,708
-------- -------- -------
Gross Profit............................................ 21,716 20,901 7,525
Selling, general and administrative expenses.............. 15,548 13,687 9,405
Goodwill amortization..................................... 1,067 858 540
-------- -------- -------
Operating Income (Loss)................................. 5,101 6,356 (2,420)
-------- -------- -------
Other:
Interest expense........................................ 804 807 831
Other................................................... (386) (397) (973)
-------- -------- -------
418 410 (142)
-------- -------- -------
Income (Loss) from Continuing Operations Before Income
Taxes (Benefit)...................................... 4,683 5,946 (2,278)
Income taxes (benefit).................................... 2,117 2,573 (674)
-------- -------- -------
Income (Loss) from Continuing Operations................ 2,566 3,373 (1,604)
-------- -------- -------
Discontinued operations, net of income tax effects:
Income from operations.................................. -- -- 174
Provision for loss on disposition....................... -- -- (600)
-------- -------- -------
Income (Loss) Before Cumulative Effect of Accounting
Change............................................... 2,566 3,373 (2,030)
Cumulative effect of accounting change.................. -- -- (1,000)
-------- -------- -------
Net Income (Loss)....................................... $ 2,566 $ 3,373 $(3,030)
======== ======== =======
Net income (loss) per share:
Continuing operations................................... $ 0.26 $ 0.40 $ (0.28)
Discontinued operations:
From operations...................................... -- -- 0.03
From disposition..................................... -- -- (0.10)
Cumulative effect of accounting change.................... -- -- (0.18)
-------- -------- -------
$ 0.26 $ 0.40 $ (0.53)
======== ======== =======
Weighted-average number of common and common-equivalent
shares outstanding...................................... 9,971 8,504 5,735
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-23
<PAGE> 4
<TABLE>
NSC CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL TOTAL
NUMBER OF PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
--------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1992..... 5,735 $ 57 $29,114 $12,435 $ 41,606
Net loss....................... (3,030 ) (3,030)
Contingently issuable common
stock........................ 970 970
--------- -------- --------- -------- ----------
Balance at December 31, 1992... 5,735 57 30,084 9,405 39,546
Net income..................... 3,373 3,373
Cash dividend declared ($1.20
per share)................... (11,965 ) (11,965)
Issuance of common stock for
acquisition.................. 4,082 41 25,373 25,414
Stock options exercised........ 154 2 622 624
--------- -------- --------- -------- ----------
Balance at December 31, 1993... 9,971 100 56,079 813 56,992
Net income..................... 2,566 2,566
Cash dividend declared ($0.15
per share)................... (1,496 ) (1,496)
--------- -------- --------- -------- ----------
Balance at December 31, 1994... 9,971 $ 100 $56,079 $ 1,883 $ 58,062
========= ======== ========= ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-24
<PAGE> 5
<TABLE>
NSC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................... $ 2,566 $ 3,373 $ (3,030)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation....................................... 2,160 2,132 1,643
Goodwill amortization.............................. 1,067 858 540
Deferred income taxes.............................. 1,072 3,457 (1,966)
(Gain)/loss on disposition of property and
equipment....................................... (123) (5) 42
Provision for loss on disposition of discontinued
operations, including deferred income tax
benefit......................................... -- -- 600
Cumulative effect of accounting change............. -- -- 1,000
CHANGES IN ASSETS AND LIABILITIES, NET OF EFFECTS OF
ACQUIRED BUSINESS:
Accounts receivable, net................................ 2,943 15,912 (3,941)
Costs and estimated earnings on contracts in process in
excess of billings................................... (1,048) 188 1,234
Other current assets.................................... 3,884 (2,964) (3,316)
Accounts payable........................................ (1,677) (749) 422
Billings in excess of costs and estimated earnings on
contracts in process................................. (471) 3,827 135
Other current liabilities............................... (2,197) (1,284) 6,920
Other................................................... 14 6 (3)
------- -------- --------
Net cash provided by operating activities.......... 8,190 24,751 280
------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment..................... (814) (891) (4,549)
Proceeds from sale of property and equipment............ 350 49 --
Purchase of Brand, net of cash acquired................. -- (767) --
Net investment in and advances to discontinued
operations........................................... -- (4,228) (12,086)
Net cash used in investing activities.............. (464) (5,837) (16,635)
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to and from OHM Corporation......................... -- (14,850) 14,109
Proceeds from issuance of long-term debt................ -- 15,000 1,013
Payments on long-term debt.............................. (3,187) (2,223) (15)
Proceeds from issuance of common stock upon exercise of
stock options........................................ -- 624 --
Cash dividend paid...................................... (1,496) (11,965) --
------- -------- --------
Net cash provided by (used in) financing
activities...................................... (4,683) (13,414) 15,107
------- -------- --------
Net increase (decrease) in cash and cash
equivalents..................................... 3,043 5,500 (1,248)
Cash and cash equivalents at beginning of periods....... 5,775 275 1,523
------- -------- --------
Cash and cash equivalents at end of periods............. $ 8,818 $ 5,775 $ 275
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-25
<PAGE> 6
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION The accompanying consolidated
financial statements include the accounts of NSC Corporation (the "Company") and
its wholly-owned subsidiaries, National Surface Cleaning, Inc. ("NSC") and
National Service Cleaning Corp. ("NSCC"), NSC Industrial Services Corp.
("Industrial") through May 4, 1993 (date of disposition); and since February 5,
1992 (date of acquisition) through May 4, 1993 (date of disposition), Combined
Plant Services Corp. and its affiliate, Gundersen/Viking (collectively, "CPS");
and since April 17, 1992 (date of acquisition) through May 4, 1993 (date of
disposition) Miami Valley Pressure Cleaning, Inc. and its affiliate, M.V.
Industrial Services Inc. (collectively, "MVIS"). All intercompany transactions
have been eliminated in consolidation. The Company is a Delaware corporation and
was a seventy percent-owned subsidiary of OHM Corporation ("OHM") through May 3,
1993. On May 4, 1993, pursuant to a Purchase Agreement among the Company,
Industrial, OHM, The Brand Companies, Inc. ("Brand") and Waste Management, Inc.
("WMI"), now known as WMX Technologies, Inc., the Company acquired the asbestos
abatement division of Brand (the "Division") in exchange for 4,010,000 shares of
the Company's common stock and all the common stock of Industrial. As of
December 31, 1993 and 1994, OHM and Rust International Inc. (a successor company
to Brand and hereinafter referred to as "Rust") each owned approximately forty
percent of the Company's common stock.
REVENUE AND COST RECOGNITION The Company primarily derives its revenues
from providing asbestos abatement and related services under fixed price, time
and materials and unit price contracts. The Company recognizes revenues and
related income from its fixed and unit price contracts in process using the
percentage-of-completion method of accounting. Revenues from time and
material-type contracts are recorded based on cost incurred. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Revenues are recognized for amounts under pending claims
when management believes it is probable the claim will result in additional
contract revenues and the amount can be reliably estimated. Contract costs
include all direct labor, material, per diem, subcontract and other direct and
indirect costs related to the contract performance. Selling, general and
administrative expenses are charged to expense as incurred. The asset, "costs
and estimated earnings on contracts in process in excess of billings,"
represents revenues recognized in excess of amounts billed. The liability,
"billings on contracts in process in excess of costs and estimated earnings,"
represents billings in excess of revenues recognized.
DIRECT SUBCONTRACT COSTS The Company incurs a substantial amount of direct
subcontract costs which are passed through to its clients. These costs result
from the use of subcontractors on projects for labor, transportation and
disposal of asbestos materials, analytical and restoration services, and other
removal-related services. The Company believes that net revenues, excluding
direct subcontract costs, more accurately reflect the amounts earned for
activities performed by the Company. Accordingly, the Company reports direct
subcontract costs as a reduction of gross revenues to arrive at net revenues.
INVENTORIES Inventories primarily are comprised of operating supplies and
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT Property and equipment are stated at cost.
Depreciation is provided over the estimated useful lives of the respective
assets using the straight-line method.
GOODWILL Goodwill is amortized over a 40-year life and is reviewed on an
ongoing basis by the Company's management based on several factors including,
among others, the Company's projection of future operations and their related
impact on cash flows. If an impairment of the carrying value were to be
indicated by this review, the Company would adjust the carrying value of
goodwill to its estimated fair value.
F-26
<PAGE> 7
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
INCOME TAXES Effective January 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"), which changed its method of accounting for income taxes from the deferred
method to the liability method. The cumulative effect of the adoption of SFAS
No. 109 resulted in the recognition of a deferred tax liability of $1,000,000.
Under the liability method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.
ALLOCATION OF CORPORATE EXPENSES Prior to May 4, 1993, the Company
received certain administrative and other services from OHM and its other
subsidiaries, which included financial, legal, certain senior executive
management, insurance, employee benefits, and other services. For such services,
the Company was charged a proportional share of the total costs. The Company
believes that such transactions with OHM and its affiliates were made on terms
no less favorable than could have been obtained in arms-length transactions with
independent third parties. A summary of significant transactions with affiliates
of the Company is presented in Note 10.
CASH EQUIVALENTS AND CASH FLOW INFORMATION The Company considers all
investments having a maturity of three months or less when purchased to be cash
equivalents. Cash equivalents are stated at cost which approximates fair market
value. Cash paid for income taxes was $263,000, $1,063,000, and $1,597,000 for
1994, 1993, and 1992, respectively. Cash paid for interest was $802,000,
$945,000, and $1,886,000 for 1994, 1993, and 1992, respectively.
NET INCOME PER SHARE The net income (loss) per share amounts for 1994,
1993, and 1992, have been computed by dividing net income (loss) by the
weighted-average number of common and common equivalent shares, if dilutive,
outstanding during the respective periods.
RECLASSIFICATIONS Certain reclassifications have been made to prior year
financial statements to conform with the current year presentation.
NOTE 2 -- ACQUISITION OF THE DIVISION
On December 23, 1992, the Company entered into a Purchase Agreement among
the Company, Industrial, OHM, Brand and WMI, pursuant to which the Company
purchased, on May 4, 1993, the Division in exchange for 4,010,000 shares of the
Company's common stock and the capital stock of Industrial. The acquisition of
the Division has been accounted for using the purchase method and, accordingly,
the acquired assets and assumed liabilities have been recorded at their
estimated fair values as of May 4, 1993. The accompanying consolidated financial
statements include the results of operations for the Division since May 4, 1993.
Pursuant to the Purchase Agreement, Brand guaranteed to the Company that, except
for certain contracts, the contracts assumed by the Company from Brand to
provide asbestos abatement and other related services would yield certain
minimum gross margins depending on the type of contract. Gross margin is defined
as revenues derived from these contracts less certain specified costs of
performing such contracts divided by such revenues. Brand paid the Company
$3,775,000 pursuant to this provision of the Purchase Agreement for the year
ended December 31, 1993. In addition, pursuant to the Purchase Agreement, Brand
guaranteed the collection of the full amount of all the Division's billed and
unbilled accounts receivables which were acquired by the Company. Pursuant to
this provision of the Purchase Agreement, Brand paid the Company $7,620,000
during the year ended December 31, 1993. As a condition of the Purchase
Agreement, on May 4, 1993, the Company entered into a $50,000,000 revolving
credit facility (see Note 7 - Long-Term Debt), repaid all of its indebtedness to
OHM, and terminated the Cash Management Agreement and Management Services
Agreement with OHM.
F-27
<PAGE> 8
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table sets forth the unaudited combined pro forma results of
operations for the years ended December 31, 1993 and 1992, using the purchase
method of accounting as if such transaction had occurred on January 1, 1992:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1993 1992
-------- --------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Gross revenues.......................................... $141,669 $187,981
Net revenues............................................ 113,656 158,462
Operating income (loss)................................. 7,511 (3,785)
Income (loss) from continuing operations................ 3,546 (3,288)
Income (loss) per share from continuing operation....... 0.42 (0.34)
</TABLE>
The pro forma combined results of operations for the years ended December
31, 1993 and 1992, are based upon certain assumptions and estimates which the
Company believes are reasonable. These pro forma combined results of operations
do not include the benefits of the synergies related to combining the two
companies. The pro forma combined results of operations for the year ended
December 31, 1992, exclude the impact of certain special charges aggregating
$12,203,000, net of income tax effects, recorded by the Division during 1992.
The pro forma combined results of operations for the years ended December 31,
1993 and 1992, may not be indicative of the operating results that actually
would have been reported had the transactions been consummated on January 1,
1992, nor are they necessarily indicative of the results which will be reported
in the future.
NOTE 3 -- DISCONTINUED OPERATIONS
On May 4, 1993, the Company exchanged the capital stock of Industrial (the
Company's environmental cleaning and industrial maintenance services business)
together with 4,010,000 shares of its common stock to Brand for the assets and
liabilities of the Division pursuant to a Purchase Agreement among the Company,
Industrial, Brand, and WMI. Therefore, Industrial is being accounted for as
discontinued operations for the years ended December 31, 1993 and 1992.
The provision for loss on disposition recorded in 1992, consisted of
estimated costs associated with the disposal and expected operating losses
through the date of disposition of the Company's environmental cleaning and
industrial maintenance services business. Gross revenues from CPS and MVIS for
the years ended December 31, 1993 and 1992, were $5,121,000 and $12,627,000,
respectively. The income from operations and provision for loss on disposition
of discontinued operations, which have been reflected in the consolidated
statement of operations for the year ended December 31, 1992, are presented net
of income taxes of $188,000 and an income tax benefit of $400,000, respectively.
Interest expense has been allocated to discontinued operations based on the
funds advanced to the Company by OHM for the acquisitions of CPS and MVIS.
Interest expense allocated to discontinued operations during the years ended
December 31, 1993 and 1992, amounted to $241,000 and $542,000, respectively.
F-28
<PAGE> 9
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 4 -- ACCOUNTS RECEIVABLE
Accounts receivable are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accounts billed and due currently......................... $20,381 $23,150
Retained.................................................. 3,589 4,146
------- -------
23,970 27,296
Allowance for uncollectible accounts...................... (782) (1,165)
------- -------
$23,188 $26,131
======= =======
</TABLE>
The retained receivables at December 31, 1994, are expected to be collected
within one year.
NOTE 5 -- COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROCESS
The consolidated balance sheets include the following amounts:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Costs incurred on contracts in process.................... $85,822 $58,631
Estimated earnings........................................ 17,138 14,662
------- -------
102,960 73,293
Less billing to date...................................... 102,410 74,262
------- -------
$ 550 $ (969)
======= =======
Costs and estimated earnings on contracts in process in
excess of billings...................................... $ 5,537 $ 4,489
Billings on contracts in process in excess of costs and
estimated earnings...................................... (4,987) (5,458)
------- -------
$ 550 $ (969)
======= =======
</TABLE>
Costs and estimated earnings on contract in process in excess of billings
included reserves for contract revenue adjustments of $530,000 and $1,546,000 at
December 31, 1994 and 1993, respectively.
NOTE 6 -- INCOME TAXES
Effective January 1, 1992, the Company elected to adopt SFAS No. 109. The
cumulative effect of adopting SFAS No. 109 as of January 1, 1992, decreased net
income by $1,000,000, or $0.18 per share.
At December 31, 1994, the Company has an alternative minimum tax ("AMT")
credit carryforward of $573,000. This carryforward resulted from the Company
generating AMT in 1990.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
F-29
<PAGE> 10
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Significant components of the Company's deferred tax liabilities and assets as
of December 31, 1994 and 1993, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1993
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
AMT credit carryforward................................... $ 573 $ 148
Other accrued liabilities................................. 533 2,521
Allowance for uncollectible accounts...................... 313 718
State net operating loss carryforward..................... -- 108
------ ------
Total deferred tax assets.............................. 1,419 3,495
Deferred tax liabilities:
Tax over book depreciation................................ 1,041 1,497
Goodwill.................................................. 3,391 3,235
Contract revenue recognition.............................. 574 1,406
Prepaid expenses and other assets......................... 498 837
Other, net................................................ 476 9
------ ------
Total deferred tax liabilities......................... 5,980 6,984
------ ------
Net deferred tax liabilities......................... $4,561 $3,489
====== ======
</TABLE>
Significant components of the provision for income taxes (benefit) are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------ ------ -------
(IN THOUSANDS)
-----------------------------
<S> <C> <C> <C>
Current:
Federal......................................... $ 768 $ (685) $ 1,001
State........................................... 277 (199) 291
------ ------ -------
Total current................................ 1,045 (884) 1,292
------ ------ -------
Deferred:
Federal......................................... 831 2,678 (1,521)
State........................................... 241 779 (445)
------ ------ -------
Total deferred............................... 1,072 3,457 (1,966)
------ ------ -------
$2,117 $2,573 $ (674)
====== ====== =======
</TABLE>
In 1992, a tax benefit of $212,000 was recorded as a component of the
results of discontinued operations.
The reasons for differences between income taxes (benefits) attributable to
continuing operations and the amount computed by applying the federal statutory
tax rate (34% is the statutory tax rate for companies that
F-30
<PAGE> 11
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
have less than $10 million of taxable income) to income (loss) from continuing
operations before income taxes are:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
LIABILITY METHOD
------------------------
1994 1993 1992
---- ---- ------
(IN THOUSANDS)
------------------------
<S> <C> <C> <C>
Federal statutory rate.............................. 34.0% 34.0% (34.0)%
Add (deduct):
State income taxes, net of federal tax benefit.... 7.1 6.5 (5.9)
Goodwill amortization............................. 3.9 3.0 8.1
Other............................................. 0.2 (0.2) 2.2
---- ---- ------
45.2% 43.3% (29.6)%
==== ==== ======
</TABLE>
NOTE 7 - LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
7.36% notes, due 1997..................................... $ 207 $ 272
8.21% notes, due 1997..................................... 431 553
Variable-rate revolving credit facility................... 9,950 12,950
------- -------
10,588 13,775
Less current portion...................................... 3,203 3,187
------- -------
$ 7,385 $10,588
======= =======
</TABLE>
The Company has a $50,000,000 revolving credit facility (the "Facility"),
with two banks that expires on June 5, 1996. Under the terms of the Facility,
the Company may borrow up to $15,000,000 on a term loan basis, up to $8,000,000
on a revolving basis, and the remaining unused balance is available for letters
of credit. Amounts outstanding under the Facility bear interest at 150 to 225
basis points above LIBOR and are secured by substantially all the Company's
assets. In addition, the Facility contains current ratio, leverage and interest
coverage covenants.
In connection with the acquisition of the Division, Rust (successor to
Brand) has provided the Company with a $25 million revolving credit facility.
Under this revolving credit agreement, Rust will make available revolving loans
to the Company until May 3, 1996, in amounts not to exceed $25 million. Such
loans will be subordinate to the senior bank financing described above, be
unsecured, bear interest at the prime rate as announced by a certain bank plus
1%, and be utilized for working capital purposes. Interest on such loans will be
payable on a quarterly basis, and the aggregate principal amount of such loans
will mature on May 31, 1996. No amounts were outstanding under this revolving
credit agreement at December 31, 1994 or 1993.
The aggregate amounts of long-term debt maturing in the three years
following December 31, 1994 are: $3,203,000 in 1995; $7,169,000 in 1996; and
$216,000 in 1997.
F-31
<PAGE> 12
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 8 -- CAPITAL STOCK
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue up to 10,000,000 shares of preferred stock, $0.01 par value,
without any further vote or action by the stockholders. As of December 31, 1994,
no preferred stock has been issued.
Pursuant to an agreement among the Company, Rust and OHM dated May 4, 1993,
each of Rust and OHM has the right to demand registration, at their own expense,
of all or a portion of the common stock of the Company held by it. In the event
either Rust or OHM demands such registration, the other entity has the right to
participate. This agreement is subject to certain conditions and limitations,
including limitations as to the frequency of exercise and Rust's and OHM's right
to participate in other registrations of the Company.
NOTE 9 -- STOCK OPTION PLAN
The Company has a stock option plan (the "1990 Plan") which provides for
the granting of options to acquire up to 860,000 shares of the Company's common
stock. The options are issuable to directors, officers, and key employees at an
exercise price not less than the fair market value of the Company's common stock
on the date of grant. The stock options granted under the 1990 Plan are
exercisable in either cumulative annual installments ranging up to 25% or
immediately commencing on the date of grant and expire ten years thereafter. At
December 31, 1994, 478,680 shares were available for grants of additional stock
options under the 1990 Plan.
The following summarizes stock option activity during 1994, 1993 and 1992:
<TABLE>
<CAPTION>
1990 PLAN
--------------------------------
NUMBER OF OPTION PRICE RANGE
OPTIONS PER SHARE
--------- ------------------
<S> <C> <C>
Outstanding at January 1, 1992.................... 580,920 $ 4.00 - $6.00
Granted......................................... 153,500 5.75 - 9.00
Canceled........................................ (23,000) 4.00 - 6.00
--------- ------------------
Outstanding at December 31, 1992.................. 711,420 $ 4.00 - $9.00
Granted......................................... 10,000 4.50
Exercised....................................... (156,000) 4.00
Canceled........................................ (116,000) 4.00 - 9.00
--------- ------------------
Outstanding at December 31, 1993.................. 449,420 $ 4.00 - $8.75
Canceled........................................ (224,100) 4.00 - 8.75
--------- ------------------
Outstanding at December 31, 1994.................. 225,320 $ 4.00 - $8.75
--------- ------------------
Exercisable at December 31, 1994.................. 221,070 $ 4.00 - $8.75
--------- ------------------
</TABLE>
NOTE 10 -- TRANSACTIONS WITH AFFILIATES
The Company has, from time to time, provided asbestos abatement and related
services to affiliates of OHM on a subcontract basis. Revenues recognized from
these affiliates for such services were $1,377,000, $3,469,000, and $2,090,000
for 1994, 1993, and 1992, respectively. In addition, the Company also provided
environmental cleaning and industrial maintenance services to a subsidiary of
OHM during 1992. Revenues recognized from this affiliate were $1,871,000 and are
included in discontinued operations in the accompanying 1992 consolidated
statement of operations.
In addition, the Company has, from time to time, provided asbestos
abatement and related services to Rust and certain of their affiliates on a
subcontract basis. Revenues recognized for such services were $4,509,000 and
$1,751,000 for the years ended December 31, 1994 and 1993, respectively. Also,
Rust and
F-32
<PAGE> 13
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
certain of its affiliates provided scaffolding, disposal, demolition, and other
related services to the Company on a subcontract basis. The cost for such
services provided by Rust was $530,000 and $2,525,000 for the years ended
December 31, 1994 and 1993, respectively.
From time to time in the normal course of business, the Company will seek
to recover amounts from customers in excess of the agreed-upon contract price,
based on customer-caused delays, errors in specifications and changes in design,
among other items. Revenues are recognized for amounts under pending claims when
management believes it is probable the claim will result in additional contract
revenues and the amount can be reliably estimated. At December 31, 1994, the
Company has a claim of $3.2 million outstanding against Rust on which it has
recognized a portion of the amount as revenue, based on management's anticipated
settlement.
During the years ended December 31, 1994, 1993, and 1992, OHM charged the
Company $363,000, $93,000, and $475,000, respectively, for general liability and
other insurance coverages. The Company's employees were eligible to participate
in OHM's group insurance and other employee benefit plans prior to the Company's
acquisition in 1993 of the asbestos abatement division of Brand. The costs
charged to the Company by OHM for these employee benefits were $242,000 and
$540,000 for the years ended December 31, 1993, and 1992, respectively.
Prior to the termination of the Cash Management Agreement with OHM on May
4, 1993, the Company advanced its excess cash to OHM and borrowed from OHM to
finance the expansion of its business. The Company was charged interest of
$591,000 and $1,384,000, for 1993, and 1992, respectively. The Company had
interest income of $316,000 and $1,074,000, for 1993, and 1992, respectively.
OHM and its other subsidiaries also furnished to the Company financial,
administrative, legal and certain other staff functions and services prior to
the termination of the Management Services Agreement with OHM on May 4, 1993.
The Company believes that the charges for such services were made on a
reasonable basis and approximated what it would have incurred to obtain such
services on its own. The Company was charged $149,000, and $281,000 by OHM for
such services during the years ended December 31, 1993, and 1992, respectively.
In addition, the Company has reimbursed OHM for certain third-party charges paid
by OHM on the Company's behalf, such as letter of credit fees, insurance and
bonding costs, and legal fees.
NOTE 11 -- EMPLOYEE BENEFIT PLANS
Effective October 1, 1992, the Company adopted the NSC Corporation
Retirement Savings Plan (the "Plan"). The Plan allows eligible employees to make
contributions, up to a certain limit, to a trust, on a tax-deferred basis under
Section 401(k) of the Internal Revenue Code. The Company may, at its discretion,
make profit-sharing contributions to the Plan out of its profits for the plan
years. Prior to October 1, 1992, the Company was a participating employer in the
OHM Corporation Retirement Savings Plan. The Company made matching contributions
of $21,000, and $28,000 to the plans described above during 1993, and 1992.
During 1994, no contributions were made.
The Company's subsidiary, NSC, has certain union employees which are
covered by union-sponsored, collectively bargained, multi-employer retirement
plans. Contributions to the plans were $2,379,000, $1,500,000, and $1,002,000
for 1994, 1993, and 1992 respectively.
NOTE 12 -- LITIGATION, COMMITMENTS AND CONTINGENCIES
The nature and scope of the Company's business bring it into regular
contact with the general public, a variety of businesses and government
agencies. Such activities inherently subject the Company to the hazards of
litigation, which are defended in the normal course of business. While the
outcomes of all claims are not clearly determinable at the present time,
management has recorded an estimate of any losses it expects to incur in
connection with the resolution of the claims.
F-33
<PAGE> 14
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Effective November 1, 1992, the Company's primary auto liability,
commercial general liability, and, in most states, its workers' compensation
liability insurance coverages were issued under an arrangement with an insurance
carrier pursuant to which the Company effectively self-insures such primary
coverages. Above the respective primary policy limits, the Company has obtained
commercial excess/umbrella and excess workers' compensation liability stop loss
coverages on a fully insured basis. Prior to November 1, 1992, the Company
obtained insurance coverages through its participation in OHM's general
insurance program pursuant to the Management Services Agreement (see Note 10-
Transactions with Affiliates), with OHM dated May 1, 1990, and through other
external sources. The Company has recorded an estimate of the loss it expects to
ultimately incur under its insurance arrangements.
The Company occupies office space and utilizes equipment in various
locations under operating leases. Rental expense under operating leases amounted
to $730,000, $455,000, and $193,000 for 1994, 1993, and 1992, respectively. The
lease agreements generally contain renewal provisions and escalation clauses.
Future minimum lease payments under noncancelable operating leases as of
December 31, 1994 are: 1995, $505,000; 1996, $186,000; 1997, $58,000; and 1998,
$9,000.
The Company had $19,017,000 and $18,267,000 letters of credit outstanding
at December 31, 1994 and 1993, respectively. These letters of credit were issued
primarily in support of the Company's insurance programs.
NOTE 13 -- MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
During 1994 and 1993, no single customer accounted for more than 10% of the
Company's consolidated gross revenues. During 1992, the Company performed
various projects for Swig, Weiler & Arnow Management Co., Inc. which accounted
for approximately 14% of the Company's consolidated gross revenues.
The Company provides asbestos abatement and related services to commercial,
institutional, and industrial clients with properties located throughout the
United States. The Company's commercial, institutional, and industrial clients
constituted 48%, 22%, and 30% of gross revenues as of December 31, 1994. The
Company generally invoices its customers as the work is being performed and does
not require collateral.
F-34
<PAGE> 15
NSC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 14 -- QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is an analysis of certain items in the consolidated
statements of operations by quarter for 1994 and 1993:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1994 QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Gross revenues....................... $34,203 $35,150 $32,076 $30,789
Net revenues......................... 27,638 29,252 26,579 25,077
Gross profit......................... 4,518 5,382 6,075 5,741
Operating income..................... 379 1,494 1,764 1,464
Net income........................... 168 731 892 775
Net income per share................. 0.02 0.07 0.09 0.08
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
1993 QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Gross revenues....................... $14,135 $26,156 $35,047 $34,916
Net revenues......................... 9,654 20,650 27,539 28,660
Gross profit......................... 3,104 4,946 6,833 6,018
Operating income..................... 1,135 1,438 2,147 1,636
Net income........................... 583 803 1,153 834
Net income per share................. 0.10 0.10 0.12 0.08
</TABLE>
F-35
<PAGE> 16
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors and Stockholders
NSC Corporation
We have audited the accompanying consolidated balance sheets of NSC
Corporation and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. Our
audits also include the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
NSC Corporation and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
As discussed in Note 6 to the financial statements, in 1992 the Company
changed its method of accounting for income taxes.
ERNST & YOUNG LLP
Boston, Massachusetts
February 1, 1995
F-20
<PAGE> 17
NSC CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Description Balance at Charged to
Beginning Costs and Deductions Balance at End
of Period Expenses (2) Describe (1) of Period
---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1994
Deducted from assets accounts:
Allowance for uncollectible accounts $ 1,165 $ 390 $ 773 $ 782
Reserve for contract revenue adjustments 1,546 332 1,348 530
------- ------- ------- -------
Total $ 2,711 $ 772 $ 2,121 $ 1,312
------- ------- ------- -------
Year Ended December 31, 1993
Deducted from assets accounts:
Allowance for uncollectible accounts $ 700 $ 500 $ 35 $ 1,165
Reserve for contract revenue adjustments 700 2,831 (3) 1,985 (4) 1,546
------- ------- ------- -------
Total $ 1,400 $ 3,331 $ 2,020 $ 2,711
------- ------- ------- -------
Year Ended December 31, 1992
Deducted from assets accounts:
Allowance for uncollectible accounts $ 215 $ 757 $ 272 $ 700
Reserve for contract revenue adjustments 227 759 286 700
------- ------- ------- -------
Total $ 442 $ 1,516 $ 558 $ 1,400
------- ------- ------- -------
</TABLE>
(1) Uncollectible accounts written off and adjustments to
unbilled revenues on contracts in process.
(2) Reduction of revenues on contracts in process and amounts
charged to bad debt expense.
(3) Approximately $2,000,000 represents reserves for contract
revenue adjustments established in conjunction with the
Company's acquisition of the asbestos division of Brand.
Goodwill was increased by $2,000,000 as a result of such
reserves.
(4) Approximately $1,239,000 represents charges against the
reserves described in Note 3 above.
