<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED COMMISSION FILE
JUNE 30, 1998 NO. 1-9309
-------------------------------------
VERSAR INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 54-0852979
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
6850 VERSAR CENTER, SPRINGFIELD, VIRGINIA 22151
(Address of principal executive offices) (Zip code)
</TABLE>
(703) 750-3000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
AMERICAN STOCK EXCHANGE
(Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of Act: NONE
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained
to the 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 as of September 1, 1998 was approximately $9,516,483.
The number of shares of Common Stock outstanding as of September 1,
1998 was 6,108,349.
The Exhibit Index required by 17 CFR Part 240.0-3(c) is located on
Pages 18 through 22 hereof.
-------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement to be filed with the
Securities and Exchange Commission with respect to the 1998 Annual Meeting of
Stockholders scheduled to be held on November 18, 1998 are incorporated by
reference into Part III hereof.
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PART I
ITEM 1. BUSINESS
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements which are
based on current expectations. Actual results may differ materially. The
forward-looking statements include those regarding cost controls and
reductions, the expected resolution of delays in billing of certain projects,
the possible impact of current and future claims against the Company based upon
negligence and other theories of liability, the integration of the recent or
ongoing acquisitions, and the possibility of the Company making acquisitions
during the next 12 to 18 months. Forward-looking statements involve numerous
risks and uncertainties that could cause actual results to differ materially,
including, but not limited to, the possibilities that the demand for the
Company's services may decline as a result of possible changes in general and
industry specific economic conditions and the effects of competitive services
and pricing; one or more current or future claims made against the Company may
result in substantial liabilities; the possibility that acquired entities may
not perform as well as expected; and such other risks and uncertainties as are
described in reports and other documents filed by the Company from time to time
with the Securities and Exchange Commission.
In May 1997, Versar acquired a majority interest in the equity of
Science Management Corporation ("SMC") and, thereafter in October 1997,
acquired the remaining outstanding equity by merging SMC into a wholly owned
subsidiary of Versar. During the second half of 1998, Versar discontinued the
management services and engineering, design and construction businesses
acquired from SMC as a result of poor performance and the lack of anticipated
contract backlog. The discontinuance of the engineering, design and
construction business was a result of declining oil prices and its impact on
the process industries. The management services business acquired from SMC
suffered from the loss of three major contracts, which constituted 75% of its
revenues. Continuing to operate SMC in its current state would have severely
impacted the viability of the entire Company. Versar has developed a plan for
the discontinuance of SMC or the sale of the entities. Versar has set up
appropriate reserves to shut down the existing businesses or sell them to third
parties.
Versar is a diversified international professional services firm,
helping clients in the private and public sectors enhance their performance
while reducing costs, conserving energy, and achieving environmental
excellence. Versar combines science, technology, and people with specialized
skills to identify problems and develop and implement solutions to assist
clients achieve their long term goals. As part of these services, we design
facilities, systems, and equipment to improve operating performance, conserve
resources, reduce emissions and waste generation, which ultimately increase
productivity and profitability and protect worker health and safety and our
environment.
Versar's three remaining major business areas include: (1)
environmental services; (2) energy service; and (3) facilities infrastructure
services. As is indicated below, certain of these business areas have
developed as a result of the integration of The Greenwood Partnership ("TGP")
into the Versar corporate group and represent a combination of TGP's services
with Versar's traditional service offerings.
ENVIRONMENTAL SERVICES includes a full range of scientific,
engineering, and construction services to address the prevention, detection,
control, management, and cleanup of toxic substances and hazardous waste in the
environment and constituted the primary business line of Versar prior to the
acquisition of TGP. Versar emphasizes innovation in process and technology
application to achieve better results more quickly and at less cost in today's
highly competitive market. Our goal is to help our clients build environmental
performance into each aspect of their organizational activities to enhance both
their environmental performance and improve their bottom line. Versar achieves
this goal by helping clients become more active in preventing pollution, and
applying innovative and cost-
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effective approaches to achieving sustainable growth while maintaining
compliance and taking corrective actions to cleanup past problems.
Today's business challenges require viewing environmental management
as integral to a business's, operations so that informed decisions can be made
based on the economics of alternate solutions and their impact on productivity
and profitability. These challenges are driven by:
- Complex and changing environmental regulations and the need for a more
strategic approach to meet national and international environmental
requirements in a way that allows industry to be profitable and
competitive in a global market.
- Increased emphasis on managing compliance as part of operations and
recognition that pollution prevention and waste minimization are
necessary parts of the long-term solution to local and national
environmental challenges.
- Competition for limited resources and a need for new and better
technology to eliminate waste, reduce emissions, and to achieve
remediation goals more cost effectively.
Versar provides the following services to help its clients meet these
challenges:
Consulting/Engineering. Capitalizing on Versar's combined strengths in
regulatory policy, risk assessment, information management, pollution control,
and treatment technology, which emphasize pollution prevention and waste
reduction. Versar provides nationally recognized expert services in the area
of natural resources management and ecological assessments to assist in
establishing policies that address issues such as nonpoint source pollution,
and health and ecological impacts of industrial effluent discharge practices.
Versar also provides consulting and engineering services to industry and
government agencies in assessing alternative compliance strategies and their
impacts on our customers' operations and profits.
Versar provides turnkey services in evaluating state-of-the-art environmentally
friendly and energy efficient technology and designing and installing systems
that both enhance operating performance and reduce costs - in most cases
providing pollution prevention solutions to compliance problems. For example,
Versar redesigned the water cycle of an industrial laundry in the Northeast so
that it would recycle and reuse process water. This both reduced water use and
operating costs with less than a two year payback. On another project Versar
applied an alternative technology and paint formulation for coating mass
transit vehicles eliminating the need to install a $4M fume collection system.
Outsourcing. Versar is increasingly providing on-site and off-site support to
help our customers manage their environmental programs. Over the last 5
years we have been providing a full range of pollution prevention, compliance
management, cleanup, and O&M services for the Washington, D.C. Metropolitan
Transit Authority. Versar also has a total of 19 on-site support staff at DOD
installations and industrial facilities across the country managing a wide
spectrum of customer's environmental management functions ranging from
underground storage tanks (USTs), asbestos abatement programs, air
compliance/permitting, real property transfers, and on-site hazardous material
pharmacies.
Corrective/Remedial Action. Versar provides the full range of services in
remedial/corrective action from site investigation, remedial design, and
construction to the operation and maintenance (O&M) of remedial systems. A
major accomplishment of the Company in FY98 was the award of a worldwide
environmental remedial action services contract (RAC) to support the Air Force
Center of Environmental Excellence. This contract has an estimated value of
$40M over 5 years and clearly indicates recognition of Versar as a remedial
construction contractor which is where the environmental market has been moving
over the last few years. Versar brings to its customers innovative solutions
to cleanup that are more cost effective and permanent. For example, Versar has
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successfully demonstrated the effectiveness of a passive reactive wall
consisting of iron fillings placed in a trench to remove halogenated organic
compounds from groundwater at Lowry Air Force Base. This eliminated the need
to pump and treat the groundwater. Under an existing contract to the Air Force
Armstrong Labs, Versar is separating reusable materials from bomb range
residues, used targets, and other scrap materials at Nellis Air Force Base.
Versar is brokering reusable material to aluminum processors and scrap metal
smelters and is saving the government an estimated $3.5M in offsets to the
total cleanup cost of $8.6M. Versar is also applying innovative approaches
that include creative financing, and stop loss insurance to cleanup
opportunities in the redevelopment of industrial properties under EPA and
States' Brownfields programs. For example, Versar is in the process of
redeveloping a Petroleum Refinery in the Western U.S. where we have assisted
the customer in creatively financing of the project through previous insurers
of the property. Versar primarily focuses on the enhancement of assets in the
cleanup of sites and the redevelopment of industrial facilities and commercial
properties. Versar has established alliances with real estate and investment
firms to help clients bring new life to other abandoned, contaminated sites in
prime real estate locations.
Versar's Environmental Services address management, compliance, and
remedial/corrective needs of clients in a wide range of technical areas
including:
- Environmental Policy
- Air Quality
- Water/Groundwater Quality
- Waste Management
- Risk Assessment
- Ecological Studies
- Technology Evaluations
- Natural Resources Management
- Industrial Hygiene
- Asbestos and Lead Paint
- Tank Management
Personal Protection Equipment (PPE)/ChemDemilitarization. A specialty area
for the Company is its Chemical Surety Laboratory and its related expertise in
personal protection equipment. Versar's support to the U.S. Army's Chemical
Weapons Demilitarization program is an important business area for Versar.
Versar's subsidiary, GEOMET Technologies, Inc., is involved in the disposal of
residual chemical weapons material at sites throughout the United States.
GEOMET's program, now in its fourth year, includes outfitting and operating the
mobile laboratory, which will support the disposal operations, design of air
monitoring and warning systems, specification of the PPE to be used, and other
assignments dealing with environmental compliance, development of operational
procedures, and program management. GEOMET is also in the business of
developing and testing PPE. Current projects include development of two PPE
ensembles for use in the depots where chemical weapons are stockpiled and in
activities where exposure to chemical agents is likely, such as laboratory work
and emergency response. The ensembles include a protective suit, clean air
source, radio communications, and a personal ice cooling system (PICS) for the
worker. In July 1998, GEOMET was awarded a $27.5M contract for the production
and fielding of the Army's Self-Contained Toxic Environment Protection Outfit
(STEPO) System at 73 installations through the year 2002. The system will be
used to recover, render safe, store and dispose of unexploded chemical and
biological weapons. GEOMET is also a commercial supplier to remedial action
contractors and emergency responders of PPE specially qualified for chemical
protection. Driven in part by the sarin nerve gas attack on the Tokyo subway
in 1995, Versar has significantly expanded this division's offering its
services to local, state, United States, and foreign governments in support of
counter-terrorism. Management believes the opportunities for commercial
application of its products and services will continue to grow in this area.
ENERGY CONSERVATION SERVICES. With the acquisition of The Greenwood
Partnership ("Greenwood" or "TGP"), Versar now includes energy conservation
services as part of its core business. This not only helps diversify the
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Company's business it provides a new entry to existing and new customers in an
emerging growth market. GEOMET Technologies Inc., Versar's subsidiary, has for
many years provided demand side management support to utilities in the
identification and implementation of efforts to reduce energy consumption.
GEOMET has provided energy auditing and energy conservation services for a
variety of clients. The Greenwood Partnership brings to Versar, engineering,
design, and construction management expertise in the upgrade of plant
infrastructure to reduce energy consumption.
Versar, through TGP, currently has alliances with three major utilities who
are marketing and experienced in Energy Services Performance Contracts (ESPC)
for the government and industry. These alliances include Duke Energy
(DukeSolutions Inc.), Virginia Power and Light (Evantage Co.), and Carolina P&L
(Strategic Resources Services). Potential fees on these contracts are based on
energy savings that can be achieved. Versar's utility partners make the
required investment to upgrade each facility while Versar is reimbursed on the
basis of a negotiated fixed fee.
Major utilities in the ESPC market are driven by the opportunity to develop
alliances with government and industry customers as deregulation of this
industry occurs in the U.S. The current market in the Federal sector is driven
by Executive Order 12902 that requires government facilities to reduce energy
consumption by 30% by 2005. However, it is generally believed that an even
larger market for energy conservation services exists in the private and
commercial sectors.
FACILITY INFRASTRUCTURE SERVICES include a full range of architectural and
engineering services in industrial/commercial facilities and supporting central
mechanical and electrical utilities and building systems. It also includes O&M
outsourcing services.
Facility Infrastructure Services is the core business of TGP which has been
integrated with Versar's engineering capabilities of Versar's core
environmental engineering services. This combined capability allows the
Company to bring state-of-the-art technology to its customers in reducing
waste, minimizing emissions, and in recovering and reusing resources to achieve
a sustainable business environment. For example, TGP recently designed a
microchip manufacturing facility deploying state-of-the-art material handling,
waste treatment, and utility infrastructure support technology.
Key industrial sectors that the Company serves include the pharmaceuticals,
electronics, biotechnology, food processing, paper products, film, plastics and
fiber industries. Services include architectural design, site development, as
well as the design, construction or design-build of plant facility, and
supporting utility, material handling, and waste management systems.
Versar/TGP provides design expertise in plant structures and associated
utilities, fuel handling, chemical treatment, distribution, piping systems
instrumentation and controls, substations and electric power distribution
systems. Systems are designed to optimize performance, environmental
compliance, safety, energy use, and utilization of space. Economic evaluations
of alternative designs, fuels, and operating parameters are conducted to
produce bottom line savings for our customers throughout the life cycle of
heating, cooling and electric power systems.
Services are performed for a wide range of corporate, industrial,
commercial, state, Federal, health care and educating customers. Specific
services include:
- Retrofit and Renovations
- Energy Management Studies and Audits
- Fire Protection
- Life Safety
- Performance Contracting
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- Life-Cycle Analysis
- Heating and Cooling Distribution Systems
- Electrical Power and Lighting
- Building HVAC Systems
Versar is offering to take over the operation and maintenance of utility
infrastructure systems of its customers on a contract services basis.
MARKETS
Versar's markets are evolving in response to its clients' changing needs,
and market opportunities are being driven by the availability of technology
aimed at enhancing operating performance and profitability. Versar has
diversified its business over the last few years, primarily through the
acquisition of TGP, with a much greater emphasis on (1) environmental services
which help the bottom line such as P2 initiatives with short paybacks and
redevelopment of industry properties and conversion of military bases for
alternative productive uses, (2) the emerging energy conservation services
markets with TGP providing Versar with alliances and core capabilities to enter
this new market, and (3) facilities infrastructure services to respond to our
clients' increasing need to upgrade plant and equipment to improve their
operating performance and to outsource non-core functions.
Versar is participating in a number of growth markets. These include:
- Industry's continued focus on productivity improvement with increased
need for services in upgrading plant and utility infrastructure.
- Deregulation of the energy industry presents opportunities for Versar
through TGP in energy conservation projects.
- Government /commercial interest in expanding capability to respond to
potential terrorism worldwide will provide continued growth
opportunities for Versar (GEOMET) services in personnel protection
equipment.
- Brownsfield legislation and tax incentives will provide opportunities
for growth of Versar's environmental cleanup services.
- Continued pressure to reduce environmental management cost will
provide opportunities for Versar to grow its business in pollution
prevention, and outsourcing services.
Versar's current client base is well balanced with 44 percent
industrial/commercial and 56 percent government. Versar also provides a wide
range of services to the financial/real estate/insurance business sector,
transportation and communications sector, services industries and others.
The U.S. Department of Defense (DOD) is Versar's largest government client,
making up 33 percent of its business base. DOD is going through many of the
same issues as are faced in private industry with restructuring and cost
reduction in response to increasing budget limitations. DOD also has an
aggressive environmental program to cleanup, realign, and close bases worldwide
as it continues to restructure to a smaller force. The major focus over the
next few years will be the to reduce its infrastructure. Versar is a major
support contractor to DOD, offering the same range of services as in the
private sector. The U.S. Environmental Protection Agency (EPA) makes up 7
percent of Versar's business and is growing in new areas such as water quality,
risk assessment, and natural resources management. Versar thus maintains
extensive knowledge of regulatory trends and their impacts. Other Federal
clients make up 5 percent of our business and include NASA, the Departments of
Energy and the Interior, Federal Housing Authority, and Intelligence Agencies.
State and local governments make up 11 percent of Versar's business.
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COMPETITION
Versar traditionally has faced substantial competition in each market in
which it operates and expects to continue to face substantial competition as it
diversifies its business. Many times, its competitors are larger and have
greater financial resources. Versar has historically competed primarily on its
scientific, technological, and engineering expertise as well as costs. As
Versar's business mix shifts more toward providing turnkey infrastructure and
resources management support services, Versar will compete with more facility
O&M and engineering/construction contractors on projects that lend themselves
more to innovation in approach, technology application, and project financing
- -- areas where Versar's senior management are skilled in packaging responses to
new and different opportunities. In essence, the market is changing rapidly,
and Versar is taking advantage of these changes to position itself for
substantial growth in new and emerging markets by providing much needed
infrastructure support to industry and government as we enter the 21st century.
However, no assurances can be given that Versar will be able to achieve such
growth or successfully compete in such new areas.
BACKLOG
As of June 30, 1998, total backlog for Versar, including unfunded tasks and
orders, was approximately $301 million, as compared to approximately $340
million as of June 30, 1997. Funded backlog for Versar was approximately $30
million, a decrease of 27 percent compared to approximately $41 million as of
June 30, 1997, as a result of the discontinuance of the operations of SMC,
which made up approximately $15 million of the fiscal year 1997 backlog.
Funded backlog is the incremental funding authorization of contracts and task
orders based on firm contractual obligations. Unfunded backlog includes
contracts and contract vehicles, including option periods, in which specific
work tasks and funding have not been authorized and for which Versar and the
client are contractually obligated to perform. Funded backlog amounts have
historically resulted in revenues; however, no assurance can be given that all
amounts included in funded backlog will ultimately be realized as revenue.
EMPLOYEES
At June 30, 1998, Versar had approximately 441 full-time employees, of
which approximately 394 were engineers, scientists, and other professionals.
Seventy-five percent of the Company's professional employees have a bachelors
degree, 30% have a masters degree, and 4% have doctorate degrees.
ITEM 2. PROPERTIES
The Company's executive office is located in a building in
Springfield, Virginia, a suburb of Washington, D.C. In June 1995, Versar
leased 73,371 square feet in two buildings from Sarnia Corporation. In October
1997, Versar reduced this leased space to 68,414 square feet. The rent is
subject to a 4% escalation per year. Both lease streams are subject to
adjustment on June 1, 1999 and 2004. In these years, the lease streams will be
adjusted to the current fair value. This value will set the base rate of the
lease streams in the year of adjustment. The adjusted lease stream is subject
to the contracted escalation in future years.
As of September 1, 1998, the Company had under lease an aggregate of
approximately 209,000 square feet of office and laboratory space in the
following locations: Springfield, Lynchburg, Richmond, and Williamsburg, VA;
Tempe, AZ; Alameda and Fair Oaks, CA; Northglenn, CO; Miami, FL; Lombard, IL;
Burlington, MA; Hopkins, MN; Columbia, Gaithersburg and Germantown, MD;
Bristol, PA; San Antonio, TX; and American Fork, UT. These leases are
generally for terms of five years or less.
Versar believes that its facilities are suitable and adequate for its
current and foreseeable operational and administrative needs.
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ITEM 3. LEGAL PROCEEDINGS
In December 1994, SMC Environmental Services Group, Inc., an indirect
subsidiary of Versar, a former employee of SMC, and two other entities were
sued by Edward A. Long, an employee of an operator of a municipal waste
transfer station. Mr. Long alleges that in October 1992, while transferring
leachate from a holding tank to a tanker truck, he blacked-out and suffered
serious personal injuries. The lawsuit, entitled Edward A. Long v. Lehigh
Valley Recycling, Inc. et al., No. 94-20222, was filed in the Court of Common
Pleas of Montgomery County, Pennsylvania, Civil Division. SMC Environmental
and its employee, who had been retained by the owner of the municipal waste
transfer station to help finalize a permit application with the Pennsylvania
Department of Environmental Protection in 1988, filed an answer denying the
allegations. The parties have undertaken certain discovery which remains
ongoing. Because this claim arose prior to the acquisition of SMC and its
subsidiaries by Versar, the Company is reviewing the insurance coverage
available to the Company. Based upon consultation with outside counsel,
management does not believe the ultimate outcome of this lawsuit will have a
material impact on Versar's consolidated financial condition or its results of
operations.
Versar and its subsidiaries are parties to various other legal actions
arising in the normal course of business. The Company believes that an
ultimate unfavorable resolution of these other legal actions will not have a
material adverse effect on its consolidated financial condition and results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the last quarter of fiscal year 1998.
EXECUTIVE OFFICERS
The current executive officers of Versar, and their ages as of September 1,
1998, their current offices or positions and their business experience for the
past five years are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Benjamin M. Rawls 57 Chairman, Chief Executive
Officer and President
Thomas S. Rooney 64 Executive Vice President and
Chief Operating Officer
Robert L. Durfee 62 Executive Vice President,
President, GEOMET Technologies, Inc.
Lawrence A. White 55 Executive Vice President,
Corporate Development
Lawrence W. Sinnott 36 Vice President,
Chief Financial Officer and Treasurer
James C. Dobbs 53 Vice President, General Counsel and
Secretary
Gayaneh Contos 62 Senior Vice President
</TABLE>
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BENJAMIN M. RAWLS, M.B.A., joined Versar as President and Chief
Executive Officer in April 1991. He became Chairman of the Board in November
1993. From 1988 to April 1991, Mr. Rawls was President and Chief Executive
Officer of Rawls Associates, Inc., a management consulting firm. Mr. Rawls was
President and Chief Executive Officer of R-C Holding, Inc. (now Air & Water
Technologies Corporation) from 1987 to 1988 and was Chairman of Metcalf & Eddy,
Inc., a subsidiary of Research-Cottrell, Inc., from 1984 to 1988.
THOMAS S. ROONEY, P.E., B.S.C.E., joined Versar in 1991 as Executive
Vice President and Chief Operating Officer. From 1989 to 1991, Mr. Rooney was
the President of Rooney Consulting, Inc., an environmental engineering company
in Haddonfield, New Jersey. Between 1987 and 1989, he was President of Orfa
Corporation, a company that built and operated plants that recycle municipal
solid waste into useful end products.
ROBERT L. DURFEE, Ph.D., is a co-founder of Versar and has been
President of GEOMET Technologies, Inc., a subsidiary of the Company, since
1991. Prior to that, Dr. Durfee managed all environmental services provided by
Versar, Inc.
LAWRENCE A. WHITE, P.E., M.E.A., joined Versar in 1992 as Executive
Vice President, Corporate Development. From 1990 to 1992, Mr. White was the
Senior Vice President, Corporate Development for Dynamac Corporation in the
firm's marketing, sales, proposals, and client development areas and Group Vice
President of Roy F. Weston, Inc. between 1983 and 1990, where he managed major
programs and served as principal consultant to numerous government and
industrial clients.
LAWRENCE W. SINNOTT, CPA, B.S., joined Versar in 1991 as Assistant
Controller. In 1992, he became Corporate Controller. In 1993, he was elected
Treasurer and Corporate Controller. In 1994, he became Vice President, Chief
Financial Officer and Treasurer. From 1989 to 1991, he was Controller of a
venture capital company, Defense Group, Inc.
JAMES C. DOBBS, J.D.,L.L.M., joined Versar in 1992 as Vice President,
General Counsel, and Secretary. From 1984 to 1992, Mr. Dobbs was employed by
Metcalf & Eddy, Inc. as Vice President and General Counsel where he was
responsible for providing legal and regulatory advice to senior management.
GAYANEH CONTOS, B.S., joined Versar in 1974, was elected Vice
President in 1985 and a Senior Vice President in 1989. Since 1980, she has been
responsible for supervising the majority of the Company's contracts with EPA.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
COMMON STOCK
The Company's common stock is traded on the American Stock Exchange
(the "AMEX"), under the symbol VSR. At June 30, 1998, the Company had 856
stockholders of record, excluding stockholders whose shares were held in
nominee name. The quarterly high and low sales prices as reported on the AMEX
during fiscal years 1998 and 1997 are presented below.
<TABLE>
<CAPTION>
Fiscal Year High Low
- ------------------------------- ------- --------
<S> <C> <C> <C>
1998 4th Quarter . . . . . . . . . . . . . . . . . . . $ 6.750 $ 3.875
3rd Quarter . . . . . . . . . . . . . . . . . . . 5.875 4.250
2nd Quarter . . . . . . . . . . . . . . . . . . . 6.250 4.813
1st Quarter . . . . . . . . . . . . . . . . . . . 5.750 3.500
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year High Low
- ------------------------------- -------- --------
<S> <C> <C> <C>
1997 4th Quarter . . . . . . . . . . . . . . . . . . . $ 4.000 $ 3.188
3rd Quarter . . . . . . . . . . . . . . . . . . . 4.188 3.000
2nd Quarter . . . . . . . . . . . . . . . . . . . 3.250 2.563
1st Quarter . . . . . . . . . . . . . . . . . . . 3.938 2.563
</TABLE>
No cash dividends have been paid by Versar since it began public
trading of its stock in 1986. The Board of Directors intends to retain any
future earnings for use in the Company's business and does not anticipate
paying cash dividends in the foreseeable future. Under the terms of the
Company's revolving line of credit, approval would be required from the
Company's primary bank for the payment of any dividends.
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ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data set forth below should be
read in conjunction with Versar's Consolidated Financial Statements and notes
thereto beginning on page F-2 of this report. The financial data is as
follows:
<TABLE>
<CAPTION>
For the Years Ended June 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ----------- ----------- ----------- ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Operations
related data:
Gross Revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 50,420 $ 44,935 $ 44,283 $ 39,090 $ 42,764
Net Service Revenue . . . . . . . . . . . . . . . . . . . . . 34,895 31,696 31,919 29,347 31,032
Operating Income (Loss) . . . . . . . . . . . . . . . . . . . 378 1,266 872 560 (1,269)
Income (Loss) from Continuing
Operations . . . . . . . . . . . . . . . . . . . . . . . 276 1,109 992 458 (2,658)
(Loss) Income from Discontinued
Operations . . . . . . . . . . . . . . . . . . . . . . . (8,829) 147 --- --- ---
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . (8,553) 1,256 992 458 (4,367)
Income (Loss) per share from Continuing
Operations - Diluted . . . . . . . . . . . . . . . . . . . $ .05 $ .21 $ .19 $ .09 $ (.59)
(Loss) Income per share from Discontinued
Operations - Basic and Diluted . . . . . . . . . . . . . . (1.55) .03 --- --- ---
Net (Loss) Income per share - Diluted . . . . . . . . . . . . $ (1.50) $ .24 $ .19 $ .09 $ (.97)
Weighted Average Shares Outstanding - . . . . . . . . . . . . 5,695 5,286 5,248 4,834 4,481
Diluted
Consolidated Balance Sheet related data:
Working Capital . . . . . . . . . . . . . . . . . . . . . . . $ 4,720 $ 9,140 $ 7,629 $ 5,425 $ 5,261
Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . 1.39 2.21 2.14 1.64 1.68
Total Assets . . . . . . . . . . . . . . . . . . . . . . . 21,564 21,870 16,979 28,195 27,782
Current Portion of Long-Term Debt . . . . . . . . . . . . . . 1,114 819 323 335 1,201
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . 688 1,437 2 4 17
Mortgage Debt of Sarnia . . . . . . . . . . . . . . . . . . . --- --- --- 12,062 12,403
--------- --------- --------- ---------- -----------
Total Debt, excluding bank line of credit . . . . . . . . . . 1,802 2,256 325 12,401 13,621
Stockholders' Equity . . . . . . . . . . . . . . . . . . . . $ 4,991 $ 9,523 $ 7,776 $ 6,290 $ 5,261
</TABLE>
Certain amounts in fiscal year 1994 have been reclassified to reflect
Versar Laboratories, Inc. and Gammaflux, Inc. as discontinued operations for
comparative purposes. In addition, Versar has included the results of
operations and financial position of Sarnia through January 1, 1996. Sarnia
was spun-off to stockholders in fiscal year 1994, but continued to be reflected
in Versar's financial statements due to the guarantee of all of Sarnia's debt
by Versar. After the completion of Sarnia's refinancing of its debt in January
1996, Versar's guarantee was reduced from $12.4 million to $1.5 million and the
divestiture was considered complete for accounting purposes. Certain amounts in
fiscal year 1997 have been reclassified to reflect the two segments of SMC,
engineering, design and construction services and management services, as
discontinued operations for comparative purposes.
11
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains certain forward-looking statements which are
based on current expectations. Actual results may differ materially. The
forward-looking statements include those regarding cost controls and
reductions, the expected resolution of delays in billing of certain projects,
the possible impact of current and future claims against the Company based upon
negligence and other theories of liability, the integration of the recent or
ongoing acquisitions, and the possibility of the Company making acquisitions
during the next 12 to 18 months. Forward-looking statements involve numerous
risks and uncertainties that could cause actual results to differ materially,
including, but not limited to, the possibilities that the demand for the
Company's services may decline as a result of possible changes in general and
industry specific economic conditions and the effects of competitive services
and pricing; one or more current or future claims made against the Company may
result in substantial liabilities; the possibility that acquired entities may
not perform as well as expected; and such other risks and uncertainties as are
described in reports and other documents filed by the Company from time to time
with the Securities and Exchange Commission.
Versar's results of operations include the financial results that are
part of the continuing operations of the Company. In May 1997, Versar acquired
a majority equity interest in SMC and, thereafter in October 1997, the
remaining outstanding equity. Following its acquisition, SMC's engineering,
design and construction services and management services segments failed to
perform in accordance with the expectations of Versar's management due to
significant business shortfalls in these segments. In September 1998, Versar's
Board of Directors authorized management to discontinue the operations of
Science Management Corporation constituting the engineering, design and
construction services and management services segments of Versar. Therefore,
results of operations of SMC's two segments have been netted together and
presented on one line, as a loss from discontinued operations. The following
discussion relates to continuing operations only, unless specifically noted.
Versar's gross revenues from continuing operations for fiscal year
1998 totaled $50,420,000, or $5,485,000 (12.2%) above fiscal year 1997 gross
revenue of $44,935,000. Gross revenue for fiscal year 1997 was $652,000
(1.5%) above that reported in 1996. The increase in Versar's gross revenue in
fiscal year 1998 was due to five months of revenue from the acquisition of the
Greenwood Partnership ("TGP") of $2,300,000 and the remaining balance of the
increase was with Versar's base business. As reflected in the table on page
14, government revenue represented 56.0% of the total revenue in 1998, compared
to 64.0% in 1997 and 66.0% in 1996. The reduction is attributable to the
addition of TGP and additional Versar commercial revenues.
Purchased services and materials for fiscal year 1998 totaled
$15,525,000 or $2,286,000 (17.3%) higher than fiscal year 1997 purchased
services. Purchased services for fiscal year 1997 were $875,000 (7.1%) higher
than reported in fiscal year 1996. The increase in 1998 is due to subcontracted
efforts on a remediation project in the Company's Northeast operation.
Net service revenue is derived by deducting the costs of purchased
services from gross revenue. Versar considers it appropriate to analyze
operating margins and other ratios in relation to net service revenue because
such revenues reflect the actual work performed by the Company.
Direct costs of services and overhead include the cost to Versar of
direct and overhead staff, including recoverable overhead costs and unallowable
costs that are directly attributable to overhead. The percentage of these
costs to net service revenue increased to 84.3% in 1998 compared to 80.1% in
1997 and 81.4% in 1996. The increase is due to operating losses of EIMS
software business and ValuAdd municipal operations of $422,000, lower labor
multipliers in TGP and lower margins on existing projects than Versar's base
business.
12
<PAGE> 13
Selling, general and administrative expenses approximated 13.7% of net
service revenue in 1998, compared to 16.0% in 1997 and 15.5% in 1996. The
decrease in fiscal years 1998 and 1997 are attributable to the higher net
service revenue, while the corporate costs for the Company were reduced.
Other income includes the costs and revenues that are not directly
attributable to contracts. In 1998, the Company had no other income or costs
compared to $42,000 and $28,000 of income in fiscal years 1997 and 1996
associated with a non-compete agreement from the sale of its majority-owned
subsidiary Gammaflux, Inc.
In fiscal year 1998, the Company recorded a special charge of $330,000
to write off of receivables and write-off of goodwill for the ValuAdd
operations. The Company's decision to shut down the ValuAdd operations is a
result of significant business shortfalls in the ValuAdd operations.
Operating income for 1998 was $378,000, a decrease of $888,000 over
fiscal year 1997. The decrease is primarily due to the special charge as
mentioned above and the $422,000 of operating losses on EIMS and ValuAdd
operations, which were closed in fiscal year 1998.
Interest expense during 1998 was $251,000, an increase of $154,000
from 1997. The increase is due to the cost of financing for the acquisition of
SMC of approximately $150,000.
Versar's income tax benefit for fiscal year 1998 was $149,000 compared
to a tax expense of $60,000 in fiscal year 1997. Due to the losses in the
current fiscal year and the non-deductible goodwill from SMC, the Company
increased its valuation on deferred tax assets until the earnings improve to
ensure the utilization of the tax assets. Refer to Note I of the Notes to
Financial Statements.
In fiscal year 1998, the Company recorded a loss from discontinued
operations for the two segments acquired from SMC of $8,829,000 net of $90,000
tax benefit including the write-off of goodwill associated with its acquisition
of $5,064,000 and operating losses for a total of $5,776,000 (net of tax) and
accrued reserves of $3,053,000 to finalize the disposition of SMC. As part of
the accrued reserves the Company reserved approximately $1,700,000 for
operating losses in the phase out of the two segments. (Refer to Note C and I
of the Notes to Financial Statements for further information on the
discontinuance of the engineering, design and construction services and
management services segments of SMC and the related tax impact to the Company.)
In summary, Versar's net loss was $8,553,000 in fiscal year 1998,
compared to net income of $1,256,000 in fiscal year 1997 and net income of
$992,000 in fiscal year 1996.
13
<PAGE> 14
REVENUE
Versar provides professional services to various industries,
government and commercial clients. A summary of revenue generated from the
Company's client base is as follows:
<TABLE>
<CAPTION>
For the Years Ended June 30,
-------------------------------------------------------------------------------
1998 1997 1996
--------------------- ---------------------- ---------------------
(In thousands, except for percentages)
<S> <C> <C> <C> <C> <C> <C>
Government
EPA $ 3,493 7% $ 3,339 7% $ 3,787 9%
State & Local 5,460 11% 6,339 14% 6,733 15%
Department
of Defense 16,771 33% 15,952 36% 16,479 37%
Other 2,385 5% 2,972 7% 2,035 5%
Commercial 22,311 44% 16,333 36% 15,249 34%
-------- ------- -------- ---- -------- ----
Gross Revenue $ 50,420 100% $ 44,935 100% $ 44,283 100%
======== ======= ======== ==== ======== ====
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized $1,667,000 of cash in 1998
primarily for working capital requirements at SMC and delayed receipt of
receivables.
The Company utilized short-term bank financing to supplement its
ability to meet day-to-day operating cash requirements. At June 30, 1998, the
Company had $4,720,000 of working capital, compared to $9,140,000 in 1997.
Working capital decreased by 48% primarily due to poor operating performance of
SMC, working capital requirements of SMC and the acquisition of The Greenwood
Partnership.
In April 1997, the Company moved its line of credit facility to
NationsBank, N.A. The new line of credit of $5,000,000 is restricted to the
borrowing base of qualifying receivables less the balance of $1,200,000 reserve
for a guarantee of debt of Sarnia and outstanding acquisition loan balances
(approximately $1,437,500 at June 30, 1998). Borrowings on the line of credit
are at the lower of the 30 day London Interbank Offered Rate ("LIBOR") plus 250
or the prime rate (8.16% at June 30, 1998). A fee of 1/4% on the unused
portion of the line of credit is also charged. The line is guaranteed by the
Company and each of the Company's wholly owned subsidiaries individually and is
collectively secured by accounts receivable, equipment and intangibles, plus
all insurance policies on property constituting collateral. Unused borrowing
availability at June 30, 1998 was approximately $1,336,000. Advances on the
line are due on November 30, 1998. The Company's covenants were modified as of
June 30, 1998, due to the discontinuance of the two segments acquired from SMC.
Management believes that cash generated by operations and borrowings available
under the line of credit and extension of the line will be adequate to meet the
working capital needs for fiscal year 1999.
As previously reported, Versar has guaranteed a five year term loan
with an original balance of $1,500,000 and a current balance of $1,200,000 for
Sarnia. Versar's reserve against the loan as of June 30, 1998 is $1,200,000.
As the term loan is repaid, the reserve will be reduced and added to Versar's
equity. Starting in fiscal year 1998, principal payments of $300,000 are due
each year and will be added back to Versar's equity as they are paid by Sarnia.
14
<PAGE> 15
ACQUISITION OF THE GREENWOOD PARTNERSHIP
On January 30, 1998, Versar completed the acquisition of The Greenwood
Partnership, P.C. As a part of the acquisition, the Company increased its
current line of credit by $2,000,000 to $5,000,000 and retired existing debt of
Greenwood of approximately $672,000, paid $300,000 in cash, recorded additional
notes payable to Greenwood stockholders of $450,000 payable over 4 years, and
issued 228,572 shares of common stock. The transaction was accounted for as a
purchase of assets and goodwill recorded as part of the transaction was
approximately $1.1 million. The assets of Greenwood are now included as
collateral under the Company's line of credit.
IMPACT OF INFLATION
Versar seeks to protect itself from the effects of inflation. The
majority of contracts the Company performs are for a period of a year or less
or are cost plus fixed-fee type contracts and, accordingly, are less
susceptible to the effects of inflation. Multi-year contracts provide for
projected increases in labor and other costs.
BUSINESS SEGMENT
In June 1997, the Financial Accounting Standard Board issued Statement
of Financial Accounting Standard No. 131 "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 becomes
effective in Versar's fiscal year 1999. SFAS No. 131 requires disclosure of
operating segments of the Company so that the reader can better understand and
assess the business enterprise performance taken as a whole. Versar currently
has three business segments: environmental services, energy conservation
services, and facility infrastructure services. Currently, the energy
conservation and facility infrastructure services segments do not meet the
reporting requirements under those required by SFAS No. 131 or SFAS No. 14.
During fiscal year 1999, the growth in these segments may require the Company
to provide financial disclosure as required under SFAS No. 131.
YEAR 2000
Certain computer programs have been written using two digits rather
than four to define the applicable year, which could result in the computer
recognizing a date using "00" as the year 1900 rather than the year 2000.
This, in turn, could result in major system failures and in miscalculations,
and is generally referred to as the "Year 2000" problem. On August 4, 1998,
the Company's Board of Directors adopted a comprehensive Strategy for Achieving
Year 2000 Compliance program for Versar and its subsidiaries. Subsequently,
management has begun to implement the eight step program to identify both
internally and externally the extent of any Year 2000 problem, the cost to the
Company to mitigate any Year 2000 effects and identify any significant client
or subcontractor compliance issues. Among other things, Versar is in the
process of evaluating the different options that are available to upgrade the
Company's existing data, business processing and financial reporting software
applications to be Year 2000 compliant. Presently, Versar does not believe
that Year 2000 compliance will result in any material investments, nor does
Versar have any information that the Year 2000 problem will have material
adverse effects on the business operations or financial performance of Versar.
In addition, Versar is not aware of any Year 2000 problems of its customers,
suppliers or network affiliates that will have a material adverse effect on the
business, operations or financial performance of Versar. However, the
implementation of our in-house and outside survey has just begun, so there can
be no assurance that the year 2000 problem will not adversely affect Versar and
its business. It is expected to cost between $100,000 to $300,000. Versar
expects that the Company will be in Year 2000 compliance by June 30, 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data begin on
page F-2 of this report.
15
<PAGE> 16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item with respect to directors of the
Company is to be contained in the Company's Proxy Statement for its 1998 Annual
Meeting of Stockholders, which is expected to be filed with the Commission not
later than 120 days after the end of the Company's 1998 fiscal year and is
incorporated herein by reference.
Information required by this item with respect to executive officers
of the Company is included in Part I of this report and is incorporated herein
by reference.
For the purpose of calculating the aggregate market value of the
voting stock of Versar held by non-affiliates as shown on the cover page of
this report, it has been assumed that the directors and executive officers of
the Company and the Company's Employee Savings and Stock Ownership Plan are the
only affiliates of the Company. However, this is not an admission that all
such persons are, in fact, affiliates of the Company.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by these items is incorporated herein by
reference to the Company's Proxy Statement for its 1998 Annual Meeting of
Stockholders which is expected to be filed with the Commission not later than
120 days after the end of the Company's 1998 fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) Financial Statements:
The consolidated financial statements and financial statement
schedules of Versar, Inc. and Subsidiaries are filed as part of this report
and begin on page F-1.
a) Report of Independent Public Accountants
b) Consolidated Balance Sheets as of June 30, 1998 and 1997
c) Consolidated Statements of Operations for the Years Ended
June 30, 1998, 1997, and 1996
d) Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended June 30, 1998, 1997, and 1996
16
<PAGE> 17
e) Consolidated Statements of Cash Flows for the Years Ended
June 30, 1998, 1997, and 1996
f) Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
a) Schedule II - Valuation and Qualifying Accounts for the
years ended June 30, 1998, 1997, and 1996
All other schedules, except those listed above, are omitted
because they are not applicable or the required information is
shown in the consolidated financial statements or notes
thereto.
(3) Exhibits:
The exhibits to this Form 10-K are set forth in a separate
Exhibit Index which is included on pages 17 through 21 of this
report.
(B) Reports on Form 8-K
None.
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number/
Item No. Description Reference
- -------- ----------- -----------
<S> <C> <C>
3.1 Restated Articles of Incorporation of Versar, Inc. filed as an exhibit to the
Registrant's Registration Statement on Form S-1 effective November 20, 1986
(File No. 33-9391) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A)
3.2 Bylaws of Versar, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (A)
4 Specimen of Certificate of Common Stock of Versar, Inc, . . . . . . . . . . . . . . . . . . . (A)
10.3 Agreement dated July 31, 1990 between the Registrant and the U.S.
Army Natick RD&E Center and as modified through May 23,1991 . . . . . . . . . . . . . . . . (G)
10.10 Incentive Stock Option Plan *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B)
10.11 Executive Tax and Investment Counseling Program. . . . . . . . . . . . . . . . . . . . . . . . (A)
10.12 Nonqualified Stock Option Plan *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (B)
10.13 Employee Incentive Plan, as amended *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (E)
10.14 Incentive Stock Option Plan of Gammaflux, Inc., a subsidiary of the Registrant . . . . . . . . (D)
10.15 Letter agreement dated June 28, 1991 among the Registrant,
Geomet Technologies, Inc., and Charles I. Judkins, Jr. . . . . . . . . . . . . . . . . . . . . (G)
10.17 Deferred Compensation Agreements dated as follows:
July 1, 1987 between the Registrant and the following persons:
Charles I. Judkins, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (C)
July 1, 1988 between the Registrant and Gayaneh Contos . . . . . . . . . . . . . . . . . . . . (F)
10.26 Executive Medical Plan dated August 21, 1991, effective July 1, 1991 . . . . . . . . . . . . . (G)
10.38 Agreement dated September 24, 1990 between Geomet Technologies Inc., a
subsidiary of the Registrant and the U.S. Army Troop Support Command as
modified through March 25, 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (G), (H)
10.39 Agreement dated September 30, 1988 between Geomet Technologies Inc., a
subsidiary of the Registrant and the U.S. Army Troop Support Command
Natick Research, Development and Engineering Center as modified
through April 26, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H), (I)
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
Page Number/
Item No. Description Reference
- -------- ----------- -----------
<S> <C> <C>
10.40 Option Exchange Offer dated April 16, 1991 between the Registrant and
participants of the Incentive Stock Option Plan and the Nonqualified
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (G)
10.41 Securities and Exchange Commission response dated September 23, 1991
to certain question regarding the Registrant's Option Exchange Offer . . . . . . . . . . . . . (G)
10.47 Bankruptcy Court-approved Settlement Agreement and Mutual Release
between Versar Architects and Engineers, Inc. and the City of
Sterling, Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H)
10.52 Incentive Stock Option Plan of Versar, Inc. dated December 1, 1992 * . . . . . . . . . . . . . (I)
10.58 Agreement dated March 10, 1993 between the Registrant and the Environmental
Protection Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (I)
10.64 Asset Purchase Agreement dated July 29, 1994 between Registrant and Kemron
Environmental Services, Inc. of certain assets of the registrants wholly-owned subsidiary
Versar Laboratories, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K)
10.65 Information Statement for the Distribution to Shareholders of Versar, Inc., the
Outstanding Shares of its Wholly-owned Subsidiary, Sarnia Corporation,
dated June 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J)
10.66 Agreement dated January 13, 1994 between the Registrant and the Department of
the Air Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K)
10.67 Agreement dated January 18, 1994 between the Registrant and OHM Services
Remediation Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K)
10.70 Agreement dated July 18, 1995 between the Registrant and the U.S. Air Force
Human Systems Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (M)
10.71 Agreement dated March 29, 1995 between the Registrant and the U.S. Army Norfolk
Corps of Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (M)
10.72 Agreement dated March 16, 1995 between the Registrant and the U.S. Army Baltimore
Corps of Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (M)
10.73 Agreement dated April 25, 1995 between the Registrant and the U.S. Army Philadelphia
Corps of Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (M)
10.74 Agreement dated August 10, 1995 between the Registrant and the Environmental
Protection Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (M)
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
Page Number/
Item No. Description Reference
- -------- ----------- -----------
<S> <C> <C>
10.75 Agreement dated January 31, 1995 between Geomet Technologies, Inc., a subsidiary
of the Registrant and the U.S. Army Soldier Systems Command . . . . . . . . . . . . . . . (M)
10.76 Agreement dated July 13, 1995 between Geomet Technologies, Inc., a subsidiary of
the Registrant and the U.S. General Services Administration . . . . . . . . . . . . . . . (M)
10.77 The Riggs National Bank of Washington D.C.'s letter dated, September 15, 1995
modifying certain provisions of the Revolving Loan and Security Agreement, dated
April 9, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (M)
10.78 Loan and Security Agreement between the Registrant and the Riggs
National Bank of Washington, D.C dated January 25, 1996. . . . . . . . . . . . . . . . . . (N)
10.79 Employment Agreement dated September 1, 1996 between the Registrant
and Benjamin M. Rawls* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (N)
10.80 Employment Agreement dated September 1, 1996 between the Registrant
and Thomas S. Rooney* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (N)
10.81 Change of Control Severance Agreement dated September 1, 1996 between
the Registrant and Lawrence W. Sinnott* . . . . . . . . . . . . . . . . . . . . . . . . . (N)
10.82 Change of Control Severance Agreement dated September 1, 1996 between
the Registrant and James C. Dobbs* . . . . . . . . . . . . . . . . . . . . . . . . . . . . (N)
10.83 Agreement and Plan of Merger dated July 29, 1997 between the Registrant
and Science Management Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (O)
10.84 Acquisition Promissory Note, dated April 30, 1997, between the Registrant and
NationsBank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (P)
10.85 Revolving Promissory Note, dated March 27, 1997, between the Registrant and
NationsBank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (P)
10.86 Financing and Security Agreement, dated March 27, 1997, between the Registrant and
NationsBank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (P)
10.87 Amendment to Financing and Security Agreement, dated April 30, 1997, between the
Registrant and NationsBank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (P)
10.88 The Greenwood Partnership Asset Acquisition Agreement . . . . . . . . . . . . . . . . . . 25-67
10.89 Modification to NationsBank loan to increase to $5M . . . . . . . . . . . . . . . . . . . 68-82
10.90 AFCEE RAC Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83-185
</TABLE>
20
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<TABLE>
<CAPTION>
Page Number/
Item No. Description Reference
- -------- ----------- -----------
<S> <C> <C>
11 Statement Re: Computation of Per Share Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 186
22 Subsidiaries of the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
27 Financial Data Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
- --------------------------------------------------------------------------------
* Indicates management contract or compensatory plan or arrangement
(A) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form S-1 Registration Statement ("Registration
Statement") effective November 20, 1986 (File No. 33-9391).
(B) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for the Fiscal Year Ended June
30, 1987 ("FY 1987 Form 10-K") filed with the Commission on September
28, 1987.
(C) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for the Fiscal Year Ended June
30, 1988 ("FY 1988 Form 10-K") filed with the Commission on September
28, 1988.
(D) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for the Fiscal Year Ended June
30, 1989 ("FY 1989 Form 10-K") filed with the Commission on September
28, 1989.
(E) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for the Fiscal Year Ended June
30, 1990 ("FY 1990 Form 10-K") filed with the Commission on September
28, 1990.
(F) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-Q for the quarter ended September 30, 1989 ("1st
Quarter FY 1990 Form 10-Q").
(G) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for the Fiscal Year Ended June
30, 1991 ("FY 1991 Form 10-K") filed with the Commission on October
15, 1991.
(H) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for Fiscal Year Ended June 30,
1992 ("FY 1992 Form 10-K") filed with the Commission on September 28,
1992.
(I) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for Fiscal Year Ended June 30,
1993 ("FY 1993 Form 10-K") filed with the Commission on September 22,
1993.
(J) Incorporated by reference Sarnia Corporation Information Statement for
distribution to shareholders of Versar, Inc. of the outstanding shares
of its wholly-owned subsidiary, Sarnia Corporation, dated June 30,
1994.
21
<PAGE> 22
(K) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for Fiscal Year Ended June 30,
1994 ("FY 1994 Form 10-K") filed with the Commission on September 27,
1994.
(L) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K/A Annual Report for Fiscal Year Ended June 30,
1994 ("FY 1994 Form 10-K/A") filed with the Commission on May 31,
1995.
(M) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for Fiscal Year Ended June 30,
1995 ("FY 1995 Form 10-K") filed with the Commission on September 28,
1995.
(N) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for Fiscal Year Ended June 30,
1996 ("FY 1996 Form 10-K") filed with the Commission on September 24,
1996.
(O) Incorporated by reference to the similarly numbered exhibit to the
Registrant's Form S-4 registration number 333-33167.
(P) Incorporated by reference to similarly numbered exhibit to the
Registrant's Form 10-K Annual Report for Fiscal Year Ended June 30,
1997 ("FY 1997 Form 10-K") filed with the Commission on September 29,
1997.
Exhibit item numbers are as outlined by item 601 of Regulation S-K.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
VERSAR, INC.
---------------------------------------
(Registrant)
Date: September 28, 1998 /S/ Benjamin M. Rawls
---------------------------------------
Benjamin M. Rawls
Chairman, Chief Executive Officer,
President, and Director
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 in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/S/ Benjamin M. Rawls Chairman, Chief Executive Officer, September 28, 1998
- ----------------------------------- President, and Director
Benjamin M. Rawls
/S/ James A. Skidmore, Jr. Vice Chairman and Director September 28, 1998
- -----------------------------------
James A. Skidmore, Jr.
/S/ Robert L. Durfee Executive Vice President and September 28, 1998
- ------------------------------------- Director
Robert L. Durfee
/S/ Lawrence W. Sinnott Vice President, Chief Financial September 28, 1998
- ----------------------------------- Officer, Treasurer, and
Lawrence W. Sinnott Principal Accounting Officer
/S/ Michael Markels, Jr. Chairman Emeritus and Director September 28, 1998
- -------------------------------------
Michael Markels, Jr.
/S/ Thomas J. Shields Director September 28, 1998
- -------------------------------------
Thomas J. Shields
/S/ Constantine G. Caras Director September 28, 1998
- ------------------------------------
Constantine G. Caras
</TABLE>
23
<PAGE> 24
<TABLE>
<S> <C> <C>
/S/ Pat H. Moore Director September 28, 1998
- -------------------------------------
Pat H. Moore
/S/ David Gladstone Director September 28, 1998
- ------------------------------------
David Gladstone
/S/ Charles I. Judkins, Jr. Director September 28, 1998
- --------------------------------------
Charles I. Judkins, Jr.
/S/ M. Lee Rice Director September 28, 1998
- --------------------------------------
M. Lee Rice
</TABLE>
24
<PAGE> 25
Report of Independent Public Accountants
To the Board of Directors and Stockholders of Versar, Inc.:
We have audited the accompanying consolidated balance sheets of Versar, Inc.
and its subsidiaries (a Delaware corporation) as of June 30, 1998 and 1997, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended June 30,
1998. 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 financial position of Versar, Inc. and
its subsidiaries as of June 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1998, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule listed in the index of financial
statements is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/S/ Arthur Andersen LLP
----------------------------------------
Arthur Andersen LLP
Washington, D.C.
September 23, 1998
F-1
<PAGE> 26
VERSAR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30,
------------------------
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents........................ $ 72 $ 96
Accounts receivable, net......................... 14,631 12,655
Prepaid expenses and other current assets........ 1,378 1,354
Deferred income taxes............................ 784 652
Assets of discontinued operations, net........... 76 1,952
-------- --------
Total current assets........................... 16,941 16,709
Property and equipment, net........................ 2,779 2,098
Deferred income taxes.............................. 502 257
Goodwill........................................... 1,069 2,501
Other assets....................................... 273 305
-------- --------
Total assets................................... $ 21,564 $ 21,870
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................. $ 3,303 $ 2,883
Bank line of credit.............................. 3,664 274
Current portion of long-term debt................ 1,114 819
Accrued salaries and vacation.................... 1,495 1,487
Other liabilities................................ 2,645 2,106
-------- --------
Total current liabilities...................... 12,221 7,569
Long-term debt..................................... 688 1,437
Other long-term liabilities........................ 2,084 1,015
Liabilities of discontinued operations, net........ 380 826
Reserve on guarantee of real estate debt........... 1,200 1,500
-------- --------
Total liabilities.............................. 16,573 12,347
-------- --------
Commitments and contingencies (Note K)
Stockholders' equity
Common stock, $.01 par value; 30,000,000 shares
authorized; 6,071,887 shares and 5,151,792
shares issued and outstanding at June 30, 1998
and 1997, respectively.......................... 61 52
Capital in excess of par value.................. 17,458 13,788
Accumulated deficit............................. (12,528) (4,317)
-------- --------
Total stockholders' equity..................... 4,991 9,523
-------- --------
Total liabilities and stockholders' equity..... $ 21,564 $ 21,870
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE> 27
VERSAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended June 30,
----------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
GROSS REVENUE $ 50,420 $ 44,935 $ 44,283
Purchased services and materials, at cost.......... 15,525 13,239 12,364
-------- -------- --------
NET SERVICE REVENUE................................... 34,895 31,696 31,919
Direct costs of services and overhead.............. 29,418 25,387 25,973
Selling, general, and administrative expenses...... 4,769 5,085 4,960
Other income, net.................................. --- (42) (28)
Losses on Sarnia operations........................ --- --- 142
Special charge..................................... 330 --- ---
-------- -------- --------
OPERATING INCOME...................................... 378 1,266 872
OTHER EXPENSE
Interest expense................................... 251 97 96
Income tax (benefit) expense....................... (149) 60 (216)
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS..................... 276 1,109 992
DISCONTINUED OPERATIONS (NOTE C)
(Loss) income from discontinued operations
(net of tax benefit of $90 at June 30,
1998 and tax expense of $90 at
June 30, 1997)............................... (5,776) 147 ---
Loss on disposal of discontinued operations,
including provision of $1,700 for operating
losses during phase out period (less
applicable income taxes of $0)............... (3,053) --- ---
-------- -------- --------
(LOSS) INCOME FROM DISCONTINUED
OPERATIONS.......................................... (8,829) 147 ---
-------- -------- --------
NET (LOSS) INCOME..................................... $ (8,553) $ 1,256 $ 992
======== ======== ========
INCOME PER SHARE FROM CONTINUING
OPERATIONS - BASIC.................................. $ .05 $ .22 $ .20
======== ======== ========
INCOME PER SHARE FROM CONTINUING
OPERATIONS - DILUTED................................ $ .05 $ .21 $ .19
======== ======== ========
(LOSS) INCOME PER SHARE FROM
DISCONTINUED OPERATIONS - BASIC
AND DILUTED......................................... $ (1.55) $ .03 $ ---
======== -------- ========
NET (LOSS) INCOME PER SHARE - BASIC................... $ (1.50) $ .25 $ .20
======== ======== ========
NET (LOSS) INCOME PER SHARE - DILUTED................. $ (1.50) $ .24 $ .19
======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING - BASIC................................. 5,695 5,041 4,905
======== ======== ========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED......................... 5,695 5,286 5,248
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE> 28
VERSAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Years Ended June 30, 1998, 1997, and 1996
--------------------------------------------------------------------
Total
Number Capital in Accumu- Stock-
of Common Excess of lated Treasury holders'
Shares Stock Par Value Deficit Stock Equity
------ ----- --------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1995................... 4,810 $ 48 $ 12,816 $ (6,565) $ (9) $ 6,290
Exercise of stock options................ 119 1 278 --- --- 279
Common stock issued for ValuAdd.......... 30 --- 97 --- --- 97
Common stock issued to ESSOP............. 32 1 108 --- --- 109
Purchase of common stock for treasury.... (18) --- --- --- (63) (63)
Issuance of treasury stock for stock
awards.............................. 7 --- --- --- 22 22
Issuance of treasury stock for ESSOP..... 15 --- --- --- 50 50
Net income............................... --- --- --- 992 --- 992
--------- --------- ---------- ---------- ---------- ---------
Balance, June 30, 1996................... 4,995 50 13,299 (5,573) --- 7,776
--------- ---------- ---------- ---------- ---------- ---------
Exercise of stock options................ 18 --- 45 --- --- 45
Common stock issued to ESSOP............. 139 2 444 --- --- 446
Purchase of common stock for treasury.... (40) --- --- --- (140) (140)
Issuance of treasury stock for ESSOP..... 40 --- --- --- 140 140
Net income............................... --- --- --- 1,256 --- 1,256
--------- --------- ---------- ---------- ---------- ---------
Balance, June 30, 1997................... 5,152 52 13,788 (4,317) --- 9,523
--------- --------- ---------- ---------- ---------- ---------
Exercise of stock options................ 71 --- 206 --- --- 206
Common stock issued for acquisitions..... 773 8 3,061 --- --- 3,069
Common stock issued to ESSOP............. 76 1 403 --- --- 404
Decrease in guarantee of Sarnia debt..... --- --- --- 300 --- 300
Tax benefit of exercised options......... --- --- --- 42 --- 42
Net loss................................. --- --- --- (8,553) --- (8,553)
--------- --------- ---------- ---------- ---------- ----------
Balance, June 30, 1998................... 6,072 $ 61 $ 17,458 $ (12,528) $ --- $ 4,991
========= ========= ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE> 29
VERSAR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Years Ended June 30,
-------------------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities
Net (loss) income ............................................. $(8,553) $ 1,256 $ 992
Adjustments to reconcile net (loss) income to
net cash provided by continuing operating activities
Loss (income) from discontinued operations............... 8,829 (147) ---
Depreciation and amortization............................ 731 695 684
Goodwill write-off....................................... 55 --- ---
Loss on sale of property and equipment................... 80 36 14
Provision for doubtful accounts receivable............... 269 (4) (37)
Common stock issued to ESSOP............................. 404 586 181
Deferred tax benefit..................................... (300) (358) (250)
------- ------- -------
Subtotal............................................ 1,515 2,064 1,584
------- ------- -------
Changes in assets and liabilities
Increase in accounts receivable......................... (2,244) (275) (616)
(Increase) decrease in prepaids and other assets....... (716) 427 (500)
Increase in accounts payable............................ 420 785 148
Increase (decrease) in accrued salaries and vacation.... 8 (132) 228
Increase (decrease) in other liabilities................ 1,608 (47) 659
Net change in assets and liabilities of Sarnia.......... --- --- 142
------- ------- -------
Net cash provided by continuing
operations......................................... 591 2,822 1,645
Changes in net assets/liabilities of discontinued
operations......................................... (2,258) (979) (615)
------- ------- -------
Net cash (used in) provided by operating
activities..................................... (1,667) 1,843 1,030
------- ------- -------
Cash flows from investing activities
Purchases of property and equipment........................... (482) (638) (1,261)
Proceeds from sale of fixed assets............................ --- 60 ---
Cash used by discontinued operations.......................... (77) --- ---
Acquisition of businesses..................................... (940) (2,870) ---
------- ------- -------
Net cash used in investing activities.............. (1,499) (3,448) (1,261)
------- ------- -------
Cash flows from financing activities
Net borrowings (payment) on bank line of credit............... 3,390 (218) 54
Principal payments on long-term debt.......................... (520) (69) (14)
Notes payable for leases...................................... 66 --- ---
Borrowing for acquisition of SMC.............................. --- 2,000 ---
Purchase of treasury stock.................................... --- (140) (63)
Proceeds from issuance of common stock........................ 206 45 279
------- ------- -------
Net cash provided by financing activities.......... 3,142 1,618 256
------- ------- -------
Net (decrease) increase in cash.................................. (24) 13 25
Cash at the beginning of the year................................ 96 83 58
------- ------- -------
Cash at the end of the year...................................... $ 72 $ 96 $ 83
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 30
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation: The accompanying consolidated financial
statements include the accounts of Versar, Inc. and its majority-owned
subsidiaries ("Versar" or the "Company"). All significant intercompany balances
and transactions have been eliminated in consolidation. The results of
operations of Sarnia Corporation ("Sarnia") were included in the Company's
financial statements through January 1, 1996. In September 1998, the Company
decided to discontinue its management services and engineering, design and
construction services businesses which are classified as discontinued
operations. Both of these businesses came from the acquisition of SMC in May
1997 (see Note B). The Company's remaining business segments are environmental
services, energy conservation services and facility infrastructure services. The
energy conservation and facility infrastructure segments are collectively less
than 10% of consolidated revenues, operating profit and identifiable assets and
therefore separate segment reporting is not required under Statement of
Financial Accounting Standards (SFAS) No. 14 "Financial Reporting for Segments
of a Business Enterprise". Both segments are expected to grow and may become
separate reportable segments in fiscal year 1999.
Accounting estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those estimates.
Contract accounting: Contracts in process are stated at the lower of
actual cost incurred plus accrued profits or net estimated realizable value of
incurred costs, reduced by progress billings. The Company records income from
major fixed-price contracts, extending over more than one accounting period,
using the percentage-of-completion method. During performance of such
contracts, estimated final contract prices and costs are periodically reviewed
and revisions are made as required. The effects of these revisions are included
in the periods in which the revisions are made. On cost-plus-fee contracts,
revenue is recognized to the extent of costs incurred plus a proportionate
amount of fee earned, and on time-and-material contracts, revenue is recognized
to the extent of billable rates times hours delivered plus material and other
reimbursable costs incurred. Losses on contracts are recognized when they become
known. Disputes arise in the normal course of the Company's business on projects
where the Company is contesting with customers for collection of funds because
of events such as delays, changes in contract specifications and questions of
cost allowability or collectibility. Such disputes, whether claims or unapproved
change orders in the process of negotiation, are recorded at the lesser of their
estimated net realizable value or actual costs incurred and only when
realization is probable and can be reliably estimated. Claims against the
Company are recognized where loss is considered probable and reasonably
determinable in amount.
It is the Company's policy to provide reserves for the collectibility
of accounts receivable when it is determined that it is probable that the
Company will not collect all amounts due and the amount of reserve requirements
can be reasonably estimated.
Depreciation and amortization: Depreciation and amortization are
computed on a straight-line basis over the estimated useful lives of the assets.
F-6
<PAGE> 31
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Intangible assets: On April 29, 1996, Versar purchased for 30,000
common shares the assets of ValuAdd. The purchase resulted in the Company
recording goodwill of $97,500, which was being amortized over a five year
period. In fiscal year 1998, the Company recorded a special charge of $330,000
to write off of receivables and write off of goodwill for the ValuAdd
operations. The Company's decision to shut down the ValuAdd operations is a
result of significant business shortfalls in the ValuAdd operations. The
remaining balance of approximately $55,000 was written off as of June 30, 1998
as the Company determined that the goodwill was impaired. On May 2, 1997, Versar
acquired 53.5% of the outstanding common stock and all outstanding preferred
stock of Science Management Corporation ("SMC") for cash. Versar had selected a
period of 15 years for amortization of the goodwill, which was determined to be
reasonable based on the mature businesses of SMC.
On October 22, 1997, the shareholders of SMC approved the Agreement and
Plan of Merger between Versar and SMC, and SMC was merged into a wholly-owned
subsidiary of Versar effective October 23, 1997. In connection with the merger,
Versar issued approximately 533,433 shares of Versar's common stock to SMC
stockholders and SMC became a wholly-owned subsidiary of Versar. The issuance of
the 533,433 shares and transaction costs increased goodwill and equity of Versar
during the second quarter of fiscal year 1998 by approximately $2,898,000.
In accordance with SFAS No. 121, in the fourth quarter of fiscal year
1998, the Company determined that the projected future cash flows over the
next 14 years, based on current information, will not be sufficient to offset
the goodwill amortization related to the SMC acquisition. The Company further
determined that the goodwill was fully impaired and, accordingly, wrote off the
entire balance of $5,064,000 of goodwill resulting from the SMC acquisition.
On January 30, 1998, Versar completed the acquisition of The Greenwood
Partnership, P.C. ("Greenwood" or "TGP"). As a part of the acquisition, the
Company increased its current line of credit by $2,000,000 and retired existing
debt of Greenwood of approximately $672,000, paid $300,000 in cash, recorded
additional notes payable to Greenwood stockholders of $450,000 payable over 4
years, and issued 228,572 shares of common stock. The transaction was accounted
for as a purchase. Goodwill recorded as part of the transaction was
approximately $1.1 million. Versar is amortizing the goodwill related to the
acquisition over 15 years, which was determined to be reasonable based on the
mature business of Greenwood. The assets of Greenwood are now included as
collateral as part of the Company's line of credit.
Direct costs of services and overhead: These expenses represent the
cost to Versar of direct and overhead staff, including recoverable overhead
costs and unallowable costs that are directly attributable to overhead.
Net (loss) income per share: The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128 "Earnings Per Share," which requires
companies to present basic earnings per share and diluted earnings per share.
The Standard requires additional informational disclosures along with the
restatement of earnings per share for all prior periods reported.
Income taxes: The Company follows Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109). The Standard
requires the recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax bases of other assets and liabilities.
Deferred compensation: The Company permitted employees to defer a
portion of their compensation, during fiscal years 1988 through 1991, providing
for future annual payments, including interest. Interest is accrued on a monthly
basis at the amount stated in each employee's agreement. The Company has
liabilities for deferred compensation of $1,026,868 and $990,000 at June 30,
1998 and 1997, respectively. Versar purchased key-man life insurance policies to
fund the amounts due under the deferred compensation agreements. The cash
surrender value of the policies, net of loans, was $194,000 and $215,000 at June
30, 1998 and 1997, respectively.
F-7
<PAGE> 32
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Cash and Cash Equivalents: All investments with an original maturity of
three months or less are considered to be cash equivalents.
New Accounting Pronouncements: In June 1997, the Financial Accounting
Standard Board issued Statement of Financial Accounting Standard No. 131
"Disclosures about Segments of an Enterprise and Related Information" (SFAS
131). SFAS No. 131 becomes effective in Versar's fiscal year 1999. SFAS No.
131 requires disclosure of operating segments of the Company so that the reader
can better understand and assess the business enterprise performance taken as a
whole. Versar currently has three business segments: environmental services,
energy conservation services, and facility infrastructure services. Currently,
the energy conservation and facility infrastructure services segments do not
meet the reporting requirements under those required by SFAS No. 131 or SFAS
No. 14. During fiscal year 1999, the growth in these segments may require the
Company to provide financial disclosure as required under SFAS No. 131.
NOTE B ACQUISITIONS
On May 2, 1997, Versar acquired 53.5% of the outstanding common stock
and all outstanding preferred stock of SMC for $2,870,000 in cash. The
acquisition was financed by a three year $2,000,000 term note at a prime rate of
interest plus 1/2% (9% at June 30, 1998) from NationsBank, N.A. The remaining
portion of $870,000 was paid with current working capital. This transaction was
accounted for under the purchase method of accounting.
On October 22, 1997, the shareholders of SMC approved the Agreement and
Plan of Merger between Versar and SMC, and SMC was merged into a wholly-owned
subsidiary of Versar effective October 23, 1997. In connection with the merger,
Versar issued approximately 533,433 shares of Versar's common stock to SMC
stockholders other than Versar and SMC became a wholly-owned subsidiary of
Versar. The issuance of the 533,433 shares increased goodwill and equity of
Versar during the second quarter of fiscal year 1998 by $2,898,000. SMC
represented the engineering, design, and construction services and management
services segments of the company in fiscal year 1997. The entire balance of the
goodwill was written off in fiscal year 1998 as the SMC businesses are
presented as discontinued operations in fiscal year 1998.
On January 30, 1998, Versar completed the acquisition of The Greenwood
Partnership, P.C. As a part of the acquisition, the Company increased its
current line of credit by $2,000,000 and retired existing debt of Greenwood of
approximately $672,000, paid $300,000 in cash, recorded an additional note
payable to Greenwood stockholders of $450,000 payable over 4 years, and issued
228,572 shares of common stock. The transaction was accounted for as a purchase
of assets and goodwill recorded as part of the transaction was approximately
$1.1 million. The assets of Greenwood are now included as collateral as part of
the Company's line of credit. The Greenwood operation became part of Versar's
energy conservation segment.
NOTE C DISCONTINUED OPERATIONS
As a result of poor performance following its acquisition of SMC, the
Company determined to discontinue operations of its management services and
engineering, design and construction services segments (acquired from SMC),
which provides services to the commercial and the petrochemical industries.
The engineering, design and construction services segment was severely impacted
by the recent downturn in the petrochemical industry and the winding down of a
$20 million construction project, which reduced their sales volume by over 80%.
Such a downturn could not be reasonably anticipated as several pending projects
were put on hold or cancelled because the reduced oil prices did not make it
economically feasible for the projects. The management services segment of SMC
also suffered from loss of three large contracts which represented 75% of the
sales volume. The Company is pursuing sale of these two businesses and expects
that such sales will occur within fiscal year 1999. The Company has identified
potential buyers, but, if a sale does not occur within a reasonable period it
is likely that a shut down will be required. A shut down would
F-8
<PAGE> 33
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
not result in further material loss to the Company. SMC's sales for fiscal year
1998 were $34,769,000 and $3,582,000 for the two months of fiscal year 1997.
In conjunction with the decision for discontinuance of these
businesses, the Company recorded a loss from discontinued operations of
$8,829,000 net of $90,000 tax benefit due to the write-off of goodwill
associated with its acquisition and operating losses of $5,776,000 (net of tax)
and accrued reserves of $3,053,000 to finalize the disposition. As part of the
accrued reserves, the Company reserved approximately $1,700,000 for operating
losses in the period prior to the sale or shut down.
Current assets of discontinued operations consist primarily of accounts
receivable. Long term liabilities consist primarily of previous SMC bankruptcy
obligations prior to 1996. (see Note I concerning the tax effect of the
discontinuance.)
Summarized financial results of the discontinued operations are as
follows:
<TABLE>
<CAPTION>
Years Ended June 30,
----------------------
1998 1997
------- -------
Balance Sheet (In thousands)
<S> <C> <C>
Cash and cash equivalents.................. $ 203 $ 341
Accounts receivable, net................... 6,068 4,870
Prepaid expenses and other current assets.. 366 134
------- -------
Total current assets..................... 6,637 5,345
Property and equipment, net................ 128 177
Other assets............................... 95 8
------- -------
Total assets............................. $ 6,860 $ 5,530
======= =======
Accounts payable........................... $ 2,397 $ 2,076
Other current liabilities.................. 4,164 1,317
------- -------
Total current liabilities................ 6,561 3,393
Other liabilities.......................... 603 1,011
------- -------
Total liabilities........................ 7,164 4,404
------- -------
Net (liabilities) assets of
of discontinued operations............... $ (304) $ 1,126
======= =======
</TABLE>
F-9
<PAGE> 34
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Years Ended June 30,
------------------------
1998 1997
-------- --------
Income Statement (In thousands)
<S> <C> <C>
Gross Revenue............................... $ 34,769 $ 3,582
Costs and expenses.......................... 35,571 3,345
-------- --------
Operating (loss) income from discontinued
operations............................... (802) 237
Goodwill write-off.......................... 5,064 ---
Income tax (benefit) expense................ (90) 90
-------- --------
(Loss) income from discontinued
operations............................... (5,776) 147
Loss on disposal of operations.............. (3,053) ---
-------- --------
Total (loss) income from discontinued
operations......................... $ (8,829) $ 147
======== ========
</TABLE>
NOTE D ASSET DISPOSITIONS
Sarnia, formerly Versar Virginia, Inc., a former wholly-owned real estate
subsidiary of Versar, was spun-off to Versar stockholders on June 30, 1994.
Sarnia was established in 1982 to own and operate Versar Center, the
headquarters buildings of Versar in Springfield, Virginia. On June 30, 1994,
Versar distributed to the holders of its common stock substantially all of the
common stock of Sarnia (the Distribution). The Distribution provided Versar
stockholders one share of Sarnia common stock for every outstanding share of
Versar common stock. The spin-off, although a divestiture for legal and tax
purposes, was not accounted for as a divestiture for accounting purposes until
January 1996, because the spin-off did not relieve Versar of the risks of
ownership due to Versar's guarantee of Sarnia's $12,400,000 debt at June 30,
1994.
On January 25, 1996, Sarnia obtained new financing which reduced Versar's
guarantee of Sarnia's indebtedness from $12,400,000 to $1,500,000. Sarnia has
paid down the debt that Versar has guaranteed to $1,200,000 at June 30, 1998,
and accordingly Versar's current reserve is $1,200,000 against the guarantee.
Therefore, after the second quarter of fiscal year 1996, Versar no longer
includes the results of operations and financial position of Sarnia in the
consolidated financial statements. Sarnia's results of operations through
January 1, 1996 are presented as single line items in the Consolidated
Statements of Operations.
F-10
<PAGE> 35
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE E ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
June 30,
------------------------
1998 1997
-------- --------
(In thousands)
<S> <C> <C>
Billed receivables
U.S. Government........... $ 4,550 $ 5,683
Commercial................ 4,665 3,405
Unbilled receivables
U.S. Government........... 3,696 3,197
Commercial................ 2,336 960
-------- --------
15,247 13,245
Allowance for doubtful accounts... (616) (590)
-------- --------
$ 14,631 $ 12,655
======== ========
</TABLE>
Unbilled receivables represent amounts earned which have not yet been
billed and other amounts which can be invoiced upon completion of fixed-price
contracts, attainment of certain contract objectives, or completion of federal
and state governments' incurred cost audits. Management anticipates that the
June 30, 1998 unbilled receivables will be substantially billed and collected in
fiscal year 1999.
NOTE F PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Estimated June 30,
Useful Life ---------------------------
in Years 1998 1997
-------------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Furniture and fixtures.......................... 5 $ 1,815 $ 1,586
Equipment....................................... 3 to 10 7,176 6,238
Leasehold improvements.......................... Life of lease 2,207 1,432
---------- ----------
11,198 9,256
Accumulated depreciation
and amortization............................. (8,419) (7,158)
---------- -----------
$ 2,779 $ 2,098
========== ==========
</TABLE>
Depreciation and amortization of property and equipment included as
expense in the accompanying Consolidated Statements of Operations was $681,000,
$676,000, and $665,000 for the years ended June 30, 1998, 1997, and 1996,
respectively.
Maintenance and repair expenses approximated $279,000, $248,000, and
$301,000 for the years ended June 30, 1998, 1997, and 1996, respectively.
F-11
<PAGE> 36
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE G DEBT
<TABLE>
<CAPTION>
June 30,
----------------------------
1998 1997
---------- -----------
(In thousands)
<S> <C> <C>
Bank line of credit, NationsBank, N.A............................. 3,664 274
Acquisition promissory note....................................... 1,438 1,958
Other............................................................. 364 298
---------- -----------
Total debt................................................... 5,466 2,530
Current portion of long-term debt................................. (4,778) (1,093)
---------- -----------
Long-term debt.................................................... $ 688 $ 1,437
========== ===========
</TABLE>
In April 1997, Versar changed its line of credit facility from the
Riggs National Bank to NationsBank, N.A. The new line of credit provides for
advances up to $5,000,000 based on qualifying receivables less the $1,200,000
guarantee of Sarnia's term loan by Versar and the outstanding acquisition loan
balance. Interest on the borrowings is based on the lower of the 30 day London
Interbank Offered Rate (LIBOR) plus two hundred and fifty basis points (8.16% at
June 30, 1998). A commitment fee of 1/4% on the unused portion of the line of
credit is also charged. The line is guaranteed by the Company and each
subsidiary individually and is collectively secured by accounts receivable,
equipment and intangibles, plus all insurance policies on property constituting
collateral. Unused borrowing availability at June 30, 1998 was approximately
$1,336,000. Advances under the line are due upon demand or on November 30, 1998.
The loan has certain covenants related to maintenance of financial ratios. The
Company's covenants were modified at June 30, 1998 due to the SMC goodwill write
off discontinuance of SMC segments. Management believes that cash generated by
operations and borrowings available from the bank line of credit and the
extension of the line will be adequate to meet the working capital needs for
fiscal year 1999.
Versar obtained a $2,000,000 promissory note from NationsBank on April
30, 1997 for the acquisition of SMC (See Note B). The interest on the note is
based on prime rate plus one half of one percent (.50%) per annum (9% at June
30, 1998). Principal payment commenced on May 31, 1997 and is scheduled to be
paid in full on April 30, 2000. At June 30, 1998, approximately $1,438,000 was
remaining on this loan.
Versar has guaranteed certain debt of Sarnia Corporation (formerly
Versar Virginia, Inc., which was spun-off to Versar shareholders on June 30,
1994). On January 25, 1996, Sarnia refinanced its outstanding debt. As a result
of the refinancing, Versar's guarantee of Sarnia's debt has decreased from
approximately $12,400,000 to $1,500,000. The $1,500,000 note matures in five
years with $300,000 principal payment per year starting fiscal year 1997.
Sarnia's balance due on the term loan was $1,200,000 at June 30, 1998 and
accordingly, Versar reduced its reserve to $1,200,000 as of June 30, 1998. As
the term loan is repaid, the reserve will be reduced and added to Versar's
equity.
The revolving bank line of credit amount outstanding based on average
daily balances for the years ended June 30, 1998, 1997, and 1996, approximated
$2,126,000, $306,000, and $673,000, respectively, and the weighted average
interest rates for such periods were 8.19%, 8.78%, and 10.82%, respectively. The
maximum amount outstanding approximated $4,449,700, $1,146,000, and $1,500,000
during fiscal years 1998, 1997, and 1996, respectively. Weighted average
interest rates are computed by relating the interest expense to the average
month-end balance.
Interest payments were $339,000, $62,000, and $89,000 for the fiscal
years ended June 30, 1998, 1997, and 1996, respectively.
F-12
<PAGE> 37
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE H STOCK OPTIONS
In November 1996, the stockholders approved the Versar 1996 Stock
Option Plan to provide employees and directors of the Company and certain other
persons an incentive to remain as employees of the Company and to encourage
superior performance. At June 30, 1997, 91,750 shares were granted under the
1996 Plan to SMC employees in connection with the acquisition. The Company also
maintains the Versar 1992 Stock Option Plan, the 1982 Incentive Stock Option
Plan, and a Non-Qualified Option Plan adopted in 1987. Options have been granted
from these plans to purchase the Company's common stock.
At June 30, 1998, options to purchase an aggregate of 1,170,240 shares
of common stock were outstanding under the 1996, 1992 and 1982 Incentive Stock
Option Plans at per share exercise prices ranging from $2.375 to $5.375 and
options to purchase an aggregate of 343,835 shares were outstanding under the
Non-Qualified Stock Option Plan at per share exercise prices ranging from $2.375
to $3.563.
Under the 1992 Plan, options have been granted and may be granted to
key employees at the fair market value on the date of grant and become
exercisable during the four-year period from the date of the grant at 20% per
year. Unexercised options are cancelled on the fifth anniversary of certain
grants under the 1982 Plan and on the tenth anniversary of the grant under the
remainder of the 1982 and 1992 Plans. Under the 1996 Stock Option Plan, options
may be granted at the fair market value on the date of grant. The vesting of
each option will be determined by the Administrator of the Plan. Each option
expires on the earlier of the last day of the tenth year after the date of grant
or the date the optionee ceases to be affiliated with the Company or its
subsidiaries.
Options under the Incentive Stock Option 1982, 1992, and 1996 Plans are
as follows:
<TABLE>
<CAPTION>
Optioned Option Price
Shares Per Share Total
------ ------------------------- -----
(In thousands, except per share price)
<S> <C> <C> <C> <C>
Outstanding at June 30, 1995........... 942 $ 2.063 to $ 3.940 $ 2,591
Issued......................... 389 2.813 to 3.625 1,178
Exercised...................... (80) 2.063 to 2.563 (185)
Cancelled...................... (35) 2.063 to 3.940 (96)
------ ---------
Outstanding at June 30, 1996........... 1,216 2.125 to 3.940 3,488
Issued......................... 99 2.719 to 3.563 349
Exercised...................... (14) 2.125 to 2.688 (35)
Cancelled...................... (377) 2.125 to 3.940 (949)
------ ---------
Outstanding at June 30, 1997........... 924 2.375 to 3.940 2,853
Issued......................... 326 3.375 to 5.375 1,466
Exercised...................... (61) 2.375 to 3.940 (176)
Cancelled...................... (19) 2.375 to 3.940 (61)
------ ---------
Outstanding at June 30, 1998........... 1,170 $ 2.375 to $ 5.375 $ 4,082
====== ========
</TABLE>
F-13
<PAGE> 38
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
At June 30, 1998, 1997, and 1996, options of 685,274, 560,731, and
807,408 shares were exercisable under the 1982, 1992 and 1996 Plans.
On April 30, 1987, the Board of Directors adopted a Non-Qualified Stock
Option Plan. Participants in the Plan include employees, independent
contractors, and, in certain circumstances, Directors of the Company. This Plan
has expired and no additional options may be granted under its terms. The
Company will continue to maintain the Plan until all options previously granted
under it have been exercised or have expired without exercise.
Options under the 1987 Non-Qualified Plan are as follows:
<TABLE>
<CAPTION>
Optioned Option Price
Shares Per Share Total
------ ------------------------- ---------
(In thousands, except per share price)
<S> <C> <C> <C> <C>
Outstanding at June 30, 1995........... 150 $ 2.375 to $ 2.500 $ 367
Issued......................... 264 3.000 to 3.563 804
Cancelled...................... (2) 2.437 to 2.437 (5)
Exercised...................... (39) 2.375 to 2.437 (93)
------ ---------
Outstanding at June 30, 1996........... 373 2.375 to 3.563 1,073
Issued......................... --- --- to --- ---
Cancelled...................... --- --- to --- ---
Exercised...................... (4) 2.500 to 2.500 (10)
------ ---------
Outstanding at June 30, 1997........... 369 2.375 to 3.563 1,063
Issued......................... --- --- to --- ---
Cancelled...................... (15) 3.125 to 3.125 (47)
Exercised...................... (10) 3.125 to 3.125 (31)
------ ---------
Outstanding at June 30, 1998........... 344 $ 2.375 to $ 3.563 $ 985
====== =========
</TABLE>
Non-Qualified stock options of 249,901, 212,134, and 163,367 shares
were exercisable at June 30, 1998, 1997, and 1996, respectively.
The Company applies APB 25 and related interpretations in accounting
for its stock option plans. Accordingly, no compensation cost has been
recognized for stock options. Had compensation cost for stock options
F-14
<PAGE> 39
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
been determined based on the fair value at the grant dates for awards under
these plans consistent with the method of SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company's net income and net income per share
would have been reduced to the pro forma amounts indicated as follows:
<TABLE>
<CAPTION>
1998 1997
------- ------
(In thousands, except
per share data)
<S> <C> <C> <C>
Net (Loss) Income: As Reported $ (8,553) $ 1,256
Pro Forma (8,724) 1,085
Net (Loss) Income Per Share - Basic: As Reported $ (1.50) $ 0.24
Pro Forma (1.53) 0.21
</TABLE>
In accordance with SFAS No. 123, the fair value approach to valuing
stock options used for pro forma presentation has not been applied to stock
options granted prior to July 1, 1995. The compensation cost calculated under
the fair value approach is recognized over the vesting period of the stock
options.
The weighted average fair value of options granted was $2.05 and $1.56
during 1998 and 1997, respectively. The fair value is estimated on the date of
grant using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1998 and 1997: expected volatility of
47.5% for both years; risk-free interest rate of 5%; and expected lives of five
years after the grant date.
NOTE I INCOME TAXES
The (benefit) provision for income taxes applicable to income from
continuing operations consists of the following:
<TABLE>
<CAPTION>
Years Ended June 30,
-------------------------------
1998 1997 1996
----- ----- -----
(In thousands)
<S> <C> <C> <C>
Currently payable
Federal ...... $ 95 $ 118 $ 2
State ........ 43 77 32
Deferred
Federal ...... (287) (135) (250)
State ........ --- --- ---
----- ----- -----
$(149) $ 60 $(216)
===== ===== =====
</TABLE>
F-15
<PAGE> 40
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Deferred tax assets are comprised of the following (in thousands):
<TABLE>
<CAPTION>
June 30, June 30,
1998 1997
------- -------
<S> <C> <C>
Deferred Tax Assets:
Employee benefits ........................ $ 687 $ 701
Bad debt reserves ........................ 314 196
All other reserves ....................... 988 417
Discontinued operations reserves ......... 704 ---
Alternative minimum tax credits .......... 22 74
Net operating loss of purchased
business ............................... 1,000 1,000
State tax net operating losses ........... 262 262
Depreciation ............................. 50 ---
------- -------
Total Deferred Tax Assets 4,027 2,650
Deferred Tax Liabilities:
Depreciation ............................. --- (20)
Other .................................... (1) (1)
------- -------
Total Deferred Tax Liabilities ... (1) (21)
Net Deferred Tax Assets ..................... 4,026 2,629
Valuation Allowance ......................... (2,740) (1,720)
------- -------
Net Deferred Tax Asset ...................... $ 1,286 $ 909
======= =======
</TABLE>
Realization of deferred tax assets is dependent upon generation of
sufficient income by Versar and in some cases sufficient income in specific
jurisdictions and by specific office locations. At June 30, 1997, the Company
had $132,000 of alternative minimum tax credit carryforwards which can be
carried forward indefinitely. The alternative minimum tax credit carryforward
may be used to offset regular tax liability in future years to the extent it
exceeds the alternative minimum tax liability. These carryforwards are reflected
as deferred tax assets. The Company has established a valuation allowance until
the probability of realization of these amounts becomes more certain.
F-16
<PAGE> 41
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The tax (benefit) provision was composed of the following:
<TABLE>
<CAPTION>
Years Ended June 30,
-------------------------------------------
1998 1997 1996
--------- -------- --------
(In thousands)
<S> <C> <C> <C>
Expected provision at federal
statutory rate.......................... $ 43 $ 397 $ 264
Change in valuation allowance.................. (300) (375) (552)
State income tax, net of federal benefit....... 28 77 32
Permanent items................................ 66 40 32
Losses on Sarnia operations not deductible..... --- --- 48
Other ........................................ 14 (79) (40)
--------- -------- --------
$ (149) $ 60 $ (216)
========= ======== ========
</TABLE>
Income taxes paid for the years ended June 30, 1998, 1997, and 1996 were
$414,000, $307,000, and $7,000, respectively.
The tax (benefit) provision applicable to losses from discontinued
operations was composed of the following:
<TABLE>
<CAPTION>
Years Ended June 30,
---------------------------
1998 1997
---------- ---------
(In thousands)
<S> <C> <C>
Expected (benefit) provision at federal
statutory rate.............................. $ (3,032) $ 81
Permanent items............................. 1,816 9
Change in valuation allowance............... 1,092 ---
Other....................................... 34 ---
---------- ---------
$ ( 90) $ 90
========== =========
</TABLE>
SMC has net operating loss carryforwards of approximately $9,500,000
for federal income tax purposes, which will expire in the years 1997 through
2011. Due to the substantial changes in SMC's ownership, there are annual
limitations on the amount of the carryforwards that can be utilized. The
utilization of the net operating losses is limited to approximately $300,000 per
year for the 13 remaining years. If the net operating losses are utilized, they
will favorably impact the results of operations as the related deferred tax
asset is fully reserved. SMC also has net operating loss carryforwards available
for use in the United Kingdom of approximately $1,000,000 which are available
indefinitely, as well as minor amounts available for use in other jurisdictions.
NOTE J EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
The Company has established an Employee Savings and Stock Ownership
Plan (ESSOP) for the benefit of its employees and those of its subsidiaries. To
be eligible to participate in the plan, an employee must have been
F-17
<PAGE> 42
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
employed for one year with at least 1,000 hours of service. The plan includes an
Employee Stock Ownership Plan (ESOP) and an Employee Savings Plan (401(k)).
Contributions to the ESOP are made at the discretion of the Company in
the form of the Company's stock or cash, which is invested by the plan's
trustees in the Company's stock. No contributions were made in fiscal years
1998, 1997, and 1996, respectively.
The Employee Savings Plan was adopted in accordance with Section 401(k)
of the Internal Revenue Code. Under the plan, participants may elect to defer up
to 15% of salary through contributions to the plan, which are invested in
selected mutual funds or used to buy insurance. The Company will match qualified
contributions with a contribution of 100% of each employee's contribution up to
4% of the employee's salary. This contribution may be in the Company's stock or
cash, which will be invested by the plan's trustees in the Company's stock.
Company matching contributions approximated $514,000, $492,000, and $473,000,
for fiscal years 1998, 1997, and 1996, respectively.
All contributions to the 401(k) Plan vest immediately. Contributions to
the ESOP vest ratably with years of service such that full vesting occurs after
five years of credited service.
Geomet Technologies, Inc. ("Geomet"), a wholly-owned subsidiary, has a
profit-sharing retirement plan for the benefit of its employees. Contributions
are made at the discretion of Geomet's Board of Directors. In fiscal year 1998
contributions approximated $25,000, but there were no contributions in fiscal
years 1997 and 1996. Vesting occurs over time, such that an employee is 100%
vested after seven years of participation.
NOTE K COMMITMENTS AND CONTINGENCIES
Versar has a substantial number of U.S. Government contracts, the costs
of which are subject to audit by the Defense Contract Audit Agency. All fiscal
years through 1993 have been audited and closed. Management believes that the
effect of disallowed costs, if any, for the periods not yet audited will not
have a material adverse effect on the consolidated financial position and
results of operations.
The Company leases approximately 210,000 square feet of office space,
including space leased from Sarnia, as well as data processing and other
equipment under agreements expiring through 2009. Minimum future obligations
under operating leases are as follows:
<TABLE>
<CAPTION>
Total
Years Ending June 30, Amount
--------------------- ------
(In thousands)
<S> <C>
1999.................................... $ 3,362
2000.................................... 2,631
2001.................................... 2,114
2002.................................... 1,858
2003.................................... 1,816
2004 and thereafter..................... 7,132
----------
$ 18,913
==========
</TABLE>
F-18
<PAGE> 43
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Certain of the lease payments are subject to adjustment for increases
in utility costs and real estate taxes. Total rental expense approximated
$2,898,000, $2,658,000 and $2,467,000, for 1998, 1997 and 1996, respectively.
Versar is a defendant in lawsuits that have arisen in the ordinary
course of its business. Management does not believe that the outcome of these
lawsuits will have a material adverse effect on the Company's consolidated
financial position and results of operations.
NOTE L CUSTOMER INFORMATION
A substantial portion of the Company's service revenue is derived from
contracts with the U.S. Government as follows:
<TABLE>
<CAPTION>
Years Ended June 30,
---------------------------------------------
1998 1997 1996
----------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
U.S. Department of Defense $ 16,771 $ 15,952 $ 16,479
U.S. Environmental Protection Agency 3,493 3,339 3,787
Other U.S. Government Agencies 2,385 2,972 2,035
----------- ---------- ----------
Total U.S. Government $ 22,649 $ 22,263 $ 22,301
=========== ========== ==========
</TABLE>
The Company's largest contract with the U.S. Air Force generated revenues
of approximately $10,513,000 and $10,768,000 and $7,951,000 in fiscal years
1998, 1997 and 1996, respectively.
F-19
<PAGE> 44
VERSAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE M QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for fiscal years 1998 and 1997 is as
follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Fiscal Year 1998 Fiscal Year 1997
--------------------------------------------------- ------------------------------------------------
Quarter ending Jun 30 Mar 31 Dec 31 Sept 30 Jun 30 Mar 31 Dec 31 Sept 30
- ------------------------------ ------------ ----------- ------------ ------------ ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gross Revenue............... $ 14,699 $ 13,505 $ 11,378 $ 10,838 $ 12,001 $ 10,727 $ 10,749 $ 11,458
Net Service Revenue......... 10,002 8,944 8,103 7,846 8,377 7,705 7,740 7,874
Operating (loss) income from
continuing operations..... (299) 112 379 84 237 216 391 265
Operating (loss) income from
discontinued operations... (8,842) (77) (29) 119 147 --- --- ---
Net (loss) income........... $ (9,141) $ 35 $ 350 $ 203 $ 384 $ 216 $ 391 $ 265
=========== ========= ========= ========= ========= ========= ========== =========
(Loss) income per share from
continuing operations -
diluted................... $ (.05) $ .02 $ .06 $ .02 $ .04 $ .04 $ .08 $ .05
========= ========= ========= ========= ========= ========= ========== =========
(Loss) income per share from
discontinued operations -
diluted................... $ (1.46) $ (.01) $ --- $ .02 $ .03 $ --- $ --- $ ---
========= ========= ========= ========= ========= ========= ========== =========
Net (loss) income per
share - diluted........... $ (1.51) $ (.01) $ .06 $ .04 $ .07 $ .04 $ .08 $ .05
========= ========= ========= ========= ========= ========= ========== =========
Weighted average number of
shares outstanding -
diluted................... 6,060 6,393 6,109 5,597 5,380 5,240 5,073 5,127
========= ========= ========= ========= ========= ========= ========== =========
</TABLE>
Quarterly financial data may not equal annual totals due to rounding. Quarterly
earnings per share data will not equal annual total due to fluctuations in
common shares outstanding.
F-20
<PAGE> 45
SCHEDULE II
VERSAR, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND END OF
YEAR EXPENSES CHARGE OFF YEAR
------------ ---------- ---------- ----------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS
<S> <C> <C> <C> <C>
1996 $ 957,199 $ (36,710) $ (217,262) $ 703,227
1997 703,227 (3,862) (109,826) 589,539
1998 589,539 268,485 (242,194) 615,830
</TABLE>
F-21
<PAGE> 1
Exhibit 10.88
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
VERSAR, INC.
AND
THE GREENWOOD PARTNERSHIP, P.C.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Obligations Not Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Sales Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Transactions and Documents at Closing . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. ADDITIONAL AGREEMENTS
2.1 Purchaser's Access and Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Covenant Against Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Waiver of Bulk Sales Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLER AND THE SHAREHOLDERS
3.1 Organization and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Enforceability of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 No Inconsistent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Possession of Franchises, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
<S> <C> <C>
3.14 Authority to Conduct Business and
Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.15 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.17 Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.19 Employment and Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.20 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.22 Absence of Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . 20
3.23 Government Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.24 Agreements and Transactions with
Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.25 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.26 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Authorization; No Inconsistent
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Shares Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Absence of Undisclosed
Adverse Conditions or Changes . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5. CONDUCT OF SELLER'S BUSINESS PENDING CLOSING
5.1 Business in the Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 No Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.4 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6. CONDITIONS TO OBLIGATIONS OF PURCHASER
6.1 Proceedings and Documents Satisfactory . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Compliance with Agreements and Conditions . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Certificates of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Government Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.8 Other Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.9 Interim Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.10 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Closing Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 No Inconsistent Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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<TABLE>
<S> <C> <C>
7. CONDITIONS TO OBLIGATIONS OF SELLER
AND THE SHAREHOLDERS
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Compliance with Agreements and Conditions . . . . . . . . . . . . . . . . . . . . . . 30
7.3 Certificate of Purchaserr . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Closing Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.7 No Inconsistent Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8. INDEMNITIES
8.1 Indemnification of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Liabilities not Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10. TERMINATION
10.1 Termination for Certain Causes . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11. POWER-OF-ATTORNEY
11.1 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.3 Irrevocable; Binding on Successors, Etc. . . . . . . . . . . . . . . . . . . . . . . 35
12. MISCELLANEOUS
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.2 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.6 Partial Invalidity and Severability . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.9 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.10 Time of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.11 Definition of Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 30th day of January
1998, by and among Versar, Inc., a Delaware corporation and Versar Acquisition
II, Corp., a Virginia corporation, (collectively the "Purchaser"), The Greenwood
Partnership, P.C., a Virginia professional corporation ("Seller"), and the
parties listed on Exhibit A hereto, who constitute the holders (collectively,
the "Shareholders" and individually a "Shareholder") of all the issued and
outstanding capital stock of the Seller.
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business ("Seller's Business") of
providing professional engineering and architectural services, and
WHEREAS, Seller desires to sell and transfer to Purchaser, and
Purchaser desires to acquire from Seller, all the assets of Seller which are
used or usable in the conduct and operation of Seller's Business, upon the terms
and conditions contained herein; and
WHEREAS, the assets of the Seller will be transferred and contributed
to Versar Acquisition II, Corp.
WHEREAS, the Shareholders are the record and beneficial owners of
100% of the issued and outstanding shares of Seller and are joining in the
representations, warranties, covenants and agreements of Seller to the extent
specified herein;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASE AND SALE. Subject to the terms and conditions contained
herein, Seller agrees to sell, transfer, convey and assign to Purchaser, and
Purchaser agrees to purchase and acquire from Seller, on the Closing Date (as
defined in Paragraph 1.8 below), free and clear of all security interests, liens
and encumbrances, all of Seller's right, title and interest in and to all of the
assets and properties of Seller which are used or usable in Seller's Business
(the "Purchased Assets"), including, without limitation, the following:
(a) all of Seller's real property, interests in real property and
all structures, improvements, buildings, and
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fixtures located thereon, including, without limitation: (i) all real property,
interests in real property and structures, improvements, buildings and fixtures
shown as "Leasehold Improvements" and "Property Under Capital Lease" on
Seller's Audited and Unaudited Balance Sheets (as defined in Paragraph 3.8
below), and (ii) all other real property, leaseholds, easements, rights of way,
licenses and other interests in real property, described on Schedule 1.1(a)
attached hereto;
(b) all of Seller's fixtures, furnishings, computers, tools,
vehicles, furniture, office equipment and other tangible personal property,
including, without limitation, all of such assets shown as "Property" and
"Equipment" on Seller's Audited and Unaudited Balance Sheets, and all of such
assets described and identified in Schedule 1.1(b) attached hereto, with only
such additions and deletions as may occur in the ordinary and necessary course
of Seller's Business in accordance with Section 5 below between the date hereof
and the Closing Date (collectively the "Personal Property");
(c) all of Seller's, work-in-process, in existence at the close
of business on the last business day before the Closing Date, which are billable
or saleable in the ordinary course of Seller's Business;
(d) all of Seller's notes and accounts receivable arising from or
as a result of Seller's Business in existence at the close of business on the
last business day before the Closing Date (collectively the "Receivables");
(e) all of Seller's proprietary and confidential information,
including, without limitation: (i) trade secrets, technical information,
know-how, ideas, designs, processes, procedures, algorithms, discoveries,
patents, patent applications, and copyrights, and all improvements thereof, (ii)
all data, files, drawings, specifications, books and records, customer lists,
and other purchase information, and (iii) all of Seller's other written or
electronic information and intangible property rights relating to the Purchased
Assets or the operation of Seller's Business;
(f) all of Seller's trademarks, service marks, and trade names
(including, without limitation, Seller's corporate name), all registrations and
pending applications therefor, and all goodwill associated therewith; however;
the Purchaser agrees that the use of the name "Greenwood" shall be limited to
the time that William M. Greenwood shall be an employee or consultant of the
Purchaser, or its subsidiaries and affiliates or five years from the Closing
Date, whichever occurs first. Thereafter, Mr. Greenwood is free to use the name
"Greenwood" in other business ventures.
(g) all of Seller's right, title and interest under the
contracts, leases, licenses and agreements which relate to Seller's Business and
which are identified in Schedule 1.1(g)
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attached hereto, and (together with the agreements referred to in Paragraph
1.1(h) below collectively the "Assigned Contracts");
(h) all of Seller's right, title and interest under contracts and
agreements relating solely to the operation of Seller's Business which are
entered into after the date hereof and which are disclosed to Purchaser in
writing at or before the Closing, for the sale, distribution and supply of goods
or services which are entered into in the ordinary course of Seller's Business
at prices and on terms consistent with the prior operating practices of Seller;
and
(i) all rights, choses in action, and claims, known or unknown,
matured or unmatured, accrued or contingent, against third parties;
(j) all Seller's prepaid expenses; and
(k) all Seller's cash.
1.2 EXCLUDED ASSETS. Notwithstanding anything in this Agreement
to the contrary, the Purchased Assets shall not include the following (the
"Excluded Assets"): the assets and property described in Schedule 1.2 attached
hereto.
1.3 PURCHASE PRICE. The purchase price for the Purchased Assets
(the "Purchase Price") shall be equal to:
(a) $282,000 in cash, payable at the Closing, plus
(b) $18,000 in non competition payments,
(c) two promissory notes, one in the amount of $298,748.21
payable to William M. Greenwood and a second note in the amount of $450,000
payable to the Shareholders pro rata, each note payable in quarterly
installments over four years with interest at a rate of 8.5%, per annum and
subordinate to Purchaser's primary lender;
(d) 228,572 shares of Purchaser's common stock calculated by
dividing the closing price of Purchaser's stock on November 11, 1997 of $5.25
into $1,200,000. These shares are being issued under Rule 145 of the Securities
Act of 1933 ("Securities Act") by which the Shareholders will be deemed to be
Underwriters under the Securities Act and whose ability to resell the shares are
restricted pursuant to Rule 144. Purchaser shall cooperate with Shareholders to
enable them to sell their shares pursuant to Rule 144.
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(e) A three year incentive bonus program whereby 30% of the
net operating profit ("Net Operating Profit") of the Greenwood Partnership
operating division in excess of $400,000 per year will be paid to all
Shareholders who remain an employee of Purchaser or a subsidiary or affiliated
company at the end of each yearly period ending January 31. The Net Operating
Profit means the division's profit after all operating costs, overhead,
corporate and administrative allocation, bonuses to division employees and
interest charged on amounts advanced to the division are subtracted. Corporate
and administrative expenses shall be determined as consistently and reasonably
allocated to all portions of Purchaser's business units. The Net Operating
Profit shall be calculated within 45 days after January 30 each year. Corporate
and administrative services provided under the corporate and administrative
allocation include, but are not limited to, insurance, risk management,
marketing and corporate development, training, human resources, legal,
information management, procurement and contract administration, bonding and
telecommunications services.
1.4 EMPLOYMENT AGREEMENTS
Purchaser will employ each Shareholder at their present
salary and shall enter into a one year employment agreement with each
Shareholder similar to the form attached hereto as Exhibit B except William M.
Greenwood who shall enter into a two-year employment agreement.
1.5 ASSUMPTION OF CERTAIN LIABILITIES
(a) Purchaser agrees to assume on the Closing Date, and to
pay or perform, in accordance with their terms, certain of the fixed and
determinable obligations and liabilities of Seller relating to Seller's Business
or the Purchased Assets (collectively the "Assumed Liabilities"), as follows:
(i) Seller's obligation, as of and after the Closing Date, to pay all
unpaid principal, interest and other amounts owing under the promissory notes
listed on Schedule 1.5(a)(i) attached hereto.
(ii) Seller's obligation, as of and after the Closing Date, to pay
when due all unpaid principal, interest and other amounts owing, and perform all
obligations, under the capital leases which are identified on Schedule
1.5(a)(ii) attached hereto; provided that Purchaser will not assume any
obligation or liability resulting from or arising out of any default,
performance or non-performance by Seller prior to the Closing Date under or with
respect to any of such capital leases; and
(iii) Seller's obligation existing on and arising after the Closing
Date under the other Assigned Contracts; provided that Purchaser will not assume
any obligation or liability resulting
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from or arising out of any default, performance or non-performance by Seller
prior to the Closing Date under or with respect to any of the Assigned
Contracts.
(iv) Seller's accounts payable which are identified on Schedule
1.5(a)(iv); and
(v) Seller's accrued expenses which are identified on Schedule 1.5
(a)(v).
1.6 OBLIGATIONS NOT ASSUMED. Except for the Assumed Liabilities (which
shall not include any obligation or liability arising from any default, breach,
misfeasance, malfeasance or nonfeasance by Seller prior to the Closing),
Purchaser shall not assume any obligation or liability of Seller of any kind,
and Seller shall pay, satisfy and perform all of its obligations (other than the
Assumed Liabilities), whether fixed, contingent, known or unknown and whether
existing as of the Closing or arising thereafter, which may affect in any way
the Purchased Assets or the operation of Seller's Business. Without limiting the
generality of the foregoing, under no circumstances shall Purchaser be deemed to
assume any liability or obligation of Seller arising out of or relating to (a)
any actual or alleged tortious conduct of Seller or any of its employees or
agents, (b) any professional liability claim, (c) any claim for breach of
warranty or contract by Seller, (d) any claim predicated on strict liability or
any similar legal theory, (e) the violation of any law, ordinance or regulation
in effect prior to the Closing, (f) any business or business activities of
Seller which are not part of Seller's Business, (g) any liability for expenses
or taxes, if any, in connection with, resulting from or arising out of this
Agreement or the transactions contemplated hereby, (h) any liability of Seller
for any federal, state or local taxes of any kind or character, or (i) any
liability of Seller under or arising by reason of this Agreement.
Notwithstanding any other provision of this Agreement, the obligations of Seller
pursuant to this paragraph shall survive the Closing and the transactions
contemplated by this Agreement.
1.7 SALES TAXES. Seller shall be responsible for the payment of all
sales, use, excise, transfer, value added and similar taxes imposed by any
governmental authority in any jurisdiction in connection with the transactions
contemplated herein. Such amounts shall not include any costs and taxes
necessary to transfer title of Seller's automobiles to Purchaser.
1.8 CLOSING. The consummation of the transactions contemplated in this
Agreement (the "Closing") shall take place at the offices of The Greenwood
Partnership, P.C., 901 Main Lynchburg, Virginia, at 10:00 a.m. local time, on
the later of: (a) January 30, 1998; or (b) the second business day after the
date on which
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all conditions to closing contained in Sections 6 and 7 have been satisfied
(the "Closing Date"); provided, however, that if the conditions to closing
contained in Sections 6 and 7 have not been satisfied or waived by April 30,
1998, the obligations of the parties to consummate the transactions contained
herein shall terminate.
1.9 TRANSACTIONS AND DOCUMENTS AT CLOSING.
(a) At the Closing:
(i) Seller shall convey to Purchaser all of Seller's right,
title and interest in and to the Purchased Assets, free and clear of
any and all liens, claims, charges and encumbrances, and in
furtherance thereof shall deliver to Purchaser a General Assignment
and Bill of Sale in substantially the form attached hereto as Exhibit
C, together with such other deeds, bills of sale, assignments,
certificates of title, documents and other instruments of transfer and
conveyance as Purchaser and its legal counsel shall reasonably
request; and
(ii) upon such delivery by Seller, Purchaser shall pay the
cash portion of the Purchase Price and the promissory notes and the
shares as specified in Paragraphs 1.3(a), (b), (c) and (d) above) to
Seller and Purchaser shall assume the Assumed Liabilities by
delivering to Seller an Assumption Agreement in substantially the form
attached hereto as Exhibit D.
(b) All deliveries, payments and other transactions and documents
relating to the Closing shall be interdependent and none shall be effective
unless and until all are effective (except to the extent that the party entitled
to the benefit thereof has waived satisfaction or performance thereof as a
condition precedent to Closing).
(c) Each party shall, at the request of any other party from time
to time and at any time, whether on or after the Closing Date, and without
further consideration, execute and deliver such deeds, assignments, transfers,
assumptions, conveyances, powers of attorney, receipts, acknowledgments,
acceptances and assurances as may be reasonably necessary to procure for the
party so requesting, and its successors and assigns, or for aiding and assisting
in collecting and reducing to possession, any and all of the Purchased Assets or
the Assumed Liabilities, or otherwise to satisfy and perform the obligations of
the parties hereunder.
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2. ADDITIONAL AGREEMENTS.
2.1 PURCHASER'S ACCESS AND INSPECTION. Seller shall provide Purchaser
and its authorized representatives full access during normal business hours from
and after the date hereof until the Closing to the Purchased Assets and the
books and records of Seller relating to Seller's Business for the purpose of
making such investigation as Purchaser may desire, and Seller shall furnish
Purchaser such information concerning Seller's Business or the Purchased Assets
as Purchaser may request. Seller shall assist Purchaser in making such
investigation and shall cause its counsel, accountants, engineers, consultants
and other non-employee representatives to be reasonably available to Purchaser
for such purposes. No investigation made heretofore or hereafter by Purchaser
shall limit or affect the representations, warranties, covenants and indemnities
of Seller and the Shareholders hereunder, each of which shall survive any such
investigation.
2.2 CONFIDENTIALITY. If the transactions contemplated herein are not
consummated, then Purchaser shall return to Seller all documents and other
written information furnished by Seller to Purchaser, and Purchaser shall not
reveal to any third party any of Seller's documents or information, provided
that the obligations of Purchaser hereunder shall not apply to:
(a) any information which was known to Purchaser prior to its
disclosure by Seller;
(b) any information which was in the public domain prior to the
disclosure thereof by Seller to Purchaser;
(c) any information which comes into the public domain through no
fault of Purchaser;
(d) any information which is disclosed to Purchaser by a third
party (which term shall not include the counsel, accountants and other
non-employee representatives of Seller) having the legal right to make such
disclosure; or
(e) any information which is required to be disclosed by order of
any court or other tribunal of competent jurisdiction.
2.3 COOPERATION. The parties shall cooperate fully with each other
and with their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and all parties shall use their best efforts to consummate the
transactions contemplated herein and to fulfill their obligations hereunder,
including, without limitation, causing to be fulfilled at the earliest practical
date the conditions precedent to the obligations of the parties to consummate
the transactions contemplated hereby. Without
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the prior written consent of the other parties, no party hereto may take any
intentional action that would cause the conditions precedent to the obligations
of the parties hereto to effect the transactions contemplated hereby not to be
fulfilled, including, without limitation, taking or causing to be taken any
action which would cause the representations and warranties made by such party
herein not to be true, correct and complete as of the Closing.
2.4 EXPENSES. All expenses incurred by Purchaser in connection with
the authorization, preparation, execution and performance of this Agreement,
including, without limitation, all fees and expenses of agents, representatives,
counsel and accountants for Purchaser, shall be paid by Purchaser. All expenses
incurred by Seller and the Shareholders in connection with the authorization,
preparation, execution and performance of this Agreement, including, without
limitation, all fees and expenses of agents, representatives, counsel and
accountants for Seller and the Shareholders, shall be paid by Seller and the
Shareholders.
2.5 BROKERS. Seller represents and warrants that no broker, except
for FMI Corporation, or finder has acted on its behalf in connection with this
Agreement or the transactions contemplated herein. Seller shall indemnify
Purchaser and hold it harmless from and against any and all claims or demands
for commissions or other compensation by any broker, finder or similar agent
claiming to have been employed by or on behalf of Seller.
2.6 EMPLOYMENT AGREEMENTS. If the transactions contemplated by this
Agreement are consummated at the Closing, then Purchaser and Shareholders agree
to execute employment agreements in the form attached hereto as Exhibit B.
2.7 COVENANT AGAINST COMPETITION.
(a) In order to induce Purchaser to enter into this Agreement and
purchase the Purchased Assets as provided herein, and for the consideration
specified in Paragraph 2.7(e) below, Seller and each Shareholder agrees that,
during Shareholders' employment by Purchaser, and for six months thereafter,
they shall not compete with the business of Purchaser, its subsidiaries or
affiliates within the geographic area of the states of Virginia, North Carolina,
West Virginia, Maryland and the District of Columbia. For the purpose of this
Agreement, activities among others which shall be deemed competitive include:
(i) owning any portion of or consulting for or employment by any entity
competitive with the services performed by Purchaser; (ii) encouraging and
soliciting or attempting to solicit any customers of Purchaser, its subsidiaries
or affiliates (including those who are or have been customers of Purchaser or
its subsidiaries or affiliates during the previous 24 months) to become a
customer of Shareholder or any other person except through normal competitive
bidding; and (iii) encouraging
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any employee of Purchaser, its subsidiaries or affiliates to become an employee
of Shareholder or of any other person.
(b) Shareholders acknowledge that the damage to Purchaser, its
subsidiaries and affiliates resulting from a breach of this Paragraph 2.7 may
cause irreparable injury. Therefore, in the event of any such breach, Purchaser,
its subsidiaries and affiliates shall be entitled to seek such remedies as are
available at law or equity to restrain and enjoin Shareholders from continuing
to violate the provisions of this paragraph.
(c) Seller and each Shareholder agrees that each of them will
not, without the prior written consent of Purchaser, for their own account or
jointly with another, directly or indirectly, for or on behalf of any
individual, partnership, corporation or other legal entity, as principal, agent
or otherwise, use or authorize any other person to use the name "The Greenwood
Partnership" or any name similar thereto, in connection with the sale or
performance of any professional engineering or architectural services. On the
Closing Date, Seller shall, and the Shareholders shall cause Seller to change
its name, and the names of any of Seller's subsidiaries, so as not to
incorporate the name "The Greenwood Partnership" or any other confusingly
similar name.
(d) Notwithstanding anything herein to the contrary (i) it shall
not be a breach of the covenants contained in Paragraph 2.7(a) above for Seller
or any Shareholder to own not more than two percent (2.0%) of the capital stock
of any corporation whose shares are publicly traded, and (ii) the covenants
described in this Paragraph 2.7 shall apply only if the transactions
contemplated by this Agreement are consummated at the Closing.
(e) In consideration of the agreements of Seller and the
Shareholders not to compete as provided in this Paragraph 2.7, Purchaser shall
pay to Shareholders $18,000 allocated pursuant to the Exhibit E attached hereto.
(f) In the event that any part of this Paragraph 2.7 shall be
deemed a court of competent jurisdiction to be in violation of applicable law
for any reason whatsoever, than such part shall not be deemed to be void, but
shall be deemed to be modified so as to be valid and enforceable, and the
remaining provisions of this Paragraph 2.7 or of this Agreement shall not be
affected. The provisions of Paragraph 2.7 shall survive the termination of
Shareholders employment for any reason.
2.8 PUBLICITY. All press releases and other public announcements
respecting the subject matter hereof shall be made only with the mutual
agreement of the parties hereto; provided,
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however, that the parties understand that Purchaser is a publicly held company
with its shares traded on the American Stock Exchange and may make such
announcements as may be necessary or convenient to comply with the rules and
regulations of the American Stock Exchange and any and all applicable federal
and state securities laws.
2.9 WAIVER OF BULK SALES LAW COMPLIANCE. Compliance with the bulk
sales laws of the State of Virginia and in any other jurisdiction where Seller
conducts its business is hereby waived by Purchaser, and Seller and the
Shareholders hereby jointly and severally agree to defend, indemnify and hold
harmless Purchaser and its affiliates from and against any claims by any person
arising out of or due to the failure to comply with such bulk sales laws,
including, without limitation, any claims by any Person against all or any part
of the Purchased Assets.
2.10 EMPLOYEES. Prior to the Closing Date, Purchaser shall offer
employment for all of Seller's employees, such employment to commence on the
Closing Date. Notwithstanding anything else in this Agreement to the contrary,
nothing in this paragraph creates or is intended to create any rights of any
kind or nature in any third parties, including, without limitation, any rights
or remedies in favor of any of Seller's employees to be employed, or respecting
the terms of employment, for any specified period of time.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND THE
SHAREHOLDERS.
To induce Purchaser to enter into this Agreement and to purchase the
Purchased Assets, Seller and the Shareholders jointly and severally represent,
warrant and covenant to Purchaser as follows:
3.1 ORGANIZATION AND COMPLIANCE. Seller is a professional corporation
duly organized, validly existing and in good standing under the laws of the
State of Virginia with its principal office and place of business at Lynchburg,
Virginia. Seller has no interest, direct or indirect, and has no commitment to
purchase or otherwise acquire any interest, direct or indirect, in any other
corporation, partnership, joint venture or other business enterprise, except as
specified in Schedule 3.1. Seller has all requisite corporate power and
authority and is entitled to own or lease the Purchased Assets and to carry on
Seller's Business as and in all places where such business is now conducted and
such properties are owned or leased. The Purchased Assets constitute all of the
tangible and intangible assets necessary to sell, license, and use the items and
perform the services presently being sold, licensed, used or performed by Seller
in connection with Seller's Business. Seller has complied in all material
respects with all federal, state and local laws, rules, regulations and
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ordinances with respect to its operations and the conduct of Seller's Business.
Seller is duly licensed, qualified or domesticated as a domestic or foreign
corporation or has the appropriate corporate or individual professional
registrations in the jurisdictions listed in Schedule 3.1 of which are all
jurisdictions where the character of the property owned by it or the nature of
the business transacted by it makes such license, qualification or
domestication necessary. Schedule 3.1 lists (a) all locations where any
Purchased Assets are located, or where Seller has an office or place of
business or maintains any Inventory, and (b) all names under which Seller has
operated during the past five years, if different from its present corporate
name.
3.2 OWNERSHIP OF SHARES. The Shareholders are the record and
beneficial owners of all of the issued and outstanding shares of Seller as set
forth in Schedule 3.2.
3.3 ENFORCEABILITY OF AGREEMENT. Seller has the full corporate power
and authority, and the Shareholders have the full right, power and capacity, to
enter into and execute this Agreement and to carry out the transactions
contemplated hereby in accordance with its terms. There are no outstanding
contracts, demands, commitments or other agreements or arrangements under which
Seller is or may become obligated to sell, transfer or assign any of the
Purchased Assets. This Agreement and all transactions required hereunder to be
performed by Seller have been duly and validly authorized and approved by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered on behalf of Seller by its duly authorized officers, and has been
duly and validly executed and delivered by each Shareholder. This Agreement
constitutes the valid and legally binding obligation, subject to general equity
principles, of Seller and each Shareholder, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally.
3.4 NO INCONSISTENT OBLIGATIONS. Except as disclosed in Schedule 3.4,
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated herein will result in a violation or breach of, or
constitute a default under (a) the articles of incorporation or bylaws of
Seller, (b) any term or provision of any indenture, note, mortgage, bond,
security agreement, loan agreement, guaranty, pledge, or other instrument,
contract, agreement or commitment, (c) any writ, order, judgment, decree, law,
rule, regulation, or ordinance, (d) any applicable ruling or order of any
administrative or governmental body, or (e) any other commitment or restriction,
to which Seller or any Shareholder is a party or by which any of them or any of
the Purchased Assets is subject or bound; nor will such actions result in (i)
the creation of any claim, lien, charge or encumbrance on any of the Purchased
Assets, (ii) the acceleration or creation of any obligation of Seller, (iii) the
forfeiture of any material right or privilege of Seller, or (iv) the forfeiture
of any
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material right or privilege of any Shareholder which may affect the
Shareholder's ability to perform under this Agreement.
3.5 CONSENTS. The execution and delivery of this Agreement by Seller
and the Shareholders and the consummation of the transactions contemplated by
this Agreement (a) do not require the consent, approval or action of, or any
filing with or notice to, any person, firm or other entity, or any public,
governmental or judicial authority, except as specified in Schedule 3.5, (b) do
not require the consent or approval of members of Seller's board of directors
pursuant to any business combination, takeover or other similar law, rule,
regulation or ordinance, and (c) do not impose any other term, condition or
restriction on Purchaser or the Purchased Assets pursuant to any business
combination, takeover or other similar statute, rule or regulation.
3.6 NO VIOLATION. Seller is not in default under or in violation of
(a) its articles of incorporation or bylaws, or (b) any writ, order, judgment,
decree, law, rule, regulation, or ordinance, or (c) any applicable ruling or
order of any administrative or governmental body.
3.7 POSSESSION OF FRANCHISES, LICENSES, ETC. Seller possesses all,
certificates, licenses, permits and other authorizations from public,
governmental, regulatory or judicial authorities, that are necessary for the
ownership, maintenance and operation of its properties, assets, and business and
Seller is not in violation of any thereof.
3.8 FINANCIAL STATEMENTS. Prior to the date hereof, Seller has
delivered to Purchaser copies of Seller's Balance Sheet as at December 31, 1994,
December 31, 1995, and December 31,1996, and Statements of Income, Retained
Earnings and Cash Flows for the fiscal years then ended, together with the
report thereon of Redey & Associates, P.C., independent certified public
accountants. All of such financial statements (including any related notes and
schedules thereto) (the "Audited Financial Statements") are true and correct and
have been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior years and present fairly the financial
condition of Seller as at the respective dates thereof and the results of its
operations and its cash flows for the periods then ended. Seller has also
delivered to Purchaser copies of Seller's unaudited Balance Sheet as at December
31, 1997 (the "Unaudited Balance Sheet"), and unaudited Statements of Income,
Retained Earnings and Cash Flows for the twelve month period then ended (such
unaudited Statements of Income, Retained Earnings and Cash Flows, together with
the Unaudited Balance Sheet, collectively the "Unaudited Financial Statements").
Except as disclosed in Schedule 3.8, the Unaudited Financial Statements
(including any related notes and schedules thereto) are true and correct, have
been prepared from the books and records of Seller in accordance with generally
accepted accounting principles applied on a basis consistent with prior
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years, and present fairly the financial condition of Seller as at the date
thereof and the results of its operations for the twelve-month period then
ended.
3.9 LIABILITIES. Seller has no debt, liability or obligation of any
kind, whether accrued, absolute, known or unknown, contingent or otherwise
(including, without limitation, (a) liability for any foreign, federal, state or
local taxes, (b)unfunded liabilities with respect to any pension, profit-sharing
or employee stock ownership plan, whether operated by Seller or any other
entity, covering employees of Seller), except (i) those reflected on the Balance
Sheet as at December 31, 1997 referred to in Paragraph 3.8 above (the "Unaudited
Balance Sheet"), (ii) liabilities incurred in the ordinary course of business
since December 31, 1997 (the "Reference Date"), and (iii) as specifically
disclosed in Schedule 3.9.
3.10 TITLE TO PROPERTIES. The Purchased Assets are all assets
necessary to conduct Seller's Business as currently being conducted by Seller
and as conducted during the periods covered by the Audited Financial Statements.
Seller has, and upon consummation of the transactions contemplated by this
Agreement at the Closing, Purchaser will have, good and marketable title to all
of the Purchased Assets, real and personal, moveable and immovable, tangible and
intangible, free and clear of any and all claims, liens, charges, restrictions
and encumbrances of any kind or character, except (a) as expressly set forth in
the Audited or Unaudited Balance Sheets as securing specific liabilities (with
respect to which no default exists), (b) as disclosed in Schedule 3.10, (c)
liens for real estate taxes which are not past due, and (d) minor imperfections
of title and encumbrances, if any, which (i) are not substantial in amount, (ii)
do not detract from the value of the property subject thereto or impair the
operations of Seller's Business or the use of the Purchased Assets, and (iii)
have arisen only in the ordinary course of business.
3.11 RECEIVABLES. All notes receivable and accounts receivable which
constitute part of the Purchased Assets are valid and collectible obligations of
the respective makers thereof and were not and are not subject to any offset or
counterclaim, except for amounts reserved against on the Audited or Unaudited
Balance Sheets and, with respect to notes and accounts arising after the
Reference Date and outstanding on the date hereof, except for a percentage
thereof equal to the percentage which said reserved amounts on the Audited or
Unaudited Balance Sheets constituted of the aggregate of notes and accounts
receivable at the date of the Audited Balance Sheet.
3.12 PERSONAL PROPERTY.
(a) Except as set forth in Schedule 3.12(a), all of the
machinery, equipment, vehicles, vessels and all other tangible
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personal property, which constitute part of the Purchased Assets, or which are
leased by Seller pursuant to an Assigned Contract, are in good condition and
repair, subject to normal wear and tear, suited for the use intended and
operated in conformity with all applicable laws, rules, regulations and
ordinances, including, without limitation, all applicable building and zoning
laws, ordinances, and regulations.
3.13 REAL PROPERTY.
(a) Seller owns or has the right to occupy and use all the real
property which is used or useable in Seller's Business (the "Real Property"),
including the real property leased to Seller pursuant to an Assigned Contract.
Schedule 3.13(a)identifies each parcel or tract of the Real Property by
location, legal description and improvements (if any) and describes the nature
of the Company's interest therein and use thereof.
(b) All agreements with respect to leases, easements, rights of
way, licenses, usufructs and other non-ownership interests which are included in
the Real Property, including any of the same which are granted to or by Seller
(collectively the "Real Property Leases") are valid and in full force and effect
in accordance with their terms. Seller has furnished Purchaser with copies of
all written Real Property Leases, all of which are identified on Schedule
3.13(b) All copies of the Real Property Leases furnished to Purchaser are true,
correct and complete and include any and all modifications thereof. There is not
under any Real Property Lease (i) any default (or, to the knowledge of Seller or
any of the Shareholders, any claimed default) by Seller, or any event of default
or event which with notice or lapse of time, or both, would constitute a default
by Seller and in respect of which Seller has not taken adequate steps to prevent
a default on its part from occurring, or (ii) to the knowledge of Seller or any
of the Shareholders, any existing default by any other party to the Real
Property Lease, or any event of default or event which with notice or lapse of
time, or both, would constitute a default by any other party to the Real
Property Lease. The interest of Seller in and under each Real Property Lease is
unencumbered and subject to no present claim, contest, dispute, action or
threatened action at law or in equity or otherwise.
(c) Seller is lawfully in possession of all Real Property which
is the subject of a Real Property Lease and with respect to which Seller is a
lessee or has been granted an interest in such Property ("Leased Real
Property"); and all conditions precedent to the obligation of Seller to take
possession and continue to occupy all Leased Real Property have been fulfilled
except for any obligations not yet due or required to be performed. Seller is
presently occupying the entirety of each parcel of the
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Leased Real Property for the purposes set forth in the Real Property Lease with
respect thereto.
(d) All buildings and improvements on the Real Property are in
good condition and repair, suited for the operation of Seller's Business and are
in compliance in all material respects with all applicable laws, rules,
regulations, and ordinances, including, without limitation, all applicable
building, electrical, plumbing, gas, fire, environmental and other regulatory
laws, rules, regulations, and ordinances, and Seller has not received any notice
of any violation or alleged violation of any thereof. No toxic or hazardous
materials were used in the construction or improvements of any building located
on the Real Property or otherwise used by Seller in connection with Seller's
Business.
(e) All requisite certificates of occupancy and other permits or
approvals required with respect to the improvements on any of the Real Property
and the occupancy and use thereof have been obtained and are currently in
effect.
(f) Except as set forth in Schedule 3.13(f), Seller owns
unencumbered title in and to the improvements, if any, on the Leased Real
Property.
(g) Except as set forth in Schedule 3.13(k), no rent or use fee
has been paid in advance, no security deposit has been paid and no brokerage
commission is payable by Seller with respect to any Real Property Lease.
3.14 AUTHORITY TO CONDUCT BUSINESS AND INTELLECTUAL PROPERTY RIGHTS.
Seller has the means, rights and information required to offer for sale and
perform the services as presently being offered for sale, or performed by
Seller, including, without limitation, the means, rights and information
required to offer for sale, and perform all such services without incurring any
liability for license fees or royalties or any claims of infringement of
patents, trade secrets, copyrights, trademark, service mark, or other
proprietary rights. Schedule 3.14 describes all proprietary inventions, designs,
ideas, processes, methods and other know-how of Seller which are valuable in the
operation of Seller's Business and, with respect to each such item, indicates
whether Seller holds any patent or patent application therefor (in each such
case, identifying the date(s) and jurisdiction(s) in which the patent was
granted or applied for and the number of such patent or application) or has
sought any advice as to the patentability of the same (in each such case,
summarizing such advice) or believes it has trade secret protection therefor (in
each such case, providing a description of the measures which have been taken to
protect the secrecy of the item). Seller is not a party to, either as licensor
or licensee, and is not bound by or subject to, any
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license agreement for any patent, process, trademark, service mark, trade name
or copyright, except as described in Schedule 3.14. All patents, copyrights,
trademarks, service marks, trade names, and applications therefor or
registrations thereof, owned or used by Seller are listed in Schedule 3.14,
and, to the extent indicated thereon, have been duly registered in, filed in or
issued by the U.S. Patent and Trademark Office or the corresponding agency or
office of the states of the United States or foreign countries indicated.
There are no rights of third parties with respect to any trademark, service
mark, trade secrets, trade name, patent, patent application, invention or
device which would have an adverse effect on the operations or prospects of
Seller. Seller has complied with all applicable laws, rules, regulations and
ordinances relating to the filing or registration of "fictitious names" or
trade names, and all such filings are identified in Schedule 3.14.
3.15 MATERIAL CONTRACTS. The Assigned Contracts include all existing
contracts and commitments of Seller (a) which are necessary to conduct Seller's
Business in the same manner as currently conducted by Seller, (b) by which the
Purchased Assets may be bound or affected, or (c) which relate to or effect the
Purchased Assets, in each case whether written or oral. Seller has heretofore
delivered to Purchaser a true, correct and complete copy of each of the written
Assigned Contracts and a complete and accurate summary of each oral Assigned
Contract. All of the Assigned Contracts have been entered into in the ordinary
course of Seller's Business, and are valid and effective in accordance with
their terms. None of the Assigned Contracts constitute a restraint of trade
under any applicable state or federal law. Seller has performed all obligations
to be performed by it as of the date of this Agreement under all Assigned
Contracts, and Seller is not in default or in arrears under any of the terms
thereof. No condition exists or has occurred which, with the giving of notice or
the lapse of time, or both, would constitute a default or accelerate the
maturity of, or otherwise modify, any Assigned Contract; and all Assigned
Contracts are in full force and effect. To the knowledge of the Shareholders and
Seller, no default by any other party to any Assigned Contract is known or
claimed by Seller to exist.
3.16 INSURANCE. Schedule 3.16 contains a complete list and
description of all fire, theft, casualty, life, title, automobile, liability and
other policies of insurance maintained by Seller, all of which are, and will be
maintained through the Closing Date, in full force and effect. Seller has
delivered to Purchaser a true, correct and complete copy of each such insurance
policy. All premiums due thereon have been paid and Seller has not received any
notice of cancellation with respect thereto. Schedule 3.16 also lists and
describes all known occurrences which may form the basis for a claim by or on
behalf of Seller under any such policy; and Seller has timely given notice of
all such occurrences to the appropriate insurer and has not waived (either
intentionally
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or inadvertently) its right to make the related claim under any such policy.
3.17 CONTINGENCIES. Except as set forth in Schedule 3.17, there are
no actions, suits, claims, demands or proceedings pending or threatened against,
by or affecting Seller or the Purchased Assets in any court or before any
arbitrator, private alternative dispute resolution system or governmental
agency, nor do there exist any other "loss contingencies" (as such term is
defined in Statement of Financial Standards No. 5 of the Financial Accounting
Standards Board), the eventual outcome of which might have an adverse effect on
Seller, the Purchased Assets, the operation of Seller's Business after the
Closing, or which would prevent or impede the transactions contemplated by this
Agreement. Except as set forth in Schedule 3.17, Seller has not been charged
with, nor is it under investigation with respect to any charge concerning, any
violation of any provision of any federal, state or other applicable law, rule,
regulation, or ordinance, or order, decree or governmental restriction with
respect to Seller's Business. There are no unsatisfied judgments against Seller
or any consent decrees, writs, restraining orders, or preliminary or permanent
injunctions to which Seller or any of the Purchased Assets are subject.
3.18 TAXES. Except as disclosed in Schedule 3.18, all taxes
(including, without limitation, all income, property, sales, use, customs,
franchise, value added, ad valorem, withholding, employees' income withholding,
and social security taxes, and all other taxes imposed on Seller or its income,
properties, sales, franchises, operations or Employee Benefit Plans or trusts),
and all deposits in connection therewith required by applicable law, imposed by
any federal, state, local or foreign jurisdiction, or by any other governmental
unit or taxing authority, and all interest and penalties thereon (all of the
foregoing hereafter collectively referred to as "Taxes"), which are due and
payable by Seller for all periods through the date hereof have been paid in
full, and adequate reserves for all other Taxes, whether or not due and payable,
and whether or not disputed, have been set up on the books of Seller. From and
after the date of this Agreement, Seller will duly file all returns and reports
with respect to Taxes, and will pay all Taxes imposed on Seller which directly
or indirectly affect Purchaser's operation of Seller's Business or the Purchased
Assets after the Closing Date, or which might create a lien or encumbrance on
the Purchased Assets, or which would adversely affect Purchaser's ability to
carry on Seller's Business after the Closing Date. Seller has duly filed all
federal, state, local and foreign tax returns and reports (including, without
limitation, returns for estimated tax), and all returns and reports of all other
governmental units or taxing authorities having jurisdiction, with respect to
all Taxes, all such returns and reports show the correct and proper amount due,
and all Taxes shown on such returns or reports and all assessments received by
Seller have been paid to
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the extent that such Taxes, or any estimates thereon, have become due.
3.19 EMPLOYMENT AND LABOR MATTERS.
(a) Schedule 3.19(a) lists all employees and agents who on the
date hereof perform services on a regular basis in the business operations of or
for Seller. No such employee or agent has terminated his employment, nor, to the
knowledge and belief of the Shareholders and Seller, plans not to accept
employment with Purchaser after the Closing Date.
(b) Except as set forth in Schedule 3.19(b), Seller has
materially complied with all federal, state and local laws, rules, regulations
and ordinances respecting health, safety and working conditions of its
employees, including, without limitation, the Occupational Safety and Health Act
of 1970, Pub. L. 91-596, as amended.
3.20 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.20 lists all plans, programs, and similar
agreements, commitments or arrangements maintained by or on behalf of Seller or
any other party that provide benefits or compensation to, or for the benefit of,
current or former employees of Seller ("Plan" or "Plans"). Except as set forth
on Schedule 3.20, only current and former employees of Seller participate in the
Plans Copies of all Plans and, to the extent applicable, all related trust
agreements, actuarial reports, and valuations for the most recent three years,
all summary plan descriptions, prospectuses, Annual Report Form 5500s or similar
forms (and attachments thereto) for the most recent three years, all Internal
Revenue Service determination letters, and any related documents requested by
Purchaser, including all amendments, modifications and supplements thereto, have
been delivered to Purchaser, and all of the same are true, correct and complete.
(b) With respect to each Plan, except as set forth on Schedule
3.20: (i) no litigation or administrative or other proceeding is pending or
threatened involving such Plan; (ii) such Plan has been administered and
operated in compliance with, and has been amended to comply with all applicable
laws, rules, and regulations, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal
Revenue Code, and the regulations issued under ERISA and the Internal Revenue
Code; (iii) Seller and its predecessors, if any, have made and as of the Closing
Date will have made or accrued, all payments and contributions required, or
reasonably expected to be required, to be made under the provisions of such Plan
or required
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to be made under applicable laws, rules and regulations, with respect to any
period prior to the Closing Date, such amounts to be determined using the
ongoing actuarial and funding assumptions of the Plan; (iv) such Plan is fully
funded in an amount sufficient to pay all liabilities accrued (including
liabilities and obligations for health care, life insurance and other benefits
after termination of employment) and claims incurred to the date hereof, or the
Unaudited Balance Sheet contains adequate reserves or paid-up insurance has
been provided, therefor; (v) on the Closing Date such Plan will be fully funded
in an amount sufficient to pay all liabilities accrued (including liabilities
and obligations for health care, life insurance and other benefits after
termination of employment) and claims incurred to the Closing Date, or adequate
reserves will be set up on Seller's books and records, or paid-up insurance
will be provided, therefor; and (vi) such Plan has been administered and
operated only in the ordinary and usual course and in accordance with its
terms, and there has not been in the four years prior hereto any material
increase in the liabilities of such Plan.
(c) Schedule 3.20 lists each Plan which is an "employee benefit
plan" as defined in Section 3(3) of ERISA, including any terminated employee
benefit plans and Multi employer Benefit Plans, which covers or covered any
employee of Seller ("ERISA Plan").
(d) Of the ERISA Plans, only the _______________ (collectively
the "Company Plans") are "employee pension benefit plans" within the meaning of
Section 3(2) of ERISA. With respect to each Company Plan, except as set forth on
Schedule 3.20: (i) such Company Plan constitutes a qualified plan within the
meaning of Section 401(a) of the Internal Revenue Code and the trust thereunder
is exempt from federal income tax under Section 501(a) of the Internal Revenue
Code; (ii) all minimum funding standards required by law with respect to the
funding of benefits payable or to be payable under such Company Plan have been
met; (iii) there is no "accumulated funding deficiency" within the meaning of
Internal Revenue Code Section 412 under such Company Plan; (iv) no reportable
event as described in Section 4043 of ERISA has occurred, or is continuing, with
respect to such Company Plan, and Seller has not incurred any liability to the
Pension Benefit Guaranty Corporation; (v) if such Company Plan is a defined
benefit plan, the fair market value of the assets of the Company Plan trust are
not less than the actuarial present value of benefits (both vested and
nonvested) accrued under such Company Plan with respect to participants and
beneficiaries, determined on a termination basis and as though all such accrued
benefits were fully vested and nonforfeitable as of the Closing Date, taking
into consideration the subsidies required under the Internal Revenue Code and
the regulations and rulings thereunder and using the ongoing actuarial methods
and assumptions of such Company Plan, which methods and assumptions are
reasonable both individually and in the aggregate; and (vi) if the Company Plan
is a defined contribution plan, it is
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funded in an amount equal to the participants' account balances, whether or not
vested.
(e) To the extent Seller or Purchaser is adopting or continuing
any Plan, nothing contained in this Agreement shall limit or restrict
Purchaser's right from and after the Closing Date to amend or to modify any of
the Plans in such manner as Purchaser deems appropriate or to terminate any of
the Plans.
3.21 ENVIRONMENTAL MATTERS. Seller (including its predecessors for
whose acts and omissions it is responsible) has complied in all material
respects with all applicable laws, rules, regulations and ordinances relating to
pollution and environmental control. All hazardous or toxic waste, materials and
substances on, in, under or off-site from the Real Property, have been properly
removed and disposed of, and no past or present disposal, spill or other release
of, or treatment, transportation or other handling of, hazardous waste,
materials or substances on, in, under or off-site from any Real Property, or
adjacent property, will subject Seller to corrective or compliance action or any
other liability. Adequate reserves have been established on the Audited or
Unaudited Balance Sheets to cover all costs of environmental compliance and such
reserves will be adequate on the Closing Date. Schedule 3.21 contains a true,
correct and complete description of (a) all permits, regulatory plans and
compliance schedules with respect to Seller or the Purchased Assets, and (b) all
litigation, investigations, inquiries, and other proceedings, rulings, orders or
citations pending, or to the knowledge of the Shareholders or Seller, threatened
or contemplated by government officials with respect to Seller or the Purchased
Assets, in each case relating to emissions or potential emissions into the
environment of solids, liquids, gases, heat, light, noise, radiation and other
forms of matter or energy ("Emissions") or the proper disposal of materials,
including solid waste materials ("Disposals"). Seller has delivered to Purchaser
true, correct, and complete copies of the permits, regulatory plans and
compliance schedules, if any, described in Schedule 3.21. The terms of such
permits, regulatory plans and schedules have not been modified from those set
forth in the copies delivered to Purchaser. Seller is not in violation of any of
the permits, plans or compliance schedules described in or required to be
described in the Schedules attached hereto or of any law, rule, regulation,
ordinance, order or decree regulating Emissions and Disposals. Seller has
received all permits and approvals with respect to Emissions and Disposals
required for the operation of Seller's Business. Seller has kept all records and
made all filings required by applicable laws, rules, regulations and ordinances
with respect to Emissions and Disposals.
3.22 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Seller nor any
officer, employee or agent of Seller, nor any other person acting on its behalf,
has, directly or indirectly, within the past five years given or agreed to give
any gift or similar
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benefit to any customer, supplier, governmental employee or other person who is
or may be in a position to help or hinder the business of Seller (or assist
Seller in connection with any actual or proposed transaction) which (a) might
subject Seller to any damage or penalty in any civil, criminal or governmental
litigation or proceeding or which might have an adverse effect on the Purchased
Assets, (b) if not given in the past, might have had an adverse effect on the
Purchased Assets or Seller's Business, or (c) if not continued in the future,
might adversely affect the Purchased Assets, Seller's Business, or Seller's
operations, cash flows or prospects or which might subject Seller to suit or
penalty in any private or governmental litigation or proceeding.
3.23 GOVERNMENT REPORTS. Schedule 3.23 contains a true, correct and
complete list, and Seller has heretofore furnished Purchaser with true, correct
and complete copies of, all reports, if any, filed during the past five years,
by Seller with (a) the Equal Employment Opportunity Commission, Federal Trade
Commission, Department of Justice, Occupational Safety and Health
Administration, Internal Revenue Service (other than tax returns and standard
forms relating to compensation or remuneration of employees), Environmental
Protection Agency and Securities and Exchange Commission or (b) any state or
local agency which performs equivalent functions.
3.24 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except as set
forth in Schedule 3.24, Seller is not directly or indirectly a party to any
contract, agreement, or lease with, or any other commitment to, (a) any party
owning, or formerly owning, beneficially or of record, directly or indirectly,
any of the shares of or other equity interest in Seller, (b) any person related
by blood, adoption or marriage to any such party, (c) any director or officer of
Seller, (d) any corporation or other entity in which any of the foregoing
parties has, directly or indirectly, at least a five percent (5.0%) beneficial
interest in the share capital or other type of equity interest in such
corporation, or (e) any partnership in which any such party is a general partner
(any or all of the foregoing being herein referred to as "Related Parties").
Without limiting the generality of the foregoing, except as disclosed in
Schedule 3.24, (i) no Related Party, directly or indirectly, owns or controls
any assets or properties which are or have been used in Seller's Business, and
(ii) no Related Party, directly or indirectly, engages in or has any significant
interest in or connection with any business (X) which is or which within the
last three years has been a competitor, customer or supplier of Seller or has
done business with Seller, or (Y) which as of the date hereof sells or
distributes products or services which are similar or related to Seller's
products or services.
3.25 ABSENCE OF CHANGES. Except as expressly provided for in this
Agreement or as may be set forth in Schedule 3.25, since the Reference Date:
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(a) there has been no change in the business, assets,
liabilities, results of operations, financial condition or prospects of Seller
or in its relationships with suppliers, customers, employees, lessors or others,
other than changes in the ordinary course of business;
(b) there has been no damage, destruction or loss to the
properties or business of Seller, whether or not covered by insurance, which has
or will have an adverse effect on such properties or business, or the
operations, or prospects of Seller;
(c) the business of Seller has been operated in the ordinary
course and consistent with its prior practices, and not otherwise;
(d) the Purchased Assets of Seller have been maintained in good
order, repair and condition, ordinary wear and tear excepted;
(e) the books, accounts and records of Seller have been
maintained in the usual, regular and ordinary manner on a basis consistent with
prior years;
(f) there has been no declaration, setting aside or payment of
any dividend or other distribution on or in respect of the share capital of
Seller, nor has there been any direct or indirect redemption, retirement,
purchase or other acquisition of any of the share capital or other securities of
Seller;
(g) there has been no (i) increase in the compensation or in the
rate of compensation or commissions payable or to become payable by Seller to
any director, officer, manager, or to any other employee or agent of Seller
earning $30,000 or more per annum; or (ii) payment of or commitment to pay any
bonus, profit share or other extraordinary compensation to any employee;
(h) there has been no mortgage, charge, lien, claim or other
encumbrance or security interest (other than liens for current taxes which are
not past due) created on or in any of the Purchased Assets or assumed by Seller
with respect to any Purchased Assets;
(i) there has been no indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred by
Seller, except current liabilities incurred in connection with the purchase of
goods or services in the ordinary course of business and consistent with its
prior practice, none of which individually or in the aggregate adversely affects
the business or financial condition of Seller;
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(j) no indebtedness, liability or obligation (whether absolute,
accrued, contingent or otherwise) has been discharged or satisfied, other than
current liabilities reflected in the Audited or Unaudited Balance Sheets of
Seller as at the Reference Date, and current liabilities incurred since the date
thereof in the ordinary course of business and consistent with its prior
practice;
(k) there has been no sale, transfer, lease or other disposition
of any asset or assets of Seller, except sales of inventory in the ordinary
course of Seller's Business, and no debt to, or claim or right of, Seller has
been canceled, compromised, waived or released;
(l) there has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any material right of Seller
under any contract, agreement or lease, or governmental license, permit or
permission;
(m) there have been no amendments or other corporate actions
having the effect of an amendment increasing past or future contributions of any
kind whatsoever to any Employee Benefit Plan of Seller;
(n) Seller has not (i) paid any judgment resulting from any suit,
proceeding, arbitration, claim or counterclaim or (ii) made any payment to any
party of more than $1,000 in settlement of any suit, proceeding, arbitration,
claim or counterclaim;
(o) Seller has not acquired any capital shares or other
securities of any corporation or any interest in any business enterprise, or
otherwise made any loan or advance to or investment in any person, firm, or
corporation; and
3.26 FULL DISCLOSURE. No representation, warranty or covenant of
Seller or the Shareholders contained in this Agreement or in any other written
statement or certificate delivered by the Seller and the Shareholders, or any of
them, pursuant to this Agreement or in connection with the transactions
contemplated herein contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. There is no fact known to
Seller or the Shareholders which materially adversely affects, or in the future
may materially adversely affect, the business, operations, cash flows, affairs,
prospects, properties or assets or the condition, financial or otherwise, of
Seller which has not been disclosed in this Agreement, or in the documents,
certificates and written statements
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furnished to Purchaser for use in connection with the transactions contemplated
hereby.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
As an inducement to the Shareholders and Seller to enter into this
Agreement and to sell the Purchased Assets to Purchaser, Purchaser hereby
represents, warrants and covenants as follows:
4.1 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 AUTHORIZATION; NO INCONSISTENT AGREEMENTS. Purchaser has full
corporate power and authority to make, execute and perform this Agreement, and
the transactions contemplated hereby. This Agreement and all transactions
required hereunder to be performed by Purchaser have been duly and validly
authorized and approved by all necessary corporate action on the part of
Purchaser. This Agreement has been duly and validly executed and delivered on
behalf of Purchaser by its duly authorized officers, and this Agreement
constitutes the valid and legally binding obligation of Purchaser enforceable,
subject to general equity principles, in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally. Neither the execution
and delivery of this Agreement nor the consummation of the transactions hereby
contemplated will constitute a violation or breach of the articles of
incorporation or the bylaws of Purchaser or any provision of any contract or
other instrument to which Purchaser is a party or by which any of the assets of
Purchaser may be affected or secured, or any order, writ, injunction, decree,
statute, rule or regulation to which Purchaser is subject, or will result in the
creation of any lien, charge, or encumbrance on any of the assets of Purchaser
or acceleration of any debt.
4.3 SHARES ISSUED. The shares issued by Purchaser to Shareholders
pursuant to this Agreement are validly issued fully paid and non assessable and
free of preemptive rights.
4.4 FINANCIAL STATEMENTS. Purchaser has delivered to Seller its
Annual Reports, including Consolidated Balance Sheets and Consolidated
Statements of Operations, for its fiscal years ended June 30, 1996 and June 30,
1997, together with its most recent Form 10-K and 10-Q. All financial statements
(including notes and schedules thereto, statements made by Purchaser, its
officers and directors relating hereto, and the report thereon by Arthur
Andersen LLP, independent certified public accountants) (the Purchaser's
Financial Statements) are true and correct and have been prepared in accordance
with generally accepted accounting
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principles applied on a basis consistent with prior years, except as set forth
in the Purchaser's Financial Statements, and present fairly the financial
condition of Seller at the respective dates thereof and the results of its
operations for the periods then ended.
4.5 ABSENCE OF UNDISCLOSED ADVERSE CONDITIONS OR CHANGES. Except as
set forth in Schedule 4.5, since September 30, 1997.
(a) there has been no material adverse change in the business,
assets, liabilities, results of operations, financial condition or products of
Purchaser and the business of the Purchaser has been operated in the ordinary
course and consistent with its prior practices;
(b) there has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the share capital of
Purchaser, nor any direct or indirect redemption, retirement, purchase or other
acquisitions of the share capital or other securities of the Purchaser except
pursuant to open market purchases of Versar common stock for its 401(k) plan,
shares issued in connection with the merger with Science Management Corporation
and contributions to Purchaser's 401(k) plan.
(c) there has been no material indebtedness or other liability or
obligation (whether absolute, accrued, contingent or otherwise) incurred,
discharged or satisfied by Purchaser, except in the ordinary course of business
and consistent with prior practice, nor has there been any material litigation,
proceeding, lien or claim materially affecting its business; and
(d) there has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any material right of
Purchaser under any contract, agreement or lease, or governmental license,
permit or permission which materially affects the financial statements of
Purchaser
4.6 FULL DISCLOSURE. No representation, warranty or covenant of
Purchaser contained in this Agreement, or in any other written statement or
certificate delivered by Purchaser pursuant to this Agreement or in connection
with the transactions contemplated herein, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
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<PAGE> 30
5. CONDUCT OF SELLER'S BUSINESS PENDING CLOSING.
Seller and the Shareholders covenant and agree that, except as may
otherwise be provided herein, without the prior written consent of Purchaser,
between the date hereof and the Closing Date:
5.1 BUSINESS IN THE ORDINARY COURSE. Seller's Business shall be
conducted only in the ordinary and usual course and consistent with prior
practices, without the creation of any additional indebtedness for borrowed
money, provided, that Seller may continue to draw on its existing lines of
credit with Central Fidelity Bank in a manner consistent with its past
practices. Without limiting the generality of the foregoing:
(a) Except as provided in Paragraph 1.1(h) above, and except as
provided in Paragraph 5.1(b) below, Seller shall not enter into any contracts,
agreements or other arrangements in connection with Seller's Business, and
except as otherwise expressly provided herein, Seller will not enter into any
contract nor effect any transaction with any Related Party.
(b) Seller shall not enter into any contracts, agreements or
other arrangements to sell, distribute or supply goods or services to any
customer or any third party except in the ordinary course of Seller's Business
at prices and on terms consistent with the prior operating practices of Seller.
(c) Seller shall not sell, assign, transfer, convey, pledge,
mortgage, encumber or otherwise dispose of, or cause the sale, assignment,
transfer, conveyance, pledge, mortgage, encumbrance or other disposition of any
of the Purchased Assets.
(d) All contracts or commitments of Seller for the purchase of
products, services and supplies shall be entered into only in the ordinary and
regular course of business to enable Seller to conduct its normal business
operations, at prices and on terms consistent with the prior operating practices
of Seller.
(e) Seller shall maintain, preserve and protect all of the
Purchased Assets in good condition, except for ordinary wear and tear and damage
by fire or other casualty; and Seller shall maintain in full force and effect
all insurance policies referred to in Paragraph 3.16 above or other insurance
equivalent thereto.
(f) The books, records and accounts of Seller shall be maintained
in the usual, regular and ordinary course of business on a basis consistent with
prior practices and in accordance with generally accepted accounting principles.
(g) Seller shall use its best efforts to preserve Seller's
Business, to keep available the services of Seller's present employees, to
preserve the goodwill of Seller's suppliers,
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customers and others having business relations with Seller, and to assist
Purchaser in retaining the services of key employees and agents of Seller after
the Closing Date on terms satisfactory to Purchaser.
5.2 NO MATERIAL CHANGES. No action shall be taken by Seller or any
Shareholder which shall materially alter the organization, capitalization, or
financial structure, practices or operations of Seller's Business. Without
limiting the generality of the foregoing:
(a) No change shall be made in the articles of incorporation or
bylaws of Seller.
(b) No change shall be made in the authorized or issued share
capital of Seller.
(c) Neither Seller nor any Shareholder shall issue or grant any
right or option to purchase or otherwise acquire any share capital or other
security of Seller.
(d) No dividend or other distribution or payment shall be
declared or made with respect to any share capital of Seller, and Seller shall
not, directly or indirectly, redeem, purchase or otherwise acquire any share
capital.
(e) No change shall be made affecting the banking arrangements of
Seller.
(f) Seller shall not liquidate or voluntarily declare bankruptcy
or seek the appointment of a receiver, trustee or custodian.
5.3 COMPENSATION. No increase shall be made in the compensation
payable or to become payable to any director, officer, employee or agent of
Seller, and no bonus or profit-share payment or other arrangement (whether
current or deferred) shall be made to or with any such director, officer,
employee or agent, except the payment of bonuses as set forth on Schedule 3.25.
No officer, director or employee shall be hired, and no consultant or agent
shall be retained, by Seller at a salary or fee in excess of $60,000 per annum.
5.4 EMPLOYEE BENEFIT PLANS.
(a) Seller shall not cause or permit any ERISA Plan to be
involved in any transaction which constitutes a "prohibited transaction" within
the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
Code, unless such transaction is specifically permitted under Sections 407 or
408 of ERISA, Section 4975 of the Internal Revenue Code or a class or
administrative exemption issued by the Department of Labor; Seller shall not
cause or permit any ERISA Plan or fiduciary of such ERISA Plan to be
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involved in a breach of fiduciary duty under Section 404 of ERISA; and Seller
shall timely make all filings, returns and reports, and timely give all notices
which are required under ERISA or the Internal Revenue Code.
(b) With respect to the Company Plans, Seller shall take such
actions, and refrain from such actions, as are necessary to maintain the
qualification of each such Plan under Section 401(a) of ERISA, and the exemption
of the trust maintained for each such Plan under Internal Revenue Code Section
501(a).
(c) Seller shall timely make all contributions and other payments
to its Plans which it is obligated to make as of the date hereof. Other than
contributions or payments declared or obligated to be paid to the Plans as of
the date hereof, no contribution shall be declared for or paid to any Plan
including, without limitation, Company Plans.
(d) No amendment or change to the provisions of any Company Plan
shall be made or adopted prior to the Closing Date.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
All obligations of Purchaser under this Agreement are subject to the
fulfillment and satisfaction of each and every of the following conditions on or
prior to the Closing, any or all of which may be waived in whole or in part by
Purchaser:
6.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings taken in
connection with the consummation of the transactions contemplated herein and all
documents and papers reasonably required in connection therewith shall be
reasonably satisfactory to Purchaser and its counsel, and Purchaser and its
counsel shall have timely received copies of such documents and papers, all in
form and substance satisfactory to Purchaser and its counsel, as reasonably
requested by Purchaser or its counsel in connection therewith.
6.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 3 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
Seller or the Shareholders, in connection with the transactions contemplated by
this Agreement shall be true and correct as of the date when made and shall be
deemed to be made again at and as of the Closing Date and shall be true and
correct at and as of such time.
6.3 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Seller and each
Shareholder shall have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by each such party
prior to or on the Closing Date.
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6.4 CERTIFICATES OF SELLER AND THE SHAREHOLDERS. Seller and the
Shareholders shall have delivered to Purchaser certificates executed by the
president of Seller and by each Shareholder, dated as of the Closing, certifying
in such detail as Purchaser may reasonably request as to (a) the fulfillment and
satisfaction of the conditions specified in Paragraphs 6.2 and 6.3 above, and
(b) the absence of any material adverse change in Seller's Business prior to the
Closing.
6.5 RESOLUTIONS. Purchaser shall have received duly adopted
resolutions of the Board of Directors and Shareholders of Seller, certified by
the Secretary or Assistant Secretary of Seller, dated the Closing Date,
authorizing and approving the execution of this Agreement and all other action
necessary to enable Seller to comply with the terms hereof.
6.6 OPINION OF COUNSEL. Purchaser shall have received from Peter O.
Ward, Jr., counsel for Seller and the Shareholders, an opinion, dated as of the
date of Closing, in substantially the forms set forth in Exhibit G attached
hereto.
6.7 GOVERNMENT CONSENTS. Purchaser shall have received from any and
all persons, firms, and other legal entities, or any public or governmental
authorities, bodies or agencies or judicial authority having jurisdiction over
the transactions contemplated by this Agreement, or any part hereof, such
consents, authorizations and approvals as are necessary for the consummation
thereof, and all notices required to be given to government authorities shall
have been given and all applicable waiting periods shall have expired.
6.8 OTHER CONSENTS. Seller shall have delivered to Purchaser such
consents and approvals from Seller's lessors, lenders and other persons, firms
and other entities having business relations with Seller as are necessary in
Purchaser's reasonable opinion for the assignment to and assumption by
Purchaser, and the continuation in full force and effect after the Closing, (a)
of the Assigned Contracts, and (b) of Seller's Business in the same manner as
conducted prior to the Closing. The parties agree to enter into a subcontract in
order that a transfer of all contract performance of the Acquired Contracts will
be made to Purchaser in all cases and, that irrespective of any assignment or
failure to obtain assignment obligation of performance and the right to any
consideration will be held by Purchaser.
6.9 INTERIM STATEMENTS. Purchaser shall have received a copy of
Seller's unaudited financial statements as at the end of the calendar month
immediately preceding the Closing Date (or if the Closing Date is within the
first 15 days of any calendar month, as at the end of the next previous calendar
month) and for the period then ended (the "Interim Statements"), accompanied by
the representation, warranty and covenant of Seller and the Shareholders that
such financial statements (a) are true and correct in
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all material respects, (b) have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior
periods, and (c) present fairly the financial condition of Seller as at such
date and the results of its operations for the period then ended. The facts
disclosed by the Interim Statements shall not be inconsistent with the
representations and warranties of Seller and the Shareholders set forth in this
Agreement at and as of the Closing Date.
6.10 EMPLOYMENT AGREEMENTS. Purchaser shall have employed the
individuals specified in Paragraph 2.6 above in accordance with the provisions
of that paragraph.
6.11 CLOSING SCHEDULES. Schedules shall have been agreed to by the
parties hereto in accordance with the provisions of this Agreement.
6.12 NO INCONSISTENT REQUIREMENTS. No legal action shall have been
commenced by any public authority or private party seeking to enjoin or prohibit
the transactions contemplated hereby.
6.13 MISCELLANEOUS. Purchaser and its counsel shall have received
such other opinions, certifications and documents from Seller or the
Shareholders as Purchaser and its counsel may reasonably request.
7. CONDITIONS TO OBLIGATIONS OF SELLER AND THE SHAREHOLDERS.
All of the obligations of Seller and the Shareholders, under this
Agreement are subject to the fulfillment and satisfaction of each and every of
the following conditions on or prior to the Closing, any or all of which may be
waived in whole or in part by Seller on behalf of itself and each of the
Shareholders:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 4 of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by Purchaser in
connection with the transactions contemplated by this Agreement shall be true
and correct on and as of the Closing Date.
7.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Purchaser shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by Purchaser prior to or on the
Closing Date.
7.3 CERTIFICATE OF PURCHASER. Purchaser shall have delivered to
Seller a certificate, dated the Closing Date, certifying in such detail as
Seller may reasonably request to the fulfillment and satisfaction of the
conditions specified in Paragraphs 7.1, and 7.2 above.
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7.4 RESOLUTIONS. Purchaser shall have delivered to Seller duly
adopted resolutions of the Board of Directors of Purchaser, certified by the
Secretary or an Assistant Secretary of Purchaser, dated the Closing Date,
authorizing and approving the execution of this Agreement by Purchaser and all
other action necessary to enable Purchaser to comply with the terms of this
Agreement.
7.5 OPINION OF COUNSEL. Seller and the Shareholders shall have
received from James C. Dobbs, counsel for Purchaser, an opinion, dated the
Closing Date, in substantially the form set forth in Exhibit H attached hereto.
7.6 CLOSING SCHEDULES. Schedules shall have been agreed to by the
parties hereto in accordance with the provisions of this Agreement.
7.7 NO INCONSISTENT REQUIREMENTS. No legal action shall have been
commenced by any public authority and no judicial or administrative order shall
have been issued seeking to enjoin or prohibit the transactions contemplated
hereby.
8. INDEMNITIES.
8.1 INDEMNIFICATION OF PURCHASER. Seller and the Shareholders shall,
jointly and severally, indemnify and hold harmless Purchaser, and its direct and
indirect parent corporations and affiliates, their officers and directors
(hereafter collectively "Indemnities") from and against and in respect of any
and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement pursuant to Paragraph 8.3(b)
below ("Indemnified Losses"), suffered or incurred by any Indemnitee by reason
of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
nonfulfillment of any agreement of Seller or any of the Shareholders contained
in this Agreement or in any certificate, schedule, instrument or document
delivered to Purchaser by or on behalf of Seller or any of the Shareholders
pursuant to the provisions of this Agreement, including, without limitation, the
Disclosure Memorandum;
(b) all obligations and liabilities of Seller other than the
Assumed Liabilities, whether direct or indirect, fixed or contingent, known or
unknown, including, without limitation, all obligations and liabilities
resulting from or arising out of any default, performance or non-performance by
Seller prior to the Closing under or with respect to any Assigned Contract; and
(c) any claims, liabilities, obligations, damages, costs, and
expenses, known or unknown, fixed or contingent, claimed or demanded by third
parties against Purchaser arising out of or resulting from Seller's operation of
its business (including
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Seller's Business) or the Purchased Assets prior to and including the Closing
Date, including, without limitation, any liability or obligation described in
Paragraph 8.1(b) above.
8.2 PAYMENT. Seller and the Shareholders shall, subject to the
provisions of Paragraphs 8.3, reimburse Indemnities, within 10 days of written
demand on Seller and the Shareholders, for any Indemnified Loss. Notwithstanding
anything contained in Paragraph 8, the liability of all Shareholders shall be
limited to the amount of consideration received pursuant to Paragraph 1.3 and
further, the liability of Shareholders Charles R. Bourn, Jr., Randy G. Parish
and Randal S. Vanghan to reimburse the Indemnities shall be limited to $50,000
each.
8.3 DEFENSE OF CLAIMS.
(a) If any claim or action by a third party arises after the
Closing Date for which Seller and the Shareholders may be liable under the terms
of this Agreement, then Indemnities shall notify Seller (who shall also act as
agent for the Shareholders for purposes of such claim or action) within a
reasonable time after such claim or action arises and is known to Indemnities,
and shall give Seller a reasonable opportunity:
(i) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend
Indemnities;
(ii) to take all other required steps or
proceedings to settle or defend any such claim or action; and
(iii) to employ counsel to contest any such claim
or action in the name of Indemnities or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to such
claims or actions shall be borne by Seller and the Shareholders. If Seller and
the Shareholders wish to assume the defense of such claim or action, then
Seller shall give written notice to Indemnities within 30 days after notice
from Indemnities of such claim or action (unless the claim or action reasonably
requires a response in less than 30 days after the notice is given to Seller,
in which event they shall notify Indemnities at least 10 days prior to such
reasonably required response date), and Seller and the Shareholders shall
thereafter assume the defense of any such claim or liability, through counsel
reasonably satisfactory to Indemnities; provided that Indemnities may
participate in such
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<PAGE> 37
defense at their own expense and shall, in any event, have the right to control
the defense of the claim or action.
(b) If Seller and the Shareholders do not assume the defense of,
or if after so assuming Seller and the Shareholders fail to defend, any such
claim or action, then Indemnities may defend against such claim or action in
such manner as they may deem appropriate (provided that Seller and the
Shareholders may participate in such defense at their own expense) and
Indemnities may settle such claim or litigation on such terms as they may deem
appropriate, and Seller and the Shareholders jointly and severally shall
promptly reimburse Indemnities for the amount of all expenses, legal and
otherwise, reasonably and necessarily incurred by Indemnities in connection with
the defense against and settlement of such claim or action. If no settlement of
such claim or litigation is made, Seller and the Shareholders jointly and
severally shall satisfy any judgment rendered with respect to such claim or in
such action, before Indemnities are required to do so, and pay all expenses,
legal or otherwise, reasonably and necessarily incurred by Indemnities in the
defense of such claim or litigation.
(c) If a judgment is rendered against any of the Indemnities in
any action covered by the indemnification hereunder, or any lien in respect of
such judgment attaches to any of the assets of any of the Indemnities, Seller
and the Shareholders shall immediately upon such entry or attachment pay such
judgment in full or discharge such lien unless, at the expense and direction of
Seller and the Shareholders, an appeal is taken under which the execution of the
judgment or satisfaction of the lien is stayed. If and when a final judgment is
rendered in any such action, Seller and the Shareholders shall forthwith pay
such judgment or discharge such lien before any of Indemnities is compelled to
do so.
9. SURVIVAL OF REPRESENTATIONS AND OTHER PROVISIONS.
9.1 SURVIVAL. The representations, warranties, covenants, agreements
and indemnifications of the parties contained in this Agreement or in any
writing delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by Purchaser and the consummation of
the transactions contemplated herein and shall continue in full force and effect
for the period (the "Survival Period") beginning on the Closing Date and
continuing until February 1, 2001. Provided, however, that the Survival Period
shall be extended automatically to include any time period necessary to resolve
a specific claim for indemnification which was made before expiration of the
Survival Period but not resolved prior to its expiration;
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<PAGE> 38
and provided, further, that any such extension shall apply only as to claims
asserted and not so resolved within the Survival Period.
9.2 LIABILITIES NOT ASSUMED. Notwithstanding the provisions of
Paragraph 9.1 above, Seller shall remain liable, during the Survival Period and
thereafter, for all liabilities and obligations of Seller not assumed pursuant
to Paragraph 1.5 above, including, without limitation, the liabilities and
obligations specified in Paragraph 1.6 above.
10. TERMINATION.
10.1 TERMINATION FOR CERTAIN CAUSES. This Agreement may be terminated
at any time prior to or on the Closing Date by Seller or Purchaser upon written
notice to the other party as follows, and, upon such termination of this
Agreement, no party hereto shall have any liability to the other:
(a) By Purchaser, if a material adverse change in the financial
condition or business of Seller shall have occurred, or any substantial part of
the Purchased Assets of Seller are destroyed due to fire or other casualty.
(b) By Purchaser if the terms, covenants or conditions of this
Agreement to be complied with or performed by the Shareholders and Seller at or
before the Closing Date shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been waived by Purchaser.
(c) By Purchaser, if there is any fact or condition with respect
to Seller's Business, the Purchased Assets, or any obligation of Seller, which
materially and adversely affects such business, assets, or the Assumed
Liabilities, or the value or continuance of the Seller's Business.
(d) By Seller and the Shareholders, if the terms, covenants or
conditions of this Agreement to be complied with or performed by Purchaser at or
before the Closing Date shall not have been complied with or performed and such
noncompliance or nonperformance shall not have been waived by Seller and the
Shareholders.
(e) By any party, if any action, suit or proceeding shall have
been instituted or threatened against any party to this Agreement to restrain or
prohibit, or to obtain substantial damages in respect of, this Agreement or the
consummation of the transactions contemplated herein, which, in the good faith
opinion of any party, makes consummation of the transactions herein contemplated
inadvisable.
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<PAGE> 39
11. POWER-OF-ATTORNEY.
11.1 APPOINTMENT OF AGENT. The Shareholders and each of them, hereby
irrevocably constitute and appoint Seller (the "Agent") as their agent and
attorney-in-fact to modify, amend or otherwise change this Agreement, or any of
its terms or provisions (including modifications, amendments or changes
subsequent to Closing), to take all actions and to execute all documents
(including all actions and documents required under Section 6 hereof) necessary
or desirable to consummate the transactions contemplated by this Agreement, and
to take all actions and to execute all documents which may be necessary or
desirable in connection therewith, to give and receive consents and all notices
hereunder, to negotiate and settle claims for indemnification under Section 8
hereof, and to perform any other act arising under or pertaining to this
Agreement and the transactions contemplated hereby. The Shareholders, and each
of them, agree that service of process upon the Agent in any action or
proceeding arising under or pertaining to this Agreement shall be deemed to be
valid service of process upon the Shareholders, and any claim by Purchaser
against the Shareholders, or any of them, in respect to this Agreement may be
asserted against, and settled with, the Agent. The Agent shall be deemed to have
accepted the appointment herein upon his execution of this Agreement.
11.2 LIABILITY OF AGENT. Nothing contained herein shall be deemed to
make the Agent personally liable to the Shareholders because of service in his
capacity as agent and attorney-in-fact. In performing any of his duties
hereunder, the Agent shall not incur any liability to the Shareholders for
losses, damages, liabilities or expenses, except for his own wilful default.
11.3 IRREVOCABLE; BINDING ON SUCCESSORS, ETC. It is expressly
understood and agreed that this power of attorney and the agency created hereby
is coupled with an interest of the respective parties hereto and shall be
binding and enforceable on and against the respective heirs, personal
representatives, successors and assigns of the Shareholders, and each of them,
and this power of attorney shall not be revoked or terminated by the death,
disability, bankruptcy or incompetency of the Shareholders, or any of them, but
shall continue to be binding and enforceable by the Agent, Purchaser and their
respective successors and on and against the heirs, personal representatives,
successors and assigns of the Shareholders in the manner provided herein.
12. MISCELLANEOUS.
12.1 NOTICES.
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<PAGE> 40
(a) All notices, demands or other communications required or
permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class, certified or registered air mail
(or the functional equivalent in any foreign country), return receipt requested,
by express mail or by facsimile transmission to the intended recipient thereof
at its address, or facsimile number set out below. Any such notice, demand or
communication shall be deemed to have been duly given immediately (if given or
made by confirmed facsimile), or three days after mailing (if given or made by
letter addressed to a location within the country in which it is posted) or
seven days after mailing (if made or given by letter addressed to a location
outside the country in which it is posted), and in proving same it shall be
sufficient to show that the envelope containing the same was duly addressed,
stamped and posted, or that receipt of a facsimile was confirmed by the
recipient. The addresses and facsimile numbers of the parties for purposes of
this Agreement are:
(i) If to Purchaser: Versar, Inc.
6850 Versar Center
Springfield, VA 22151
Attn: General Counsel
Facsimile No.703-642-6825
(ii) If to Seller or
the Shareholders: William M. Greenwood, P.E.
108 Bennett Circle
Williamsburg, VA 23185
With copies to: Peter O. Ward, Jr. Esq.
801 Main Street
Lynchburg, VA 24505
Facsimile No.804-847-8526
(b) Any party may change the address to which notices, requests,
demands or other communications to such parties shall be delivered or mailed by
giving notice thereof to the other parties hereto in the manner provided herein.
12.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
12.3 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and this Agreement contains the sole
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<PAGE> 41
and entire agreement among the parties with respect to the matters covered
hereby. This Agreement shall not be altered or amended except by an instrument
in writing signed by or on behalf of the party entitled to the benefit of the
provision against whom enforcement is sought.
12.4 GOVERNING LAW. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Virginia, without regard to conflicts rules.
12.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns.
12.6 PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof shall constitute their
agreement with respect to the subject matter hereof and all such remaining
terms, or parts thereof, shall remain in full force and effect. To the extent
legally permissible, any illegal, invalid or unenforceable provision of this
Agreement shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable provision.
12.7 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
any party hereto to exercise, and no delay in exercising any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No waiver by any party hereto to any breach of or
default in any term or condition of this Agreement shall constitute a waiver of
or assent to any succeeding breach of or default in the same or any other term
or condition hereof.
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<PAGE> 42
12.8 HEADINGS. The headings of particular provisions of this
Agreement are inserted for convenience only and shall not be construed as a part
of this Agreement or serve as a limitation or expansion on the scope of any term
or provision of this Agreement.
12.9 NUMBER AND GENDER. Where the context requires, the use of the
singular form herein shall include the plural, the use of the plural shall
include the singular, and the use of any gender shall include any and all
genders.
12.10 TIME OF PERFORMANCE. Time is of the essence.
12.11 DEFINITION OF KNOWLEDGE. The words "known", "to the knowledge
of," "to the best knowledge of," "aware" or words of similar import employed in
this Agreement with reference to any individual or entity shall be conclusively
presumed to mean that the person or entity has made reasonable and diligent
efforts under the circumstances to become knowledgeable; in the case of any
person other than a natural person, the "knowledge" of such person shall be
deemed to be the knowledge of its directors and senior officers.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
PURCHASER:
Versar, Inc.
By: /S/ Benjamin M. Rawls
----------------------
(CORPORATE SEAL) Name: Benjamin M. Rawls
---------------------
Title: Chairman & CEO
--------------------
ATTEST:
/S/ James Charles Dobbs
- --------------------------
Secretary
Versar Acquisition II, Corp.
By: /S/ Benjamin M. Rawls
-----------------------
(CORPORATE SEAL) Name: Benjamin M. Rawls
---------------------
ATTEST: Title: President
--------------------
/S/ James Charles Dobbs
- --------------------------
Secretary
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<PAGE> 43
SELLER:
The Greenwood Partnership, P.C.
By: /S/ William M. Greenwood
---------------------------
(CORPORATE SEAL) Name: William M. Greenwood
---------------------
Title: President
--------------------
ATTEST:
/S/ B. Gordon Watkins, Jr.
- ---------------------------
Secretary
SHAREHOLDERS:
/S/ William M.Greenwood (SEAL)
-------------------------
William M. Greenwood
/S/ David A. Kincaid (SEAL)
-------------------------
David A. Kincaid
/S/ Donald P. Manning (SEAL)
-------------------------
Donald P. Manning
/S/ B. Gordon Watkins (SEAL)
-------------------------
B. Gordon Watkins
/S/ Charles R. Bourn, Jr. (SEAL)
-------------------------
Charles R. Bourn, Jr.
/S/ Randy G. Parrish (SEAL)
-------------------------
Randy G. Parrish
/S/ Randal S. Vaughan (SEAL)
-------------------------
Randal S. Vaughan
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<PAGE> 1
EXHIBIT 10.89
SECOND AMENDED AND RESTATED
REVOLVING PROMISSORY NOTE
$5,000,000 McLean, Virginia
January 30, 1998
FOR VALUE RECEIVED, VERSAR, INC., a corporation organized under the
laws of the State of Delaware ("Versar"), GEOMET TECHNOLOGIES, INC., a
corporation organized under the laws of the State of Delaware ("Geomet"),
SCIENCE MANAGEMENT CORPORATION, a corporation organized under the laws of the
State of Delaware ("SMC"), SMC ENVIRONMENTAL SERVICES GROUP, INC., a
corporation organized under the laws of the State of Pennsylvania ("SMC
Environmental"), SMC MCEVER, INC., a corporation organized under the laws of
the State of Texas ("SMC McEver"), SMC BUSINESS INFORMATION SYSTEMS, INC., a
corporation organized under the laws of the State of Delaware ("SMC Business"),
SMC MANAGEMENT SERVICES GROUP, INC., a corporation organized under the laws of
the State of New Jersey ("SMC Management"), VERSAR ACQUISITION II, CORP., a
corporation organized under the laws of the Commonwealth of Virginia ("Versar
Acquisition"; together with SMC, SMC Environmental, SMC McEver, SMC Business,
Versar and Geomet being collectively called, the "Borrowers", and each
individually, a "Borrower"), jointly and severally, promise to pay to the order
of NATIONSBANK, N.A., a national banking association, its successors and
assigns (the "Lender"), the principal sum of FIVE MILLION DOLLARS ($5,000,000)
(the "Principal Sum"), or so much thereof as has been or may be advanced or
readvanced to or for the account of the Borrowers pursuant to the terms and
<PAGE> 2
conditions of the Financing Agreement (as hereinafter defined), together with
interest thereon at the rate or rates hereinafter provided, in accordance with
the following:
1. INTEREST. (a) Except as otherwise expressly set forth
below, amounts outstanding hereunder shall bear interest at the LIBOR Rate (as
hereinafter defined), plus two hundred and fifty basis points (i.e. 2.50%).
For purposes hereof, the "LIBOR Rate" shall mean a fluctuating rate equal to
the daily London Interbank Offered Rate for thirty (30) days U.S. Dollar
deposits as quoted by the Lender as of 11:00 A.M. (Washington, D.C., time) (the
"LIBOR Rate"). The interest rate on all sums accruing interest at the LIBOR
Rate under this Note shall change immediately and contemporaneously with any
change in the LIBOR Rate.
(b) In addition, so long as no event of default or any act,
event or condition which, with notice or the passage of time or both, would
constitute an event of default under any Financing Document has occurred and is
continuing, the Borrowers shall have the right to elect that specified amounts
advanced under this Note in a minimum amount of $100,000 and increments of
$50,000, bear interest at the Prime Rate per annum. For purposes hereof, the
"Prime Rate" means the fluctuating prime rate of interest established and
declared by the Lender from time to time. The Prime Rate does not necessarily
represent the lowest rate of interest charged by the Lender to its borrowers.
(c) All interest payable under the terms of this Note shall
be calculated on the basis of a 360-day year and the actual number of days
elapsed.
(d) In respect to any interest rate election hereunder and
any transactions contemplated hereby, the Borrowers authorize the Lender to
accept, rely upon, act upon and comply with, any verbal or written
instructions, requests, confirmations and orders of the
<PAGE> 3
President and Chief Executive Officer, the Vice President, Treasurer & Chief
Financial Officer and Vice President, Secretary & General Counsel on behalf of
the Borrowers. The Borrowers acknowledge that the transmission between the
Borrowers and the Lender of any such instructions, requests, confirmations and
orders involves the possibility of errors, omissions, mistakes and
discrepancies and agrees to adopt such internal measures and operational
procedures to protect its interests. By reason thereof, the Borrowers hereby
assume all risk of loss and responsibility for, release and discharge the
Lender from any and all responsibility or liability for, and agree to
indemnify, reimburse on demand and hold the Lender harmless from, any and all
claims, actions, damages, losses, liability and expenses by reason of, arising
out of or in any way connected with or related to, (i) the Lender's acceptance,
reliance and actions upon, compliance with or observation of any such
instructions, requests, confirmations or orders, and (ii) any such errors,
omissions, mistakes and discrepancies, except those caused by the Lender's
gross negligence or willful misconduct.
2. Payments and Maturity. The unpaid Principal Sum, together with
interest thereon at the rate or rates provided above, shall be payable as
follows:
(a) Interest only on the unpaid Principal Sum shall be due
and payable monthly, commencing February 1, 1998, and on the same day of each
month thereafter to maturity; and
(b) Unless sooner paid, the unpaid Principal Sum, together
with interest accrued and unpaid thereon, shall be due and payable in full on
November 30, 1998.
The fact that the balance hereunder may be reduced to zero from time
to time pursuant to the Financing Agreement will not affect the continuing
validity of this Note or the Financing
3
<PAGE> 4
Agreement, and the balance may be increased to the Principal Sum after any such
reduction to zero.
3. DEFAULT INTEREST. Upon the occurrence of an Event of Default
(as hereinafter defined), the unpaid Principal Sum shall bear interest
thereafter at a rate (the "Default Rate") two percent (2%) per annum in excess
of the then current rate or rates of interest hereunder until such Event of
Default is cured.
4. LATE CHARGES. If the Borrowers shall fail to make any payment
under the terms of this Note within ten (10) days after the date such payment is
due, the Borrowers shall pay to the Lender on demand a late charge equal to five
percent (5%) of such payment.
5. APPLICATION AND PLACE OF PAYMENTS. All payments, made on
account of this Note shall be applied first to the payment of any late charge
then due hereunder, second to the payment of accrued and unpaid interest then
due hereunder, and the remainder, if any, shall be applied to the unpaid
Principal Sum. All payments on account of this Note shall be paid in lawful
money of the United States of America in immediately available funds during
regular business hours of the Lender at its principal office in McLean,
Virginia or at such other times and places as the Lender may at any time and
from time to time designate in writing to the Borrowers. The Lender is
authorized to deduct any payment (including payments of principal and/or
interest as above provided) from the Borrowers' Account Number 4113103748 on or
after the date the payment is due; provided, however, that such authorization
shall not be deemed to relieve the Borrowers from their obligation to make
such payment when it is due.
6. PREPAYMENT. The Borrowers may prepay the Principal Sum in
whole or in part without premium or penalty.
4
<PAGE> 5
7. FINANCING AGREEMENT AND OTHER FINANCING DOCUMENTS. This Note
is the "Second Restated Note" described in that certain Third Amendment to
Financing and Security Agreement of even date herewith by and among the
Borrowers and the Lender, which Third Amendment to Financing and Security
Agreement, further amends that certain Financing and Security Agreement dated
March 31, 1997 (the "Original Financing Agreement") by and among Versar and
Geomet (the "Original Borrowers"). The Original Financing Agreement has been
amended by that certain First Amendment to Financing and Security Agreement
dated April 30, 1997, by and among the Original Borrowers and the Lender and
which Original Financing Agreement was further amended by that certain Second
Amendment to Financing and Security Agreement dated November 30, 1997 by and
among the Original Borrowers, SMC, SMC Environmental, SMC McEver and SMC
Business and the Lender (the Original Financing Agreement, as amended,
modified, restated, substituted, extended and renewed at any time and from time
to time, is called the "Financing Agreement"). The indebtedness evidenced by
this Note is included within the meaning of the term "Obligations" as defined
in the Financing Agreement. This Note increases, amends and restates in its
entirety that certain Amended and Restated Revolving Promissory Note in the
maximum principal amount of Three Million Dollars ($3,000,000) dated November
30, 1997 (the "First Restated Note") from the Original Borrowers, SMC, SMC
Environmental, SMC McEver and SMC Business in favor of the Lender. The term
"Financing Documents" as used in this Note, shall mean collectively this Note,
each Acquisition Note, the Financing Agreement and any other instrument,
agreement, or document previously, simultaneously, or hereafter executed and
delivered by any of the Borrowers and/or any other person, singularly or
jointly with any other person, evidencing, securing, guaranteeing, or in
5
<PAGE> 6
connection with the Principal Sum, this Note and/or the Financing Agreement.
It is expressly understood and agreed that the indebtedness evidenced by the
First Restated Note has not been extinguished or discharged hereby. The
Borrowers and the Lender agree that the execution of this Note is not intended
and shall not cause or result in a novation with regard to the First Restated
Note.
8. SECURITY. This Note is secured as provided in the Financing
Agreement.
9. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an "Event
of Default" and collectively, the "Events of Default") under the terms of this
Note:
(a) The failure of the Borrowers to pay to the Lender
within five (5) days of when due any and all amounts payable by the Borrowers
to the Lender under the terms of this Note; or
(b) The occurrence of an event of default (as defined
therein) under the terms and conditions of any of the other Financing
Documents.
10. REMEDIES. Upon the occurrence of an Event of Default, at the
option of the Lender, all amounts payable by the Borrowers to the Lender under
the terms of this Note shall immediately become due and payable by the
Borrowers to the Lender without notice to the Borrowers or any other person,
and the Lender shall have all of the rights, powers, and remedies available
under the terms of this Note, any of the other Financing Documents and all
applicable laws. The Borrowers and all endorsers, guarantors, and other
parties who may now or in the future be primarily or secondarily liable for the
payment of the indebtedness evidenced by this Note hereby severally waive
presentment, protest and demand, notice of protest, notice of
6
<PAGE> 7
demand and of dishonor and non-payment of this Note and expressly agree that
this Note or any payment hereunder may be extended from time to time without in
any way affecting the joint and several liability of the Borrowers, guarantors
and endorsers.
Until such time as the Lender is not committed to extend further
credit to the Borrowers and all Obligations of the Borrowers to the Lender have
been indefeasibly paid in full in cash, and subject to and not in limitation of
the provisions set forth in the next following paragraph below, no Borrower
shall have any right of subrogation (whether contractual, arising under the
Bankruptcy Code or otherwise), reimbursement or contribution from any Borrower,
or any guarantor nor any right of recourse to its security for any of the debts
and obligations of any Borrower which are the subject of this Note. Except as
otherwise expressly permitted by the Financing Agreement, any and all present
and future debts and obligations of any other to any Borrower are hereby
subordinated to the full payment and performance of all present and future
debts and obligations to the Lender under this Note and the Financing Agreement
and the Financing Documents, provided, however, notwithstanding anything set
forth in this Note to the contrary, prior to the occurrence of a payment
Default, the Borrowers shall be permitted to make payments on account of any of
such present and future debts and obligations from time to time in accordance
with the terms thereof.
The Borrowers further agree that, if any payment made by the
Borrowers, or any other person is applied to this Note and is at any time
annulled, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
any property hereafter securing this Note is required to be returned by the
Lender to any Borrower, their estate, trustee, receiver or any other party,
including, without limitation, such
7
<PAGE> 8
Borrower, under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, such
Borrower's liability hereunder (and any lien, security interest or other
collateral securing such liability) shall be and remain in full force and
effect, as fully as if such payment had never been made, or, if prior thereto
any such lien, security interest or other collateral hereafter securing such
the Borrower's liability hereunder shall have been released or terminated by
virtue of such cancellation or surrender, this Note (and such lien, security
interest or other collateral) shall be reinstated in full force and effect, and
such prior cancellation or surrender shall not diminish, release, discharge,
impair or otherwise affect the obligations of such Borrower of the amount of
such payment (or any lien, security interest or other collateral securing such
obligation).
The JOINT AND SEVERAL obligations of each Borrower under this Note
shall be absolute, irrevocable and unconditional and shall remain in full force
and effect until the outstanding principal of and interest on this Note and all
other Obligations or amounts due hereunder and under the Financing Agreement
and the Financing Documents shall have been indefeasibly paid in full in cash
in accordance with the terms thereof and this Note shall have been canceled.
11. EXPENSES. The Borrowers jointly and severally promise to pay
to the Lender on demand by the Lender all costs and expenses incurred by the
Lender in connection with the collection and enforcement of this Note,
including, without limitation, reasonable attorneys' fees and expenses and all
court costs.
8
<PAGE> 9
12. NOTICES. Any notice, request, or demand to or upon the
Borrowers or the Lender shall be deemed to have been properly given or made
when delivered in accordance with Section 11.01 of the Financing Agreement.
13. MISCELLANEOUS. Each right, power, and remedy of the Lender as
provided for in this Note or any of the other Financing Documents, or now or
hereafter existing under any applicable law or otherwise shall be cumulative
and concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Financing Documents or now or
hereafter existing under any applicable law, and the exercise or beginning of
the exercise by the Lender of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by the Lender of
any or all such other rights, powers, or remedies. No failure or delay by the
Lender to insist upon the strict performance of any term, condition, covenant,
or agreement of this Note or any of the other Financing Documents, or to
exercise any right, power, or remedy consequent upon a breach thereof, shall
constitute a waiver of any such term, condition, covenant, or agreement or of
any such breach, or preclude the Lender from exercising any such right, power,
or remedy at a later time or times. By accepting payment after the due date of
any amount payable under the terms of this Note, the Lender shall not be deemed
to waive the right either to require prompt payment when due of all other
amounts payable under the terms of this Note or to declare an Event of Default
for the failure to effect such prompt payment of any such other amount. No
course of dealing or conduct shall be effective to amend, modify, waive,
release, or change any provisions of this Note.
14. PARTIAL INVALIDITY. In the event any provision of this Note
(or any part of any provision) is held by a court of competent jurisdiction to
be invalid, illegal, or unenforceable in
9
<PAGE> 10
any respect, such invalidity, illegality, or unenforceability shall not affect
any other provision (or remaining part of the affected provision) of this Note;
but this Note shall be construed as if such invalid, illegal, or unenforceable
provision (or part thereof) had not been contained in this Note, but only to
the extent it is invalid, illegal, or unenforceable.
15. CAPTIONS. The captions herein set forth are for convenience
only and shall not be deemed to define, limit, or describe the scope or intent
of this Note.
16. APPLICABLE LAW. Each Borrower acknowledges and agrees that
this Note shall be governed by the laws of the Commonwealth of Virginia, even
though for the convenience and at the request of the Borrowers, this Note may
be executed elsewhere.
17. WAIVER OF TRIAL BY JURY. EACH BORROWER HEREBY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO WHICH EITHER BORROWER AND THE LENDER MAY
BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS NOTE OR (B) THE
FINANCING DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES
A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.
THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY EACH
BORROWER, AND EACH BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT
OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. EACH BORROWER FURTHER
REPRESENTS
10
<PAGE> 11
THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF
THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND
THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
18. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE OR
ANY RELATED INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW), THE RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF
COMMERCIAL DISPUTES OF ENDISPUTE, INC., D/B/A J.A.M.S./ENDISPUTE ("J.A.M.S.")
AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF AN INCONSISTENCY, THE
SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT,
AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS
NOTE RELATES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN FAIRFAX
COUNTY, VIRGINIA AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR.
IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED
11
<PAGE> 12
FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION
WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS
OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN
ADDITIONAL SIXTY (60) DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS NOTE SHALL BE DEEMED
TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C. Section 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT
THE RIGHT OF THE LENDER: (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SET OFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE
APPOINTMENT OF A RECEIVER. THE LENDER MAY EXERCISE SUCH SELF HELP RIGHTS,
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES
BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT
PURSUANT TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THE EXERCISE OF
SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF ANY ACTION FOR
FORECLOSURE
12
<PAGE> 13
OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT
OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF
THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be
executed under seal by their duly authorized officers as of the date first
written above.
<TABLE>
<S> <C>
WITNESS/ATTEST: VERSAR, INC.
/S/ James Charles Dobbs By: /S/ Benjamin M. Rawls (SEAL)
- ----------------------------- -----------------------------
Name: Benjamin M. Rawls
Title: Chairman & CEO
WITNESS/ATTEST: GEOMET TECHNOLOGIES, INC.
/S/ Benjamin M. Rawls By: /S/ James Charles Dobbs (SEAL)
- ----------------------------- -----------------------------
Name: James Charles Dobbs
Title: Vice President
WITNESS/ATTEST: SCIENCE MANAGEMENT CORPORATION
/S/ Benjamin M. Rawls By: /S/ James Charles Dobbs (SEAL)
- ----------------------------- -----------------------------
Name: James Charles Dobbs
Title: Vice President
WITNESS/ATTEST: SMC ENVIRONMENTAL SERVICES GROUP, INC.
/S/ Benjamin M. Rawls By: /S/ James Charles Dobbs (SEAL)
- ----------------------------- -----------------------------
Name: James Charles Dobbs
Title: Vice President
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C>
WITNESS/ATTEST: SMC MCEVER, INC.
/S/ Benjamin M. Rawls By: /S/ James Charles Dobbs (SEAL)
- ---------------------------- -----------------------------
Name: James Charles Dobbs
Title: Vice President
WITNESS/ATTEST: SMC BUSINESS INFORMATION SYSTEMS, INC.
/S/ Benjamin M. Rawls By: /S/ James Charles Dobbs (SEAL)
- ---------------------------- -----------------------------
Name: James Charles Dobbs
Title: Vice President
WITNESS/ATTEST: SMC MANAGEMENT SERVICES GROUP, INC.
/S/ Benjamin M. Rawls By: /S/ James Charles Dobbs (SEAL)
- ---------------------------- -----------------------------
Name: James Charles Dobbs
Title: Vice President
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
WITNESS/ATTEST: VERSAR ACQUISITION II, CORP.
/S/ James Charles Dobbs By: /S/ Benjamin M. Rawls (SEAL)
- ---------------------------- -----------------------------
Name: Benjamin M. Rawls
Title: Chairman & CEO
</TABLE>
15
<PAGE> 1
EXHIBIT 10.90
AIR FORCE MATERIAL COMMAND
HUMAN SYSTEMS CENTER/PKV
3207 NORTH ROAD
BROOKS AFB, TX 78235-5363
AMENDMENT/MODIFICATION NO.: F41624-97-D-8011, P00001
DATED: MAY 28, 1998
<PAGE> 2
Page 2 of 78
TABLE OF CONTENTS
F41624-97-D-8011, P00001
<TABLE>
<CAPTION>
PART I - THE SCHEDULE
<S> <C>
Section A.. . . . . .Award/Contract Page . . . . . . . . . . . . . . . . . . . page 1
Table of Contents . . . . . . . . . . . . . . . . . . . . page 2
Section B Supplies/Services & Price/Costs . . . . . . . . . . . . . pages 3-9
Section C Description/Specs/Work Statement . . . . . . . . . . . . . page 10
Section D Packaging and Marking . . . . . . . . . . . . . . . . . . pages 11-12
Section E Inspections and Acceptance . . . . . . . . . . . . . . . pages 13-16
Section F Deliveries or Performance . . . . . . . . . . . . . . . . pages 17-18
Section G Contract Administration Data . . . . . . . . . . . . . . pages 19-21
Section H Special Contract Requirements . . . . . . . . . . . . . . pages 22-30
PART III - CONTRACT CLAUSES
Section I Contract Clauses . . . . . . . . . . . . . . . . . . . . pages 31-77
PART III - DOCUMENTS, EXHIBITS/OTHER ATTACH
Section J List of Exhibits/Attachments . . . . . . . . . . . . . . page 78
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . page 1-55
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . page 1-34
Exhibit C . . . . . . . . . . . . . . . . . . . . . . . page 1-53
Statement of Work . . . . . . . . . . . . . . . . . . . page 1-24
</TABLE>
<PAGE> 3
Page 3 of 78
SECTION B - SUPPLIES OR SERVICES AND PRICES/COST
1. FULL TEXT CLAUSES
B-001 CONTRACT TYPE
Pursuant to FAR 16.102(b), it is in the Government's best interest to award
this contract with the following contract types which shall be established
within each Delivery Order:
<TABLE>
<CAPTION>
AMIS Coding Contract Type
----------- -------------
<S> <C>
R COST PLUS AWARD FEE (CPAF)
U COST PLUS FIXED FEE (CPFF)
J FIRM FIXED PRICE (FFP)
</TABLE>
A. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE ONLY TO
COST REIMBURSEMENT DELIVERY ORDER EFFORTS.
B-002 ESTIMATED COST (FULL FUNDING)
Pursuant to FAR 52.232-20, "Limitation of Cost, "SECTION I hereof, the
estimated cost is $_____________ [to be identified on the individual delivery
order].
B-003 ESTIMATED COST (INCREMENTALLY FUNDED - COST
REIMBURSEMENT)
Pursuant to FAR 52.232-22, "Limitation of Funds," SECTION I hereof, the total
estimated cost is $__________ [TBD at delivery order). The amount presently
available and allotted to this order is $__________ [TBD at delivery order].
It is contemplated that the funds presently allotted to this order will cover
the work to be performed until (DATE).
Section B
<PAGE> 4
Page 4 of 78
B-004 PAYMENT OF FEE
Pursuant to AFMC FAR 5316.307(b) insert the following clause in Section B of
each Cost Plus Fixed Fee (CPFF), delivery order:
5352.216-9001 PAYMENT OF FEE (JUL 1997)
The estimated cost and fee for this contract are shown below. The applicable
fixed fee or target fee set forth below may be increased or decreased only by
negotiation and modification of the contract for added or deleted work. As
determined by the Contracting Officer, it shall be paid as it accrues in
regular installments based upon the percentage of completion of work (or the
agree-upon period(s) for term contracts).
Estimated Cost $_______________
(insert target or fixed fee) Fee $_______________ )
B. THE FOLLOWING FULL TEXT CLAUSE IS APPLICABLE ONLY TO
FIXED-PRICE DELIVERY ORDER EFFORTS.
B-005 TOTAL PRICE [INCREMENTALLY FUNDED - FIXED PRICE]
Pursuant to DFARS 252.232-7007 ~"Limitation of Government's Obligation",
Section H hereof, the total price is $_________ [TBD at delivery order]. The
amount presently available and allotted to this order is $_________ [TBD at
delivery order). In accordance with subparagraph (c), it is contemplated that
the funds presently allotted to this order will cover the work to be performed
until (DATE)..
Section B
<PAGE> 5
Page 5 of 78
II. CONTRACT LINE ITEMS
<TABLE>
<CAPTION>
Quantity Unit Price
Item No Supplies/Services Purch Unit Total Item Amount
- ------- ----------------- ---------- -----------------
<S> <C> <C> <C>
0001 CLIN see class: U 1 $
LO $
noun: FULL SERVICE ENVIRONMENTAL
REMEDIATION EFFORTS
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: 9
[contract type will be specified in each delivery
order]
Descriptive Data:
The contractor shall provide the necessary effort for
environmental remediation of various AFCEE customer
sites as set forth in Attachment 1, Statement of Work
(SOW), dated 28 Mar 97, and attached to Section J
hereof. Specific work and the total amount shall be
defined in individual orders issued pursuant to FAR
52.216-18, "Ordering," and IAW the Delivery Order SOW
or Statement of Objectives (SOO).
0002 CLIN see class: U I $NSP
LO $NSP
noun: DATA - EXHIBITS A, B, AND C
acrn: nsn:
site codes pqa: D
acp: D Fob: D
pr/mipr data: FY7624-97-08183 type contract: 9
[contract type will be specified in each delivery
order]
Descriptive Data:
The contractor shall provide data in accordance with
Contract D Requirements List (CDRL), DD Form 1423
dated 28 Mar 97, designated as Exhibits A, B, and C
and attached to Section J hereof. Specific data
requirements will be identified on individual
delivery orders. This CLIN is Not Separately Priced
(NSP). The prices associated with this CLIN are to
be included with CLIN 0001.
</TABLE>
Section B
<PAGE> 6
Page 6 of 78
<TABLE>
<CAPTION>
Quantity Unit Price
Item No Supplies/Services Purch Unit Total Item Amount
- ------- ----------------- ---------- -----------------
<S> <C> <C> <C>
0003 CLIN see class: U 1 $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 1
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 1. The period of
performance of evaluation period 1 is from _____ to
_____ [TBD after contract award].
0004 CLIN see class: U I $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 2
acrn: nsn:
site codes pqa: D
acp: D Fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 2. The period of
performance of evaluation period 2 is from _____ to
_____ [TBD after contract award].
</TABLE>
Section B
<PAGE> 7
Page 7 of 78
<TABLE>
<CAPTION>
Quantity Unit Price
Item No Supplies/Services Purch Unit Total Item Amount
- ------- ----------------- ---------- -----------------
<S> <C> <C> <C>
0005 CLIN see class: U 1 $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 3
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 3. The period of
performance of evaluation period 3 is from _____ to
_____ [TBD after contract award].
0006 CLIN see class: U I $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 4
acrn: nsn:
site codes pqa: D
acp: D Fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 4. The period of
performance of evaluation period 4 is from _____ to
_____ [TBD after contract award].
</TABLE>
Section B
<PAGE> 8
Page 8 of 78
<TABLE>
<CAPTION>
Quantity Unit Price
Item No Supplies/Services Purch Unit Total Item Amount
- ------- ----------------- ---------- -----------------
<S> <C> <C> <C>
0007 CLIN see class: U 1 $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 5
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 5. The period of
performance of evaluation period 5 is from _____ to
_____ [TBD after contract award].
0008 CLIN see class: U I $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 6
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 6. The period of
performance of evaluation period 6 is from _____ to
_____ [TBD after contract award].
</TABLE>
Section B
<PAGE> 9
Page 9 of 78
<TABLE>
<CAPTION>
Quantity Unit Price
Item No Supplies/Services Purch Unit Total Item Amount
- ------- ----------------- ---------- -----------------
<S> <C> <C> <C>
0009 CLIN see class: U 1 $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 7
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 7. The period of
performance of evaluation period 7 is from _____ to
_____ [TBD after contract award].
0010 CLIN see class: U I $
LO $
noun: AWARD FEE POOL - EVALUATION PERIOD 8
acrn: nsn:
site codes pqa: D
acp: D fob: D
pr/mipr data: FY7624-97-08183 type contract: R
Descriptive Data:
The CLIN is established to accumulate funds and for
the payment of the award fee pool for each CPAF
delivery order in evaluation period 8. The period of
performance of evaluation period 8 is from _____ to
_____ [TBD after contract award].
</TABLE>
Section B
<PAGE> 10
Page 10 of 78
SECTION C
DESCRIPTION/SPECS/WORK STATEMENT
I. The work to be performed will be in accordance with the
Statement of Work (SOW) set forth in Attachment I attached to Section J and as
stated in Section B. Specific work requirements will be identified on
individual Delivery Orders through the SOW or Statement of Objectives (SOO).
II. The specifications for data, as identified in the Contract
Data Requirements List (CDRL), are included herein as Exhibits A, B & C
attached to Section J of the contract. Specific data deliverable requirements
will be identified on individual Delivery Orders.
Section C
<PAGE> 11
P00001 Page 11 of 78
SECTION D
PACKAGING AND MARKING
1. AFMC FAR SUPPLEMENT CLAUSES IN FULL TEXT
THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
5352.247-9008 CONTRACTOR COMMERCIAL PACKAGING AND
MARKING (AFMC) (JUL 1997)
(a) Items shall be packaged and marked in accordance with the Contractor's best
commercial practice to ensure undamaged arrival at destination. Individual
shipments exceeding 150 pounds, 108 inches in length, or 130 inches in girth
plus length shall be packaged on skidded crates or palletized to allow handling
by forklift.
(b) The exterior container shall be marked (readable from 24 inches): "NOT FOR
OUTSIDE STORAGE."
5352.247-9009 MILITARY PACKAGING AND MARKING (AFMC) (JUL 1997)
Items shall be packaged in accordance with MIL-STD-2073, Standard Practice for
Military Packaging. Shipping and storage markings shall be in accordance with
MIL-STD-129, Military Standard Marking for Shipment and Storage.
II. ADDITIONAL FULL TEXT CLAUSES
THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFF0RTS.
D-001 PROHIBITED PACKING MATERIALS
The use of asbestos, excelsior, newspaper or shredded paper (all types
including waxed paper, computer paper and similar hygroscopia or non-neutral
material) is prohibited.
D-002 CAUTION MARKINGS - ASBESTOS MATERIALS
In accordance with 29 CFR 191 0.1001, the following caution labels shall be
placed on all products containing asbestos fibers and to containers of all
items containing asbestos in a form that can be inhaled.
CAUTION
Section D
<PAGE> 12
Page 12 of 78
CONTAINS ASBESTOS FIBERS
AVOID CREATING DUST
BREATHING ASBESTOS DUST CAN CAUSE SERIOUS BODILY HARM
THE ABOVE LABEL SHALL BE PRINTED IN LETTERS OF SUFFICIENT SIZE AS TO BE
READILY VISIBLE AND LEGIBLE.
D-003 TRANSPORTATION OF HAZARDOUS WASTE
For the transportation of hazardous wastes and/or contaminated materials to
off-site treatment, storage and/or disposal facilities, see the Statement of
Work paragraph 4.6.3.
Section D
<PAGE> 13
Page 13 of 78
SECTION E
INSPECTION AND ACCEPTANCE
1. FEDERAL ACQUISITION REGULATION CLAUSES
A. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSE SHALL BE
APPLICABLE TO COST REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
52.246-13 INSPECTION - DISMANTLING, DEMOLITION, OR REMOVAL
OF IMPROVEMENTS (AUG 1996)
B. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSE SHALL BE
APPLICABLE TO FIXED-PRICE DELIVERY ORDER EFFORTS.
52.246-12 INSPECTION OF CONSTRUCTION (AUG 1996)
II. DEFENSE FAR SUPPLEMENT CLAUSES
THE FOLLOWING INCORPORATED BY REFERENCE CLAUSE SHALL BE
APPLICABLE TO BOTH COST REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER
EFFORTS.
252.246-7000 MATERIAL INSPECTION AND RECEIVING REPORT (DEC 1991)
III. FAR CLAUSE IN FULL TEXT
THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE TO
COST-REIMBURSEMENT DELIVERY ORDER EFFORTS.
52.246-12 INSPECTION OF CONSTRUCTION (AUG 1996) (DEVIATION)
(a) Definition. "Work" includes, but is not limited to,
materials, workmanship, and manufacture and fabrication of components.
(b) The Contractor shall maintain an adequate inspection
system and perform such inspections as will ensure that the work performed
under the contract conforms to contract requirements. The Contractor shall
maintain complete inspection records and make them available to the Government.
All work shall be conducted under the general direction of the Contracting
Officer and is subject to Government inspection and test at all places and at
all reasonable times before acceptance to ensure strict compliance with the
terms of the contract.
(c) Government inspections and tests are for the sole benefit
of the Government and do not--
Section E
<PAGE> 14
P00001 Page 14 of 78
(1) Relieve the Contractor of responsibility for providing
adequate quality control measures;
(2) Relieve the Contractor of responsibility for damage to
or loss of the material before acceptance;
(3) Constitute or imply acceptance; or
(4) Affect the continuing rights of the Government after
acceptance of the completed work under paragraph (i)
of this section.
(d) The presence or absence of a Government inspector does not
relieve the Contractor from any contract requirement, nor is the inspector
authorized to change any term or condition of the specification without the
Contracting Officer's written authorization.
(e) The Contractor shall promptly furnish, at no increase in
the estimated contract price, all facilities, labor, and material reasonably
needed for performing such safe and convenient inspections and tests as may be
required by the Contracting Officer. The Government shall perform all
inspections and tests in a manner that will not unnecessarily delay the work.
Special, full size, and performance tests shall be performed as described in
the contract.
(f) The Contractor shall, at no increase in the estimated
contract price, replace or correct work found by the Government not to conform
to contract requirements, unless in the public interest the Government consents
to accept the work. The Contractor shall promptly segregate and remove
rejected material from the premises.
(g) If the Contractor does not promptly replace or correct
rejected work, the Government may by contract or otherwise, replace or correct
the work.
(h) If, before acceptance of the entire work, the Government
decides to examine already completed work by removing it or tearing it out, the
Contractor, on request, shall promptly furnish all necessary facilities, labor,
and material. The Contracting Officer shall make a contract price adjustment
for the additional services involved in the examination and reconstruction,
including, if completion of the work was thereby delayed, an extension of time.
Section E
<PAGE> 15
Page 15 of 78
(i) Unless otherwise specified in the
contract, the Government shall accept, as promptly as practicable after
completion and inspection, all work required by the contract or that portion of
the work the Contracting Officer determines can be accepted separately.
Acceptance shall be final and conclusive except for latent defects, fraud,
gross mistakes amounting to fraud, or the Government's rights under any
warranty or guarantee.
IV. AFMC FAR SUPPLEMENT CLAUSE IN FULL TEXT
THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE TO
COST-REIMBURSEMENT AND FIXED PRICE DELIVERY ORDER EFFORTS.
5352.246-9000 MATERIAL INSPECTION AND RECEIVING REPORT
OMB NO. 0704-0248 (AFMC) (JUL 1997)
(a) As specified by DFARS, Appendix F, Table 2, a copy of DD Forms 250 shall be
forwarded to the following address:
(1) Forward the purchasing office copy to: (HSC/PKV)
[Cognizant Delivery order
Contract Administrator
3207 North Road
Brooks AFB, TX 78235-5363
(2) For shipments involving Military Assistance Program (MAP), Grant Aid (GA),
or Foreign Military Sales (FMS) requirements, an additional copy shall be sent
to: (insert address).
(3) Additional distribution of DD Forms 250 is to be made to the following
address(es): (insert address(es) or not applicable).
(b) These special instructions shall be included in any subcontract hereunder
where the items purchased from the subcontractor are to be shipped directly to
the U.S. Government or to a foreign destination.
(c) If delivery of , GA, or FMS items to foreign destinations is required, the
copies of DD Forms 250 required by DFARS, Appendix F, Table 2, Material
Inspection and Receiving Report, Special Distribution, shall be forwarded to
the "ship to" address designated in the contract.
V. ADDITIONAL FULL TEXT CLAUSES
Section E
<PAGE> 16
Page 16 of 78
THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
E-001 INSPECTION AND ACCEPTANCE
(a) Inspection and acceptance of performance shall be made by
the Contracting Officer Representative (COR) designated on the respective
delivery order.
(b) Inspection and acceptance of data shall be in accordance
with the Contract Data Requirements List (CDRLS) attached hereto. In those
instances where the symbol "LT" appears in Block 7 which would otherwise
designate the point for final inspection and acceptance, the place for such
final inspection and acceptance shall be at the office designated in Block 6,
"Requiring office."
Section E
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SECTION F
DELIVERIES OR PERFORMANCE
I. FEDERAL ACQUISITION REGULATION CLAUSES
A. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSE SHALL BE
APPLICABLE TO BOTH COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
52.247-34 F.O.B. DESTINATION (NOV 1991)
B. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE ONLY TO THE COST-REIMBURSEMENT DELIVERY ORDER EFFORTS.
52.211-10 COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK (APR 1984)
(DEVIATION)
(The information to be inserted in the
above-referenced clause is as follows: - In paragraph
reference (a), insert "... within [CO fill-in number
of calendar days on each delivery order]. - In
paragraph reference (c), insert "...not later than
[the date specified in Section F of the delivery order.
52.242-15 STOP-WORK ORDER (AUG 1989)
ALTERNATE I (APR 1984) (DEVIATION)
C. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE ONLY TO THE FIXED-PRICE DELIVERY ORDER EFFORTS.
52.211-10 COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK
(APR 1984)
(The information to be inserted in the
above-referenced clause is as follows: - In paragraph
reference (a), insert "... within [CO fill-in on each
delivery order]. - In paragraph reference (c),
insert "...not later than [CO fill-in # of days
or
Calendar date on each delivery order].
52.242-14 SUSPENSION OF WORK (APR 1984)
Section F
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II. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
F-001 DELIVERIES OR PERFORMANCE
The Contractor shall deliver/perform the Item(s) called for in accordance with
the Line Item(s) set forth in the individual delivery orders hereto. The
abbreviation "U" as may be used means either "Unknown" or "To Be Determined."
The abbreviation "ASREQ" as may be used means "As Required Herein."
F-002 ORDERING PERIOD
Contract period of performance shall commence upon receipt of a fully executed
contract and continue for ninety-six (96) months thereafter. No new orders
will be placed after the end of the sixtieth (60th) month.
Section F
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SECTION G
CONTRACT ADMINISTRATION DATA
I. AF FAR SUPPLEMENT CLAUSE IN FULL TEXT
THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE TO BOTH COST
REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
5352.232~-9000 REMITTANCE ADDRESS (MAY 1996)
If the remittance address is different from the mailing address, enter the
remittance address below. Failure to provide this information may impact
payment.
- ---------------------------------------------
- ---------------------------------------------
- ---------------------------------------------
III. ADDITIONAL FULL TEXT CLAUSES
A. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
G-001 ESTIMATED CONTRACT AMOUNT
The total program value for this acquisition is $475,000,000. The total dollar
value of all orders placed on all contracts awarded will not exceed the total
program value. The dollar amount of orders placed on any one contract cannot
be determined in advance. Delivery orders will be placed in accordance with
the terms of this solicitation/contract.
B. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE ONLY TO
COST-REIMBURSEMENT DELIVERY ORDER EFFORTS.
G-002 INVOICE AND PAYMENT PROCESS (COST REIMBURSEMENT)
(a) A public voucher SF 1034, shall be submitted for each
delivery order to the cognizant Defense Contract Audit Agency (DCAA) office
pursuant to FAR 52.216-7
Section G
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"Allowable Cost and Payment" clause. Copies (2) shall be forwarded
concurrently to the cognizant Contract Administrator at HSC/PKV, 3207 North
Road, Brooks AFB, TX 78235-5363, for AFCEE review. Under the provisions of FAR
42.803(b), the DCAA auditor, as the authorized representative of the
Contracting Officer for examining vouchers received directly from contractors,
will transmit provisionally approved vouchers to the cognizant disbursing
office for payment.
(b) Those costs claimed, which are determined by the DCAA
auditor to be unallowable or suspended, will be identified on DCAA Form I
"Notice of Contract Costs Suspended and/or Disapproved," which will be issued
to the contractor, with a copy to cognizant ACO and one to the Contract
Administrator at HSC/PKV. On such actions of suspended or disapproved costs,
the contractor may appeal in writing to the cognizant ACO, who will make a
determination promptly in writing. Any final decision by the Contracting
Officer may be appealed thereafter in accordance with the provisions of the
"Disputes" clause of the contract.
(c) (1) For purposes of Award Fee billing, submittal of
the public voucher shall be accompanied by the modification authorizing payment
of Award Fee dollars.
(2) For purposes of Fixed Fee billing, the contractor
will submit an invoice to the Contract Administrator at HSC/PKV for the
Contracting Officer Representative's (COR) substantiation and certification as
to agreement of the percentage of work completed and forward approved invoice
to the cognizant disbursement office for payment.
(d) Upon delivery order completion, the last voucher under
each delivery order shall be identified as final. Final payment under each
fixed price delivery order will be made upon final acceptance as evidence by an
executed and approved DD Form 250Z with a contractor assigned shipment number.
The contractor shall forward the DD250Z to the cognizant Contract Administrator
at HSC/PKV, 3207 North Road, Brooks AFB, T'X 78235-5363 for processing.
B. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO
ONLY THE FIXED-PRICE DELIVERY ORDER EFFORTS.
G-003 INVOICE AND PAYMENT PROCESS (FIXED-PRICE)
(a) Firm-Fixed Price (FFP) delivery order acceptance and
payment will be accomplished in accordance with FAR 52.232-5. The contractor's
monthly estimate of the amount and value of work accomplished shall be
submitted on a contractor signed and dated "Certificate of Performance" (CP)
accompanied by a completed contractor invoice. The contractor shall provide
the original plus a copy of the CP and the invoice to the cognizant Contract
Administrator at HSC/PKV, 3207 North Road, Brooks AFB, TX 78235-5363.
(b) After approval of the estimate by the Contracting Officer
Representative (COR), the original CP and invoice will be forwarded to the
cognizant disbursing office for payment.
(c) Upon delivery order completion, the last invoice under
each delivery order shall be identified as final. Final payment under each
fixed price delivery order will be
Section G
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made upon final acceptance as evidence by an executed and approved DD Form 250Z
with a contractor assigned shipment number. The contractor shall forward the
DD250Z to the cognizant Contract Administrator at HSC/PKV, 3207 North Road,
Brooks AFB, TX 78235-5363 for processing.
Section G
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SECTION H
SPECIAL CONTRACT REQUIREMENTS (SCR) - INDEX
1. FULL TEXT CLAUSES
ANY CLAUSES REQUIRING MODIFICATION FOR OVERSEAS WORK SHALL BE
ADDRESSED AT THE DELIVERY ORDER LEVEL.
<TABLE>
<S> <C>
H-001 COMSEC NOTICE
H-002 INCORPORATION OF SECTION K OF THE SOLICITATION BY REFERENCE
H-003 RELEASE OF INFORMATION
*H-004 BASE FEE
H-005 LABORATORY REVIEW AND AUDIT PROGRAM
H-006 LEGAL HOLIDAYS
H-007 TRANSPORTATION OF HAZARDOUS WASTES AND CONTAMINATED MATERIALS
H-008 HOURS OF WORK
H-009 STANDARD COMMERCIAL WARRANTY
H-010 MINIMUM GUARANTEE
H-011 CONSTRUCTION PERMIT
H-012 CONSIDERATION FACTORS FOR DELIVERY ORDERS (SELECTION CRITERIA)
H-013 ORDERING PROCEDURES
H-014 TEAMING ARRANGEMENTS
</TABLE>
* Applicable to CPAF orders only
Section H
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II. FULL TEXT CLAUSES
THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE TO BOTH
COSTREIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS, WITH THE EXCEPTION
THAT H-004 ENTITLED, BASE FEE IS APPLICABLE ONLY TO COST-REIMBURSEMENT EFFORTS.
H-001 COMSEC NOTICE
All communications with DoD organizations are subject to communications
security (COMSEC) review. Contractor personnel will be aware that
telecommunications networks are continually subject to intercept by unfriendly
intelligence organizations. The DoD has authorized the military departments to
conduct COMSEC monitoring and recording of telephone calls originating from, or
terminating at, DoD organizations. Tberefore, civilian Contractor personnel are
advised that any time they place a call to, or receive a call from, a USAF
organization, they are subject to COMSEC procedures. The Contractor will
assume the responsibility for ensuring wide and frequent dissemination of the
above information to all employees dealing with official DoD information. (AFI
33-219)
H-002 INCORPORATION OF SECTION K OF THE SOLICITATION BY
REFERENCE
Pursuant to Federal Acquisition Regulation (FAR) 15.406-1(b), SECTION K of the
solicitation is hereby incorporated herein by reference.
H-003 RELEASE OF INFORMATION
(a) The Contractor shall not make public release of any
information relating to all or any part of this contract without prior approval
of the Office of Public Affairs, AFCEE/PA, 3207 North Road, Brooks AFB TX
78235-5363.
(b) For the purpose of this clause, "information" includes but
is not limited to news releases, articles, manuscripts, brochures,
advertisements, still and motion pictures, speeches, trade association
meetings, symposia, published professional papers, etc. (Except for
deliverables listed in the Delivery Order)
(c) Two copies of any information to be released must be
submitted to AFCEE/PA for security and policy review and clearance 45 days
prior to release. Information copies will also be sent to the cognizant
Contracting Officer and AFCEE Team Chief. Papers/presentations co-authored
with an Air Force author may be submitted by either author.
(d) The Contractor agrees that in the release of information
relating to this contract, such release shall include a statement to the effect
that the project or effort depicted was or is sponsored by the agency set forth
below:
The Air Force Center For Environmental Excellence
(AFCEE) Brooks AFB Texas
Section H
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(e) Nothing in the foregoing shall affect compliance with the
requirements of the clause of this contract entitled "Security
Requirements".
(f) The Contractor further agrees to include this clause in
any subcontract awarded as a result of this contract.
H-004 BASE FEE
This contract incorporates the proposed award fee plan of Zero percent for the
base fee and up to Six percent for the award fee. The Contractor shall receive
a base fee amount of zero percent (0%) of the estimated cost negotiated on each
Cost-Reimbursement delivery order. Award fee will be determined in accordance
with the Award Fee Plan and Special Contract Requirement AFMC FAR Sup
5352.216-9003 (JUL 1997).
H-005 LABORATORY REVIEW AND AUDIT PROGRAM
(a) The Contractor agrees the laboratory performing analyses
required by this contract shall participate in an inter-laboratory comparison
program conducted by the US EPA, NIOSH, OSHA and/or equivalent laboratories
depending on the type of analyses requested. This will be subject to audit by
AFCEE and/or its GSE&I contractor representative to ensure that the systems and
procedures described in the contractor's QAPP, laboratory QA/QC plan, and other
supporting documentation are operational and in conformance with contract
requirements. Evaluation reports on laboratory performance shall be made
available to AFCEE upon request. AFCEE may also request the contractor to ship
a limited number of duplicate project samples to a referee laboratory and/or to
analyze proficiency test samples provided by AFCEE or its GSE&I contractor.
(b) The field work, field sampling, laboratory analyses and
any other work performed by the Contractor or its subcontractors for this
contract are subject to inspection, review, and audit by AFCEE personnel or
GSE&I contractor representatives under AFCEE direction. This will be to ensure
that the systems and procedures described in the Contractor's Quality Program
Plan (QPP) and supporting documentation are operational and in conformance with
contract requirements.
(c) GSE&I personnel are not authorized to direct the
Contractor in any manner. It is expressly understood that the operation of
this clause shall not be the basis of an equitable adjustment. Modifications,
realignment or redirection of the Contractor's technical efforts and/or
contract requirements shall be effected only by written direction of the
Contracting Officer.
Section H
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H-006 LEGAL HOLIDAYS
The following legal holidays are observed by each United States Military
installation:
<TABLE>
<S> <C>
New Year's Day 01 January
Martin Luther King's Birthday Third Monday in January
President's Day Third Monday in February
Memorial Day Last Monday in May
Independence Day 04 July
Labor Day First Monday in September
Columbus Day Second Monday in October
Veteran's Day 11 November
Thanksgiving Day Fourth Thursday in November
Christmas Day 25 December
</TABLE>
NOTE: Any of the above holidays falling on a Saturday will be observed on the
preceding Friday; holidays falling on a Sunday will be observed on the
following Monday.
H-007 TRANSPORTATION OF HAZARDOUS WASTES AND CONTAMINATED MATERIALS
In the performance of a Delivery Order, the Contractor may be required to
transport hazardous waste and/or contaminated materials to off-site treatment
or disposal facilities. When such transportation is stipulated, the Contractor
shall comply with the following requirements.
(a) The Contractor shall ensure that all waste transporters
maintain insurance coverage for the transportation of hazardous waste as
prescribed by all Federal, State, and/or local regulations and statutes.
(b) The Contractor shall ensure that all waste transport
contractors provide the Contracting Officer Representative (COR) with a copy of
their completed Resource Conservation and Recovery Act (RCRA) Part A waste
transporter application and a notarized copy of their Environmental Protection
Agency (EPA) waste transport identification number.
(c) The Contractor shall ensure that all waste transport
contractors provide the COR with notarized statements describing the status and
background of any civil or criminal lawsuits filed against them within the last
ten years.
(d) The Contractor shall ensure that only trucks certified by
the manufacturer as meeting the Department of Transportation (DOT) 311 and 312
specifications are used to transport bulked liquid waste.
(e) The Contractor shall ensure that all Installation
Restoration Program (IRP) waste materials transported to any off-site locations
have waste manifests signed by the Government accompanying the shipments.
(f) The Contractor shall ensure that all IRP waste materials
transported on public roads have bills of lading accompanying the shipments in
addition to waste manifests.
Section H
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(g) The Contractor shall ensure that all waste transport
vehicle operators comply with the minimum health and safety training
requirements specified by EPA, DOT and the Occupational Safety and Health
Administration (OSHA) for hazardous waste vehicle operators.
(h) The Contractor shall obtain letters of commitment from
waste haulers and from treatment, disposal, or recovery facility
owners/operators to haul and accept Air Force waste shipments. The letters
shall indicate all agreements and commitments for handling and acceptance of
the specified materials as described in each contract.
H-008 HOURS OF WORK
The normal hours of work on military installations (unless otherwise stated)
are from 7:30 am. to 4:30 p.m., Monday through Friday, excluding holidays. The
lunch period for Contractors requiring escorts is from 11:30 am. to 12:30 p.m.
Access to work sites may be restricted to these hours and days. For work
during other than normal hours of work, the Contractor shall submit, in
writing, for the Contracting Officer's approval, a notice of any period of
scheduled work at times other than the normal hours of work specified above.
This notice shall be submitted not less than three (3) work days prior to each
period of work scheduled at times other than normal hours of work including
Federal holidays.
H-009 STANDARD COMMERCIAL WARRANTIES
The contractor agrees that any and all supplies or equipment furnished under
this contract shall be covered by the most favorable standard commercial
warranty the contractor gives to any customer and that the rights and remedies
provided herein are in addition to and do not limit any rights afforded to the
Government by any other clause of this contract. The contractor shall mark all
shipping documents and containers so that any warranted items are readily
identifiable on delivery. A copy of all warranties and associated information
will be provided to the Government upon completion of the effort. The
effective date of any warranty will be upon final inspection and acceptance by
the Contracting Officer Representative (COR) designated in the applicable
delivery order in accordance with the "Inspection and Acceptance" clauses in
Section E of this contract.
H-010 MINIMUM GUARANTEE
Notwithstanding FAR 52.216-19, Delivery Order Limitations (APR 1984), if no
orders are placed against this contract, the Contractor shall be paid the
minimum guarantee of $15,000 in total.
H-01 I CONSTRUCTION PERMIT
(a) Properly approved and coordinated construction permits,
including but not limited to, AF Form 103, easements, drilling permits, rights
of entry, or leases, shall be in place prior to the contractor performing field
activities. Field activities include, but are not limited to, excavation;
installation of monitoring; extraction and injection wells; performing borings;
installation of treatment systems; groundwater containment systems.
(b) AF Form 103 shall be obtained by the contractor from the
designated Air Force base personnel prior to performing field activities on Air
Force property.
Section H
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(c) Easements, drilling permits, rights of entry, or leases
shall be obtained by the contractor from the appropriate Air Force offices
prior to performing any field activities related to off site contamination.
H-012 CONSIDERATION FACTORS FOR DELIVERY ORDERS
(SELECTION CRITERIA)
In accordance with FAR 16.505 the following procedures will be used by the
Contracting Officer to ensure fair opportunity to be considered in the
placement of delivery orders. Fair opportunity to be considered for placement
of all delivery orders will consist of a Government review of the following
applicable consideration factors (no relative order of importance):
(a) specific technical and/or management capabilities,
(b) proximity to the proposed work site,
(c) availability of labor and resources,
(d) the contractors' performance on prior delivery orders,
including:
(1) cost control,
(2) quality of work,
(3) customer satisfaction,
(4) compliance with law and regulation especially
regarding local preference and socioeconomic factors.
(e) schedule drivers (regulatory drivers, risk, reuse,
obligation rates)
(f) cost
Based on the Government review and at the Contracting Officer's discretion, a
delivery order may be competed using these factors.
The ombudsman shall review complaints from the contractors and ensure that all
contractors are afforded a fair opportunity to be considered, consistent with
the procedures in this clause. The delivery order ombudsman is the Director of
Contracting, HSC/PK, 8005 9th Street, Brooks AFB TX 78235-5353, (210) 536-6312.
Section H
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H-013 ORDERING PROCEDURES
Each delivery order shall be issued in accordance with the following
procedures:
(a) Request for Proposal - The Contracting Officer will
furnish the contractor with a written request for proposal. The request will
include:
(1) A description of the specified work and data
items required, including the site location,
(2) the anticipated performance period and critical
milestones,
(3) any Government-Furnished property, material,
or base support to be made available for performance of the order,
- Site Visit date
- Rough Orders of Magnitude (ROM)
- Lease versus Buy Analysis
(4) any other pertinent information, (such as
applicable Davis-Bacon wage rates).
(b) Proposal - The Contractor shall, within the time specified
in the order RFP, provide the Contracting Officer an original and copies [as
determined at delivery order level] of the proposal. Additional copies may be
required in accordance with AFMC FAR Sup 5352.2-15-9007 (in Part A of this
Section) and DFARs 215.805-5(a)(1)(A) "Field Pricing Support". The proposal
shall address:
(1) The comprehensive technical and management
approach to accomplish the work effort;
(2) a detailed cost or pricing proposal in
accordance with the instructions set forth in the RFP and FAR 15.804-6, Table
15-2;
(3) a proposed schedule for completing the delivery
order efforts;
(4) proposed Small Business and Small
Disadvantaged Business Subcontract Plan Goals; (if applicable);
(5) any other pertinent information;
(c) Discussions/Negotiations - The following is based on SCR
H-012:
(1) Fair Opportunity to be Considered (one
contractor solicited) - Upon receipt of the proposal, the Contracting Officer
and Technical Representatives will review the proposal and enter into
discussions/negotiations with the contractor as may be necessary.
(2) Fair Opportunity to be Considered (multiple
contractors solicited) - Upon receipt of the proposals, the Contracting Officer
and Technical Representatives will review the initial proposals, decide to
award without conducting discussions/negotiations or hold discussion with one
or more contractors. When discussions/negotiations are conducted, each
participating contractor shall be given one opportunity to revise its initial
Section H
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proposal to reflect any changes that result from the discussions/negotiations.
The Contracting Officer will award the delivery order to the contractor
offering the best value to the government, based on either the initial or a
revised proposal. Unsuccessful offerors will be notified.
(d) At the conclusion of discussions/negotiations, if
requested by the Contracting Officer, the Contractor shall provide a
Certificate of Current Cost or Pricing Data pursuant to FAR 15.804-2 using the
format as set forth in FAR 15.804-4(a), if applicable. The Contracting Officer
will unilaterally issue a Delivery Order which shall include:
(1) Date of the order;
(2) Contract and Delivery Order numbers;
(3) Statement of Work, including references to
applicable specifications;
(4) Applicable Data Item Numbers from the Contract
Data Requirement List (CDRL).
(5) any Government-furnished property, material, or
base support to be made available for performance of the order;
(6) the agreed-to total amount and appropriate break
out for the specific contract type;
(7) accounting and appropriation data;
(8) the names, addresses and phone numbers of the
applicable Contracting Officer Representative (COR) as well as any other
necessary points of contact; and
(9) any other pertinent information deemed necessary
to the performance of the order.
(e) The contractor shall commence all necessary and required
preliminary work, to include but not be limited to, all required permits and/or
bonds, if applicable, and those required data items (see contract Exhibits A, B
and C), upon receipt of a duly executed delivery order or Notice of Award (NOA)
signed by the Contracting Officer. The Contractor may visit the site to
perform any necessary and required efforts prior to actual mobilization and
start-up at the site. Pursuant to SCR H-011 and AFMC FAR Supplement
5352.228-9003, the contractor shall not commence actual remedial
action/construction work at the site until receipt of a written
Notice-To-Proceed (NTP) signed by the Contracting Officer. Prior to issuance
of the NTP, the Government reserves the right to convene a post-award
pre-construction conference at the applicable site. The contractor shall attend
any such conference as directed by the Contracting Officer Representative. The
contractor shall not deliver any materials or equipment to the site prior to
receipt of an NTP or a written authorization signed by the Contracting Officer
Representative.
H-014 TEAMING ARRANGEMENTS
(a) If this contract was awarded from an offer submitted on
the basis of a major teaming arrangement, the government's consideration of
the contractor for placement of
Section H
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delivery orders will reflect the teaming arrangement. In the event that the
teaming arrangement is dissolved or significantly changed, the government
reserves the right to reconsider the suitability of the changed arrangements
for purposes of issuing delivery orders.
(b) Your teaming approach and major team members provided in
your proposal are hereby incorporated as set forth in AFMC FAR clause
5352.215.9005(JUL 1997). The major teaming partners are listed below:
Sverdrup Civil, Inc., Maryland Heights, MO
Granite Construction Company, 735 W. Beach St., Watsonville, CA
Ferguson-Harbour, Inc., 340 Rockland Road, Hendersonville, TN
ERM Program Management Company, 855 Springdale Dr. Exton PA
(c) Should it become advantageous to deviate from the initial
teaming arrangement, the contractor should request approval from the
Contracting Officer before making such arrangements.
(d) This does not authorize contractor team arrangements in
violation of antitrust statutes or limit the Government's rights to require
consent to subcontract. The prime contractor is held fully responsible for
contract performance, regardless of any team arrangement between the prime
contractor and its subcontractors.
(e) Notwithstanding the above teaming arrangements and issues
relating to consent, all teaming arrangement (subcontract) pricing must be
supported in accordance with Far 15.806. Subcontract cost and pricing data, as
appropriate, should be presented in the delivery order proposal.
Section H
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SECTION I - CONTRACT CLAUSES
Contract clauses in this section from the FAR, Defense FAR Sup, Air Force FAR
Sup, and Air Force Materiel Command FAR Sup, are current through the following
updates:
FAR: FAC 97-1, DAC 91-12 and AFMCFARS (Jul 97 version)
NOTICE: The following contract clauses pertinent to this SECTION are hereby
incorporated by reference. A deviation has been approved for the use of the
term "delivery order" in lieu of "contract" or "schedule", as appropriate.
1. FEDERAL ACQUISITION REGULATION CLAUSES
A. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE TO BOTH COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
<TABLE>
<S> <C>
52.202-1 DEFINITIONS (OCT 1995) ALTERNATE I (APR 1984)
52.203-3 GRATUITIES (APR 1984)
52.203-5 COVENANT AGAINST CONTINGENT FEES (APR 1984)
52.203-6 RESTRICTIONS ON SUBCONTRACTOR SALES TO THE GOVERNMENT (JUL 1995)
52.203-7 ANTI-KICKBACK PROCEDURES (JUL 1995)
52.203-8 CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR IMPROPER ACTIVITY (JAN 1997)
52.203-10 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER
ACTIVITY (JAN 1997)
52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL
TRANSACTIONS (JAN 1990)
52.204-2 SECURITY REQUIREMENTS (AUG 1996)
ALTERNATE II (APR 1984)
52.204-4 PRINTING/COPYING DOUBLE-SIDED ON RECYCLED PAPER (JUN 1996)
52.209-6 PROTECTING THE GOVT'S INTEREST WHEN SUBCONTRACTING WITH
CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT (JUL 1995)
52.211-13 TIME EXTENSIONS (APR 1984)
52.211-15 DEFENSE PRIORITY AND ALLOCATION REQUIREMENTS (SEP 1990)
52.215-2 AUDIT AND RECORDS--NEGOTIATION (AUG 1996)
52.215-23 PRICE REDUCTION FOR DEFECTIVE COST OR PRICING DATA MODIFICATIONS (OCT 1995)
52.215-25 SUBCONTRACTOR COST OR PRICING DATA - MODIFICATIONS (OCT 1995)
</TABLE>
Section I
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<TABLE>
<S> <C>
52.215-27 TERMINATION OF DEFINED BENEFIT PENSION PLANS (MAR 1996)
52.215-31 WAIVER OF FACILITIES CAPITAL COST OF MONEY (SEP 1987)
52.215.33 ORDER OF PRECEDENCE (JAN 1986)
52.215-39 REVERSION OR ADJUSTMENT OF PLANS FOR POST
RETIREMENT BENEFITS OTHER THAN PENSION (PRB)
(MAR 1996)
52.215-40 NOTIFICATION OF OWNERSHIP CHANGES (FEB 1995)
52.215-42 REQUIREMENTS FOR COST OR PRICING DATA OR
INFORMATION OTHER THAN COST OR PRICING DATA-
MODIFICATIONS (JAN 1997)
ALTERNATE I (OCT 1995)
ALTERNATE II (OCT 1995)
ALTERNATE III (OCT 1995)
52.216-18 ORDERING (OCT 1995)
(The dates to be inserted in paragraph (a) of the above-referenced clause are "...from the award date
--------------
through 60 MAC".
------
52.216-19 ORDER LIMITATIONS (OCT 1995)
(The information to be inserted in the above-referenced clause is as follows:
- In paragraph (a), insert "...less than $15,000 ..." as the minimum order.
-------
- In paragraph (b)(1), insert $475,000,000
------------
- In paragraph (b)(2), insert $475,000,000
------------
- In paragraph (b)(3), insert "...within ten (10) days...".
--------
- In paragraph (d), insert "...within ten (10) days...".)
--------
52.216-22 INDEFINITE QUANTITY (OCT 1995)
(Pursuant to paragraph (d) of the above-referenced clause, insert:
"96 MAC".
--------
52.219-8 UTILIZATION OF SMALL, SMALL DISADVANTAGED AND
WOMEN-OWNED SMALL BUSINESS CONCERNS (OCT 1995)
52.219-9 SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED
SMALL BUSINESS SUBCONTRACTING PLAN (AUG 1996)
ALTERNATE II (MAR 1996)
52.219-14 LIMITATIONS ON SUBCONTRACTING (DEC 1996)
52.219-16 LIQUIDATED DAMAGES--SUBCONTRACTING PLAN (OCT 1995)
52.222-1 NOTICE TO THE GOVERNMENT OF LABOR DISPUTES (FEB 1997)
52.222-3 CONVICT LABOR (AUG 1996)
52.222-4 CONTRACT WORK HOURS AND SAFETY STANDARDS ACT-
OVERTIME COMPENSATION (JUL 1995)
52.222-6 DAVIS-BACON ACT (FEB 1995)
52.222-7 WITHHOLDING OF FUNDS (FEB 1988)
52.222-8 PAYROLLS AND BASIC RECORDS (FEB 1988)
52.222-9 APPRENTICES AND TRAINEES (FEB 1988)
</TABLE>
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<TABLE>
<S> <C>
52.222-10 COMPLIANCE WITH COPELAND ACT REQUIREMENTS (FEB 1988)
52.222-11 SUBCONTRACTS (LABOR STANDARDS) (FEB 1988)
52.222-12 CONTRACT TERMINATION - DEBARMENT (FEB 1988)
52.222-13 COMPLIANCE WITH DAVIS-BACON AND RELATED ACT
REGULATIONS (FEB 1988)
52.222-14 DISPUTES CONCERNING LABOR STANDARDS (FEB 1988)
52.222-15 CERTIFICATION OF ELIGIBILITY (FEB 1988)
52.222-26 EQUAL OPPORTUNITY (APR 1984)
52.222-27 AFFIRMATIVE ACTION COMPLIANCE REQUIREMENTS FOR
CONSTRUCTION (APR 1984)
52.222-29 NOTIFICATION OF VISA DENIAL (APR 1984)
52.222-35 AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM
ERA VETERANS (APR 1984)
52.222-36 AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (APR 1984)
52.222-37 EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS
AND VETERANS OF THE VIETNAM ERA (JAN 1988)
52.223-2 CLEAN AIR AND WATER (APR 1984)
52.223-5 POLLUTION PREVENTION AND RIGHT TO KNOW INFORMATION (MAR 1997)
52.223-6 DRUG-FREE WORKPLACE (JAN 1997)
52.223-7 NOTICE OF RADIOACTIVE MATERIALS (JAN 1997)
52.223-11 OZONE-DEPLETING SUBSTANCES (JUN 1996)
52.225-11 RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (OCT 1996)
52.225-15 BUY AMERICAN ACT -- CONSTRUCTION MATERIALS UNDER TRADE AGREEMENTS ACT & NORTH AMERICAN FREE TRADE
AGREEMENT (JAN 1996)
ALTERNATE I (JAN 1996)
52.226-1 UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED ECONOMIC ENTERPRISES (SEP 1996)
52.227-1 AUTHORIZATION AND CONSENT (JUL 1995)
52.227-2 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT (AUG 1996)
52.227-4 PATENT INDEMNITY -- CONSTRUCTION CONTRACTS (APR 1984)
ALTERNATE I (APR 1984)
- In paragraph (b), insert "None unless otherwise determined at delivery order level".
52.228-2 ADDITIONAL BOND SECURITY (OCT 1997)
52.228-3 WORKERS' COMPENSATION INSURANCE (DEFENSE BASE ACT) (APR 1984)
52.228-4 WORKERS' COMPENSATION & WAR HAZARD INSURANCE OVERSEAS (APR 1984)
52.228-11 PLEDGES OF ASSETS (FEB 1992)
52.228-12 PROSPECTIVE SUBCONTRACTOR REQUEST FOR BONDS (OCT 1995)
</TABLE>
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<TABLE>
<S> <C>
52.228-14 IRREVOCABLE LETTER OF CREDIT (OCT 1997)
52.228-15 PERFORMANCE AND PAYMENT BONDS--CONSTRUCTION (SEP 1996)
52.229-2 NORTH CAROLINA STATE AND LOCAL SALES AND USE TAX (APR 1984)
52.230-2 COST ACCOUNTING STANDARDS (APR 1996)
52.230-6 ADMINISTRATION OF COST ACCOUNTING STANDARDS (APR 1996)
52.232-17 INTEREST (JUN 1996)
52.232-23 ASSIGNMENT OF CLAIMS (JAN 1986)
ALTERNATE I (APR 1984)
52.232-27 PROMPT PAYMENT FOR CONSTRUCTION CONTRACTS
(MAY 1997)
52.232-33 MANDATORY INFORMATION FOR ELECTRONIC FUNDS
TRANSFER PAYMENT (AUG 1996)
52.233-1 DISPUTES (OCT 1995)
52.236-5 MATERIAL AND WORKMANSHIP (APR 1984)
52.236-7 PERMITS AND RESPONSIBILITIES (NOV 1991)
52.242-1 NOTICE OF TO DISALLOW COSTS (APR 1984)
52.242-13 BANKRUPTCY (JUL 1995)
52.243-6 CHANGE ORDER ACCOUNTING (APR 1984)
52.243-7 NOTIFICATION OF CHANGES (APR 1984)
52.248-3 VALUE ENGINEERING-CONSTRUCTION (MAR 1989)
52.251-1 GOVERNMENT SUPPLY SOURCES (APR 1984)
52.253-1 COMPUTER GENERATED FORMS (JAN 1991)
</TABLE>
B. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE ONLY TO THE COST-REIMBURSEMENT DELIVERY ORDER EFFORTS.
<TABLE>
<S> <C>
52.216-7 ALLOWABLE COST AND PAYMENT (FEB 1997)
ALTERNATE I (MAR 1997)
52.216-9 FIXED FEE CONSTRUCTION (MAR 1997)
52.222-2 PAYMENT FOR OVERTIME PREMIUMS (JUL 1990)
[Pursuant to paragraph (a) of the above-referenced clause, the dollar
amount agreed to is $ TBD (enter either the negotiated dollar amount or
--- ------
the word "ZERO" prior to award of each delivery order).
52.222-16 APPROVAL OF WAGE RATES (FEB 1988)
52.225-15 BUY AMERICAN ACT - CONSTRUCTION MATERIALS UNDER
TRADE AGREEMENTS ACT & NORTH AMERICAN FREE TRADE
AGREEMENT (MAY 1997)
ALTERNATE I (MAY 1997)
52.229-8 TAXES-FOREIGN COST REIMBURSEMENT CONTRACTS (MAR 1990)
52.229-10 STATE OF NEW MEXICO GROSS RECEIPTS AND COMPENSATING TAX (OCT 1988)
52.232-10 LIMITATION OF COST (APR 1984)
52.232-22 LIMITATION OF FUNDS (APR 1984)
(The days to be inserted in paragraphs (c) and (d) is "30" in lieu of "60".
</TABLE>
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<TABLE>
<S> <C> <C>
The percentage to be inserted in paragraph (c) is " 8 5 %" in lieu of " 75 % .)
52.233-3 PROTEST AFTER AWARD (AUG 1996)
ALTERNATE I (JUN 1985)
52.236-8 OTHER CONTRACTS (APR 1984) (DEVIATION)
52.236-11 USE AND POSSESSION PRIOR TO COMPLETION (APR 1984) (DEVIATION)
52.236-12 CLEANING UP (APR 1984) (DEVIATION)
52.236-26 PRECONSTRUCTION CONFERENCE (FEB 1995) (DEVIATION)
52.236-18 WORK OVERSIGHT IN COST-REIMBURSEMENT CONSTRUCTION CONTRACT (APR 1984)
52.236-19 ORGANIZATION AND DIRECTION OF THE WORK (APR 1984)
52.242-3 PENALTIES FOR UNALLOWABLE COSTS (OCT 1995)
52.242-4 CERTIFICATION OF INDIRECT COSTS (JAN 1997)
52.243-2 CHANGES - COST-REIMBURSEMENT (AUG 1987)
ALTERNATE III (APR 1984)
52.244-2 SUBCONTRACTS (COST-REIMBURSEMENT AND LETTER CONTRACTS) (FEB 1997)
ALTERNATE I (AUG 1996)
52.244-5 COMPETITION IN SUBCONTRACTING (DEC 1996)
52.249-6 TERMINATION (COST-REIMBURSEMENT) (MAY 1986)
ALTERNATE I (APR 1984)
52.249-14 EXCUSABLE DELAYS (APR 1984)
</TABLE>
C. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE ONLY TO THE FIXED-PRICE DELIVERY ORDER EFFORTS.
<TABLE>
<S> <C>
52.228-5 INSURANCE - WORK ON A GOVERNMENT INSTALLATION (JAN 1997)
52.229-3 FEDERAL, STATE, AND LOCAL TAXES (JAN 1991)
52.229-5 TAXES - CONTRACT PERFORMED IN U.S. POSSESSIONS OR PUERTO RICO (APR 1984)
52.229-6 TAXES-FOREIGN FIXED-PRICE CONTRACTS (JAN 1991)
52.232-5 PAYMENTS UNDER FIXED-PRICE CONSTRUCTION CONTRACTS (MAY 1997)
52.233-3 PROTEST AFTER AWARD (AUG 1996)
52.236-2 DIFFERING SITE CONDITIONS (APR 1984)
52.236-3 SITE INVESTIGATION AND CONDITIONS AFFECTING THE WORK.(APR 1984)
52.236-6 SUPERINTENDENCE BY THE CONTRACTOR (APR 1984)
52.236-8 OTHER CONTRACTS (APR 1984)
52.236-9 PROTECTION OF EXISTING VEGETATION, STRUCTURES, EQUIPMENT, UTILITIES, AND IMPROVEMENTS (APR 1984)
52.236-11 USE AND POSSESSION PRIOR TO COMPLETION (APR 1984)
52.236-12 CLEANING UP (APR 1984)
52.236-13 ACCIDENT PREVENTION (NOV 1991)
52.236-14 AVAILABILITY AND USE OF UTILITY SERVICES (APR 1984)
52.236-21 SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION (FEB 1997)
ALTERNATE I (APR 1984)
52.236-26 PRECONSTRUCTION CONFERENCE (FEB 1995)
52.243-4 CHANGES (AUG 1987)
52.244-1 SUBCONTRACTS (FIXED-PRICE CONTRACTS) (FEB 1995)
52.245-2 GOVERNMENT PROPERTY (FIXED-PRICE CONTRACTS) (DEC 1989)
</TABLE>
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<TABLE>
<S> <C>
[(a) Pursuant to AFAC 92-5 1, the coverage provided by the second sentence of subparagraph (c)(2) of the
above-referenced clause is hereby waived.] [(b) The dates fixed by the Contracting Officer for paragraph (i) are
"twenty-one (21) calendar days prior to demobilization from the performance site or completion of each delivery
order, whichever occurs first, for which Government property is in the possession of the Contractor"]
52.246-21 WARRANTY OF CONSTRUCTION (APR 1984)
52.249-2 TERMINATION FOR CONVENIENCE OF THE GOVERNMENT
(FIXED-PRICE) (AUG 1996)
ALTERNATE I (APR 1984)
</TABLE>
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<TABLE>
<S> <C>
52.249-3 TERMINATION FOR CONVENIENCE OF THE GOVERNMENT
(DISMANTLING, DEMOLITION, OR REMOVAL OF
IMPROVEMENTS) (SEP 1996)
52.249-10 DEFAULT (FIXED-PRICE CONSTRUCTION) (APR 1984)
ALTERNATE I (APR 1984)
</TABLE>
II. DEFENSE FAR SUPPLEMENT CLAUSES
A. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE TO BOTH COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
<TABLE>
<S> <C>
252.201-7000 CONTRACTING OFFICER'S REPRESENTATIVE (DEC 1991)
252.203-7001 SPECIAL PROHIBITION ON EMPLOYMENT (JUN 1997)
252.203-7002 DISPLAY OF DOD HOTLINE POSTER (DEC 1991)
252.204-7000 DISCLOSURE OF INFORMATION (DEC 1991)
252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT (APR 1992)
252.205-7000 PROVISION OF INFORMATION TO COOPERATIVE
AGREEMENT HOLDERS (DEC 1991)
252.209-7000 ACQUISITION FROM SUBCONTRACTORS SUBJECT TO ON-SITE
INSPECTION UNDER THE INTERMEDIATE-RANGE NUC.
FORCES (INF) TREATY (NOV 1995)
252.215-7000 PRICING ADJUSTMENTS (DEC 1991)
252.219-701 NOTICE OF PARTIAL SMALL BUSINESS SET-ASIDE WITH
PREFERENTIAL CONSIDERATION FOR SMALL DISADVANTAGED
BUSINESS CONCERNS (MAY 1995)
ALTERNATE I (MAY 1995)
252.219-7003 SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED
SMALL BUSINESS SUBCONTRACTING PLAN (DOD CONTRACTS) (APR 1996)
252.219-7004 SMALL, SMALL DISADVANTAGED AND WOMEN-OWNED
SMALL BUSINESS SUBCONTRACTING PLAN (TEST
PROGRAM) (JUL 1996)
252.219-7005 INCENTIVE FOR SUBCONTRACTING WITH SMALL
BUSINESSES, SMALL DISADVANTAGED BUSINESSES, HISTORICALLY BLACK
COLLEGES AND UNIVERSITIES AND MINORITY INSTITUTIONS (NOV 1995)
252.219-7008 NOTICE OF EVALUATION PREFERENCE FOR SMALL
DISADVANTAGED BUSINESS CONCERNS-CONSTRUCTION
ACQUISITION-TEST PROGRAM (APR 1996)
</TABLE>
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<TABLE>
<S> <C>
252.22-7000 RESTRICTIONS ON EMPLOYMENT OF PERSONNEL (DEC 1991)
- Insert for paragraph (a) is "Name of state - Alaska or Hawaii as determined at delivery order level"
[NOTE: This clause applies only to delivery orders issued for work in Alaska or Hawaii at a time when that state's
unemployment rate exceeds the national unemployment rate.]
252.222-7001 RIGHT OF FIRST REFUSAL OF EMPLOYMENT- CLOSURE OF MILITARY
INSTALLATIONS (APR 1993)
252.222-7002 COMPLIANCE WITH LOCAL LABOR LAWS (OVERSEAS) (JUN 1997)
252.222-7004 COMPLIANCE WITH SPANISH SOCIAL SECURITY LAWS AND REGULATIONS (JUN 1997)
252.223-7001 HAZARD WARNING LABELS (DEC 1991)
- Insert for paragraph (c), [as determined in delivery order level]
252.223-7002 SAFETY PRECAUTIONS FOR AMMUNITION AND EXPLOSIVES (MAY 1994)
252.223-7004 DRUG-FREE WORK FORCE (SEP 1988)
252.223-7005 HAZARDOUS WASTE LIABILITY (OCT 1992)
252.223-7006 PROHIBITION ON STORAGE AND DISPOSAL OF TOXIC AND HAZARDOUS
MATERIALS (APR 1993)
252.225-7005 IDENTIFICATION OF EXPENDITURES IN THE UNITED STATES (DEC 1991)
252.225-7012 PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (SEP 1997)
252.225-7031 SECONDARY ARAB BOYCOTT OF ISRAEL (JUN 1992)
252.225-7041 CORRESPONDENCE IN ENGLISH (JUN 1997)
252.225-7042 AUTHORIZATION TO PERFORM (JUN 1997)
252.228-7003 CAPTURE AND DETENTION (DEC 1991)
252.228-7006 COMPLIANCE WITH SPANISH LAWS AND INSURANCE (JUN 1997)
252.229-7002 CUSTOMS EXEMPTIONS (GERMANY) (JUN 1997)
252.229-7003 TAX EXEMPTIONS (ITALY) (JUN 1997)
252.229-7004 STATUS OF CONTRACTORS AS A DIRECT CONTRACTOR (SPAIN) (JUN 1997)
252.229-7005 TAX EXEMPTIONS (SPAIN) (JUN 1997)
252.229-7006 VALUE ADDED TAX EXCLUSION (UNITED KINGDOM) (JUN 1997)
252.229-7007 VERIFICATION OF UNITED STATES RECEIPT OF GOODS (JUN 1997)
252.231-7000 SUPPLEMENTAL COST PRINCIPLES (DEC 1991)
252.232-7006 REDUCTION OR SUSPENSION OF CONTRACT PAYMENTS UPON FINDING OF FRAUD
(AUG 1992)
252.232-7008 ASSIGNMENT OF CLAIMS (OVERSEAS) (JUN 1997)
252.233-7001 CHOICE OF LAW (OVERSEAS) (JUN 1997)
252.242-7000 POSTAWARD CONFERENCE (DEC 1991)
252.242-7006 COST/SCHEDULE STATUS REPORT PLANS (MAR 1997)
252.245-7000 GOVERNMENT FURNISHED MAPPING, CHARTING ANDGEODESY PROPERTY
(DEC 1991)
252.245-7001 REPORTS OF GOVERNMENT PROPERTY (MAY 1994)
</TABLE>
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<TABLE>
<S> <C>
252.249-7002 NOTIFICATION OF PROPOSED PROGRAM TERMINATION OR
REDUCTION (AUG 1993)
252.251-7000 ORDERING FROM GOVERNMENT SUPPLY SOURCES
(MAY 1995)
</TABLE>
B. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSE SHALL BE
APPLICABLE ONLY TO THE COST-REIMBURSEMENT DELIVERY ORDER EFFORTS.
252.242~-7005 COST/SCHEDULE STATUS REPORT (MAR 1997)
C. THE FOLLOWING INCORPORATED BY REFERENCE CLAUSES SHALL BE
APPLICABLE TO ONLY THE FIXED-PRICE DELIVERY ORDER EFFORTS.
<TABLE>
<S> <C>
252.228-7006 PROSPECTIVE SUBCONTRACTOR REQUEST FOR BONDS (SEP 1992)
252.236-7000 MODIFICATION PROPOSALS PRICE BREAKDOWN (DEC 1991)
252.236-7001 CONTRACT DRAWINGS, MAPS, AND SPECIFICATIONS (DEC 1991)
252.236-7005 AIRFIELD SAFETY PRECAUTIONS (DEC 1991)
252.243-7001 PRICING OF CONTRACT MODIFICATIONS (DEC 1991)
</TABLE>
III. FAR CLAUSES IN FULL TEXT
A. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED-PRICE DELIVERY ORDER EFFORTS.
52.223-3 HAZARDOUS MATERIAL IDENTIFICATION AND MATERIAL SAFETY DATA
(JAN 1997)
(a) "Hazardous material," as used in this clause, includes
any material defined as hazardous under the latest version of Federal Standard
No. 313 (including revisions adopted during the term of the contract).
(b) The offeror must list any hazardous material, as defined
in paragraph (a) of this clause, to be delivered under this contract. The
hazardous material shall be properly identified and include any applicable
identification number, such as National Stock Number or Special Item Number.
This information shall also be included on the Material Safety Data Sheet
submitted under this contract.
Material (If none, insert "None") Identification No.
[AS DETERMINED AT DELIVERY ORDER LEVEL]
(c) The apparently successful offeror, by acceptance of the
contract, certifies that the list in paragraph (b) of this clause is complete.
This list must be updated during
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performance of the contract whenever the Contractor determines that any other
material to be delivered under this contract is hazardous.
(d) The apparently successful offeror agrees to submit, for
each item as required prior to award, a Material Safety Data Sheet, meeting the
requirements of 29 CFR 1910.1200(g) and the latest version of Federal Standard
No. 313, for all hazardous material identified in paragraph (b) of this clause.
Data shall be submitted in accordance with Federal Standard No. 313, whether or
not the apparently successful offeror is the actual manufacturer of these
items. Failure to submit the Material Safety Data Sheet prior to award may
result in the apparently successful offeror being considered nonresponsible and
ineligible for award.
(e) If, after award, there is a change in the composition of
the item(s) or a revision to Federal Standard No. 313, which renders
incomplete or inaccurate data submitted under paragraph (d) of this clause or
the certification submitted under paragraph (c) of this clause, the Contractor
shall promptly notify the Contracting Officer and resubmit the data.
(f) Neither the requirements of this clause nor any act or
failure to act by the Government shall relieve the Contractor of any
responsibility or liability for the safety of Government, Contractor, or
subcontractor personnel or property.
(g) Nothing contained in this clause shall relieve the
Contractor from complying with applicable Federal, State, and local laws,
codes, ordinances, and regulations (including the obtaining of licenses and
permits) in connection with hazardous material.
(h) The Government's rights in data furnished under this
contract with respect to hazardous material are as follows:
(1) To use, duplicate and disclose any data to which
this clause is applicable. The purposes of this right are to:
(i) Apprise personnel of the hazards to which
they may be exposed in using handling, packaging, transporting, or disposing of
hazardous materials;
(ii) Obtain medical treatment for those
affected by the material; and
(iii) Have others use, duplicate, and disclose
the data for the Government for these purposes.
(2) To use, duplicate, and disclose data furnished
under this clause, in accordance with subparagraph (h)(1) of this clause, in
precedence over any other clause of this contract providing for rights in data.
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(3) The Government is not precluded from using
similar or identical data acquired from other sources.
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52.223-14 TOXIC CHEMICAL RELEASE REPORTING (OCT 1996)
(a) Unless otherwise exempt, the Contractor, as owner or
operator of a facility used in the performance of this contract, shall file by
July I for the prior calendar year an annual Toxic Chemical Release Inventory
Form (Form R) as described in sections 313(a) and (g) of the Emergency Planning
and Community Right-to-Know Act of 1986 (EPCRA) (42 U.S.C. 11023(a) and (g)),
and section 6607 of the Pollution Prevention Act of 1990 (PPA) (42 U.S.C.
13106). The Contractor shall file, for each facility subject to the Form R
filing and reporting requirements, the annual Form R throughout the life of the
contract.
(b) A Contractor owned or operated facility used in the
performance of this contract is exempt from the requirement to
file an annual Form R if-
(1) The facility does not manufacture, process, or
otherwise use any toxic chemicals listed under section 313(c) of EPCRA, 42
U.S.C. 11023(c);
(2) The facility does not have IO or more full-time
employees as specified in section 313(b)(1)(A) of EPCRA, 42 U.S.C.
11023(b)(1)(A);
(3) The facility does not meet the reporting
thresholds of toxic chemicals established under section 313(f) of EPCRA, 42
U.S.C. 11023 (f) (including the alternate thresholds at 40 CFR 372.27, provided
an appropriate certification form has been filed with EPA);
(4) The facility does not fall within Standard
Industrial Classification Code (SIC) designations 20 through 39 as set forth in
section 19.102 of the Federal Acquisition Regulation (FAR); or
(5) The facility is not located within any State of
the United States, the District of Columbia, the Commonwealth of Puerto Rico,
Guam, American Samoa, the United States, Virgin Islands, the Northern Mariana
Islands, or any other territory or possession over which the United States has
jurisdiction.
(c) If the Contractor has certified to an exemption in
accordance with one or more of the criteria in paragraph (b) of this clause,
and after award of the contract circumstances change so that any of its owned
or operated facilities used in the performance of this contract is no longer
exempt.
(1) The Contractor shall notify the Contracting
Officer; and
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(2) The Contractor, as owner or operator of a
facility used in the performance of this contract that is no longer exempt,
shall (i) submit a Toxic Chemical Release Inventory Form (Form R) on or before
July 1 for the prior calendar year during which the facility becomes eligible;
and (ii) continue to file the annual Form R for the life of the contract for
such facility.
(d) The Contracting Officer may terminate this contract
or take other action as appropriate, if the Contractor fails to comply
accurately and fully with the EPCRA and PPA toxic chemical release filing and
reporting requirements.
(e) Except for acquisitions of commercial items as
defined in FAR Part 12, the Contractor shall-
(1) For competitive subcontracts expected to exceed
$100,000 (including all options), include a solicitation provision
substantially the same as the provision at FAR 52.223-13, Certification of
Toxic Chemical Release Reporting; and
(2) Include in any resultant subcontract exceeding $1
00,000 (including all options), the substance of this clause, except this
paragraph (e).
52.252-2 CLAUSES INCORPORATED BY REFERENCE (JUN 1988)
This contract incorporates one or more clauses by reference, with the same
force and effect as if they were given in full text. Upon request, the
Contracting Officer will make their full text available.
52.252-6 AUTHORIZED DEVIATIONS IN CLAUSES (APR 1984)
(a) The use in this solicitation or contract of any Federal
Acquisition Regulation (48 CFR Chapter 1) clause with an authorized deviation
is indicated by the addition of "(DEVIATION)" after the date of the clause.
(b) The use in this solicitation or contract of any Department
of Defense FAR Supplement (48 CFR Chapter 2) clause with an authorized
deviation is indicated by the addition of "(DEVIATION)" after the name of the
regulation.
B. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE ONLY TO
COST-REIMBURSEMENT DELIVERY ORDER EFFORTS.
52.236-4 PHYSICAL DATA (APR 1984) (DEVIATION)
Data and information for the contractor's information will be
furnished at the individual delivery order level as required in the Statement
of Work, Paragraph 2.3. The Government shall not be responsible for any
interpretation of or conclusion drawn from the data or information by the
Contractor.
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52.236-9 PROTECTION OF EXISTING VEGETATION, STRUCTURES, EQUIPMENT,
UTILITIES, AND IMPROVEMENTS (APR 1984) (DEVIATION)
(a) The Contractor shall preserve and protect all
structures, equipment, and vegetation (such as trees, shrubs and grass) on or
adjacent to the work site, which are not to be removed and which do not
unreasonably interfere with the work required under this contract. The
Contractor shall only remove trees when specifically authorized to do so, and
shall avoiddamagingg vegetation that will remain in Place. If any limbs or
branches of trees are broken during contract performance, or by careless
operation of equipment, or by workmen, the Contractor shall trim those limbs or
branches with a clean cut and paint the cut with a tree pruning compound as
directed by the Contracting Officer.
(b) The Contractor shall protect from damage all existing
improvements and utilities
(1) at or near the work site, and
(2) on adjacent property of a third party, the
locations of which are made known to or should be known by the Contractor. The
Contractor shall repair any damage to those facilities, including those that
are the property of a third party, resulting from failure to comply with the
requirements of this contract or failure to exercise reasonable care in
performing the work.
52.236-10 OPERATIONS AND STORAGE AREAS (APR 1984) (DEVIATION)
(a) The Contractor shall confine all operations
(including storage of materials) on Government premises to areas authorized or
approved by the Contracting Officer. The Contractor shall hold and save the
Government, it's officers and agents, free and harmless from liability of any
nature occasioned by the Contractor's performance
(b) Temporary buildings (e.g., storage sheds, shops,
offices) and utilities may be erected and removed by the Contractor only as
directed by the Contracting Officer. The temporary buildings and utilities
shall remain the property of the Contractor and shall be removed by the
Contractor upon completion of the work.
(c) The Contractor shall, under regulations prescribed by
the Contracting Officer, use only established roadways, or use temporary
roadways constructed by the Contractor when and as authorized by the
Contracting Officer. When materials are transported in prosecuting the work,
vehicles shall not be loaded beyond the loading capacity recommended by the
manufacturer of the vehicle or prescribed by any Federal, State, or local law
or regulation. When it is necessary to cross curbs or sidewalks, the
Contractor shall protect them from damage. The Contractor shall repair any
damaged curbs, sidewalks, or roads unless directed by the Contracting Officer.
52.236-13 ACCIDENT PREVENTION (NOV 1991) (DEVIATION)
(a) The Contractor shall provide and maintain work
environments and procedures which will
(1) safeguard the public and Government personnel,
property, materials, supplies, and equipment exposed to Contractor operations
and activities;
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(2) avoid interruptions of Government operations and
delays in project completion dates; and
(3) control costs in the performance of this contract.
(b) For these purposes on contracts for construction or
dismantling, demolition, or removal of improvements, the Contractor shall-
(1) Provide appropriate safety barricades, signs and
signal lights;
(2) Comply with the standards issued by the
Secretary of Labor at 29 CFR part 1926 and 29 CFR part 1910; and
(3) Ensure that any additional measures the
Contracting Officer determines to be reasonably necessary for the purposes are
taken.
(c) If this contract is for construction or dismantling,
demolition or removal of improvements with any Department of Defense agency or
component, the Contractor shall comply with all pertinent provisions of the
latest version of U.S, Army Corps of Engineers Safety and Health Requirements
Manual, EM 385-1-1, in effect on the date of the solicitation.
(d) Whenever the Contracting Officer becomes aware of any
noncompliance with these requirements or any condition which poses a serious or
imminent danger to the health or safety of the public or Government personnel,
the Contracting Officer shall notify the Contractor orally, with written
confirmation, and request immediate initiation of corrective action. This
notice, when delivered to the Contractor or the Contractor's representative at
the work site, shall be deemed sufficient notice of the noncompliance and that
corrective action is required. After receiving the notice, the Contractor
shall immediately take corrective action. If the Contractor fails or refuses
to promptly take corrective action, the Contracting Officer may issue an order
stopping all or part of the work until satisfactorily corrective action has
been taken. The contractor shall not be entitled to any equitable adjustment
in fee on any individual delivery order or any stop work order issued under
this clause.
(e) The Contractor shall insert this clause, including
this paragraph (e), with appropriate changes in the designation of the parties,
in subcontracts.
52.236-21 SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION (FEB 1997)
(DEVIATION)
(a) The Contractor shall keep on the work site a copy of the
drawings and specifications and shall at all times give the Contracting Officer
access thereto. Anything mentioned in the specifications and not shown on the
drawings, or shown on the drawings and not mentioned in the specifications,
shall be of like effect as if shown or mentioned in both. In case of
difference between drawings and specifications, the specifications shall
govern. In case of discrepancy in the figures, in the drawings, or in the
specifications, the matter shall be promptly submitted to the Contracting
Officer, who shall promptly make a determination in writing. Any adjustment by
the Contractor without such a determination shall be at its own risk subject to
disallowance of costs. The Contracting Officer shall furnish from time to time
such detailed drawings and other information as considered necessary, unless
otherwise provided.
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(b) Wherever in the specifications or upon the drawings
the words "directed", "required", "ordered", "designated", "prescribed", or
words of like import are used, it shall be understood that the "direction",
"requirement", "order", "designation", or "prescription", of the Contracting
Officer is intended and similarly the words "approved", "acceptable",
"satisfactory", or words of like import shall mean "approved by", or
"acceptable to", or "satisfactory to" the Contracting Officer, unless otherwise
expressly stated.
(c) Where "as shown", "as indicated", "as detailed", or
words of similar import are used, it shall be understood that the reference is
made to the drawings accompanying this contract unless stated otherwise. The
word "provided" as used herein shall be understood to mean "provide complete in
place", that is "furnished and installed".
(d) Shop drawings means drawings, submitted to the
Government by the Contractor, subcontractor, or any lower tier subcontractor
pursuant to a construction contract, showing in detail
(1) the proposed fabrication and assembly of
structural elements and
(2) the installation (i.e., form, fit, and
attachment details) of materials of equipment. It includes drawings, diagrams,
layouts, schematics, descriptive literature, illustrations, schedules,
performance and test data, and similar materials furnished by the contractor to
explain in detail specific portions of the work required by the contract. The
Government may duplicate, use, and disclose in any manner and for any purpose
shop drawings delivered under this contract.
(e) If this contract requires shop drawings, the
Contractor shall coordinate all such drawings, and review them for accuracy,
completeness, and compliance with contract requirements and shall indicate its
approval thereon as evidence of such coordination and review. Shop drawings
submitted to the Contracting Officer without evidence of the Contractor's
approval may be returned for resubmission. The Contracting Officer will
indicate an approval or disapproval of the shop drawings and if not approved as
submitted shall indicate the Government's reasons therefor. Any work done
before such approval shall be at the Contractor's risk and subject to
disallowance of costs. Approval by the Contracting Officer shall not relieve
the Contractor from responsibility for any errors or omissions in such
drawings, nor from responsibility for complying with the requirements of this
contract, except with respect to variations described and approved in
accordance with (f) below.
(f) If shop drawings show variations from the contract
requirements, the Contractor shall describe such variations in writing,
separate from the drawings, at the time of submission. If the Contracting
Officer approves any such variation, the Contracting Officer shall issue an
appropriate contract modification, except that, if the variation is minor or
does not involve a change in price or in time of performance, a modification
need not be issued.
(g) The Contractor shall submit to the Contracting
Officer for approval four copies (unless otherwise indicated) of all shop
drawings as called for under the various headings of these specification. Three
sets (unless otherwise indicated) of all shop drawings, will be retained by the
Contracting Officer and one set will be returned to the Contractor. Upon
completing the work under this contract the Contractor shall furnish a complete
set of all shop drawings as finally approved. These drawings shall show all
changes and revisions made up to the time the equipment is completed and
accepted.
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52.244-6 SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL
COMPONENTS (OCT 1995)
(a) Definition.
"Commercial item," as used in this clause, has the meaning contained in the
clause at 52.202-1, Definitions.
"Subcontract," as used in this clause, includes a transfer of commercial items
between divisions, subsidiaries, or affiliates of the Contractor or
subcontractor at any tier.
(b) To the maximum extent practicable, the Contractor shall incorporate, and
require its subcontractors at all tiers to incorporate, commercial items or
nondevelopmental items as components of items to be supplied under this
contract.
(c) Notwithstanding any other clause of this contract, the Contractor is not
required to include any FAR provision or clause, other than those listed below
to the extent they are applicable and as may be required to establish the
reasonableness of prices under Part 15, in a subcontract at any tier for
commercial items or commercial components:
(1) 52.222-26, Equal Opportunity (E.O. 11246);
(2) 52.222-35, Affirmative Action for Special Disabled and Vietnam Era
Veterans (38 U.S.C. 4212(a));
(3) 52-222-36, Affirmative Action for Handicapped Workers (29 U.S.C. 793); and
(4) 52.247-64, Preference for Privately Owned U.S.-Flagged Commercial Vessels
(46 U.S.C. 1241) (flow down not required for subcontracts awarded beginning May
1, 1996).
(d) The Contractor shall include the terms of this clause, including this
paragraph (d), in subcontracts awarded under this contract.
52.245-5 GOVERNMENT PROPERTY (COST-REIMBURSEMENT, TIME-AND-MAT'ERIAL,
OR LABOR-HOUR CONTRACTS) (JUL 1995) (DEVIATION)
(a) Government Furnished property.
(1) The term "Contractor's managerial personnel," as
used in paragraph (g) of this clause, means any of the Contractor's directors,
officers, managers, superintendents, or equivalent representatives who have
supervision or direction of--
(i) All or substantially all of the Contractor's
business;
(ii) All or substantially all of the
Contractor's operation at any one plant, or separate location at which the
contract is being performed; or
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(iii) A separate and complete major
industrial operation connected with performing this contract.
(2) The Government shall deliver to the Contractor,
for use in connection with and under the terms of this contract, the
Government-furnished property described in the Schedule or specifications,
together with such related data and information as the Contractor may request
and as may be reasonably required for the intended use of the property
(hereinafter referred to as "Government-furnished property").
(3) The delivery or performance dates for this
contract are based upon the expectation that Government-furnished property
suitable for use will be delivered to the Contractor at the times stated in the
Schedule or, if not so stated, in sufficient time to enable the Contractor to
meet the contract's delivery or performance dates.
(4) If Government-furnished property is received by
the Contractor in a condition not suitable for the intended use, the Contractor
shall, upon receipt, notify the Contracting Officer, detailing the facts, and,
as directed by the Contracting Officer and at Government expense, either effect
repairs or modification or return or otherwise dispose of the property. After
completing the directed action and upon written request of the Contractor, the
Contracting Officer shall make an equitable adjustment as provided in paragraph
(h) of this clause.
(5) If Government-furnished property is not
delivered to the Contractor by the required time or times, the Contracting
Officer shall, upon the Contractor's timely written request, make a
determination of the delay, if any, caused the Contractor and shall make an
equitable adjustment in accordance with paragraph (h) of this clause.
(b) Changes in Government-furnished property.
(1) The Contracting Officer may, by written notice,
(i) decrease the Government-furnished
property provided or to be provided under this contract or
(ii) substitute other Government-furnished
property for the property to be provided by the Government or to be acquired by
the Contractor for the Government under this contract. The Contractor shall
promptly take such action as the Contracting Officer may direct regarding the
removal, shipment, or disposal of the property covered by this notice.
(2) Upon the Contractor's written request, the
Contracting Officer shall make an equitable adjustment to the contract in
accordance with paragraph (h) of this clause, if the Government has agreed in
the Schedule to make such property available for performing this contract and
there is any.
(i) Decrease or substitution in this property
pursuant to subparagraph (b)(1) above; or
(ii) Withdrawal of authority to use property,
if provided under any other contract or lease.
(c) Title.
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(1) The Government shall retain title to all
Government-furnished property.
(2) Title to all property purchased by the
Contractor for which the Contractor is entitled to be reimbursed as a direct
item of cost under this contract shall pass to and vest in the Government upon
the vendor's delivery of such property.
(3) Title to all other property, the cost of which
is reimbursable to the Contractor, shall pass to and vest in the Government
upon
(i) Issuance of the property for use in
contract performance;
(ii) Commencement of processing of the
property for use in contract performance; or
(iii) Reimbursement of the cost of the
property by the Government, whichever occurs first.
(4) All Government-furnished property and all
property acquired by the Contractor, title to which vests in the Government
under this paragraph (collectively referred to as "Government property"), are
subject to the provisions of this clause. Title to Government property shall
not be affected by its incorporation into or attachment to any property not
owned by the Government, nor shall Government property become a fixture or lose
its identity as personal property by being attached to any real property.
(d) Use of Government property. The Government property
shall be used only for performing this contract, unless otherwise provided in
this contract or approved by the Contracting Officer.
(e) Property administration.
(1) The Contractor shall be responsible and
accountable for all Government property provided under the contract and shall
comply with Federal Acquisition Regulation (FAR) Subpart 45.5, as in effect on
the date of this contract.
(2) The Contractor shall establish and maintain a
program for the use, maintenance, repair, protection, and preservation of
Government property in accordance with sound business practice and the
applicable provisions of FAR Subpart 45.5.
(3) If damage occurs to Government property, the
risk of which has been assumed by the Government under this contract, the
Government shall replace the items or the Contractor shall make such repairs as
the Government directs. However, if the Contractor cannot effect such repairs
within the time required, the Contractor shall dispose of the property as
directed by the Contracting Officer. When any property for which the
Government is responsible is replaced or repaired, the Contracting Officer
shall make an equitable adjustment in accordance with paragraph (h) of this
clause.
(f) Access. The Government and all its designees shall have
access at all reasonable times to the premises in which any Government property
is located for the purpose of inspecting the Government property.
(g) Limited risk of loss.
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(1) The Contractor shall not be liable for loss or
destruction of, or damage to, the Government property provided under this
contract or for expenses incidental to such loss, destruction, or damage,
except as provided in subparagraphs (2) and (3) below.
(2) The Contractor shall be responsible for loss
or destruction of, or damage to, the Government property provided under this
contract (including expenses incidental to such loss, destruction, or damage)-
(i) That results from a risk expressly
required to be insured under this contract, but only to the extent of the
insurance required to be purchased and maintained or to the extent of insurance
actually purchased and maintained, whichever is greater;
(ii) That results from a risk that is in fact
covered by insurance or for which the Contractor is otherwise reimbursed, but
only to the extent of such insurance or reimbursement;
(iii) For which the Contractor is otherwise responsible under the express terms
of this contract;
(iv) That results from willful misconduct or
lack of good faith on the part of the Contractor's managerial personnel; or
(v) That results from a failure on the part
of the Contractor, due to willful misconduct or lack of good faith on the part
of the Contractor's managerial personnel, to establish and administer a program
or system for the control, use, protection, preservation, maintenance, and
repair of Government property as required by paragraph (e) of this clause.
(3) (i) If the Contractor fails to act as
provided by subdivision (g)(2)(v) above, after being notified (by certified
mail addressed to one of the Contractor's managerial personnel) of the
Government's disapproval, withdrawal of approval, or non-acceptance of the
system or program, it shall be conclusively presumed that such failure was due
to willful misconduct or lack of good faith on the part of the Contractor's
managerial personnel.
(ii) In such event, any loss or destruction
of, or damage to, the Government property shall be presumed to have resulted
from such failure unless the Contractor can establish by clear and convincing
evidence that such loss, destruction, or damage--
(A) Did not result from the
Contractor's failure to maintain an approved program or system; or
(B) Occurred while an approved program
or system was maintained by the Contractor.
(4) If the Contractor transfers Government property
to the possession and control of a subcontractor, the transfer shall not affect
the liability of the Contractor for loss or destruction of, or damage to, the
property as set forth above. However, the Contractor shall require the
subcontractor to assume the risk of, and be responsible for, any loss or
destruction of, or damage to, the property while in the subcontractor's
possession or control, except to the extent that the subcontract, with the
advance approval of the Contracting Officer, relieves the subcontractor from
such liability. In the absence
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of such approval, the subcontract shall contain appropriate provisions
requiring the return of all Government property in as good condition as when
received, except for reasonable wear and tear or for its use in accordance with
the provisions of the prime contract.
(5) The Contracting Officer shall notify the
Contracting Officer upon loss or destruction of, or damage to, Government
property provided under this contract, with the exception of low value property
for which loss, damage, or destruction is reported at contract termination,
completion, or when needed for contract performance. The Contractor shall take
all reasonable action to protect the Government property from further damage,
separate the damaged and undamaged Government property, put all the affected
Government property in the best possible order, and furnish to the Contracting
Officer a statement of-
(i) The lost, destroyed, or damaged Government
property;
(ii) The time and origin of the loss,
destruction, or damage;
(iii) All known interests in commingled
property of which the Government property is a part; and
(iv) The insurance, if any, covering any part of or
interest in such commingled property.
(6) The Contractor shall repair, renovate, and take
such other action with respect to damaged Government property as the
Contracting Officer directs. If the Government property is destroyed or
damaged beyond practical repair, or is damaged and so commingled or combined
with property of others (including the Contractor's) that separation is
impractical, the Contractor may, with the approval of and subject to any
conditions imposed by the Contracting Officer, sell such property for the
account of the Government. Such sales may be made in order to minimize the
loss to the Government, to permit the resumption of business, or to accomplish
a similar purpose. The Contractor shall be entitled to an equitable adjustment
in the contract price for the expenditures made in performing the obligations
under this subparagraph (g)(6) in accordance with paragraph (h) of this clause.
However, the Government may directly reimburse the loss and salvage
organization for any of their charges. The Contracting Officer shall give due
regard to the Contractor's liability under this paragraph (g) when making any
such equitable adjustment.
(7) The Contractor shall not be reimbursed for, and
shall not include as an item of overhead, the cost of insurance or of any
reserve covering risk of loss or destruction of, or damage to, Government
property, except to the extent that the Government may have expressly required
the Contractor to carry such insurance under another provision of this
contract.
(8) In the event the Contractor is reimbursed or
otherwise compensated for any loss or destruction of, or damage to, Government
property, the Contractor shall use the proceeds to repair, renovate, or replace
the lost, destroyed, or damaged Government property or shall otherwise credit
the proceeds to, or equitably reimburse, the Government, as directed by the
Contracting Officer.
(9) The Contractor shall do nothing to prejudice the
Government's rights to recover against third parties for any loss or
destruction of, or damage to, Government property. Upon the request of the
Contracting Officer, the Contractor shall, at the Government's expense, furnish
to the Government all reasonable assistance and
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cooperation (including the prosecution of suit and the execution of instruments
of assignment in favor of the Government) in obtaining recovery. In addition,
where a subcontractor has not been relieved from liability for any loss or
destruction of, or damage to, Government property, the Contractor shall enforce
for the benefit of the Government the liability of the subcontractor for such
loss, destruction, or damage.
(h) Equitable adjustment. When this clause specifies an
equitable adjustment, it shall be made to any affected contract provision in
accordance with the procedures of the Changes clause. When appropriate, the
Contracting Officer may initiate an equitable adjustment in favor of the
Government. The right to an equitable adjustment shall be the Contractor's
exclusive remedy. The Government shall not be liable to suit for breach of
contract for--
(1) Any delay in delivery of Government-furnished
property;
(2) Delivery of Government-furnished property
in a condition not suitable for its intended use;
(3) A decrease in or substitution of Government-
furnished property; or
(4) Failure to repair or replace Government
property for which the Government is responsible.
(i) Final accounting and disposition of Government property.
Upon completing this contract, or at such earlier dates as may be fixed by the
Contracting Officer, the Contractor shall submit, in a form acceptable to the
Contracting Officer, inventory schedules covering all items of Government
property not consumed in performing this contract or delivered to the
Government. The Contractor shall prepare for shipment, deliver f.o.b. origin,
or dispose of the Government property as may be directed or authorized by the
Contracting Officer. The net proceeds of any such disposal shall be credited
to the cost of the work covered by this contract or paid to the Government as
directed by the Contracting Officer. The foregoing provisions shall apply to
scrap from Government property; provided, however, that the Contracting Officer
may authorize or direct the Contractor to omit from such inventory schedules
any scrap consisting of faulty castings or forgings or of cutting and
processing waste, such as chips, cuttings, borings, turnings, short ends,
circles, trimmings, clippings, and remnants, and to dispose of such scrap in
accordance with the Contractor's normal practice and account for it as a part
of general overhead or other reimbursable costs in accordance with the
Contractor's established accounting procedures.
(j) Abandonment and restoration of Contractor premises.
Unless otherwise provided herein, the Government-
(1) May abandon any Government property in place, at
which time all
obligations of the Government regarding such abandoned property shall cease;
and
(2) Has no obligation to restore or rehabilitate the
Contractor's premises under any circumstances (e.g., abandonment, disposition
upon completion of need, or contract completion). However, if the
Government-furnished property (listed in the Schedule or specifications) is
withdrawn or is unsuitable for the intended use, or if other Government
property is substituted, then the equitable adjustment under paragraph (h) of
this clause may properly include restoration or rehabilitation costs.
(k) Communications. All communications under this clause
shall be in writing.
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(l) Overseas contracts. If this contract is to be performed
outside the United States of America, its territories, or possessions, the
words "Government" and "Government-furnished" (wherever they appear in this
clause) shall be construed as "United States Government" and "United States
Government-furnished," respectively.
C. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE ONLY
TO FIXED-PRICE DELIVERY ORDER EFFORTS.
52.236-4 PHYSICAL DATA (APR 1984) (DEVIATION)
Data and information for the Contractor's information will be
furnished at the individual delivery order level as required in the Statement
of Work, Paragraph 2.3. The Government shall not be responsible for any
interpretation of or conclusion drawn from the data or information by the
Contractor.
52.236-10 OPERATIONS AND STORAGE AREAS (APR 1984)(DEVIATION)
(a) The Contractor shall confine all operations (including
storage of materials) on Government premises to areas authorized or approved
by the Contracting Officer.
(b) Temporary buildings (e.g. storage sheds, shops, offices)
and utilities may be erected by the Contractor only with the approval of the
Contracting Officer and shall be built with labor and materials furnished by the
Contractor without expense to the Government. The temporary buildings and
utilities shall remain the property of the Contractor and shall be removed by
the Contractor at its expense upon completion of the work. With the written
consent of the Contracting Officer, the buildings and utilities may be abandoned
and need not be removed.
(c) The Contractor shall, under regulations prescribed by the
Contracting Officer, use only established roadways, or use temporary roadways
constructed by the Contractor when and as authorized by the Contracting Officer.
When materials are transported in prosecuting the work, vehicles shall not be
loaded beyond the loading capacity recommended by the manufacturer of the
vehicle or prescribed by any Federal, State, or local law or regulation. When
it is necessary to cross curbs or sidewalks, the Contractor shall protect them
from damage. The Contractor shall repair or pay for the repair of any damaged
curbs, sidewalks, or roads.
IV. DEFENSE FAR SUPPLEMENT CLAUSES IN FULL TEXT
A. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO
BOTH COST REIMBURSEMENT AND FIXED PRICE DELIVERY ORDER EFFORTS.
252.247-7023 TRANSPORTATION OF SUPPLIES BY SEA (NOV 1995)
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(a) Definitions. As used in this clause --
(1) "Components" means articles, materials, and
supplies incorporated directly into end products at any level of manufacture,
fabrication, or assembly by the Contractor or any subcontractor.
(2) "Department of Defense" (DoD) means the Army,
Navy, Air Force, Marine Corps, and defense agencies.
(3) "Foreign Rag vessel" means any vessel that is
not a U.S.-flag vessel.
(4) "Ocean transportation" means any transportation
aboard a ship, vessel, boat, barge, or ferry through international waters.
(5) "Subcontractor" means a supplier, material man,
distributor or vendor at any level below the prime contractor whose contractual
obligation to perform results from, or is conditioned upon, award of the prime
contract and who is performing any part of the work or other requirement of the
prime contract. However, effective May 1, 1996, the term does not include a
supplies, material man, distributor, or vendor of commercial items or
commercial components.
(6) "Supplies" means all property, except land and
interests in land, that is clearly identifiable for eventual use by or owned by
the DoD at the time of transportation by sea.
(i) An item is clearly identifiable for
eventual use by the DoD if, for example, the contract documentation contains a
reference to a DoD contract number or a military destination.
(ii) "Supplies" includes (but is not limited
to) public works; buildings and facilities; ships; floating equipment and
vessels of every character, type, and description, with parts, subassemblies,
accessories, and equipment; machine tools; material; equipment; stores of all
kinds; end items; construction materials; and components of the foregoing.
(7) "U.S.-flag vessel" means a vessel of the United
States or belonging to the United States, including any vessel registered or
having national status under the laws of the United States.
(b) The Contractor shall employ United States-flag vessels
in the transportation by sea of any supplies to be furnished in the performance
of this contract. The Contractor and its subcontractors may request that the
Contracting Officer authorize shipment in foreign-flag vessels, or designate
available U.S.-flag vessels, if the Contractor or a subcontractor believes that:
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(1) U.S.-flag vessels are not available for timely shipment;
(2) The freight charges are inordinately excessive or unreasonable; or
(3) Freight charges are higher than charges to private persons for
transportation of like goods.
(c) The Contractor must submit any request for use of other than U.S.-flag
vessels in writing to the Contracting Officer at least 45 days prior to the
sailing date necessary to meet its delivery schedules. The Contracting Officer
will process requests submitted after such date(s) as expeditiously as possible,
but the Contracting Officer's failure to grant approvals to meet the shipper's
sailing date will not of itself constitute a compensable delay under this or any
other clause of this contract. The request shall contain at a minimum --
(1) Type, weight, and cube of cargo;
(2) Required shipping date;
(3) Special handling and discharge requirements;
(4) Loading and discharge points;
(5) Name of shipper and consignee;
(6) Prime contract number; and
(7) A documented description of efforts made to
secure U.S.-flag vessels, including points of contact (with names and telephone
numbers) with at least two U.S. flag carriers contacted. Copies of telephone
notes, telegraphic and facsimile message or letters will be sufficient for this
purpose.
(d) The Contractor shall, within 30 days after each shipment covered by
this clause, provide the Contracting Officer and the Division of National Cargo,
Office of Market Development, Maritime Administration, U.S. Department of
Transportation, Washington, DC 20590, one copy of the rated on board vessel
operating carrier's ocean bill of lading, which shall contain the following
information -
(1) Prime contract number;
(2) Name of vessel;
(3) Vessel flag of registry;
(4) Date of loading;
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(5) Port of loading;
(6) Port of final discharge;
(7) Description of commodity;
(8) Gross weight in pounds and cubic feet if available;
(9) Total ocean freight in U.S. dollars; and
(10) Name of the steamship company.
(e) The Contractor agrees to provide with its final invoice under this
contract a representation that to the best of its knowledge and belief --
(1) No ocean transportation was used in the performance of this
contract;
(2) Ocean transportation was used and only U.S.-flag vessels were
used for all ocean shipments under the contract;
(3) Ocean transportation was used, and the Contractor had the
written consent of the Contracting Officer for all non-U.S.-flag ocean
transportation; or
(4) Ocean transportation was used and some or all of the shipments
were made on non-U.S.-flag vessels without the written consent of the
Contracting Officer. The Contractor shall describe these shipments in the
following format:
ITEM CONTRACT
DESCRIPTION LINE ITEMS QUANTITY TOTAL
(f) If the final invoice does not include the required representation,
the Government will reject and return it to the Contractor as an improper
invoice for the purposes of the Prompt Payment clause of this contract. In the
event there has been unauthorized use of non-U.S.-flag vessels in the
performance of this contract, the Contracting Officer is entitled to equitably
adjust the contract, based on the unauthorized use.
(g) The Contractor shall include this clause, including this
paragraph (g), in all subcontracts under this contract which exceed the
simplified acquisition threshold in Part 13 of the Federal Acquisition
Regulation.
252.247-7024 NOTIFICATION OF TRANSPORTATION OF SUPPLIES BY SEA (NOV 1995)
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(a) The Contractor has indicated by the response to the
solicitation provision, Representation of Extent of Transportation by Sea, that
it did not anticipate transporting by sea any supplies. If, however, after the
award of this contract, the Contractor learns that supplies, as defined in the
Transportation of Supplies by Sea clause of this contract, will be transported
by sea, the Contractor--
(1) Shall notify the Contracting Officer of that
fact; and
(2) Hereby agrees to comply with all the terms and
conditions of the Transportation of Supplies by Sea clause of this contract.
(b) The Contractor shall include this clause, including
this paragraph (b), revised as necessary to reflect the relationship of the
contracting parties, in all subcontracts hereunder, except (effective May 1,
1996) subcontracts for the acquisition of commercial items or components.
252.248-7000 PREPARATION OF VALUE ENGINEERING CHANGE PROPOSALS (MAY 1994)
Prepare value engineering change proposals, for submission pursuant to the
value engineering clause of this contract, in the format prescribed by the
version of MILL-STD-973 in effect on the date of contract award.
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B. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE ONLY TO
COST-REIMBURSEMENT DELIVERY ORDER ~EFFORTS.
252.236-7000 MODIFICATION PROPOSALS-PRICE BREAKDOWN (DEC 1991) (DEVIATION)
(a) The contractor shall furnish an estimated cost and fee breakdown
itemized as required and within the time specified by the Contracting Officer,
with any proposal for a contract modification.
(b) The estimated cost and fee breakdown -
(1) Must include sufficient detail to permit an
analysis of fee and of all costs for-
(i) Material;
(ii) Labor;
(iii) Equipment;
(iv) Subcontracts; and
(v) Overhead; and
(2) Must cover all work involved in the
modification, whether the work was deleted, added, or changed.
(c) The contractor shall provide similar
estimated cost and fee breakdowns to support any amounts claimed for
subcontracts.
(d) The contractor's proposal shall include a
justification for any time extension proposed.
C. THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE ONLY TO
FIXED PRICE DELIVERY ORDER EFFORTS.
252.246-7002 WARRANTY OF CONSTRUCTION (GERMANY)
(JUNE 1997)
(a) ln addition to any other representations in this contract, the
Contractor warrants, except as provided in paragraph j) of this clause, that
the work performed under this contract conforms to the contract requirements
and is free of any defect of equipment, material, or design furnished or
workmanship performed by the Contractor or any subcontractor or supplier at any
tier.
(b) This warranty shall continue for the period(s) specified
in Section 13, VOB, Part B, commencing from the date of final acceptance of the
work under this contract. If the Government takes possession of any part of
the work before final acceptance, this
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warranty shall continue for the period(s) specified in Section 13, VOB, Part B,
from the date the Government takes possession.
(c) The Contractor shall remedy, at the Contractor's expense, any failure to
conform or any defect. In addition, the Contractor shall remedy, at the
Contractor's expense, any damage to Government-owned or -controlled real or
personal property when that damage is the result of--
(I) The Contractor's failure to conform to contract requirements; or
(2) Any defect of equipment, material, or design furnished or workmanship
performed.
(d) The Contractor shall restore any work damaged in fulfilling the terms and
conditions of this clause.
(e) The Contracting Officer shall notify the Contractor, in writing, within a
reasonable period of time after the discovery of any failure, defect, or
damage.
(f) If the Contractor fails to remedy any failure, defect, or damage within a
reasonable period of time after receipt of notice, the Government shall have
the right to replace, repair, or otherwise remedy the failure, defect, or
damage at the Contractor's expense.
(g) With respect to all warranties, express or implied, from subcontractors,
manufacturers, or suppliers for work performed and materials furnished under
this contract, the Contractor shall--
(1) Obtain all warranties that would be given in normal commercial practice;
(2) Require all warranties to be executed in writing, for the benefit of the
Government, if directed by the Contracting Officer; and
(3) Enforce all warranties for the benefit of the Government as directed by the
Contracting Officer.
(h) ln the event the Contractor's warranty under paragraph (b) of this clause
has expired, the Government may bring suit at its expense to enforce a
subcontractor's, manufacturer's, or supplier's warranty.
(i) Unless a defect is caused by the Contractor's negligence, or the negligence
of a subcontractor, or supplier at any tier, the Contractor shall not be liable
for the repair of any defects of material or design furnished by the Government
or for the repair of any damage resulting from any defeat in
Government-furnished material or design.
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(J) This warranty shall not limit the Government's right under the Inspection
clause of this contract, with respect to latent defects, gross mistakes, or
fraud.
V. AF FAR SUP CLAUSES IN FULL TEXT
5352.204-9000 NOTIFICATION OF GOVERNMENT SECURITY ACTIVITY
(MAY 1996)
Thirty days before the date contractor operations will begin on base, the
contractor shall notify the security police activity shown in the distribution
block of the DD Form 254, DOD Contract Security Classification Specification,
as to:
(a) The name, address, and telephone number of this
contract company's representative and designated alternate in the U.S. or
overseas area, as appropriate;
(b) The contract number and military contracting command;
(c) The highest classification category of defense
information to which contractor employees will have access;
(d) The Air Force installations in the U.S. (in overseas
areas, identify only the APO number(s)) where the contract work will be
performed;
(e) The date contractor operations will begin on base in
the U.S. or in the overseas area;
(f) The estimated completion date of operations on base
in the U.S. or in the overseas area; and
(g) Any changes to information previously provided under
this clause.
This requirement is in addition to visit request procedures contained in DOD
5220.22-M, National Industrial Security Program Operating Manual.
5352.204-9001 VISITOR GROUP SECURITY AGREEMENTS (MAY 1996)
Prior to beginning operations involving classified information on an
installation identified on the DD Form 254 where the contractor is not required
to have a facility security clearance, the contractor shall enter into a
security agreement (or understanding) with the installation commander to ensure
that the contractor's security procedures are properly integrated with those of
the installation. As a minimum, the agreement shall identify the security
actions which will be performed:
(a) By the installation for the contractor, such as
providing storage and. classified reproduction facilities, guard services,
security forms, security inspections under DOD
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5220.22-M, classified mail services, security badges, visitor control, and
investigating security incidents; and
(b) Jointly by the contractor and the installation, such as
packaging and addressing classified transmittals, security checks, internal
security controls, and implementing emergency procedures to protect classified
material.
5352.216-9001 AWARDING ORDERS UNDER MULTIPLE AWARD
CONTRACTS (MAY 1996)
(a) All multiple award contractors shall be provided a fair
opportunity to be considered for each order in excess of $2,500 pursuant to the
procedures established in this clause, unless the Contracting Officer
determines that:
(1) The agency 's need for the services or supplies
is of such urgency that providing such opportunity to all such contractors
would result in unacceptable delays;
(2) Only one such contractor is capable of
providing the services or supplies at the level of quality required because the
services or supplies ordered are unique or highly specialized;
(3) The task or delivery order should be issued on
a sole source basis in the interest of economy or efficiency because it is a
logical follow-on to an order already issued under the contract, provided that
all awardees were given a fair opportunity pursuant to the procedures in this
clause to be considered for the original order; or
(4) It is necessary to place an order to satisfy
a minimum guarantee.
(b) Unless the procedures in paragraph (a) are used for
awarding individual orders, multiple award contractors will be provided a fair
opportunity to be considered for each order using the following procedures:
(c) Under the provisions of the Federal Acquisition
Streamlining Act of 1994, 10 U.S.C. 2304 (c) (Public Law 103-355), a protest is
not authorized in connection with the issuance or proposed issuance of an
individual task or delivery order except for a protest on the grounds that the
order increases the scope, period, or maximum value of the contract under which
the order is issued.
(d) For this contract, the designated task or delivery order
ombudsman is HSC/PK, Director of Contracting, (210) 536-6312. The task
or delivery order ombudsman is responsible for reviewing complaints from
multiple award contractors and ensuring that all of the contractors are
afforded a fair opportunity to be considered for task and delivery orders in
excess of $2,500, consistent with procedures in the contract. However, it is
not within the designated task or delivery order contract ombudsman's authority
to prevent the issuance of an order or disturb an existing order.
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(e) This clause does not guarantee the contractor issuance of any task order or
delivery order above the minimum guarantee(s) stated in [identify clause that
stipulates minimum guarantee(s)] of this contract.
5352.223-9000 ELIMINATION OF CLASS I OZONE DEPLETING SUBSTANCES
IN AIR FORCE PROCUREMENT (MAY 1996)
(a) It is the Air Force policy to eliminate the use of Class I
Ozone Depleting Substances (ODS) in all Air Force procurement.
(b) Unless a specific waiver has been authorized, Air Force
procurement:
(1) May not include any specification, standard,
drawing or other document that requires the use of a Class I ODS in the design,
manufacture, test, operation, or maintenance of any system, subsystem, item,
component or process:
(2) May not include any specification, standard,
drawing or other document that established a requirement that can only be met
by use of a Class I ODS; and
(3) May not require the delivery of any item of
supply that contains a Class I ODS or any service that includes the use of
Class I ODS.
(c) For the purposes of the Air Force policy, the following
are Class I ODS:
(1) Halons: 1011, 1202, 1211, 1301 and 2402
(2) Chloroflurocarbons (CFC): CFC-11, CFC-12,
CFC-13, CFC- 111, CFC-112, CFC-113, CFC-114, CFC-115, CFC-211, CFC-212,
CFC-213, CFC-214, CFC-215, CFC-216, and CFC-217.
(3) Other controlled substances: carbon
tetrachloride, methyl chloroform, and methyl bromide.
(d) The Air Force has reviewed the requirements specified
in this contract to reflect this policy. Where considered essential, specific
authorization has been obtained to continue use of these substances. Notify the
Contracting Officer if any additional Class I ODS have been required in the
performance of this contract or will be delivered as part of end item(s) or
services(s) under this contract.
5352.242-9000 CONTRACTOR ACCESS TO AIR FORCE INSTALLATIONS
(MAY 1996)
(a) The contractor shall obtain base identification and
vehicle passes for all contractor personnel who make frequent visits to or
perform work on the Air Force installation(s) cited in the contract.
Contractor personnel are required to wear or prominently display installation
identification badges or contractor-furnished, contractor identification badges
while visiting or performing work on the installation.
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(b) The contractor shall submit a written request on company
letterhead to the (base point of contract or field engineer) listing the
following: contract number, location of work site, start and stop dates, and
names of employees and subcontractor employees needing access to the base. The
letter will also specify the individual authorized to sign for a request for
base identification credentials or vehicle passes. When reporting to the
registration office, the authorized contractor individual should provide a
valid driver's license, current vehicle registration and valid vehicle
insurance certificate, to obtain a vehicle pass.
(c) During performance of the contract, the contractor
shall be responsible for obtaining required identification for newly assigned
personnel and for prompt return of credentials and vehicle passes for any
employee who no longer requires access to the work site.
(d) When work under this contract requires unescorted entry
to controlled or restricted areas, the contractor shall comply with AFI 31-209,
the Air Force Resource Protection Program, and AFI 31 -501, Personnel Security
Program Management, as applicable.
(e) Upon completion or termination of the' contract or
expiration of the identification passes, the prime contractor shall ensure that
all base identification passes issued to employees and subcontractor employees
are returned to the issuing office.
(f) Prior to submitting an invoice for final payment, the
prime contractor shall obtain a clearance certification from the issuing office
which states all base identification passes have been turned in, accounted for,
or transferred to a follow-on contract. This certification shall be submitted
to the base point of contact or base engineer prior to submission of the final
invoice for payment.
(g) Failure to comply with these requirements may result
in withholding of final payment.
VI. AFMC FAR SUP CLAUSES IN FULL TEXT
A. THE FOLLOWING FULL TEXT CLAUSES SHALL BE APPLICABLE TO BOTH
COST-REIMBURSEMENT AND FIXED PRICE DELIVERY ORDER EFFORTS.
5352.211-9001 MILITARY SPECIFICATIONS AND STANDARDS--
ALTERNATIVES (AFMC) (JUL 1997)
The alternative specifications and standards listed herein are approved
substitutes for the military-specifications/standards (MIL-Specs/STDs) cited
in this contract. Unless an
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alternative is specifically approved by the Government and listed herein, the
superseded or canceled MIL-Specs/STDs cited in this contract shall be
contractually binding.
Originally Cited MIL-Spec/STD Approved Alternative
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5352.215-9005 INCORPORATION OF CONTRACTOR'S TECHNICAL
PROPOSAL (AFMC) (JUL 1997)
(a) The following documents are incorporated herein by
reference and made a part of this contract:
Paragraph Nos.___________________________________________________________
through _________________________________ of Contractor's Technical Proposal
(or appropriate document(s) name) Version
No.___________________________________ dated ___________________, entitled
____________________________________________________.
(b) Nothing contained in the Contractor's technical proposal
shall constitute a waiver to any other requirement of this contract. In the
event of any conflict between the Contractor's technical proposal and any other
requirement of the contract, the conflict shall be resolved in accordance with
the Order of Precedence clause. For purposes of the Order of Precedence clause
the documents listed above shall rank (insert rank order).
(c) The detailed technical content of the Contractor's
proposal was an important factor in the selection of the Contractor for award
of this contract. The documents listed above are now contractually binding.
The Contractor shall not change or otherwise deviate from the content of these
documents without prior written approval from the Contracting Officer.
(d) If it is necessary to change the learning arrangements,
performance, design, configuration, or other items specified in the technical
proposal in order to comply with the requirements of the contract clauses,
special contract requirements, or statement of work, the contract shall be
modified appropriately.
(e) The Contractor agrees that the documents listed above
reflects the results/responses to all discussions, Clarification Requests
(CRs), and/or Deficiency Reports (DRs) issued during the negotiation process.
If, after contract award, it is discovered that changes made during
negotiations were not incorporated in the Sow and/or technical proposal, such
changes to the Contractor's documents shall be considered administrative in
nature and shall be made by unilateral modification to the contract, at no
change in contract cost or price or other terms and conditions.
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5352.217-9010 ASSOCIATE CONTRACTOR AGREEMENTS (AFMC)
(JUL 1997)
(a) The Contractor shall enter into Associate Contractor Agreements
(ACA) for any portion of the contract requiring joint participation in the
accomplishment of the Government requirement. The agreements shall include the
basis for sharing information, data, technical knowledge, expertise, and/or
resources essential to the integration of the (insert name of the program or
project) which shall ensure the greatest degree of cooperation for the
development of the program to meet the terms of the contract. Associate
contractors are listed in (h) below.
(b) ACAs shall include the following general information:
(1) Identify the associate contractors and their
relationships.
(2) Identify the program involved and the relevant
Government contracts of the associate contractors.
(3) Describe the associate contractor interfaces
by general subject matter.
(4) Specify the categories of information to be
exchanged or support to be provided.
(5) Include the expiration date (or event) of the
ACA.
(6) Identify potential conflicts between relevant
Government contracts and the ACA; include agreements on protection of
proprietary data and restrictions on employees.
(c) A copy of such agreement shall be provided to the Contracting
Officer for review before execution of the document by the cooperating
contractors.
(d) Nothing in the foregoing shall affect compliance with the
requirements of the clause at 5352.209-9002, Organizational Conflict of
lnterest.
(e) The Contractor is not relieved of any contract requirements or
entitled to any adjustments to the contract terms because of a failure to
resolve a disagreement with an associate contractor.
(f) Liability for the improper disclosure of any proprietary data
contained in or referenced by any agreement shall rest with the parties to the
agreement, and not the Government.
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(g) All costs associated with the agreements are included in the
negotiated cost of this contract. Agreements may be amended as required by the
Government during the performance of this contract.
(h) The following contractors are associate contractors with whom
agreements are required:
<TABLE>
<CAPTION>
CONTRACTOR ADDRESS PROGRAM/CONTRACT
<S> <C> <C>
BOOZ-ALLEN & 300 Convent, Ste 1250 SETA/F41624-94-C-8013
HAMILTON San Antonio, TX 78205
WPI 100 N. E. Loop 410, GSE&I/F41624-95-D-8141
Ste 1200
San Antonio, TX 78216
SW RESOURCE 121 Interpark, Ste 103 Data Specialist/
DEVELOPMENT San Antonio, TX 78216 F41624-96-C-8004
</TABLE>
5352.219-9000 INCORPORATION OF SUBCONTRACTING PLAN
(AFMC) (JUL 1997) [applies only to large business]
Special attention is invited to the clause at FAR 52.219-9, Small Business and
Small Disadvantaged Business Subcontracting Plan. The subcontracting plan
contained in Attachment 2 attached to Section J dated YYMMDD is incorporated
herein by reference. The small business goal is 25% at award. The small and
disadvantaged business goal is
5% at award. The women owned business goal is 5% at award.
5352.223-9000 USE OF HAZARDOUS MATERIALS IN THE PERFORMANCE OF ON-BASE
CONTRACTS (AFMC) (JUL 1997)
(a) "Hazardous Material" as used in this clause includes any material
defined as hazardous under the latest version of Federal Standard No. 313
(including revisions adopted during the term of the contract).
(b) The list of hazardous materials identified FAR 52.223-3, Hazardous
Material Identification and Material Safety Data, and DFARS 252.223-7001, Hazard
Warning Labels shall be updated during performance of the contract whenever the
Contractor determines that any other material to be delivered or used on base in
excess of (insert locally specified time Period) and/or a (insert locally
specified quantitv of material) under this contract is hazardous based on
changes in the composition of the item(s) or a revision to Federal Standard No.
313. Provide written notification of changes in the Material Safety Data Sheets
(MSDSs), including a copy of the updated MSDS, of each item to the identified
point of contact on the installation prior to use of the item on installation.
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(c) The Contractor shall submit a Contractor Hazardous Material
Report (insert form number), available from (insert installation) (insert
appropriate office, e.g.. Hazardous Material Support Center or Hazardous
Material Cell) at (insert phone number) for each item identified under Section I
clauses referenced above or updates resulting from paragraph (b) of this clause
15 days prior to bringing the items on base. Update the report at least monthly
(beginning no later than 30 days after the material is brought on base) until
the hazardous material is removed from the base.
(d) All hazardous material used on base (including material to
be used for a period of less than 24 hours) shall contain a hazardous material
warning label. The label shall include a list of the hazardous chemical(s),
material identification which matches the part number and/or trade name on the
MSDS, appropriate hazard warnings (including description of target organs), and
name and address of the chemical manufacturer, importer, or other responsible
party.
(e) The Contractor is responsible for conducting and
documenting employee hazard communication training prior to the commencement of
work on base.
(f) Neither the requirements of this clause nor any act or
failure to act by the Government shall relieve the Contractor of any
responsibility or liability for the safety of Government, Contractor, or
subcontractor personnel or property.
(g) Nothing contained in this clause shall relieve the
Contractor from complying with applicable Federal, State, and local laws, codes,
ordinance, and regulations (including the obtaining of licenses and permits in
conjunction with hazardous material).
(h) Notwithstanding any other rights in technical data
specified elsewhere in this contract, the Government may use, duplicate, and
disclose any data to which this clause is applicable to apprise personnel of the
hazards to which they may be exposed and obtain medical treatment for those
affected by the material. In addition, the Government may allow others to use,
duplicate and disclose data for these purposes.
5352.225-9001 ENGLISH LANGUAGE REQUIREMENTS
(AFMC) (JUL 1997)
(a) Deliver all documents in the English language.
(b) Provide an English language speaking person during
in-plant visits, inspections, reviews, audits, and other similar activities.
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5352.228-9001 INSURANCE CLAUSE IMPLEMENTATION (AFMC) (JUL 1997)
The Contractor shall obtain and maintain the minimum kinds and amounts of
insurance during performance of this contract as specified by FAR 28.307-2,
Liability, and contemplated by FAR 52.228-5, Insurance--Work on a Government
Installation, and/or 52.228-7, Insurance--Liability to Third Persons.
5352.236-9001 PREPARATION OF MATERIAL APPROVAL
SUBMITTALS (AFMC) (JUL 1997)
The submittals contemplated by FAR 52.236-5, Materials and Workmanship, shall
be accomplished on and in accordance with instructions pertaining to AF Form
3000, Material Approval Submittal.
5352.237-9001 CONTRACTOR IDENTIFICATION (AFMC) (JUL 1997)
(a) Contractor personnel and their subcontractors must
identify themselves as Contractors or subcontractors during meetings, telephone
conversations, in electronic messages, or correspondence related to this
contract.
(b) Contractor-occupied facilities (on AFMC or other
Government installations) such as offices, separate rooms, or cubicles must be
clearly identified with Contractor supplied signs, nameplates or other
identification, showing that these are work areas for Contractor or
subcontractor personnel.
5352.243-9001 ADVANCE CHANGE ADJUSTMENT AGREEMENTS
(AFMC) (JUL 1997)
(a) Purpose. This clause establishes a procedure by which
the parties agree to change this contract per the Changes clause of this
contract without an equitable adjustment to the contract price. The parties
agree that each change not exceeding $5,000.00 [or as otherwise negotiated at
the delivery order level], which also does not affect the contract delivery or
performance schedules or any other contract clause, ter~m or condition shall be
a change having no effect on the contract price. For cost contracts, there
will be no fee adjustment for each change not exceeding $5.,000.00 [or as
otherwise negotiated at the delivery order level], which does not affect
contract delivery or performance, or any contract clause, term or condition.
(b) Procedure. When it is proposed to make a change under
the Changes clause and both parties agree that such a change shall require no
equitable adjustment as contemplated by paragraph (a) of this clause, the
Contractor shall submit a written
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proposal or offer to accomplish the proposed change without an equitable
adjustment. If the Contracting Officer determines no adjustment is necessary,
the Contractor's proposal may be accepted by issuing a unilateral modification
using an SF Form 30 or AFMC Form 702, Amendment of Solicitation/Modification of
Contract. The modification shall (1) be issued under the Changes clause; (2)
cite this clause; (3) reference the Contractor's proposal or offer; and (4)
direct the changes to be made. The issuance of the modification shall
constitute acceptance of the Contractor's proposal or offer, shall be binding
on both parties, and shall be a full, complete and final settlement for the
directed changes.
5352.243-9002 NOT-TO-EXCEED/NOT-LESS-THAN AGREEMENTS
(AFMC) (JUL 1997)
(a) Prior to the issuance of a change order under this
firm-fixed-price contract, the Contractor shall promptly furnish, upon request
of the Contracting Officer, written agreement as to the maximum (in the case of
an increase) adjustments to the contract price and/or in the delivery schedule
(or time of performance), caused by the change.
* Or in the case of a reduction, a not-less-than amount for the price.
(b) The Contracting Officer shall also solicit such agreement on
limitations to the adjustments or to any other contract requirements which may
be subject to equitable adjustment by reason of the change. Any such written
agreement shall then be cited in the change order and, upon its issuance, shall
be a binding part of the contract. In no event shall the definitive equitable
adjustment exceed the delivery schedule (or time of performance) adjustments so
established. All costs associated with the change order shall be segregated
from other contract costs until the change order has been definitized. Except
with respect thereto, nothing contained herein shall affect the rights of the
parties to an equitable adjustment by reason of the change, pursuant to the
"Changes" clause.
ALTERNATE III (AFMC) (JUL 1997).
(a) Prior to the issuance of a change order under this contract, the
Contractor shall promptly furnish, upon request of the Contracting Officer,
written agreement as to the maximum (in the case of an increase) adjustments* to
be made in both the estimated cost and fixed fee, and/or in the delivery
schedule (or time of performance), caused by the change.
* Or in the case of a reduction, a not-less-than amount for both the estimated
cost and the fixed fee.
ALTERNATE IV (AFMC) (JUL 1997).
(a) Prior to the issuance of a change order under this contract, the
Contractor shall promptly furnish, upon request of the Contracting Officer,
written agreement as to the
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maximum (in the case of an increase) adjustments* to be made in both the
estimated cost and base fee and/or in the delivery schedule (or time of
performance), caused by the I change.
* Or in the case of a reduction, a not-less-than amount for both the estimated
cost and base fee.
5352.244-9000 DELETION OF ADVANCE NOTIFICATION/CONSENT
REQUIREMENT FOR SUBCONTRACTS (AFMC) (JUL 1997)
Paragraphs (a) and (b) of FAR 52.244-2, Subcontracts (Cost-Reimbursement and
Letter Contracts), do not apply to the following subcontracts, which were
evaluated during negotiations: (insert approved subcontracts).
This clause shall in no way relieve the Contractor of any responsibility for
performing this contract; shall not create any obligation of the Government to,
or privity with, these subcontractors; shall be without prejudice to any right
or claim of the Government under this contract; and shall not constitute a
determination of the acceptability of the subcontract terms or conditions or
the allowability of any costs under this contract. Any request for consent to
subcontract for subcontracts not listed above must be processed through the
cognizant Administrative Contracting Officer as required by the "Subcontracts"
clause.
5352.245-9000 GOVERNMENT-FURNISHED PROPERTY (GRP)
(AFMC) (JUL 1997)
Pursuant to the Government Property clause herein, the Government shall furnish
the item(s) of property listed below as Government-Furnished Property (GFP) to
the Contractor, f.o.b. (insert origin or destination as appropriate), for use
in performance of this contract. Upon completion of the contract, the
Contractor shall obtain disposition instructions from the Government Property
Administrator of the activity having responsibility for administration of the
contract.
ITEM NR NSN NOUN PART NO QTY DELIVERY DATE
5352.245-9004 BASE SUPPORT (AFMC) (JUL 1997)
Base support shall be provided by the Government to the Contractor in
accordance with this clause. Failure by the Contractor to comply with the
requirements of this clause shall release the Government, without prejudice,
from its obligation to provide base support by the date(s) required. If
warranted, and if the Contractor has complied with the requirements of this
clause, an equitable adjustment shall be made if the Government fails to
provide base support by the date(s) required.
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(a) Base support includes Government-controlled working space,
material, equipment, services (including automatic data processing), or other
support (excluding use of the Defense Switched Network (DSN)) which the
Government determines can be made available at, or through, any Air Force
installation where this contract shall be performed. All Government property in
the possession of the Contractor, provided through the base support clause,
shall be used and managed in accordance with the Government Property clauses.
(b) The Air Force installations providing the support shall be listed
in subparagraph (e), and the Government support to be furnished by each
installation under this contract shall be listed in subparagraph (f).
(c) Unless otherwise stipulated in the contract schedule, support
shall be provided on a no-charge-for-use basis and the value shall be a part of
the Government's contract consideration.
(d) The Contractor agrees to immediately report (with a copy to the
cognizant CAO) inadequacies, defective Government-Furnished Property (GFP), or
nonavailability of support stipulated by the contract schedule, together with a
recommended plan for obtaining the required support. The Government agrees to
determine (within 10 workdays) the validity and extent of the involved
requirement and the method by which it shall be fulfilled (e.g., purchase,
rental, lease, GFP, etc.). Facilities shall not be purchased under this clause.
Additionally, the Contractor (or authorized representative) shall not purchase,
or otherwise furnish any base support requirement provided by the clause (or
authorize others to do so), without prior written approval of the Contracting
Officer regarding the price, terms, and conditions of the proposed purchase, or
approval of other arrangements.
(e) Following are installations where base support will be provided
(insert list of installations).
(f) The Government support to be furnished under this contract is
(insert list of support items). Because of the nature and location of the work
performed, the value of such equipment is undeterminable. The Contractor shall
not incur any cost resulting from nonsupport prior to Contracting Officer
concurrence in accordance with this clause.
ALTERNAT'E I (AFMC) (JUL 1997).
(g) When this contract is a cost, cost-reimbursement,
time-and-materials, or labor hour contract, the Contractor agrees that in the
performance of this contract or any major subcontract no direct or indirect
costs for property will be incurred if the Government determines that property
is available at, or through any Air Force installation where this contract shall
be performed. Only the prior written approval of the Contracting Officer can
relieve the Contractor from this restriction.
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B. THE FOLLOWING FULL TEXT CLAUSES SHALL BE
APPLICABLE TO COSTREIMBURSEMENT DELIVERY ORDER EFFORTS.
5352.216-9003 AWARD FEE (AFMC) (JUL 1997)
(a) In addition to the Zero percent (0%) base fee set forth in H-004 of this
contract, the Contractor may earn an award fee of up to six percent (6%) of the
estimated cost on each delivery order on the basis of performance during the
evaluation periods, and in the amount specified in the award fee plan.
(b) Monitoring of Performance. The Contractor's performance will be
continually monitored by the performance monitor whose findings are reported to
the Award Fee Review Board (AFRB). The AFRB recommends an award fee to the Fee
Determining Official (FDO) who makes the final decision of the award fee amount
paid based on the Contractor's performance during the award fee evaluation
period.
(c) Award Fee Plan. The evaluation criteria and associated grades are
specified in the award fee plan. The evaluation periods with the associated
award fee pool amounts and performance criteria with associated percentages of
available award fee are also specified in the award fee plan. Upon contract
award, the Contractor will be provided the FDO-approved award fee plan.
(d) Modification of Award Fee Plan. Unilateral changes may be made to the
award fee plan if the Contractor is provided written notification by the
Contracting Officer before the start of the upcoming evaluation period.
Changes affecting the current evaluation period must be by bilateral agreement.
(e) Self-Evaluation. The Contractor may submit to the Contracting Officer,
within five (5) working days after the end of each award fee evaluation period,
a brief written self-evaluation of its performance for that period. This
self-evaluation shall not exceed (insert number of pages) pages. This
self-evaluation will be used in the AFRB's evaluation of the Contractor's
performance during this period.
(f) Disputes. All FDO decisions regarding the award fee, including but not
limited to, the amount of the award fee, if any; the methodology used to
calculate the award fee; the calculation of the award fee; the Contractor's
entitlements to the award fee; and the nature and success of the Contractor's
performance, shall not be subject to the "Disputes" clause nor reviewed by any
Board of Contract Appeal (BCA), court, or other judicial entity.
(g) Award Fee Payment.
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(1) Award fee is not subject to the allowable cost, and payment or termination
clauses of this contract.
(2) The Contractor may bill for the award fee immediately upon receipt of the
Contracting Officer's authorization for payment of the earned award fee amount.
5352-228-9000 PAYMENT AND PERFORMANCE BONDS
REQUIREMENTS FOR FIXED-PRICE
SUBCONTRACTS (AFMC) (JUL 1997)
(a) Pursuant to DFARS 228.102-1, the requirement for payment and
performance bonds is waived for cost-reimbursement contracts. In the
performance of this cost reimbursement contact, it is expected that fixed-price
subcontracts for construction or demolition efforts will be used. Therefore, for
fixed-price construction subcontracts greater than $25,000 the prime Contractor
is required to obtain from each construction subcontractor: (1) A payment bond
in favor of the prime Contractor sufficient to pay material and labor costs;
and, (2) A performance bond in an equal amount, if available at no additional
cost.
(b) When evidence of a performance bond and a payment bond with good
and sufficient surety is required, such evidence shall be delivered to the
Contracting Officer within 10 calendar days after award of the respective
subcontract by the prime Contractor.
(c) All bonds, including any necessary reinsurance agreements and
construction permits, must be received by the Contracting Officer before a
notice to proceed with the work is issued.
(b) When evidence of a performance bond and a payment bond with good
and sufficient surety is required, such evidence shall be delivered to the
Contracting Officer within 10 calendar days after award of the respective
subcontract by the prime Contractor.
(c) All bonds, including any necessary reinsurance agreements and
construction permits, must be received by the Contracting Officer before a
notice to proceed with the work is issued.
(a) Pursuant to DFARS 228.102-1, the requirement for payment
and performance bonds is waived for cost-reimbursement contracts. In the
performance of this cost-reimbursement contract, it is expected that fixed price
subcontracts for construction or demolition efforts will be used. Therefore, for
fixed price construction subcontracts greater than $25,000, the Contractor is
required to obtain from each construction subcontractor:
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(1) A payment bond in favor of the prime contractor
sufficient to pay material and labor costs; and,
(2) A performance bond in an equal amount, if available
at no additional cost.
(b) When evidence of a performance bond and a payment bond
with good and sufficient surety is required, such evidence shall be delivered
to the Contracting Officer within 10 calendar days after award of the
respective subcontract by the prime contractor.
(c) All bonds, including any necessary reinsurance agreements
and construction permits must be received by the Contracting Officer before a
notice to proceed with the work will be issued.
1. DFARS CLAUSES IN FULL TEXT
THE FOLLOWING FULL TEXT CLAUSE SHALL BE APPLICABLE ONLY TO
FIXED-PRICE DELIVERY ORDER EFFORTS.
252.232-7007 LIMITATION OF GOVERNMENT'S OBLIGATION (AUG)
(a) Contract line item 0001 is incrementally funded. For this
item, the sum of $________________________ [TBD at each Delivery Order] of the
total price is presently available for payment and allotted to this contract.
An allotment schedule is set forth in paragraph (i) of this clause.
(b) For item(s) identified in paragraph (a) of this
clause, the Contractor agrees to perform up to the point at which the total
amount payable by the Government, including reimbursement in the event of
termination of those item(s) for the Government's convenience, approximates the
total amount currently allotted to the contract. The Contractor will not be
obligated to continue work on those item(s) beyond that point. The Government
will not be obligated in any event to reimburse the Contractor in excess of the
amount allotted to the contract those item(s) regardless of anything to the
contrary in the clause entitled "Termination for Convenience of the Government."
As used in this clause, the total amount payable by the Government in the event
of termination of applicable contract line item(s) for convenience includes
costs, profit, and estimated termination settlement costs for those item(s).
(c) Notwithstanding the dates specified in the allotment
schedule in paragraph (i) of this clause, the Contractor will notify the
Contracting Officer in writing at least ninety days prior to the date when, in
the Contractor's best judgment, the work will reach the point at which the
total amount payable by the Government, including any cost for termination for
convenience will approximate 85 percent of the total amount then allotted to
the contract for performance of the applicable item(s). The notification will
state (1) the estimated date when that point will be reached and (2) an
estimate of additional funding, if any, needed to continue performance of
applicable line items up to the next scheduled date for allotment of funds
identified in paragraph (i) of this clause, or to a
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mutually agreed upon substitute date. The notification will also advise the
Contracting Officer of the estimated amount of additional funds that will be
required for the timely performance of the item(s) funded pursuant to this
clause, for a subsequent period as may be specified in the allotment schedule
in paragraph (i) of this clause or otherwise agreed to by the parties. If
after such notification additional funds are not allotted by the date
identified in the Contractor's notification, or by an agreed substitute date,
the Contracting Officer will terminate any item(s) for which additional funds
have not been allotted, pursuant to the clause of this contract entitled
"Termination for Convenience of the Government."
(d) When additional funds are allotted for continued performance of
the contract line item identified in paragraph (a) of this clause, the parties
will agree as to the period of contract performance which will be covered by the
funds. The provisions of (b) through (d) of this clause will apply in like
manner to the additional allotted funds and agreed substitute date, and the
contract will be modified accordingly.
(e) If, solely by reason of failure of the Government to
allot additional funds, by the dates indicated below, in amounts sufficient for
timely performance of the contract line item identified in paragraph (a) of
this clause, the Contractor incurs additional cost or is delayed in the
performance of the work under this contract, and if additional funds are
allotted, an equitable adjustment will be made in the price or prices
(including appropriate target, billing, and ceiling prices where applicable) of
the items or in the time of delivery or both. Failure to agree to any such
equitable adjustment hereunder will be a dispute concerning a question of fact
within the meaning of the clause of this contract entitled "Disputes."
(f) The Government may at any time prior to termination allot
additional funds for the performance of the contract line item identified in
paragraph (a) of this clause.
(g) The termination provisions of this clause do not limit the rights
of the Government under the clause entitled "Default." The provisions of this
clause are limited to the work on and allotment of funds for the contract line
items set forth in paragraph (a) above. This clause no longer applies once the
contract is fully funded except with regard to the rights or obligations of the
parties concerning equitable adjustments negotiated under paragraphs (d) and (e)
of this clause.
(h) Nothing in this clause affects the rights of the Government to
terminate this contract pursuant to the clause of this contract entitled
"Termination for Convenience of the Government."
(i) The parties contemplate that the Government will allot funds to
this contract in accordance with the following schedule:
On execution of contract $
(month) (day), 199x [to be determined on each delivery order] $
(month) (day), 199y [to be determined on each delivery order] $
(month) (day), 199z [to be determined on each delivery order] $
252.246-7002 WARRANTY OF CONSTRUCTION (GERMANY) (JUNE 1997)
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(a) ln addition to any other representations in this contract, the Contractor
warrants, except as provided in paragraph (j) of this clause, that the work
performed under this contract conforms to the contract requirements and is free
of any defect of equipment, material, or design furnished or workmanship
performed by the Contractor or any subcontractor or supplier at any tier.
(b) This warranty shall continue for the period(s) specified in Section 13,
VOB, Part B, commencing from the date of final acceptance of the work under
this contract. If the Government takes possession of any part of the work
before final acceptance, this warranty shall continue for the period(s)
specified in Section 13, VOB, Part B, from the date the Government takes
possession.
(c) The Contractor shall remedy, at the Contractor's expense, any failure to
conform or any defect. In addition, the Contractor shall remedy, at the
Contractor's expense, any damage to Government-owned or -controlled real or
personal property when that damage is the result of--
(1) The Contractor's failure to conform to contract requirements; or
(2) Any defect of equipment, material, or design furnished or workmanship
performed.
(d) The Contractor shall restore any work damaged in fulfilling the terms and
conditions of this clause.
(e) The Contracting Officer shall notify the Contractor, in writing, within a
reasonable period of time after the discovery of any failure, defect, or
damage.
(f) lf the Contractor fails to remedy any failure, defect, or damage within a
reasonable period of time after receipt of notice, the Government shall have
the right to replace, repair, or otherwise remedy the failure, defect, or
damage at the Contractor's expense.
(g) With respect to all warranties, express or implied, from subcontractors,
manufacturers, or suppliers for work performed and materials furnished under
this contract, the Contractor shall--
(1) Obtain all warranties that would be given in normal commercial practice;
(2) Require all warranties to be executed in writing, for the benefit of the
Government, if directed by the Contracting Officer; and
(3) Enforce all warranties for the benefit of the Government as directed by the
Contracting Officer.
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(h) In the event the Contractor's warranty under paragraph (b) of this clause
has expired, the Government may bring suit at its expense to enforce a
subcontractor's, manufacturer's, or supplier's warranty.
(i) Unless a defect is caused by the Contractor's negligence, or the negligence
of a subcontractor or supplier at any tier, the Contractor shall not be liable
for the repair of any defects of material or design furnished by the Government
or for the repair of any damage resulting from any defeat in
Government-furnished material or design.
(j) This warranty shall not limit the Government right under the Inspection
clause of this contract, with respect to latent defects, gross mistakes, or
fraud.
Section I
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Attachment 1
Page 78 of 78
SECTION J
LIST OF EXHIBITS AND ATTACHMENTS
<TABLE>
<CAPTION>
DOCUMENT TITLE AND DATA NO. OF PAGES
- -------- -------------- -------------
<S> <C> <C>
Exhibit A Contract Data Requirements List (CDRL) 55
for Technical data dated 28 Mar 97, and Data
Item Descriptions (DIDS) with Index
Exhibit B Contract Data Requirements List (CDRL) 34
for Management data dated 28 Mar 97, and Data
Item Descriptions (DIDS) with Index
Exhibit C Contract Data Requirements List (CDRL)
for Cost data dated 28 Mar 97, and Data
Item Descriptions (DIDS) with Index
Atch 1 Statement of Work dated 28 Mar 97
</TABLE>
Attachment 1-SOW
<PAGE> 79
Attachment 1
Page 1 of 24
BASIC CONTRACT
STATEMENT OF WORK
FOR
FULL SERVICE REMEDIAL ACTION
AT ANY
WORLDWIDE LOCATION
CONTRACT: F41624-97-R-8003
DATE: 28 MAR 97
Attachment 1 - SOW
<PAGE> 80
Attachment 1
Page 2 of 24
TABLE OF CONTENTS
SECTION/PARAGRAPH
1.0 SCOPE
1.1 Background
2.0 APPLICABLE DOCUMENTS
2.1 Compliance Documents
2.2 Guidance Documents
2.3 Delivery Order Specific Documents
3.0 ADMINISTRATION AND MANAGERIAL REQUIREMENTS
3.1 Management, Planning, and Reporting Functions
3.1.1 Integrated Master Schedule
3.1.2 Project Schedules
3.1.3 Cost Performance Report
3.1.4 Contract Funds Status Report
3.1.5 Cost and Schedule Status Report
3.1.6 Performance and Cost Report
3.1.7 Funds and Man-Hour Expenditure Report
3.1.8 Project Status Report
3.2 Technical Documents
3.2.1 Quality Plans
3.2.2 Technical Plans and Reports
3.2-2.1 Technical Plans
3.2-2.2 Technical Reports
3.3 Meetings
3.4 Permits
3.5 Construction Submittals
4.0 TECHNICAL REQUIREMENTS
4.1 Containment
4.1.1 Capping
4.1.2 Stabilization and Solidification
4.1.3 Ground Water Physical and Hydraulic Control
Attachment 1 - SOW
<PAGE> 81
Attachment 1
Page 3 of 24
Table of Contents (continued)
4.2 Removal
4.2.1 Excavation
4.2.2 Ground Water Pumping
4.2.3 Free Product Removal
4.2.4 Soil Vapor Vacuum Extraction
4.2.5 Drum and Tank Removal
4.2.6 Asbestos Removal
4.2.7 Lead-Based Paint Waste Removal
4.2.8 Radon Monitoring, Reduction, and Removal
4.2.9 Low-level Radioactive Waste
4.2.10 Ordinance Removal
4.2.11 Polychlorinated Biphenyl Removal
4.3 Treatment
4.3.1 Carbon Absorption
4.3.2 Air Stripping
4.3.3 Biological Treatment
4.3.4 Thermal Treatment
4.3.5 Chemical Treatment
4.4 Innovative and Proven Treatment Technologies
4.5 Miscellaneous Requirements
4.5.1 Hydrant Refueling System
4.5.2 Facility Demolition and Site Enhancement and Restoration
4.5.3 Long Term Monitoring and Long Term Operation and Maintenance
4.6 Additional Requirements
4.6.1 Sampling, Testing, Analysis, and Monitoring
4.6-1.1 Sampling
4.6.1.2 Testing and Analysis
4.6-1.3 Process Monitoring
4.6-1.4 Record Keeping
4.6.2 Site Preparation and Clearance
4.6.3 Transportation
4.6.4 Site Closure and Demobilization
Attachment 1 - SOW
<PAGE> 82
Attachment 1
Page 4 of 24
1.0 SCOPE
This basic contract Statement of Work (SOW) defines the scope of remedial
actions that may be carried out under a Delivery Order (DO) at various worldwide
locations. This SOW encompasses the range of methods and technologies supporting
activities necessary to remedy site conditions in accordance with technical and
regulatory requirements. These sites may require proven and/or innovative
technologies and methods to accomplish the work. Innovative technologies and
methods may include those listed in the reports of the Superfund Innovative
Technology Evaluation (SITE) Program published by the US Environmental
Protection Agency (EPA), and those developed under sponsorship of the US Air
Force.
The work to be performed under this basic contract SOW requires environmental
remediation of sites located on US Government (primarily Air Force)
installations as well as any other worldwide site for which the Air Force Center
for Environmental Excellence (AFCEE) customers have responsibility.
The Contractor shall function as an integral team member in support of the AFCEE
mission. These expectations include efficient management of DOs including
accurate, on-time submittals of contract deliverables and timely identification
and solution of impediments to successful project execution. Technical
requirements include early involvement in the process to allow for the
development of the most cost-effective and technically sound remedy. AFCEE will
rely on the contractor's expertise in recognizing and addressing problematic
issues and successful execution of each DO. The Contractor shall perform all
work in accordance with federal, state, and local statutes and regulations.
Remedies shall conform to environmental permit or decision document
requirements.
1. 1 Background
The Air Force is committed to effective compliance and stewardship activities
for Air Force lands, including Government Owned-Contractor Operated (GOCO)
facilities, to provide access to the air, land, and water needed to maintain and
improve Air Force mission capability. This commitment is accomplished by
complying with federal, state, and local environmental statutes and regulations.
Compliance is accomplished under many Air Force programs, several of which have
been implemented to investigate conditions at past hazardous waste disposal and
spill sites and select remedial actions for those sites that pose a threat to
human health and welfare and to the environment. It is the expanded mission of
the AFCEE, as a national asset to the US Government, to provide these same
services and capabilities to other agencies and AFCEE customers, in addressing
similarly aggressive national and international remediation programs, as
requested.
Attachment 1 - SOW
<PAGE> 83
Attachment 1
Page 5 of 24
2.0 APPLICABLE DOCUMENTS
2.1 Compliance Documents
The Contractor shall comply with all federal, Air Force, state, and local
regulatory agency requirements, and applicable statutes, policies, and
regulations, including, but not limited to, those cited by reference below:
a. Occupational Safety and Health Administration (OSHA) Act
b. Department of Transportation (DOT) Regulations
c. National Environmental Policy Act (NEPA)
d. Clean Water Act (CWA)
e. Safe Drinking Water Act (SDWA)
f. Clean Air Act (CAA)
g. Federal Water Pollution Control Act as amended by the
CWA
h. Endangered Species Act
i. Toxic Substances Control Act (TSCA)
j. Resource Conservation and Recovery Act (RCRA), as
amended by the Hazardous and Solid Waste Amendments
(HWSA)
k. Comprehensive Environmental Response Compensation and
Liability Act (CERCLA) as amended by the Superfund
Amendments and Reauthorization Act (SARA)
1. National Emission Standards for Hazardous Air
Pollutants, Title 40, Code of Federal Regulation (CFR),
Part 61, Subparts A and M, US EPA
m. Asbestos Standards, Title 40 CFR, Part 763, Subparts
G and E, US EPA
n. National Historic Preservation Act (NHPS)
o. Fish and Wildlife Coordination Act
p. Solid Waste Disposal Act as amended by RCRA of 1976
q. Archaeological and Historical Preservation Act
r. Flood Plain Management, Executive Order (EO) 11988 as
amended by EO 12148
s. Act for the Preservation of American Antiquities
t. Archaeological Resources Protection Act
u. Wilderness Act
v. Protection of Wetlands act
w. National Trails Systems Act
x. Marine Protection and Sanctuaries Act
y. Water Bank Act
z. Coastal Zone Management Act
aa. Coastal Barriers Resource Act
ab. Great Lakes Coastal Barrier Act
ac. Farmland Protection Policy
ad. Federal Facility Compliance Act of 1992
ae. Site and project specific Records of Decisions (RoDs).
Attachment 1 - SOW
<PAGE> 84
Attachment 1
Page 6 of 24
af. DoD-STD-100C, Engineering Drawing Practices, 1988
ag. Quality Program Plan (QPP), dated TBD
ah. Department of Defense Standard 6055.9, Ammunition and
Explosives Safety Standards
ai. Other federal, state and local regulation and statutes
as applicable.
aj. Uniform Building Code, current edition
ak. Construction Specifications Institute Master Format
CSI MP-2-1-88, 6 October 1988
al. American Society of Heating Refrigeration and Air
Conditioning Engineers, (ASHRAE) Handbooks; 1989
Fundamentals, 1990 Refrigeration, 1991 HVAC
Applications, and 1992 HVAC Systems and Equipment.
am. National Standard Plumbing Code, current edition
an. Model Quality Assurance Project Plan (QAPP), current
edition, Air Force Center for Environmental
Excellence/Environmental Restoration Division
(AFCEE/~ER), Brooks AFB, TX
2.2 Guidance Documents
The following documents are incorporated by reference herein as guidance:
a. "Interim Guidelines and Specifications for preparing
Quality Assurance Project Plans", Quality Assurance
Management Staff (QAMS)-005-80, US EPA, 1980
b. Guidance on Setting Permit Conditions and Reporting
Trial Bum Results, January 1989, EPA 6256-89091
ORD/OSW
c. Preparation of Illustrations for Reports of the US
Geological Survey, Plate III, Ridgeway, JL, 1920
d. Guidance on Cleanup of Surface Tank and Drum Sites,
PB-87-110672, US EPA, June 1985
e. A Guidance to the Assessment and Remediation of
Underground Releases, API Publication 1628, second
edition, August 1989.
f. Removal and Disposal of underground Petroleum Storage
Tanks, API recommended practice 1604, second edition,
December 1987.
g. National Fire Protection Association Standards,
current editions
h. EPA/625/8/8-87/014 September 1987, "A Compendium of
Technologies Used in the Treatment of Hazardous
Wastes."
i. American Society for Testing and Materials (ASTM)
Standards (most current).
j. Water Measurement Manual, Bureau of Reclamation, 1967
k. ANSI Z39.18, Information Sciences - Scientific and
Technical Reports Organizations, Preparation, and
Production.
1. Remedial Action Cost Engineering and Requirements
System, current version.
m. Air Force Engineering Technical Letters (AFETLs).
n. Occupational Safety and Health Guidance Manual for
Hazardous Waste Site Activities
(NIOSH/OSHA/US Geological Survey/EPA, 1985)
Attachment 1 - SOW
<PAGE> 85
Attachment 1
Page 7 of 24
o. Test Methods for Evaluation Solid Waste
Physical/Chemical Methods, current edition,
(EPA/SW846).
p. Model Field Sampling Plan (FSP), current edition,
AFCEE/ER, Brooks AFB, TX
q. Model Work Plan (WP), current edition, AFCEE/ER,
Brooks AFB, TX
2.3 Delivery Order Specific Documents
Documents shall be incorporated as determined at the DO level.
Attachment 1 - SOW
<PAGE> 86
Attachment 1
Page 8 of 24
3.0 ADMINISTRATIVE AND MANAGERIAL REQUIREMENTS
The Contractor shall implement remedial actions as specified in each DO and in
accordance with compliance documents listed in Section 2. 1. The Contractor
shall be familiar with the guidance documents listed in Section 2.2. The
Contractor shall supply all labor, equipment, and materials necessary to
accomplish the work assigned unless otherwise specified in each DO. The
Contractor shall perform management and planning functions as well as
performance measurement and fund status reporting during the course of this
effort.
3.1 Management, Planning, and Reporting Requirements
The Contractor shall plan project activities and develop, implement, and
maintain schedules of project events, describe the status of resources, report
on activity and progress toward accomplishing objectives, and document the
results of project efforts for each DO.
3.1.1 Integrated Master Schedule
The Contractor shall prepare a work breakdown structure (WBS) or equivalent task
breakdown for each DO. The breakdown structures shall be used to report schedule
status. The Contractor shall provide an Integrated Master Schedule for the task
specific DO. (Contract Data Requirements Lists [CDRLS] B001, B002)
3.1.2 Project Schedules
The Contractor shall prepare a computer generated network analysis which is a
detailed task plan for all tasks for approval by the COR. The network analysis
(e.g., GANTT, PERT, CPM) shall be in the form of a progress chart of suitable
scale to indicate appropriately the percentage of work scheduled for completion
by any given date during the period of the DO. The Network Analysis shall show
both serial and parallel sub-tasks leading to a deliverable product/report. Show
early and late start and completion date with float. (CDRL B003)
3.1.3 Cost Performance Report
The Contractor shall implement and maintain a performance measurement system to
support the gathering of cost and schedule data for the purpose of determining
program status. The WBS or equivalent task breakdown shall be used for reporting
cost. The cost performance report (CPR) presents the performance measurement
baseline, and the cost and schedule performance against that baseline. The
submittal shall consist of the appropriate figures containing cost and related
data for measuring project cost and schedule status. (CDRL C001)
Attachment 1 - SOW
<PAGE> 87
Attachment 1
Page 9 of 24
3.1.4 Contract Funds Status Report
The Contractor shall prepare contract funds status reports (CFSRS) to provide
contract funding information for the task specific DO. The purpose of the CFSR
is to update and forecast funding requirements, funding changes and budget
estimates, identify any funds in excess of DO needs which may become available
for deobligation, and provide rough estimates of termination costs. (CDRL C002)
3.1.5 Cost and Schedule Status Report
T'he Contractor shall prepare summarized contract cost and schedule performance
information for program management purposes. The Cost and Schedule Status Report
(CSSR) contains contract data, including original and current contract values
and the management estimate at completion, performance data, and narrative
explanations which present information on significant cost, schedule variances,
contractual problems, or other areas of interest. (CDRL C003)
3.1.6 Performance and Cost Report
The Performance and Cost Report (PCR) shall be prepared by the Contractor. The
PCR provides the current status and projected requirements for funds, manhours,
and work completion. (CDRL C004)
3.1.7 Funds and Man-Hour Expenditure Report
The Funds and Man-Hour Expenditure Report (FEMR) shall be prepared by the
Contractor. The FEMR provides the Government visibility into Contractor
expenditures for labor, materials, travel, and other contract charges. It tracks
these expenditures against baseline values and provides cost to completion
estimates. (CDRL C005)
3.1.8 Project Status Report
The Contractor shall prepare Project Status Reports. This report is used to
review and evaluate the overall progress and existing or potential problem areas
on the project. The report shall be prepared in a Contracting Officer's
Representative (COR) approved formal. The content of the report shall include a
summary of events occurring during the reporting period, discussion of
performance, identification of problems and any corrective action taken, and
outstanding issues. (CDRL B004)
3.2 Technical Documents
Attachment 1 - SOW
<PAGE> 88
Attachment 1
Page 10 of 24
3.2.1 Quality Plans
After award of the basic contract, the Contractor will be tasked to prepare a
basic contract QPP for AFCEE review and approval. Once the basic contract QPP
has been reviewed and approved, it shall be incorporated as a compliance
document as defined in Section 2. 1. The basic contract QPP will become the
standard from which the task specific DO QPP will be developed. The Contractor
shall prepare, for AFCEE review and approval, a site specific QPP for the task
specific DO. If the Contractor has previously submitted an AFCEE approved
corporate QPP, this QPP shall be used as the basic contract QPP. The Contractor
is required to implement, maintain, and comply with the approved basic contract
QPP and the site specific QPP.
The QPP shall include the Contractor's Environmental Health and Safety Plan
(HSP), required by 29 CFR 1910.120, the Environmental Sampling and Analysis Plan
(SAP), and the Environmental Construction Quality Plan (CQP). The SAP shall
include a QAPP which is to be in compliance with the AFCEE Model QAPP, defined
as Item an. in Section 2.1, and a FSP. The AFCEE Model FSP is available as a
guidance document, Item p. under Section 2.2. (CDRLs A001, A002, A003)
3.2.2 Technical Plans and Reports
3.2.2.1 Technical Plans
The Contractor shall identify and review the results, findings, and
recommendations from relevant previous studies and projects prior to preparing
project plans. The Contractor shall prepare, implement, maintain, and comply
with plans as needed to accomplish tasks under each DO.
a. Environmental Community Relations Plan (CDRL A004)
b. Environmental Cleanup Plan (include the following
subsections only as appropriate)
(1) Project Activities (Work Plan) (CDRL A005)
(2) Site Security Plan (CDRL A006)
(3) Excavation Plan (CDRL A007)
(4) Spill and Discharge Control Plan (CDRL A008)
(5) Bench Scale Test Plan (CDRL A009)
(6) Asbestos Abatement Plan (CDRL A010)
(7) Air Modeling and Monitoring Plan (CDRL A011)
(8) Surface Water Management Plan (CDRL A012)
(9) Ground Water Management Plan (CDRL A013)
(10) Erosion Control Plan (CDRL A014)
(11) Emissions Control Plan (CDRL A015)
(12) Transportation Plan (CDRL A016)
(13) Remediation Management Plan (CDRL A017)
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(14) Siting Analysis Plan (CDRL A018)
(15) Site Preparation Plan (CDRL A019)
(16) Demobilization and Closure Plan (CDRL A020)
c. Standard Operating Procedures for Hazardous Material
(CDRL A021)
d. Environmental Operations and Maintenance Plan (CDRL
A022)
3.2.2.2 Technical Reports
Other reporting mechanisms include, but are not limited to, technical reports,
problem reports, photographs, "as built" drawings, and shop drawings.
a. Technical Report (CDRL A023)
(1) Analytical Data Report Package (CDRL A024)
(2) Environmental Site/Project Summary (CDRL A025)
b. Production or Delivery Problem Report (CDRL A026)
c. Still Photographic Records (CDRL A027)
d. Status Report (Technical) (CDRL A028)
The Contractor shall provide engineering data including design plans and
specifications, as-builts drawings, and equipment or material specifications
(cut-sheets). These documents shall be completed by the Contractor according to
the most appropriate industry standard.
3.3 Meetings
The Contractor shall attend a pre-proposal conference or site visit and post
award or preperformance conference. The Contractor also shall attend meetings to
discuss technical or regulatory issues and project progress and status, as
requested by the COR. If requested by the COR, the Contractor shall prepare, and
submit for review, presentation materials for meetings and an agenda. The
Contractor shall prepare minutes for all meetings attended. (CDRLs B005, B006,
B007)
3.4 Permits
The Contractor shall apply for and obtain all federal, state, local, and other
applicable environmental permits, licenses and certificates required to perform
and complete each remedial action. The Contractor shall maintain a library of
these documents at the Contractor's temporary office on base as well as the
corporate facility handling each DO. The Contractor shall comply with permit
conditions.
3.5 Contractor Documentation
The Contractor shall create and maintain a Master Document List (MDL) that
includes all documents, whether the document is a deliverable or not, which are
prepared during the
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course of the delivery order. The MDL and its documents shall be maintained in
libraries readily available for submittal to the Government. All Material
Submittals shall be accomplished in accordance with the instructions pertaining
to AF Form 3000, Material Approval Submittal. (CDRL B008)
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4.0 TECHNICAL REQUIREMENTS
T'he Contractor shall perform remedial activities as described in each DO.
Requirements include, but are not limited to, containment, removal, and/or
treatment of waste. Other requirements include demolition, facility enhancement
or restoration, long term operation and maintenance, and long term monitoring.
Incidental requirements include mobilization of personnel and equipment,
preparation of the site, testing, sampling, and analysis, site restoration, and
demobilization of personnel and equipment.
4.1 Containment
The Contractor shall contain contaminated materials in-situ and ex-situ through
capping, solidification, stabilization, either ground water physical or
hydraulic control, or other methods specified in each DO. The Contractor shall
evaluate and/or modify the containment design and specification plans, as
specified in each DO. The Contractor shall perform all work in accordance with
AFCEE approved plans and specifications.
4. 1.1 Capping
The Contractor shall plan, construct, operate, and maintain physical barriers
(caps) over contaminated areas to reduce contaminant migration using natural
materials such as clays, gravels, soils, synthetic materials such as
geotextiles, impervious materials such as concrete or asphalt, or combinations
of these materials. Additionally, the Contractor shall plan, construct, operate,
monitor, maintain, and decommission leachate collection and treatment systems,
gas ventilation of collection systems, and storm water run-on and run-off
control systems that are associated with the remedy.
4.1.2 Stabilization and Solidification
The Contractor shall plan, stabilize, and solidify contaminated materials using
cementation, organic or inorganic stabilization and solidification, and
vitrification processes either in-situ or ex-situ. The Contractor shall provide
and operate the equipment and materials necessary to stabilize or solidify,
move, and/or emplace the contaminated materials. Cementation reagents include
cements, pozzolanic materials, and blends of these reagents. Organic
stabilization and solidification methods include the uses of polymers, resins,
and other organic substances to encapsulate contaminants, and the blending of
contaminated materials into asphalt using hot batch and low temperature emulsion
methods.
4.1.3 Ground Water Physical or Hydraulic Control
The Contractor shall install physical barriers, such as slurry walls, grout
curtains, and sheet piling, or ground water extraction systems that influence
the hydraulic properties of the aquifer. In support of the remedy, the
Contractor shall be required to determine
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aquifer hydraulic, geologic, and chemical properties, such as, but not limited
to, permeability, porosity, specific yield, ground water velocity and direction,
transmissivity, gradient, lithologic sequence, and organic and inorganic
constituents. This determination shall be completed using existing data and
obtaining additional data as required.
With regard to the installation of ground water extraction systems, the
Contractor shall analyze and convert existing ground water monitoring wells for
use as extraction, injection, and re-injection wells, if applicable. In
addition, the Contractor shall plan, install, test, operate, maintain, monitor
and decommission horizontal and vertical ground water extraction, injection, and
re-injection wells and required connections to a ground water treatment system
or other system receiving the ground water.
4.2 Removal
The Contractor shall remove contaminated materials and environmental media for
treatment, recycling, and disposal. The Contractor shall evaluate and/or modify,
as specified in each DO, the removal design and specification plans. Media and
materials to be removed may include, but are not limited to, tanks, drums,
containers, underground storage , contaminated soil, soil gas, ground water, and
asbestos containing materials. Removal methods include, but are not limited to,
excavation, ground water pumping, and soil vapor vacuum extraction.
4.2.1 Excavation
The Contractor shall perform field investigations necessary to identify and
verify the location of utilities and mark the location of utilities in
accordance with industry practice. Prior to initiating excavation activities,
the Contractor shall obtain the appropriate digging permits in accordance with
basic contract special requirements H011. If necessary, field investigations
shall conducted, as necessary, to sample and analyze soils and other materials
to verify the nature and extent of contaminants. Excavation activities shall be
planned and implemented in a manner that protects existing site utilities,
structures, surface features, service operations, monitoring and other types of
wells, and the general site environment. This includes the protection of trees,
shrubs and other vegetation not in the excavation zone from damage from dust,
compaction of soils, and physical contact with machines and equipment. If
appropriate, the Contractor shall conserve uncontaminated topsoil by removal,
storage, or redistribution. All reasonable measures should be taken to minimize
and suppress fugitive emissions of dust, vapors and other site materials during
excavation.
The Contractor shall plan, construct, operate, maintain, and decommission
storage facilities for excavated material. Except during active periods of
accumulation or loading, all waste storage piles shall be covered to prevent
leachate generation, minimize off gassing of contaminants, and divert storm
water run-off. The storage pile covers shall be anchored to sustain the maximum
anticipated wind. Additionally, the Contractor shall
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plan, construct, operate, maintain, and decommission storm water run-on and
run-off and leachate containment systems and excavation dewatering systems and
properly dispose of accumulated water. Excavations shall be backfilled with
material that is uncontaminated, free from debris, and similar to that of
adjacent soils. All backfilled excavations shall be restored with topsoil or
other approved material and reseeded with vegetation to prevent erosion.
4.2.2 Ground Water Pumping
The Contractor shall plan, install, test, operate, maintain, monitor, and
decommission a ground water extraction, injection, and re-injection system to
mitigate the risk associated contaminated ground water. In support of the
selected remedy, the Contractor shall be required to characterize aquifer
hydraulic, geologic, and chemical properties, such as, but not limited to,
permeability, porosity, specific yield, ground water velocity and direction,
transmissivity, gradient, lithologic sequence, and organic and inorganic
constituents. If appropriate, existing ground water monitoring wells shall be
evaluated and converted for use as extraction, injection and re-injection wells.
The Contractor shall plan, install, test, operate, maintain, monitor, and
decommission the required connections to the system receiving the ground water.
4.2.3 Free Product Removal
The Contractor shall plan, install, and operate equipment to selectively remove
free product from the ground water. The Contractor shall install and operate the
system in a manner that minimizes the amount of ground water being recovered and
maximizes the free product removal. The contractor shall separate, collect, and
manage the free product removed for disposal, recycling, or treatment.
4.2.4 Soil Vapor Vacuum Extraction
The Contractor shall plan, construct, operate, maintain, and decommission soil
vapor vacuum extraction (SV(2)E) systems to remove contaminated soil gas from
the subsurface. The Contractor shall characterize the subsurface conditions
necessary for optimizing the operation of a (SV(2)E) system using existing data
and obtaining additional data as required. The Contractor shall plan, construct,
operate, maintain, and decommission vertical and horizontal subsurface vapor
collection and injection wells. Injection wells may be located in the
unsaturated and the saturated subsurface zones. To maximize (SV(2)E) efficiency,
the Contractor shall cover the ground surface located above the extraction wells
with a low permeability material. The Contractor shall be responsible for
planning, installing, and maintaining connections from the (SV(2)E) gas
discharge to vapor treatment systems.
4.2.5 Drum and Tank Removal
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The Contractor shall plan and execute the removal and disposal of tanks, drums,
other containers, and their contents. The removal shall require the
disconnection, backflushing, and disposal of the associated pipelines and the
plugging and/or capping of any portion of pipeline left in place. The Contractor
shall install replacement tanks, associated piping, and leak detection systems.
Additionally, the Contractor shall clean, cut, and/or crush tanks, drums, and
containers and arrange for transportation and disposal. Spent wash materials
shall be collected and properly disposed of in accordance with applicable
regulations. Leaking drums and drums of questionable structural integrity shall
be overpacked for transportation and disposal.
4.2.6 Asbestos Removal
The Contractor shall survey, plan, and implement the removal, encapsulation, and
enclosure of asbestos-containing materials (ACM) such as pipe boiler and
acoustical insulation, fire retardant, floor tile, transite sheet, and
cement-asbestos siding. The ACM shall be removed, containerized, and properly
disposed of in accordance with applicable regulations. To protect workers and
occupants in buildings undergoing abatement, enclosure systems and engineering
controls, such as negative air pressure and high efficiency particulate
filtering systems shall be installed. The Contractor shall replace the ACM's
with suitable non-asbestos containing materials.
4.2.7 Lead-Based Paint Waste Removal
The Contractor shall remove or encapsulate, transport, and dispose of lead-based
paint (LBP) waste or materials, structures, soils, etc. containing lead based
paint. All waste shall be containerized and sampled to delete the appropriate
disposal method and facility. Waste consolidation and minimization practices
shall be evaluated to provide the best value to the government. As an
alternative to removal, the Contractor shall encapsulate the painted surface to
act as a barrier between the LBP and the environment.
4.2.8 Radon Monitoring, Reduction, and Removal
The Contractor shall monitor the levels of radon as directed by the DO. Sampling
locations shall be selected such that the major entry routes to structures and
exposure points are monitored.
The Contractor shall plan, install, test, operate, maintain, and decommission
systems used to reduce radon concentrations to regulatory acceptable levels.
These systems shall be used to recover and exhaust the radon gas from beneath
the structural slab or flooring or to ventilate the interior of the affected
structure. In addition to the installation of these systems, the Contractor
shall seal the radon source to maximize the radon recovery and to prevent the
migration of the gas into the structure.
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4.2.9 Low-Level Radioactive Waste
The Contractor shall plan and implement the removal and transport of low-level
radioactive waste (LLRW), as specified in each DO. All tasks shall be
coordinated with the COR in conjunction with the US Air Force Radioisotope
Committee. The nature of the waste shall be characterized and properly disposed
of in accordance with the applicable regulations.
4.2.10 Ordinance Removal
The Contractor shall plan, remove, transport, and dispose of unexploded
ordinance or waste products from exploded ordinance, such as lead shot.
Coordination with the Base/Installation's Explosive Ordinance Disposal (EOD)
office is required.
4.2.11 Polychlorinated Biphenyls
T'he Contractor shall plan, remove, transport, and dispose of polychlorinated
biphenyl (PCB) contaminated waste. Removal activities include the application
and recovery of surfactants, the scabbilization or scarification of a concrete
surface, or the excavation of contaminated soils. All work shall be conducted in
accordance with TSCA which sets the clean-up levels, disposal standards, and the
confirmation sampling requirements.
4.3 Treatment
The Contractor shall treat contaminated materials using technologies such as
carbon adsorption, air stripping, biological processes, thermal, and chemical
treatment. Contaminated materials include ground and surface water, soil,
sediment, liquid wastes, solid wastes, sludges, residues, soil gas, and remedial
system effluent streams. The Contractor shall plan, install, test, operate,
maintain, and decommission the treatment systems and supporting pretreatment
systems such as phase separators, chemical precipitators, aerators, and filters.
The Contractor shall evaluate and/or modify the treatment design and
specification plans and document and report on activities.
4.3.1 Carbon Adsorption
The Contractor shall plan, install, test, operate, maintain, and decommission
carbon adsorption systems to treat contaminated aqueous streams, such as
extracted ground water and air stripper discharge, and contaminated gaseous
streams, such as the effluents from soil vapor vacuum extraction systems and air
strippers.
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4.3.2 Air Stripping
The Contractor shall plan, install, test, operate, maintain and decommission air
stripping towers for treatment of contaminated water. Necessary controls shall
be provided for reliable and efficient operation.
Influent water pretreatment equipment necessary to ensure reliable and efficient
air stripper operation shall be provided and maintained by the Contractor.
Pretreatment can include aeration, bacterial degradation, pH adjustment,
inorganic precipitation, and adsorption and ion exchange systems.
4.3.3 Biological Treatment
The Contractor shall plan, install, test, operate, and maintain biological
treatment systems to remove contaminants from soil, water, and air. Biological
treatment systems include, but are not limited to covered comfort piles,
reactors, land treatment, in-situ biodegradation, bioventing and activated
sludge. Tests shall be conducted to evaluate the effectiveness of
bioremediation. The Contractor shall control air emissions from biological
treatrnent systems.
4.3.4 Thermal Treatment
The Contractor shall plan, install, test, operate, maintain and decommission
thermal treatment equipment to decontaminate soil, site material, and effluent
gas streams from SV(2)E systems, air strippers, biological treatment systems,
and other remedial systems. Trial burns shall be conducted to demonstrate
thermal treatment system performance. The Contractor shall collect, manage,
store, and dispose of thermal treatment residues.
4.3.5 Chemical Treatment
The Contractor shall plan, install, test, operate, maintain and decommission
chemical treatment equipment to decontaminate soil, water, and air from remedial
extraction systems. Treatment shall be accomplished by neutralization, chemical
reaction, or other processes that change the chemical structure, such as
ultraviolet oxidation.
4.4 Innovative and Proven Removal Technologies
Documents to be reviewed include, but are not limited to, those published by the
US EPA under the SITE programs The Contractor shall plan, construct, operate,
and maintain,
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monitor and decommission innovative environmental remediation technologies and
other proven removal technologies depending upon site specific characteristics.
4.5 Miscellaneous Requirements
4.5.1 Hydrant Refueling Systems
The Contractor shall provide for the removal, disposal, installation,
replacement, repair, maintenance and/or upgrade of hydrant refueling systems.
This includes activities associated with connecting pipelines, fuel and solvent
contaminated soils, residual liquids and sludges, and site restoration. The
Contractor shall also be responsible for the collection, testing, analysis, and
reporting of contaminants present in soils, liquids, and sludges.
4.5.2 Facility Demolition and Site Enhancement and Restoration
The Contractor shall conduct demolition efforts in conjunction with new
construction or renovation, removal of outdated facilities, and site clearing
from natural disasters. These capabilities are required in an effort to prevent
unmanaged disposal of hazardous materials, and to reduce the amount of solid
waste sent to municipal landfills. Surveys to be conducted on demolition efforts
may include, but are not limited to asbestos, PCBs, and lead-based paint.
4.5.3 Long Term Monitoring and Long Term Operations and Maintenance
The Contractor shall be responsible for the operation, maintenance, monitoring,
and evaluation of in-place remedial systems, as required, in each DO. Activities
include, but are not limited to landfill cap repair, groundwater sampling and
analysis, monitoring in support of the effectiveness of the selected remedy
(i.e. fate and transport groundwater modeling in support of natural attenuation)
and maintenance of pump and treat systems.
4.6 Additional Requirements
4.6.1 Sampling, Testing, Analysis, and Monitoring
The Contractor shall sample, analyze, and test environmental media and monitor
meteorological and process conditions in keeping with the established QPP. The
Contractor shall generate the analytical and test data in order to support the
safe conduct of remediation projects, obtain information necessary for
remediation system parameters to monitor the progress of remediation and
remedial system performance, demonstrate regulatory compliance, and establish
that remediation goals have been achieved. The
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Contractor shall create and maintain written and electronic records as specified
in each DO.
4.6. 1.1 Sampling
The Contractor shall take representative samples of environmental media,
including soil, sediment, ground water, surface water, waste materials,
leachate, soil gas and ambient air. The Contractor shall be required to sample
for air quality performance compliance, effluents from remediation equipment
such as, but not limited to, incinerator stacks and soil vapor extraction
discharge. The Contractor shall drill, install, and develop vertical and/or
horizontal monitoring wells to collect ground water samples, and conduct soil
borings to obtain subsurface samples.
4.6.1.2 Testing and Analysis
The Contractor shall analyze and test environmental samples using standardized
methods as prescribed in the "Test Methods for Evaluating Solid Wastes,
Physical/Chemical Methods", current edition. Quantitative and qualitative
analyses for fuels, volatile organics, semi-volatile organics, pesticides, PCBs,
asbestos, metals, other inorganic species and physical properties shall be
conducted. The Contractor shall ensure the defensibility of test and analytical
results through execution of scientifically sound activities as outlined in the
appropriate portion of the approved QPP.
4.6.1.3 Process Monitoring
The Contractor shall monitor, adjust, and/or repair remedial equipment to ensure
that performance measurements are consistent with optimal operational
parameters, reliability goals are being met, the progress of remediation is
consistent with system expectations, and compliance with applicable statutes and
regulations is demonstrated.
4.6.1.4 Record Keeping
The Contractor shall create and maintain in one location written and electronic
records sufficient to recreate each sampling, analytical, testing and monitoring
event. The Contractor shall make these records available to the government upon
request. The Contractor shall maintain records of, and derived from, all
activities outlined in the appropriate portion of the QPP supporting the
generation of these sampling and analysis records. The Contractor shall also
retain written calculations using information obtained from sampling, analysis
monitoring and testing activities, to include all raw data.
The contractor shall meet any Installation Restoration Program Information
Management System (IRPIMS) data deliverable requirements, as required in each
DO. The contractor shall collect and submit the data required to populate the
IRPIMS database on 3.5" floppy diskettes. The contractor shall be responsible
for the recording of field and laboratory
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data into the computerized format specified by the current version of the IRPIMS
Data Loading Handbook (mailed under separate cover). AFCEE/MSC will provide
IRPTools PC software upon request. This program is designed to assist the
contractor in preparation and validation of their data. The contractor may
choose to use IRPTools PC (mailed separately with software manual), to input and
format their data, but all data shall be validated by IRPTools PC prior to
submission. A hard copy of the items of interest report and a copy of the
transmittal letter (as described below) must accompany all submission diskettes.
IRPIMS submission groups, including resubmissions, shall be delivered according
to the time schedule specified in the current version of the IRPIMS Data Loading
Handbook.
All IRPIMS data deliverables shall be sent to:
HQ AFCEE/MSC BLDG 532
ENVIRONMENTAL SYSTEMS SUPPORT TEAM
ATTN: IRPIMS Data Management
3207 North Road
Brooks AFB, TX 78235-5363
The contractor shall provide a transmittal letter to the Government contracting
office responsible for the contract. For AFCEE contracts, this address is:
HSC/PKV BLDG 532
3207 North Road
Brooks AFB, TX 78235-5363
This letter shall list the submission group(s) included or omitted (with an
appropriate explanation), show the government contract and delivery order
numbers as well as identify the Air Force point of contact who is responsible
for monitoring this contract.
The contractor shall be responsible for the accuracy and completeness of all
data submitted. All data submitted by the contractor shall correspond exactly
with the data recorded in the original laboratory reports and any other
documents associated with sampling and laboratory tasks. Each submission group
delivered by the contractor will be electronically evaluate by AFCEE/MSC for
format compliance and data integrity in order to verify acceptability. All
submissions are required to be error-free and compliant with latest IRPIMS Data
Loading Handbook. Any errors in the submission that are identified by AFCEE/MSC
must be corrected by the contractor. (CDRL B009)
4.6.2 Site Preparation and Clearance
The Contractor shall perform site work, as necessary, to prepare sites for
implementing remedial actions. The Contractor shall plan the work and document
all activities. The
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Contractor shall clear the site and remove designated structures and debris to
prepare the site for remediation and execute earthwork to prepare for
construction of the technical remedies. The Contractor shall perform actions
including, but not limited to, excavation and fill, borrowing, hauling, grading,
topsoil storage, removal of hidden obstacles, and implementation of erosion
control measures.
The Contractor shall construct temporary access roads, parking areas, paths, and
curbs necessary for work at the remediation site and erect fencing and gates for
the duration of the activity. Security and access controls shall be implemented
to prevent unauthorized entry to sites and to protect wildlife from site
exposure.
The Contractor shall survey existing utilities to determine adequacy and need
for modifications to support site activities. The Contractor shall construct
connections or new systems for electrical power, water, sewer, gas distribution,
telephone, and other utilities, as required, to accomplish the remedial action.
The Contractor shall erect or install support buildings, equipment enclosures,
and storage facilities for contaminated material and shall be in accordance
with applicable regulatory requirements.
The Contractor shall plan, construct, operate, maintain and decommission systems
necessary to control storm water run-on and run-off. These systems may include,
but are not limited to, berms, dikes, flood walls, levees, pipes, culverts,
gabions, rip rap, chutes, flumes, lagoons, basins, and tanks. The Contractor
shall plan, construct, operate, maintain, and decommission facilities required
to transport surface water drainage to a treatment plant, discharge location, or
any other destination.
4.6.3 Transportation
The Contractor shall comply with the following requirements for any task
involving the transportation of hazardous wastes and/or contaminated materials
to off-site treatment, storage and/or disposal facilities. Waste materials shall
be transported in accordance with 49 CFR 172, 173, 178, 179 and all other
applicable local, state and federal transportation regulations.
All vehicles leaving the exclusion zone shall be decontaminated prior to leaving
the project site. The Contractor shall inspect all vehicles prior to their
leaving the project site to ensure that the least possible amount of soil
adheres to wheels and undercarriages.
The Contractor shall not deliver site materials to any facility other than the.
approved disposal facility (i.e. listed on the shipping manifest).
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The Contractor shall be responsible for any and all actions necessary to remedy
situations involving contaminant excursions in transit or mud, soil,
contaminants, waste materials tracked off-site.
The Contractor shall prepare and submit for COR approval a route selection
report containing results of any inspections of the proposed access routes to
determine road conditions, overhead clearance, weight restrictions, and required
traffic control measures.
The Contractor shall ensure that trucks are protected against contamination by
properly covering and lining them with compatible materials, and/or by
decontaminating them prior to any use other than hauling contaminated materials.
The Contractor shall comply with Special Provision H-007 of the basic contract.
Prior to leaving the site, a load inspection of all shipments shall be
accomplished by the Contractor in conjunction with a responsible government
party designated by the COR. The resulting Load Inspection Report shall be
submitted to the COR. The Load Inspection Report shall include:
a. A complete and accurate manifest
b. Verification of appropriate Department of Transportation (DOT)
approved shipping container(s) in accordance with 49 CFR 172, 173, 178, 179 and
all other applicable local, state and federal transportation regulations
c. Labeling in accordance with DOT regulations specified by 49
CFR 172, 173, 178, 179 and all other applicable local, state and federal
transportation regulations
d. When required, a Bill of Lading traceable to the manifest
e. Validation that all waste shipment containers are in good
condition and not leaking
f. A statement that the driver is physically fit to perform his
duties
g. Validation that the driver has written documentation in his
possession of completion of the required DOT safety training and health
monitoring
h. A statement that the driver's log book is current
i. Validation that a certificate of insurance is in force
4.6.4 Site Closure and Demobilization
The Contractor shall decontaminate equipment and facilities, decommission
facilities as necessary, and restore the site. The Contractor shall document and
report on activities and train Government Personnel as required.
The Contractor shall decontaminate equipment and structures and dispose of
contaminated materials.
The Contractor shall remove temporary facilities installed to accomplish the
remediation work, such as office trailers storage buildings, decontamination
facilities, personnel sanitation facilities, shops, surfacing, fencing,
walkways, and signs and disconnect and
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remove temporary utilities such as power, telephone, water, sewer and gas no
longer needed at the site. The Contractor shall shut down the facility.
Activities associated with shut down include, but are not limited to, defueling
and disposing of system fluids, combustible materials, debris, and other wastes.
The Contractor shall also be responsible for isolating and "mothballing"
equipment.
The Contractor shall perform earthwork to restore the site. This includes, but
is not limited to, excavation, fill, backfill, hauling, grading, compaction,
contouring, and topsoil replacement. Implement erosion control measures using
such methods as seeding, mulch, sodding, and erosion control fabrics; restore
mads, structures and utilities; plant trees, shrubbery, grasses and other
vegetation.
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EXHIBIT 11
VERSAR, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended June 30,
---------------------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
NET (LOSS) INCOME.............................. $ (8,553) $ 1,256 $ 992
========== ========== ==========
(LOSS) INCOME FROM DISCONTINUED
OPERATIONS.................................. $ (8,829) $ 147 $ ---
========== ========== ==========
Weighted average common shares outstanding -
Basic....................................... 5,695,212 5,041,455 4,905,126
---------- ---------- ----------
NET (LOSS) INCOME PER SHARE - BASIC............ $ (1.50) $ 0.25 $ 0.20
========== ========== ==========
(LOSS) INCOME PER SHARE FROM
DISCONTINUED OPERATIONS - BASIC............. $ (1.55) $ .03 $ ---
========== ========== ==========
Common shares from above....................... 5,695,212 5,041,455 4,905,126
Assumed exercise of options (treasury stock
method)..................................... --- 244,354 342,597
---------- ---------- ----------
5,695,212 5,285,809 5,247,723
========== ========== ==========
NET (LOSS) INCOME PER SHARE - DILUTED.......... $ (1.50) $ 0.24 $ 0.19
========== ========== ==========
(LOSS) INCOME PER SHARE FROM
DISCONTINUED OPERATIONS - DILUTED........... $ (1.55) $ .03 $ ---
========== ========== ==========
</TABLE>
186
<PAGE> 1
Exhibit 21
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
State of Name under which subsidiary
Name Incorporation conducts business
- ---- ------------- ---------------------------
<S> <C> <C>
Fluxagamm, Inc. (a)* Delaware Fluxagamm, Inc.
Versar Risk Management, Inc.* New York Versar New York, Inc. in New
York; Versar Inc. elsewhere
GEOMET Technologies, Inc. Delaware GEOMET Technologies, Inc.
Versar Laboratories, Inc. (b)* Delaware Versar Laboratories, Inc.
Versar of Ohio, Inc. Ohio Versar of Ohio, Inc.
Science Management Corporation Delaware Science Management Corporation
The Greenwood Partnership, LTD Virginia The Greenwood Partnership, LTD
</TABLE>
(a) formerly Gammaflux, Inc.
(b) formerly Versar Consultants, Inc.
* Dormant Entities
187
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