SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended July 4, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 0-18095
THE RANDERS GROUP INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 38-2788025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
570 Seminole Road
Norton Shores, Michigan 49444
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date.
Class Outstanding at July 31, 1998
------------------------------ ----------------------------
Common Stock, $.0001 par value 14,115,682 Actual
127,146,733 Pro forma
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THE RANDERS GROUP INCORPORATED
Consolidated Balance Sheet
(Unaudited)
Assets
July 4, April 4,
(In thousands) 1998 1998
- ---------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents (includes $9,717 and
$8,713 under repurchase agreement with
related party) $11,270 $ 9,763
Accounts receivable, less allowances of $949
and $760 13,630 14,304
Unbilled contract costs and fees 10,445 9,333
Prepaid income taxes 1,342 1,359
Prepaid expenses 560 373
------- -------
37,247 35,132
------- -------
Property, Plant, and Equipment, at Cost 15,955 15,716
Less: Accumulated depreciation and amortization 4,383 4,052
------- -------
11,572 11,664
------- -------
Other Assets 1,199 1,177
------- -------
Cost in Excess of Net Assets of Acquired Companies 44,901 45,220
------- -------
$94,919 $93,193
======= =======
2
<PAGE>
THE RANDERS GROUP INCORPORATED
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
July 4, April 4,
(In thousands except share amounts) 1998 1998
- --------------------------------------------------------------------------
Current Liabilities:
Notes payable and current maturities of
long-term obligations $ 185 $ 187
Accounts payable 4,985 3,809
Accrued payroll and employee benefits 2,519 3,254
Accrued income taxes 613 1,016
Other accrued expenses 980 725
Due to affiliated companies 1,008 319
------- -------
10,290 9,310
------- -------
Deferred Income Taxes 888 888
------- -------
Other Deferred Items 1,054 1,049
------- -------
Long-term Obligations 1,901 1,948
------- -------
Shareholders' Investment:
Common stock, $.0001 par value, 30,000,000
shares authorized; 127,146,733 pro forma
shares issued and outstanding 13 13
Capital in excess of par value 79,321 79,321
Retained earnings 1,452 664
------- -------
80,786 79,998
------- -------
$94,919 $93,193
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3
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THE RANDERS GROUP INCORPORATED
Consolidated Statement of Income
(Unaudited)
Three Months Ended
--------------------
July 4, June 28,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Revenues $ 20,083 $ 16,844
-------- --------
Costs and Operating Expenses:
Cost of revenues 15,054 12,352
Selling, general, and administrative expenses 3,589 2,921
-------- --------
18,643 15,273
-------- --------
Operating Income 1,440 1,571
Interest Income 125 21
Interest Expense (43) (24)
-------- --------
Income Before Provision for Income Taxes 1,522 1,568
Provision for Income Taxes 734 727
-------- --------
Net Income $ 788 $ 841
======== ========
Basic and Diluted Earnings per Share (Note 3) $ .01 $ .01
======== ========
Weighted Average Shares (Note 3):
Basic 127,147 120,787
======== ========
Diluted 127,404 120,820
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
THE RANDERS GROUP INCORPORATED
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
------------------
July 4, June 28,
(In thousands) 1998 1997
- --------------------------------------------------------------------------
Operating Activities:
Net income $ 788 $ 841
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 682 595
Provision for losses on accounts receivable 257 -
Other noncash items 5 22
Changes in current accounts, excluding the
effects of transfer of business from parent
company:
Accounts receivable 417 1,248
Unbilled contract costs and fees (1,112) (3,883)
Other current assets (203) (11)
Accounts payable 1,176 285
Other current liabilities (196) (746)
------- -------
Net cash provided by (used in) operating
activities 1,814 (1,649)
------- -------
Investing Activities:
Purchases of property, plant, and equipment (272) (421)
Proceeds from sale of property, plant, and
equipment 12 16
------- -------
Net cash used in investing activities (260) (405)
------- -------
Financing Activities:
Repayment of note payable (47) (44)
Net transfer from parent company - 2,327
------- -------
Net cash provided by (used in) financing
activities (47) 2,283
------- -------
Increase in Cash and Cash Equivalents 1,507 229
Cash and Cash Equivalents at Beginning of Period 9,763 1,737
------- -------
Cash and Cash Equivalents at End of Period $11,270 $ 1,966
======= =======
Noncash Activities:
Transfer of acquired business from parent company $ - $ 4,700
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
THE RANDERS GROUP INCORPORATED
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been prepared
by The Randers Group Incorporated (the Company) without audit and, in the
opinion of management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of the financial position at July 4, 1998, and
the results of operations and cash flows for the three-month periods ended July
4, 1998, and June 28, 1997. Interim results are not necessarily indicative of
results for a full year.
The consolidated balance sheet presented as of April 4, 1998, has been
derived from the consolidated financial statements that have been audited by the
Company's independent public accountants. The consolidated financial statements
and notes are presented as permitted by Form 10-Q and do not contain certain
information included in the annual financial statements and notes of the
Company. The consolidated financial statements and notes included herein should
be read in conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended April 4, 1998,
filed with the Securities and Exchange Commission.
2. Pending Common Stock Reverse Split
In January 1998, the Company's Board of Directors voted to effect a
one-for-five reverse stock split. The proposal is subject to approval by the
Company's shareholders. A preliminary proxy statement with respect to a special
shareholders' meeting that is expected to be held to approve the reverse stock
split has been filed with the Securities and Exchange Commission (SEC) and is
currently being reviewed by the SEC's staff. Pro forma common shares outstanding
as of July 4, 1998, on a restated basis to reflect the reverse stock split,
would have been 25,429,347 shares. The following table presents other selected
financial data on a restated basis to reflect the reverse stock split.
Three Months Ended
------------------
July 4, June 28,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Basic and Diluted Earnings per Share $ .03 $ .03
Weighted Average Shares:
Basic 25,429 24,157
Diluted 25,481 24,164
6
<PAGE>
THE RANDERS GROUP INCORPORATED
3. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
Three Months Ended
--------------------
July 4, June 28,
(In thousands except per share amounts) 1998 1997
- --------------------------------------------------------------------------
Basic
Net Income $ 788 $ 841
-------- --------
Shares Issuable in Connection with the
Acquisition of The Killam Group 113,031 113,031
Randers' Weighted Average Shares Outstanding
From May 12, 1997, Date of Acquisition by
Thermo TerraTech Inc. 14,116 7,756
-------- --------
Pro Forma Weighted Average Shares 127,147 120,787
-------- --------
Basic Earnings per Share $ .01 $ .01
======== ========
Diluted
Net Income $ 788 $ 841
-------- --------
Pro Forma Weighted Average Shares 127,147 120,787
Effect of Stock Options 257 33
-------- --------
Pro Forma Weighted Average Shares, as Adjusted 127,404 120,820
-------- --------
Diluted Earnings per Share $ .01 $ .01
======== ========
The computation of diluted earnings per share excludes the effect of
assuming the exercise of certain outstanding stock options because the effect
would be antidilutive. As of July 4, 1998, there were 6,985,000 shares of such
options outstanding, with exercise prices ranging from $.65 to $.88 per share.
4. Comprehensive Income
During the first quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This
pronouncement sets forth requirements for disclosure of the Company's
comprehensive income and accumulated other comprehensive income. In general,
comprehensive income combines net income and "other comprehensive income," which
represents certain items reported as components of shareholders' investment. The
Company has no such items and accordingly, its comprehensive income is equal to
its net income for all periods presented.
7
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects," "seeks,"
"estimates," and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements, including those detailed under the heading "Forward-looking
Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended April 4, 1998, filed with the Securities and Exchange
Commission.
Overview
The Company provides comprehensive engineering and outsourcing services in
such areas as water and wastewater treatment, highway and bridge projects,
process engineering, construction management, and inspection and operational
services.
In May 1997, Thermo TerraTech Inc. purchased a controlling interest in The
Randers Group Incorporated (Randers) a provider of design, engineering, project
management, and construction services for industrial clients in the
manufacturing, pharmaceutical, and chemical-processing industries. Subsequently,
Thermo TerraTech entered into a definitive agreement to transfer its wholly
owned engineering and consulting businesses (known as The Killam Group) to
Randers in exchange for additional shares of Randers' common stock. As a result
of these transactions, the Killam Group is deemed to be the "accounting
acquiror" and historical results for Randers have been restated to solely
reflect the financial information of The Killam Group for periods prior to May
12, 1997, and to reflect the combined results of The Killam Group and Randers
(collectively, the Company) from May 12, 1997, the date on which Thermo
TerraTech became the majority-owner of Randers. The Company's Killam Associates,
Inc. subsidiary provides environmental consulting and engineering services and
specializes in wastewater treatment and water resources management. The
Company's BACKillam subsidiary provides both private- and public-sector clients
with a range of consulting services that address transportation planning and
design. In November 1996, Thermo TerraTech acquired Carlan Consulting Group,
Inc., a provider of transportation and environmental consulting and professional
engineering and architectural services, and subsequently transferred it to the
Company. The Company has proposed changing its name to The Randers Killam Group
Inc., subject to shareholder approval.
8
<PAGE>
THE RANDERS GROUP INCORPORATED
Results of Operations
First Quarter Fiscal 1999 Compared With First Quarter Fiscal 1998
Revenues increased 19% to $20,083,000 in the first quarter of fiscal 1999
from $16,844,000 in the first quarter of fiscal 1998, primarily due to the
inclusion of revenues from Randers for the full quarter in fiscal 1999, which
resulted in a $3,478,000 increase in revenues. Randers was acquired effective
May 1997 for accounting purposes.
The gross profit margin decreased to 25% in the first quarter of fiscal 1999
from 27% in the first quarter of fiscal 1998, primarily due to a change in sales
mix to lower-margin construction-management contracts from higher-margin design
contracts.
Selling, general, and administrative expenses as a percentage of revenues
increased to 18% in the first quarter of fiscal 1999 from 17% in the first
quarter of fiscal 1998, primarily due to the inclusion of Randers in May 1997,
which has higher expenses as a percentage of revenues.
Interest income increased to $125,000 in the first quarter of fiscal 1999
from $21,000 in the first quarter of fiscal 1998, primarily due to higher
average cash balances.
The effective tax rates were 48% and 46% in the first quarter of fiscal 1999
and 1998, respectively. The effective tax rates exceeded the statutory federal
income tax rate primarily due to nondeductible amortization of cost in excess of
net assets of acquired companies and the impact of state income taxes. The tax
rate increased in the first quarter of fiscal 1999 primarily due to an increase
in nondeductible expenses.
The Company is currently assessing the potential impact of the year 2000 on
the processing of date-sensitive information by the Company's computerized
information systems as well as products purchased by the Company. The Company
believes that its internal information systems are either year 2000 compliant or
will be so prior to the year 2000 without incurring material costs. There can be
no assurance, however, that the Company will not experience unexpected costs and
delays in achieving year 2000 compliance for its internal information systems,
which could result in a material adverse effect on the Company's future results
of operations.
The Company is presently assessing whether its key suppliers are adequately
addressing the year 2000 issue and the effect this might have on the Company.
The Company has not completed its analysis and is unable to conclude at this
time that the year 2000 issue as it relates to products purchased from key
suppliers is not reasonably likely to have a material adverse effect on the
Company's future results of operations.
9
<PAGE>
Liquidity and Capital Resources
Consolidated working capital was $26,957,000 at July 4, 1998, compared with
$25,822,000 at April 4, 1998. Included in working capital are cash and cash
equivalents of $11,270,000 at July 4, 1998, compared with $9,763,000 at April 4,
1998. During the first quarter of fiscal 1999, $1,814,000 of cash was provided
by operating activities. During this period, $1,176,000 of cash was provided by
an increase in accounts payable, which was primarily due to increased
subcontract work at Randers, as well as the timing of payments. This source of
cash was offset in part by an increase of $1,112,000 in unbilled contract costs
and fees. This increase was due to the timing of billings and, to a lesser
extent, costs incurred for providing construction personnel under a New England
pipeline project at Killam Associates for which work began during the first
quarter of fiscal 1999.
The Company's investing activities in the first quarter of fiscal 1999
primarily consisted of capital additions. The Company expended $272,000 for
purchases of property, plant, and equipment in the first quarter of fiscal 1999.
The Company expects to expend approximately $1,300,000 for purchases of
property, plant, and equipment during the remainder of fiscal 1999.
In the first quarter of fiscal 1999, the Company's financing activities used
cash of $47,000 for the repayment of a note payable.
The Company expects to have positive cash flow from its existing operations.
Although the Company does not presently intend to actively seek to acquire
additional businesses in the near future, it may acquire one or more
complimentary businesses if they are presented to the Company on terms the
Company believes to be attractive. Such acquisitions may require significant
amounts of cash. The Company expects that it will finance any such acquisitions
through a combination of internal funds, and/or short-term borrowings from
Thermo TerraTech or Thermo Electron Corporation, although it has no agreement
with these companies to ensure that funds will be available on acceptable terms,
or at all. The Company believes that its existing resources are sufficient to
meet the capital requirements of its existing businesses for the foreseeable
future.
PART II - OTHER INFORMATION
Item 6 - Exhibits
See Exhibit Index on the page immediately preceding exhibits.
10
<PAGE>
THE RANDERS GROUP INCORPORATED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized as of the 6th day of August 1998.
THE RANDERS GROUP INCORPORATED
Paul F. Kelleher
----------------------------
Paul F. Kelleher
Chief Accounting Officer
John N. Hatsopoulos
----------------------------
John N. Hatsopoulos
Chief Financial Officer and
Senior Vice President
11
<PAGE>
THE RANDERS GROUP INCORPORATED
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ---------------------------------------------------------------------------
10.1 Deferred Compensation Agreement dated September 16, 1986,
between Elson T. Killam Associates Inc. and Emil C. Herkert.
10.2 Addendum dated 1990, to Deferred Compensation Agreement dated
September 16, 1986, between Elson T. Killam Associates Inc.
and Emil C. Herkert.
10.3 Amendment No. 1, dated April 27, 1990, to Deferred
Compensation Agreement dated September 16, 1986, between
Elson T. Killam Associates Inc. and Emil C. Herkert.
27 Financial Data Schedule.
12
<PAGE>
EXHIBIT 10.1
DEFERRED COMPENSATION AGREEMENT
AGREEMENT made as of the 16th day of September, 1986, between Elson T.
Killam Associates, a New Jersey corporation with offices at 27 Bleeker Street,
Millburn, New Jersey, (hereinafter referred to as the "Company") and EMIL C.
HERKERT, residing at 12 Druetzler Court, Whippany, New Jersey, (hereinafter
referred to as "Employee").
WHEREAS, the Employee is employed by the Company to serve as an officer
pursuant to the terms and conditions of a certain Employment Agreement dated as
at September 10, 1986.
WHEREAS, in consideration of anticipated services to be rendered by the
Employee, the Company desires to provide the Employee with additional
compensation as provided below;
NOW, THEREFORE, it is mutually agreed by the Employee and the Company as
follows:
1. DEFINITIONS.
For purposes of this Agreement the words and/or phrases below shall have
the following meaning:
(a) "Deferred Compensation Account" shall mean the account established and
maintained by the Company for the Employee to which Company contributions
hereunder, and earnings and appreciation thereon, are credited, and to which
expenses and depreciation are charged.
(b) "Disability" shall mean if the Company finds, on the basis of medical
evidence satisfactory to the Company, that continuously for at least six months,
the Employee has been unable to perform his duties as an employee of the Company
as a result of bodily injury or disease.
(c) "Full Time Basis" shall mean employment with the Company in excess of
1000 hours or service (as defined in the Company's Internal Revenue Code Section
401(k) Thrift and Savings Plan in effect as of September 16, 1986.
(d) "Normal Retirement Age" shall mean the date the Employee attains the
age of 60 years.
(e) "Post Acquisition Month of Service" shall mean a month, commencing
September 1986 during which the Employee is employed by the Company for at least
one hour.
2. DEFERRED COMPENSATION AMOUNT.
(a) Normal Retirement Benefit. Commencing with the first day of the month
next succeeding the date upon which the Employee attains normal retirement age,
the Company shall pay the Employee the amount in his Deferred Compensation
Account in one of the following optional forms:
(i) One lump sum payment in cash, or
(ii) Purchase of a 15 year sum certain annuity, payable in 180 equal
monthly installments, provided, however, that such annuity shall
not be in a form which will provide for payment over a period
extending beyond either the life expectancy of the employee (or
the life expectancy of the employee and his spouse).
The election of the form of benefit provided for hereunder shall he made
in writing at least 90 days prior to the date on which the Employee's first
retirement benefit payments become due, or with the consent of the Company at
any time prior to the date at which the first retirement benefit payment becomes
due. If the Employee dies prior to electing a payment option, the Company, after
consultation with the spouse or other beneficiary, and a legal representative of
the Estate of the Employee, shall in it's sole and actual discretion, make such
designation in writing within nine months of the Employee's death.
(b) Deferred Retirement Benefit.
In the event that the Employee remains in the employ of the Company on a
full time basis beyond his normal retirement age, the Company shall continue to
make contributions to the Deferred Compensation Account as provided in Paragraph
4(a). The Company shall pay to the Employee, or his spouse, the amount in his
Deferred Compensation Account in one of the optional forms described above at
Paragraph 2(a), commencing on the first day of the month next succeeding the
date upon which the Employee retires.
(c) Pre Retirement Benefit. In the event that employment of the Employee
with the Company is terminated prior to his attaining the normal retirement age
for any reason, other than disability or death, the Company shall immediately
cease making contributions to the Deferred Compensation Account. The Deferred
Compensation Account, however, shall continue to be credited with earnings and
appreciation, and be charged with expenses and depreciation, as the case may be,
until the date the Employee would have attained his normal retirement age if he
had remained in the employ of the Company. The Company shall pay to the
Employee, or his spouse, the amount in his Deferred Compensation Account in one
of the optional forms described above at Paragraph 2(a), commencing on the first
day of the month next succeeding the date on which the Employee would have
reached normal retirement age.
3. DISABILITY OR DEATH.
(a) Amount of Benefit. If the Employee's employment is terminated because
of the disability or death of the Employee before he has retired (whether normal
retirement or deferred retirement) or if the employment of the Employee has been
terminated prior to his attaining normal retirement age and he later becomes
disabled or dies, the Company shall pay to the Employee (in the event of his
disability), or his spouse, (in the event of his death), the amount in his
Deferred Compensation Account as of the date of such disability or death. The
Company shall pay to the employee, or his spouse, the amount in his Deferred
Compensation Account in one of the optional forms described above in Paragraph
2(a), commencing on the first day of the month next succeeding such disability
or death, as the case may be.
(b) Death After Commencement of Benefit. If the employee shall elect to
receive an annuity pursuant to Paragraph 2(a)(ii) and shall die after payments
thereon have commenced, but before a total of 180 monthly payments (or such
lesser amount as provided in the annuity) are made by Company, the remaining
payments should be made to his spouse.
(c) Death of a Spouse. If both the Employee and his spouse should die
before a total of 180 monthly payments (or such lesser amount as provided in the
annuity) are made by the Company, the remaining payments shall be paid per
stirpes to the issue of the Employee who survive both the Employee and his
spouse. If no such issue survives both the Employee and his spouse, payment
shall be made to the Company.
(d) Incapacity of Employee or Other Beneficiary. If any person to whom any
payment is due under this Agreement is legally adjudicated as being under a
disability preventing such person from acting on his or her own behalf, any
payment due (unless a prior claim therefor shall have been made by a duly
appointed guardian, committee, or other legal representative) may be paid, in
the Company's discretion, to such person with whom such person resides for such
person's use and benefit, and the receipt by such person or such person's
guardian or such other person shall be a complete discharge of the Company's
liability under this Agreement to the extent of such payment.
4. DEFERRED COMPENSATION ACCOUNT.
(a) Contributions. Commencing October 1, 1986 and on the first day of
October of each year thereafter during the continuance of the Employees full
time Employment with the Company, the Company shall contribute Twenty Thousand
($20,000.00) Dollars per annum to the Deferred Compensation Account for the
purpose of funding the Employee's retirement benefit provided for hereunder.
(b) Investment Authority. Funds so contributed to the Deferred
Compensation Account shall be invested in certificates of deposit, mutual funds,
annuity contracts, stocks, bonds, or any other assets as may be selected by the
Company in its sole discretion. In the exercise of the foregoing discretionary
investment powers, the Company may engage at its expense investment counsel,
and, if it so desires may delegate to such counsel full or limited authority to
select the assets in which the funds are to be invested.
(c) Investment Ownership. Title to and beneficial ownership of any assets
contributed and allocated to the Deferred Compensation Account hereunder, shall
at all times remain the Companys', and the Employee, and his spouse, as the case
may be, shall not have any proprietary interest whatsoever in any specific
assets hereunder.
(d) Investment Gains and Losses. The Employee, on behalf of himself, his
spouse and his issue, however, assumes all risk in connection with any decrease
in value of the Deferred Compensation Account and will benefit from any increase
in value of the Deferred Compensation Account.
5. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Employee, his heirs, executors, administrators and legal representatives, and
the Company, its successors and assigns.
6. NO ASSIGNMENT BY EMPLOYEE.
The rights of the Employee or his spouse under this Agreement may not
assigned, transferred, pledged or encumbered except by will or by the laws of
intestate distribution.
7. AMENDMENT OF AGREEMENT.
This Agreement may not be altered, changed, amended or terminated except
by written agreement signed by the Employee and the Company.
8. NO TRUST.
Nothing contained in this Agreement, nor any action taken pursuant to or
in furtherance of the provisions of this Agreement shall create or be construed
to create a trust of any kind, or a fiduciary relationship between the Company
and the Employee or between the Company and any other person entitled to
payments under this Agreement.
9. JOINT AND SEVERAL LIABILITY.
The Company, Duncan, Lagnese and Associates, Inc., and Engineering,
Technology and Knowledge Corp., shall be jointly and severally liable for the
payment of any benefits provided for hereunder.
10. COMPLIANCE WITH CODE, ETC.
It is intended and understood by the parties hereto that this Agreement
complies with the provisions of the Internal Revenue Code and Regulations in
effect at the time of its execution. If, at a later date, the laws of the United
States or of the State of New Jersey are construed in such a way as to make this
Agreement void and of no effect, then this Agreement will be given effect in
such manner as will carry out the purposes and intentions of the parties.
11. SEVERABILITY.
If this Agreement shall ever be interpreted by the Internal Revenue
Service as ineffective with regard to deferral of the Employee's income, and
such interpretation shall become final and unappealable, then only those amounts
in the account which would be treated as taxable income by the Internal Revenue
Service at the time of such final interpretation will be paid over to the
Employee. All other assets in the account at the time of such final
interpretation will be distributed to the Employee according to Paragraph 2,
above.
12. EFFECT ON OTHER AGREEMENTS.
Nothing in this Agreement shall prevent the Employee from receiving, in
addition to any amounts he may be entitled to receive under this Agreement, any
amounts that may be distributable to him at any time under any employment
agreement, pension plan, profit sharing plan, or other incentive plan or similar
plan of the Company now in effect or which may hereafter be adopted.
13. GOVERNING LAW.
This Agreement has been made in the State of New Jersey and shall be
interpreted in accordance with and governed by the laws of this State.
14. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement
shall be settled by arbitration in accordance with the rules of the American
Arbitration Association. The arbitration award shall be final and binding and
judgment upon the award rendered in such arbitration may be entered in any court
having jurisdiction thereof. All costs arising out of such arbitration shall be
borne by the party prevailing in any such arbitration.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on
its behalf by its representatives and the Employee has signed this Agreement all
as of the day and year first above written.
ATTEST: ELSON T. KILLAM ASSOICATES, INC.
By: /s/ Emil C. Herkert
WITNESS:
/s/ Emil C. Herkert
Emil C. Herkert
LIMITED TO PARAGRAPH 9
DUNCAN, LAGNESE AND ASSOCIATES, INC.
By: [signature illegible]
ENGINEERING, TECHNOLOGY & KNOWLEDGE, CORP.
By: [signature illegible]
EXHIBIT 10.2
ADDENDUM TO DEFERRED COMPENSATION AGREEMENT
BETWEEN
ELSON T. KILLAM ASSOCIATES, INC.
a New Jersey Corporation
(the "Company")
and
EMIL C. HERKERT
(the "Employee")
THIS ADDENDUM, dated , 1990, shall constitute a part of and shall amend
the Deferred Compensation Agreement (the "Agreement") dated September 16, 1986
by and between the Company and Employee. In the event of any inconsistencies
between the terms of this Addendum and the terms of the Agreement, the parties
agree that the terms of this Addendum shall prevail. The parties hereby agree to
the following provisions:
1. Paragraphs 2, 3, 4 and 11 of the Agreement are deleted in their
entirety.
2. A new Paragraph 2 is added to the Agreement as follows:
2. DEFERRED COMPENSATION PAYMENTS
(a) The Company shall pay the Employee a single lump sun payment on
or before June 15, 1990 equal to the sum of $100,626.38 plus an additional
gross-up amount to compensate for the Federal and State income tax
liability of the Employee attributable to such payment. The total payment
shall be calculated as follows:
$__________ / (1- Tax Rate), where Tax Rate is equal to the sum of
the highest marginal Federal and New Jersey income tax rate
percentages applicable to married individuals at the time of payment.
(b) The Company shall also make a lump sum payment to the Employee on
October 15, 1990 and on each October 15 thereafter during the term of
employment of the Employee. Such payment shall be an amount equal to the
sum of $20,000 plus an additional gross-up amount to compensate for the
Federal and State income tax liability of the Employee attributable to
such payment. The total annual payment shall be calculated as follows:
$20,000 / (1- Tax Rate), where Tax Rate is equal to the sum of the
highest marginal Federal and New Jersey income tax rate percentages
applicable to married individuals at the time of payment.
(c) Payments by the Company shall be subject to the applicable
withholding requirements of Federal and state laws and regulations.
3. A new paragraph 3 is added to the Agreement as follows:
3. PAYMENTS IN EVENT OF TERMINATION OF EMPLOYMENT.
(a) In the event that the Employee's employment with the Company is
terminated by reason of his death or Disability or is terminated for any
other reason, then within thirty days of such termination the Company
shall pay Employee (or to his personal representative or guardian) an
amount equal to the annual payment provided for under paragraph 2(b)
above, multiplied by a factor, the numerator of which shall be the number
of days between the previous October 1 and the date of termination, and
the denominator of which shall be 365.
4. All other terms and conditions of the Deferred Compensation Agreement
shall remain in full force and effect, which, by the execution of this Addendum,
the parties hereby confirm and ratify.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on
its behalf by its representatives and the Employee has signed this Agreement all
as of the day and year written above.
ATTEST: ELSON T. KILLIAM
ASSOCIATES, INC
By: /s/ Frank Piedelievre
WITNESS:
/s/ Emil C. Herkert
Emil C. Herkert
EXHIBIT 10.3
AMENDMENT #1 TO DEFERRED COMPENSATION PLAN
FOR
EMIL C. HERKERT
This amendment, dated April 27, 1990 establishes the appreciation of the
Deferred Compensation Plan contributions from the beginning of the Plan and
continuing into the future in the absence of the investment of the funds.
The funds established and contributed to by the company in yearly amounts will
be deemed to have appreciated at a rate equal to the prime rate of interest as
determined in the Wall Street Journal for the first business day of each month,
which amount shall be compounded on a monthly basis from its inception in
September 1986 and continue as long as the funds have not otherwise been
invested.
Agreed to this 27th day of April, 1990.
Frank Piedelievre Emil C. Herkert
/s/ Frank Piedelievre /s/ Emil C. Herkert
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 4, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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