<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1996.
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM ___________________ TO ________
Commission file number 0-20267
OMEGA ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 91-1499751
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
19805 NORTH CREEK PARKWAY, PO BOX 3005
BOTHELL, WASHINGTON 98041-3005
(Address of Principal Executive Offices) (Zip Code)
206-486-4800
(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to section 12(g) of the Act: COMMON STOCK
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. X Yes No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
AS OF JUNE 14, 1996, $112,497,893.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date. AS OF JUNE 14, 1996,
41,408,691 SHARES OF COMMON STOCK, $.0025 PAR VALUE PER SHARE.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS AND NOMINEES
Six directors, constituting the entire Board of Directors, are to be
elected to hold office until the next Annual Meeting of Shareholders and until
their respective successors have been elected and shall qualify. The current
Board of Directors are the individuals named below, except Sir Brian Wolfson,
who is being presented as a nominee for director at the next Annual Meeting.
All of the individuals named below are Board of Director nominees, except Mr.
O'Sullivan who has decided not to stand for re-election.
The following table sets forth information with respect to current
directors and nominees:
Name Age Principal Occupation Director
---- --- -------------------- Since
--------
Leo L. Azure, Jr. 57 Chairman of the Board of Directors 1990
Louis J. Tedesco 56 President and Chief Executive Officer 1995
of the Company
Edgar S. Brower 66 Chairman of the Board of Directors, 1995
President and Chief Executive Officer
of Pacific Scientific Company
Edward J. O'Sullivan 52 President of Pacific Centers, Inc. 1990
Douglas R. Rogers 67 Business Consultant 1995
Steve Sarich, Jr. 75 President of 321 Investment Company, 1991
C.S.S. Management Company and
Arctic Ventures
Sir Brian Wolfson 60 Chairman of Colorvision Plc and Global -
Health Alternatives
Mr. Azure has been Chairman of the Board of Directors of the Company since
its organization in September 1990 except from October 1995 through April 1996,
at which time he served as Chairman of the Executive Committee of the Board of
Directors. He served as Chief Executive Officer of the Company from September
1990 to June 1991 and between March 1992 and September 1993. Mr. Azure was
Chief Executive Officer and Chairman of the Board of Directors of Pacer Cats
Corporation (formerly, Pacer Corporation) from June 1982 to March 1992; and
during all or part of such period he also served as Chairman of the Board of
Directors of VoiceCom Systems, Inc. He was also a director of United Tote,
Inc., from 1988 to 1992 and a founder and director of Wall Data Incorporated
from November 1982 to 1986. Pacer Cats Corporation is a manufacturer of
electronic point of sale devices, which went public in 1985 and in 1988 was sold
to a subsidiary of Wembley Plc of Great Britain. VoiceCom Systems is an
international voice messaging company. United Tote, Inc. is a public company
that is a manufacturer of electronic gaming totalizers. Wall Data is a computer
software manufacturer. Mr. Azure is a member of several business and
professional associations, including the American Electronics Association in
which he has served as national director and as chairman of its Washington State
chapter.
Mr. Tedesco became President, Chief Executive Officer and a director of the
Company in October 1995. From May 1989 to October 1995, he was President and
Chief Executive Officer of Energy America Incorporated, an energy and
environmental services company. From April 1988 to April 1989, he was a
Director of Shielding Systems Corporation and President of its Ray Proof
operations, a manufacturer of engineered products for the electromagnetic
compatibility industry. From September 1985 to April 1988, he was President and
CEO of Dravo Engineering Companies Inc. and Corporate Senior Vice President and
Group Executive of Dravo Corporation,
1
<PAGE>
responsible for all engineering and construction functions. From August 1981 to
September 1985 he was with Fluor Corporation, becoming a Vice President and
General Manager, Fluor Engineers Inc.
Mr. Brower has been Chairman of the Board of Directors, President and Chief
Executive Officer of Pacific Scientific Company (NYSE:PSX) since he joined the
Company in 1985. Pacific Scientific designs, manufactures and markets
electrical and safety equipment. From 1977 to 1985 he was with Allied
Corporation where his last position was Corporate Group Vice President and
President of the Electronic Components Company. From 1972 to 1976 he was
Assistant Postmaster General during the Nixon and Ford Administrations. Prior
to that, he was President and Chief Executive Officer of Recognition Terminals,
Inc., a subsidiary of Irving, Texas-based Recognition Equipment Inc. Mr. Brower
has an Industrial Engineering degree from the University of Southern California
and is a California Registered Professional Engineer.
Mr. O'Sullivan became a director of the Company in November 1990. He has
been President of Pacific Center, Inc. since 1985. In 1978, he founded the
predecessor to Omega Services (formerly O'Sullivan Omega, Inc., "O'Sullivan"),
which assets were acquired by the Company in 1991, and was the predecessor's
President from 1978 to 1991 and was O'Sullivan's Chairman of the Board of
Directors from 1978 to 1995. Prior to the acquisition of O'Sullivan, the
predecessor spun off its non-petroleum related business assets to a new entity,
Shamrock Construction, Inc., which was subsequently sold by Mr. O'Sullivan. Mr.
O'Sullivan has served on the State of Washington Department of Ecology
Underground Storage Tank Advisory Committee and on the Executive Committee of
the Washington Chapter of the Associated General Contractors of America.
Mr. Rogers became a director of the Company in October 1995. Over the last
four years, he has been a business consultant. He was President and Chief
Executive Officer of ECOVA Corporation, a technology venture capital
corporation, from 1989 to 1991. For twenty-eight years prior to 1989, Mr.
Rogers was with Arthur Young & Company (now Ernst & Young) where he was
Managing Partner of both the Seattle and Anchorage offices and was also
responsible for the consulting practices in three other offices. He is a
certified public accountant (inactive) and a registered professional engineer.
Mr. Sarich became a director of the Company in 1991. He is President of
several companies, including the following: 321 Investment Company (since April
1973), Arctic Ventures (since April 1979) and C.S.S. Management Company (since
August 1979). 321 Investment Company is an investment company. Arctic
Ventures is in the commercial fishing business. C.S.S. Management Company holds
certain rights to technologies for extracting precious metals from arsenic ores,
and owns a gold and silver mining operation and mill in Baring, Washington. Mr.
Sarich is also on the board of directors of several companies, including Trace
Athletics, Flow Scan Instrument Company, Wall Data Incorporated, Life Medical
Technologies, CYCLOPPS (The Ozone Co.), Multiple Zones International, Racer Mate
and Back Technologies. He was a principal or on the Board of Directors of the
following companies: Costco, Physio Control, Intermec Corporation, and Pacer
Cats Corporation.
Sir Brian Wolfson has extensive and varied experience as a senior
executive in engineering and specialty leasing businesses in the United
States and international locations. He was Chairman of Wembley Plc from 1986
to 1996. Since 1996, he has been the Chairman of Colorvision Plc and Global
Health Alternatives. He also holds Board assignments with Kepner Tregoe,
New Jersey, since 1980 and Fruit of the Loom Inc., Chicago since 1992. From
1979 through 1980, he was the first non-North American World President of the
Young Presidents Organization. He received an honorary Doctorate of Business
Administration from John Moores University in 1989. A Founder Governor of
the Joseph H. Lauder Institute at the University of Pennsylvania, Sir Brian
Wolfson was knighted for services to the United Kingdom in 1990.
2
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
Name Age Position
---- --- --------
Leo L. Azure, Jr. 57 Chairman of the Board of Directors
Louis J. Tedesco 56 President and Chief Executive Officer
Jeffery B. Weinress 49 Executive Vice President
Dan E. Steigerwald 54 Chief Financial Officer
Theodore M. Gurr 51 President, Environmental Services Division
Roy V. Sutton 51 President, Petroleum Services Division
For the biographies of Messrs. Azure, Jr. and Tedesco, see "Directors."
Mr. Weinress joined the Company in January 1996 as Executive Vice President
and has over 20 years of experience in administration, financial management and
development of professional service companies. Prior to joining Omega, he was
Chief Financial Officer of Energy America from 1987 to 1995 and Chairman of ENV
America, its environmental service affiliate, from 1992 to 1995. His previous
experience includes serving as Managing Director for First Interstate
Cogeneration Capital Associates and Vice President of Bank of America. Mr.
Weinress received his BA in Economics from Dartmouth College, his MBA in finance
from Harvard Business School, his MA from Harvard University with additional
graduate work at Princeton University, University of Edinburgh and University of
California at Los Angeles.
Mr. Steigerwald joined the Company in November of 1994 as the Chief
Financial Officer. From 1992 through November of 1994 he was active as a private
investor. From 1978 to 1992 he served in various financial management positions
with Smith International, Inc. rising to Vice President and Chief Financial
Officer. Prior to 1978 he served as Director of Financial Planning at Rockwell
International Corporation; Corporate Controller at Hovermarine Corporation; and
Senior Accountant/Manager Consultant in Ernst & Young's Portland, Maine office.
Mr. Steigerwald is a CPA and earned a Masters of Business Administration degree
from the Amos Tuck School of Business at Dartmouth College and a Bachelor of
Science from Pennsylvania State University.
Mr. Gurr has over 25 years experience as a registered professional
geologist in Florida, Georgia, North Carolina and South Carolina. In 1983 he
founded and served as President of Gurr & Associates, Inc., an environmental
consulting firm, which subsequently merged with Omega in November 1994. Prior
to this, as a partner at Dames & Moore, an environmental consulting firm, he
opened and managed the Lakeland office for five years. He has also served as
the senior mines planner for Mobil in central Florida, and International
Minerals Corporation. He served as secretary of the Petroleum Efficiency Task
Force (PETF) selected by the governor and was selected to sit on the 1995
Florida petroleum UST Legislative Advisory Workgroup.
Mr. Sutton has 30 years experience in the petroleum equipment industry. He
worked nine years with Petroleum Engineering, Inc. as operations manager. He
acquired W.B. Goode Company, Inc. in 1977 and merged with Omega in September
1993. He is past president of The Petroleum Equipment Institute, the
international trade association representing petroleum equipment distributors,
manufacturers, and affiliates. He is the current president of the Virginia
Association of Petroleum Equipment Contractors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
3
<PAGE>
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by such persons.
Mr. Kravitz exercised employee stock options to purchase 40,399 shares of
the Company's Common Stock in April 1995 and filed the Report of Changes in
Ownership with the SEC in July 1995.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the compensation for
the fiscal years indicated of the Chief Executive Officers of the Company and
the four other most highly compensated executive officers of the Company as of
March 31, 1996 whose total salary and bonus for the year ended March 31, 1996
exceeded $100,000, for services in all capacities to the Company and its
subsidiaries or divisions during such fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------------------ -----------------
Name Other Securities
and Annual Underlying All Other
Principal Fiscal Salary Bonus Compensation Options/ Compensation
Position Year $ $ ($) (1) SARs (#) ($)
- ------------------------- ------- ------- ------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leo L. Azure, Jr. 1996 100,000 - 15,201(2) - -
Chairman of the Board of 1995 114,231 - - - -
Directors 1994 150,000 - - - -
Louis J. Tedesco(3) 1996 80,525 25,000 - 330,000 -
Chief Executive Officer
and President
David C. Kravitz 1996 140,000 - - - 170,967(4)
Former Chairman of the 1995 140,000 - - - -
Board, Chief Executive 1994 143,462 - - - 100,000(5)
Officer and President
Dan E. Steigerwald(6) 1996 137,877 10,000 - 150,000 -
Chief Financial Officer 1995 41,038 - - 125,000 -
Theodore M. Gurr(7) 1996 302,000 - - 108,000 -
President of Environmental 1995 100,667 - - 108,000 -
Services Division
Roy V. Sutton(8) 1996 225,921 - - 250,000 -
President of Petroleum 1995 225,922 - - - -
Services Division 1994 112,500 - - 250,000 -
</TABLE>
- -----------------------------
(1) The total amount of personal benefits paid to each named executive officer
is less than the lesser of (i) $50,000 or (ii) 10% of the total reported
salary and bonus for such individual for each such respective fiscal year,
except Mr. Azure in 1996.
(2) The Company pays for certain of Mr. Azure's auto expenses and life
insurance premiums.
4
<PAGE>
(3) Mr. Tedesco became Chief Executive Officer and President in October 1995.
Amounts exclude temporary living expenses paid by the Company.
(4) Mr. Kravitz became Chairman of the Board of Directors in October 1995 and
resigned in March 1996 from all positions with the Company. In accordance
with Mr. Kravitz's separation package, the Company paid him $140,000
severance and is providing health insurance benefits through March 31,
1997. The Company accelerated the vesting of 125,000 stock options under
the 1990 Stock Option Plan with an exercise price of $3.25. Mr. Kravitz is
vested in a total of 263,089 stock options which expire March 31, 1997.
Omega has conditionally agreed to forgive his $227,703 note and interest
payable to the Company over 10 years beginning March 31, 1996 and pay him
ten annual payments of $8,197.
(5) The Company reimbursed Mr. Kravitz $100,000 for relocation and other
expenses relative to the Company's request for Mr. Kravitz's relocation to
the Seattle metropolitan area.
(6) Mr. Steigerwald became the Chief Financial Officer in November 1994. In
1996, Mr. Steigerwald was granted 25,000 additional stock options and stock
options granted in 1995 were repriced from $5.8125 to $3.625. The table
excludes $35,754 for reimbursement of Mr. Steigerwald's relocation expenses
relative to the Company's request for Mr. Steigerwald's relocation to the
Seattle metropolitan area.
(7) Mr. Gurr joined the Company in November 1994 in connection with the
acquisition of Gurr & Associates, Inc. In 1996, Mr. Gurr's stock options
granted in 1995 were repriced from $5.81 to $3.625. Amounts exclude salary
and stock options for Mr. Gurr's spouse, a former employee of the Company.
(8) Mr. Sutton joined the Company in September 1993 in connection with the
acquisition of W. B. Goode Company, Inc. In 1996, Mr. Sutton's stock
options granted in 1994 were repriced from $9.5625 to $3.625.
5
<PAGE>
The following table provides certain information concerning grants of
options to purchase the Company's Common Stock made during the fiscal year ended
March 31, 1996 to the persons named in the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------------------------------
Number of POTENTIAL REALIZABLE
Securities VALUE OF ASSUMED
Underlying % of Total ANNUAL RATES OF
Options/ Options/SARs STOCK PRICE
SARs Granted to Exercise or APPRECIATION FOR
Granted Employees in Base Price Expiration OPTION TERM (1)
----------------------
Name (#)(2)(8) Fiscal Year ($/Sh) Date(3) 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leo L. Azure, Jr. - - - - - -
Louis J. Tedesco(4) 330,000 7% 3.59357 10/5/05 $745,792 $1,889,984
David C. Kravitz - - - - - -
Dan E. Steigerwald(5) 125,000 3.625 11/07/04 $261,230 $649,459
(4) 25,000 3.59357 10/13/05 56,499 143,181
-------- -------- ----------
150,000 3% $317,729 $792,640
Theodore M. Gurr(6) 108,000 2% 3.625 11/18/04 $228,419 $569,340
Roy V. Sutton(7) 250,000 5% 3.625 9/30/03 $449,126 $1,083,221
</TABLE>
- ---------------------------------
(1) The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. Actual gains realized, if any, on stock
option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. There
can be no assurance that the values shown in this table will be achieved.
(2) Options granted in 1996 were without SARs. Amounts include options granted
in prior fiscal years which were repriced during fiscal 1996.
(3) Stock option grants expire in ten years from date of grant.
(4) Represents an assumed market price per share of Common Stock of $5.854 at
5% and $9.321 at 10%.
(5) Represents an assumed market price per share of Common Stock of $5.715 at
5% and $8.821 at 10%.
(6) Represents an assumed market price per share of Common Stock of $5.740 at
5% and $8.897 at 10%.
(7) Represents an assumed market price per share of Common Stock of $5.422 at
5% and $7.958 at 10%.
(8) On May 16, 1996, the Company granted Mr. Tedesco 240,000 additional stock
options and Mr. Steigerwald 150,000 additional stock options, both with an
exercise price of $2.625 expiring on May 16, 2006. Additionally, on May
16, 1996, the Company replaced Messrs. Sutton and Gurr's stock options with
options at an exercise price of $2.625 expiring on May 16, 2006. Mr.
Sutton's new options were increased to 300,000, 200,000 of which are fully
vested with the remaining 100,000 vesting 25% annually over four years.
Mr. Gurr's new options are 25% vested with remaining balance vesting at 33%
annually over three years.
6
<PAGE>
The following table provides certain information concerning exercises of
options to purchase the Company's Common Stock in the fiscal year ended March
31, 1996, and unexercised options held as of March 31, 1996, by the persons
named in the Summary Compensation Table:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($) (1)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (# ) ($) Unexercisable Unexercisable
- ----------------------- ------------------ --------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Leo L. Azure, Jr. - - - -
Louis J. Tedesco - - 0 / 330,000 0 / 0
David C. Kravitz 40,399 80,626 263,089 / 0 0 / 0
Dan E. Steigerwald - - 31,250 / 118,750 0 / 0
Theodore M. Gurr - - 0 / 108,000 0 / 0
Roy V. Sutton - - 0 / 250,000 0 / 0
</TABLE>
(1) Based on a market price of $2.7188 per common share.
COMPENSATION OF DIRECTORS
The Company currently pays its outside directors $12,000 annually and
reimburses the directors for their travel expenses to the meetings. In fiscal
year 1996, Steve Sarich, Jr., Edward J. O'Sullivan, Edgar S. Brower and Douglas
R. Rogers were each granted ten-year non-qualified stock options for 50,000
shares at $3.6250, the fair market value of the Common Stock on that date,
vesting over four years.
EMPLOYMENT ARRANGEMENTS
Mr. Tedesco has an employment arrangement with the Company wherein if he is
terminated for other than cause, he will receive one year's salary which is
currently $190,000.
In connection with the acquisition of Gurr & Associates, Inc., Mr. Gurr has
an employment contract with the Company through November 1997. If his
employment is terminated for other than cause, Mr. Gurr would be entitled to his
salary through November 1997.
In connection with the acquisition of W.B. Goode Company, Inc., Mr. Sutton
has an employment contract with the Company through September 1996, which can be
renewed for successive one-year terms. If he is terminated for other than
cause, Mr. Sutton would be entitled to his salary through the end of the
contract term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors has established a Compensation Committee. During
the fiscal year ended March 31, 1996, the Compensation Committee of the Board of
Directors determined compensation for the executive officers of the Company.
The Compensation Committee currently consists of Mr. Edgar S. Bower, Chairman,
Mr. Leo L. Azure, Jr., Chairman of the Board of Directors and Mr. Edward J.
O'Sullivan. Mr. David C. Kravitz was a former member of the Board of Directors
and Chief Executive Officer and President of the
7
<PAGE>
Company. Mr. Edward J. O'Sullivan is a member of the Board of Directors and
former Chairman of the Board of Directors at Omega Services, a former
subsidiary of the Company. Ms. Sonja G. Decker, a former employee of the
Company, joined the Board of Directors in April 1995 and resigned in September
1995, and did not participate in the Compensation decisions for the last fiscal
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding ownership of
the Common Stock of the Company as of June 14, 1996 by (i) each person known by
the Company to be the beneficial owner of more than 5% of the outstanding Common
Stock of the Company, (ii) each director or nominee of the Company, (iii) the
Chief Executive Officer and each other executive officer of the Company as of
March 31, 1996 whose salary and bonus for the year ended March 31, 1996 exceeded
$100,000, and (iv) all executive officers and directors of the Company as a
group. Each person has sole investment and voting power with respect to the
shares indicated, subject to community property laws where applicable, except as
otherwise indicated below.
Amount of
Beneficial Percentage of
Name* Ownership (1) Shares
---- ------------- -------------
Leo L. Azure, Jr. 3,655,117 9%
Louis J. Tedesco - -
Edgar S. Brower - -
Steve Sarich, Jr. 843,568 2%
Edward J. O'Sullivan 200,000 **
Douglas R. Rogers - -
Dan E. Steigerwald 32,250 **
Theodore M. Gurr 2,023,199 5%
Roy V. Sutton 200,100 **
Sir Brian Wolfson - -
All officers and directors as a
group (10 persons) 6,954,234 17%
- ------------------
*The address of each of the directors or executive officers is c/o Omega
Environmental, Inc., 19805 North Creek Parkway, P.O. Box 3005, Bothell,
Washington 98041-3005.
** Percentage of shares is less than 1%.
(1) Including stock options exercisable on or within 60 days after June
14, 1996.
In addition, The Tail Wind Fund Ltd. owns 20 shares (100%) of the
outstanding Series A Convertible Redeemable Preferred Stock.
8
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with Mr. Kravitz's relocation to the greater Seattle area and
his exercise of warrants, the Company loaned him $220,000 in August 1993,
bearing interest at the rate of 6% per annum, payable annually. In 1996, as
part of Mr. Kravitz's severance package, the Company agreed to conditionally
forgive the loan and unpaid interest totaling $227,703 over ten years beginning
March 31, 1996.
In accordance with the Gurr & Associates, Inc. acquisition agreement, the
Company issued 1,204,949 common shares to Mr. Gurr in November, 1994 and
1,273,750 additional common shares in November, 1995 because the aggregate
market value of the Company's stock given as consideration at closing did not
exceed $10,000,000 for at least 30 consecutive trading days prior to November
18, 1995.
In fiscal 1995, the Company loaned Mr. Gurr $500,000, bearing interest at
8.5% per annum, payable annually and maturing in May 1996. The note receivable
is collateralized by 100,000 shares of the Company's Common Stock owned by Mr.
Gurr. Payment of the note and accrued interest was extended to November 1997.
As of March 31, 1995, the Company had a receivable from Mr. Sutton related
to the acquisition of W.B. Goode Company, Inc. ("Goode") for $1,274,298. In
April and May 1995, Mr. Sutton repaid this balance in full. Additionally, in
connection with the Goode acquisition agreement, the Company paid Mr. Sutton
$157,671 in cash because the aggregate market value of the Company's Common
Stock given as consideration at the closing was less than the amount guaranteed.
Mr. Sutton owns part of a business that supplies island forms to the
Company. Mr. Sutton is not involved in the day-to-day management of that
business and purchases made by the Company, which are minor, are at competitive
prices.
The Company leases warehouse and office facilities and an airplane from the
related parties below. Based on its research of the leasing markets, the
Company believes the terms of these leases are no less favorable than could be
obtained from unaffiliated third parties.
* Mr. O'Sullivan leases an office facility in Portland, Oregon to a
division of the Company through August 1997, for approximately $32,000
per year. In June 1996, Mr. O'Sullivan sold this office facility to
an unrelated third party.
* Mr. Sutton leases two office/warehouse facilities located in Richmond
and Roanoke, Virginia the Company through July 2000 and December 2001,
respectively, for approximately $96,000 per year.
* The Company leases an airplane from Mr. Gurr for approximately $63,000
per year. In July 1996, the Company canceled this lease with Mr.
Gurr.
* Beginning October 1995, Mr. Gurr leases an office facility in
Lakeland, Florida to the Company on a month-to-month basis. In 1996,
the Company paid Mr. Gurr approximately $152,000 for rental of this
facility. The Company is currently negotiating a long-term
arrangement for this facility.
9
<PAGE>
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.
Omega Environmental, Inc.
By: /s/ Dan E. Steigerwald
--------------------------
Chief Financial Officer
Date: July 26, 1996
