0000819977-95-000011.txt : 19950811 0000819977-95-000011.hdr.sgml : 19950811 ACCESSION NUMBER: 0000819977-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950804 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMCON CENTRAL INDEX KEY: 0000819977 STANDARD INDUSTRIAL CLASSIFICATION: 8711 IRS NUMBER: 941738964 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16225 FILM NUMBER: 95558980 BUSINESS ADDRESS: STREET 1: 400 S EL CAMINO REAL STE 1200 CITY: SAN MATEO STATE: CA ZIP: 94402 BUSINESS PHONE: 4153751522 MAIL ADDRESS: STREET 1: P O BOX 349014 CITY: SACRAMENTO STATE: CA ZIP: 95834-9014 FORMER COMPANY: FORMER CONFORMED NAME: EMCON ASSOCIATES /CA/ DATE OF NAME CHANGE: 19910611 10-Q 1 1995 2ND QUARTER FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended Commission file number June 30, 1995 0-16225 EMCON ------------------------------------------------------ (Exact name of Registrant as specified in its charter) California 94-1738964 - ------------------------------------ ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 South El Camino Real, Suite 1200 San Mateo, California 94402 - ------------------------------------ --------------- (Zip Code) (415) 375-1522 ----------------------------- Registrant's telephone number, including area code 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 --- --- 8,245,126 shares of Common Stock Issued and Outstanding as of July 31, 1995. 1 EMCON FORM 10-Q QUARTERLY REPORT TABLE OF CONTENTS Page FACING SHEET..................................................................1 TABLE OF CONTENTS.............................................................2 PART I Financial Information ITEM 1 Financial Statements Consolidated Balance Sheets - June 30, 1995 and December 31, 1994............................3 Consolidated Statements of Income - Three months and six months ended June 30, 1995 and 1994.........................................4 Consolidated Statements of Cash Flows - Six months ended June 30, 1995 and 1994........................5 Notes to Consolidated Financial Statements.....................6 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.......................8 PART II Other Information..................................................10 ITEM 4 Submission of Matters to a Vote of Security Holders................10 SIGNATURES...................................................................12 INDEX TO EXHIBITS............................................................13 2 EMCON CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------- June 30, December 31, 1995 1994 (In thousands, except share amounts) (Unaudited) (Audited) - -------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents .......................... $ 3,808 $ 5,152 Marketable securities .............................. 2,017 2,436 Accounts receivable, net of allowance for doubtful accounts of $1,125 and $975 at June 30, 1995 and December 31, 1994, respectively ................. 37,980 38,323 Prepaid expenses and other current assets .......... 3,406 3,253 --------- --------- Total Current Assets ............................ 47,211 49,164 Net property and equipment, at cost ................ 18,105 18,651 Intangible assets, net of amortization ............. 8,866 9,202 Other assets ....................................... 4,092 3,810 --------- --------- Total Assets .................................... $ 78,274 $ 80,827 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable ................................... $ 5,213 $ 8,846 Accrued payroll and related benefits ............... 5,287 5,580 Other accrued liabilities .......................... 2,099 1,908 Non-current obligations due within one year ........ 167 248 --------- --------- Total Current Liabilities ....................... 12,766 16,582 Non-current obligations ............................ 1,135 1,186 Commitments and contingencies ...................... -- -- Shareholders' Equity: Preferred stock, no par value, 5,000,000 shares authorized; no shares issued or outstanding ..................................... -- -- Common stock, no par value, 15,000,000 shares authorized; 8,245,126 and 8,186,279 shares issued and outstanding at June 30, 1995 and December 31, 1994, respectively ................. 41,142 40,958 Retained earnings .................................. 23,240 22,132 Unrealized losses on marketable securities ......... (9) (31) --------- --------- Total Shareholders' Equity ...................... 64,373 63,059 --------- --------- Total Liabilities and Shareholders' Equity ...... $ 78,274 $ 80,827 ========= =========
See accompanying notes 3 EMCON CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
- ----------------------------------------------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, (In thousands, ------------------ --------------------- except per share amounts) 1995 1994 1995 1994 - ----------------------------------------------------------------------------------------------------------- Gross revenue ..................................... $31,116 $ 30,028 $ 61,485 $ 51,740 Outside services, at cost ......................... 4,663 4,610 8,756 7,580 -------- -------- -------- -------- Net revenue .................................... 26,453 25,418 52,729 44,160 Costs and expenses: Direct expenses ................................ 10,050 10,006 20,036 17,076 Indirect expenses .............................. 15,418 14,983 31,180 26,506 -------- -------- -------- -------- Income from operations ...................... 958 429 1,513 578 Interest income, net .............................. 36 85 95 197 Equity in loss of affiliates ...................... (5) -- (25) -- -------- -------- -------- -------- Income before provision for income taxes .......... 1,016 514 1,583 775 Provision for income taxes ........................ 305 144 475 217 -------- -------- -------- -------- Net income ........................................ $ 711 $ 370 $ 1,108 $ 558 ======== ======== ======== ======== Income per share .................................. $ 0.09 $ 0.05 $ 0.14 $ 0.08 ======== ======== ======== ========
See accompanying notes 4 EMCON CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
- -------------------------------------------------------------------------------- Six months ended June 30, Increase (decrease) in cash and cash equivalents -------------------- (in thousands) 1995 1994 - -------------------------------------------------------------------------------- Cash flow from operating activities: Net income .......................................... $ 1,108 $ 558 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization ..................... 2,562 1,978 Loss on sale/disposal of property and equipment ................................... 56 68 Increase in salary continuation plan .............. 35 47 Changes in operating assets and liabilities: Accounts receivable ......................... 343 1,985 Prepaid expenses and other current assets ..................................... (153) (517) Other assets ................................ (288) 200 Accounts payable ............................ (3,633) (50) Accrued payroll and related benefits ........ (293) (501) Other accrued liabilities ................... 21 (537) - -------------------------------------------------------------------------------- Net cash provided by (used for) operating activities . (242) 3,231 - ------------------------------------------------------------------------------- Cash flow from investing activities: Additions to property and equipment ................. (1,830) (3,905) Purchases of available for sale securities .......... (28) (3,500) Maturities of available for sale securities ......... 469 6,301 Acquisitions, net of cash acquired ................. -- 1,148 Proceeds from sale of property and equipment ........ 52 138 - -------------------------------------------------------------------------------- Net cash provided by (used for) investing activities (1,337) 182 - -------------------------------------------------------------------------------- Cash flow from financing activities: Payment of current and noncurrent obligations ....... (51) (6,530) Issuance of common stock for cash ................... 286 478 Repurchase of common stock .......................... -- (423) - -------------------------------------------------------------------------------- Net cash provided by (used for) financing activities 235 (6,475) - -------------------------------------------------------------------------------- Decrease in cash and cash equivalents .................. (1,344) (3,062) Cash and cash equivalents, beginning of year ........... 5,152 10,578 - -------------------------------------------------------------------------------- Cash and cash equivalents, end of period ............... $ 3,808 $ 7,516 - --------------------------------------------------------------------------------
See accompanying notes 5 EMCON NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany accounts and transactions. While the financial information is unaudited, the statements in this report reflect all adjustments, which are normal and recurring, that are necessary for a fair presentation of the results of operations for the interim periods covered and of the financial condition of the Company at the dates of the balance sheets. The operating results for the interim periods presented are not necessarily indicative of performance for the entire year. These financial statements and notes should be read in conjunction with the Company's consolidated financial statements for the fiscal year ended December 31, 1994. 2. Restructuring Charges In December 1994, as a result of changes in senior management, the Company's Board of Directors approved a corporate restructuring plan which included the write off of employment contracts with no current or future value, termination of personnel, and the elimination or abandonment of excess and underperforming assets and facilities. During the six months ended June 30, 1995, $502,000 of cash charges related to the restructuring were incurred and charged against the established reserve. At June 30, 1995, $287,000 of accrued restructuring costs remained and were included in other accrued liabilities. To-date, $894,000 of restructuring charges have been incurred. 3. Effective April 1, 1994, the Company acquired all of the capital stock of Wehran Envirotech, Inc. ("Wehran"), an environmental consulting company headquartered in Middletown, New York. 6 The following summarizes the unaudited pro forma net revenue, net income, and income per share for the combined company for the six month period ended June 30, 1995 and 1994 had the acquisition occurred at the beginning of the period presented. (unaudited) Six months ended June 30, ------------------- (in thousands) 1995 1994 - -------------------------------------------------------------------------------- Net revenue.......................................... $52,729 $48,928 Net income (loss).................................... 1,108 (597) Income (loss) per share.............................. $ 0.14 $ (0.07) - -------------------------------------------------------------------------------- The above proforma results of operations do not purport to reflect the actual results of operations had the Company actually acquired Wehran as of the beginning of the period presented. 4. Litigation As a professional services firm engaged in environmental-related matters the Company encounters potential liability, including claims for significant environmental damage in the normal course of business. The Company is party to lawsuits and is aware of potential exposure related to certain claims, but in the opinion of management the resolution of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows. 5. Income Per Share Income per share is based on the weighted average number of common and dilutive common - equivalent shares outstanding using the modified treasury stock method for the three months and six months ended June 30, 1995 and 1994. 6. Other In 1994, the Company converted to a fifty-two/fifty-three week fiscal year which will result in a fifty-two week year in 1995. The Company's year end falls on the Friday closest to the last day of the calendar year. The Company also follows a five-four-four week quarterly cycle. For convenience, the accompanying financial statements have been shown as ending on the last day of the calendar period. 7 EMCON ITEM 2. Management's Discussion and Analysis of Financial Condition and Results Of Operations. RESULTS OF OPERATIONS Current Year-to-Date versus Prior Year-to-Date. Net revenue for the first six months of 1995 totaled $52,729,000, a 19% increase from the $44,160,000 for the same period of 1994. The increase in net revenue is due in part to the inclusion of Wehran for all of the first six months of 1995 as compared to only the second quarter of 1994 following its acquisition in April of that year (Wehran contributed net revenue of $5,471,000 in the quarter ended March 31, 1995.) The increase in net revenue was also partly attributable to improvement in the Company's consulting operations in the Southeast and California markets as well as to increased revenues from the expanded operations of the laboratory division in Florida and Southern California. Direct expenses totaled $20,036,000 for the first six months of 1995, a 17% increase from the $17,076,000 during the same period in 1994. Direct expenses include compensation for billable hours for technical and professional staff and other project related costs charged to the client. The increase in direct expenses is primarily due to the acquisition of Wehran in April 1994 (Wehran incurred direct expenses of $1,980,000 in the quarter ended March 31, 1995), and to a lesser extent, to the improved utilization of billable labor in the consulting operations and the expansion of the laboratory division's operations in Florida and Southern California. Direct expenses as a percentage of net revenue decreased to 38% from 39% during the first six months of 1995 and 1994, respectively. Indirect expenses for the first six months of 1995 were $31,180,000, an 18% increase over $26,506,000 for the same period in 1994. Indirect expenses include nonbillable hours for professional and technical staff and general and administrative expenses such as rent, bonuses, benefits, insurance, legal and depreciation. Indirect expenses as a percent of net revenue decreased to 59% from 60% during the first six months of 1995 and 1994, respectively. The improvement was principally due to improved utilization of technical and professional staff as well as cost containment and restructuring measures put in place during the fourth quarter of 1994. Income from operations for the first six months of 1995 was $1,513,000, a 162% increase compared to $578,000 for the same period in 1994. The company recorded interest income, net of interest expense of $95,000 and $197,000 for the first six months of 1995 and 1994, respectively. The decrease was due to a decrease in the average invested cash during the period. 8 Quarter Ended June 30, 1995 and 1994. For the quarter ending June 30, 1995, net revenue totaled $26,453,000, a 4% increase from net revenue of $25,418,000 in the second quarter of 1994. The increase in net revenue was partly attributable to improvements in the Company's consulting operations in the Southeast and California markets offset in part by softness in the Midwest and Northeast operations. Net revenue was also positively impacted by the expansion of the laboratory division's operations in Florida and Southern California. Direct expenses for the quarter ended June 30, 1995 were $10,050,000 versus $10,006,000 in the same quarter last year. Direct expenses as a percent of net revenue decreased to 38% from 39% for the quarters ended June 30, 1995 and 1994, respectively. Indirect expenses for quarters ended June 30, 1995 and 1994, respectively, were $15,418,000, a 3% increase over $14,983,000 for the same quarter last year. Due to the increase in net revenue and somewhat improved utilization of technical and professional staff, indirect expenses, as a percent of net revenue decreased to 58% from 59% for the quarter ended June 30, 1995 and 1994, respectively. The Company recorded interest income, net of interest expense of $36,000 for the second quarter of 1995, compared with $85,000 in the same quarter last year. The decrease was primarily due to a decrease in cash available for investment. In July 1995, the Company announced that additional cost cutting measures will be undertaken over the balance of the year including closure of two underperforming offices and reductions of staff of approximately 5%. The Company anticipates that although the above actions may have a negative impact on revenue and expenses in the near term, such actions are an important step in returning the Company to a more acceptable level of profitability. LIQUIDITY AND CAPITAL RESOURCES During the first six months of 1995, the Company financed its operations principally from cash and marketable securities on hand, cash generated by operations and the issuance of common stock under the Company's Employee Stock Purchase Plan, and from the return on investment on its cash, cash equivalents and marketable securities. Net cash used by operations during the six months ended June 30, 1995 was $242,000. The Company at June 30, 1995 had cash, cash equivalents, and marketable securities of $5,825,000. The Company invested $1,830,000 for the purchase of property and equipment in the first six months of 1995, primarily for computers, and communication systems and to a lesser extent, for laboratory equipment. The Company believes that cash generated from operations and its available bank line of $10,000,000, together with existing cash and marketable securities, will be sufficient to meet the Company's capital needs for at least the next twelve months. 9 EMCON PART II OTHER INFORMATION Items 1. - 3. Not applicable. Item 4. Submission of Matters to a Vote of Security-Holders On May 24, 1995, the Annual Meeting of the Shareholders of EMCON was held at 3:00 p.m., local time, at 1921 Ringwood Avenue, San Jose, California. Of the 8,245,126 shares outstanding as of the record date, 7,199,135 shares were present or represented by proxies at the meeting. Election of Directors. An election of directors was held with the following individuals being elected to the Board of Directors: For Withheld --------- -------- Thorley D. Briggs 7,023,474 175,661 Eugene M. Herson 7,149,281 49,854 Stephen W. Vincent 7,127,751 71,384 H. Lee Fortier 7,136,807 62,328 Donald R. Andres 7,045,784 153,351 Douglas P. Crane 7,150,245 48,890 Jack M. Marzluft 7,145,359 53,776 Donald R. Kerstetter 7,166,718 32,417 Peter Vardy 7,165,775 33,360 Amendment to Employee Stock Purchase Plan. The shareholders voted to amend the EMCON Employee Stock Purchase Plan (the "Plan") to increase the number of shares of Common Stock authorized for issuance thereunder by 350,000. The proposal received 6,301,755 affirmative votes, 509,103 negative votes, 39,377 abstentions and 348,900 broker non-votes. Ratification of Appointment of Independent Auditors. The shareholders voted to ratify the appointment of Ernst & Young LLP as EMCON's independent auditors for the fiscal year ending December 31, 1995. The proposal received 7,120,642 affirmative votes, 44,529 negative votes, 33,877 abstentions, and 87 broker non-votes. Item 5. Other Information In July 1995, Mr. Thorley D. Briggs retired as Chairman of the Board and as a director of the Company. At the July 28, 1995 meeting of the Board of Directors, Mr. Douglas P. Crane was unanimously elected to serve as the new Chairman of the Board. 10 Item 6. Exhibits and Reports (a) Exhibits - See Index to Exhibits on Page 13. (b) Reports on Form 8-K - No reports on Form 8-K were filed with the Securities and Exchange Commission during the quarter ended June 30, 1995. 11 EMCON 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. Date: August 3, 1995 EMCON R. Michael Momboisse ----------------------- R. MICHAEL MOMBOISSE Chief Financial Officer and Vice President - Legal (Duly authorized and principal financial and accounting officer) 12 EMCON INDEX TO EXHIBITS Sequentially Exhibit Numbered Number Page - ------ ------------ 2.1 Agreement and Plan of Reorganization dated effective * April 1, 1994, among Wehran Envirotech, Inc., Registrant and certain other related parties, incorporated by reference from Exhibit 2.1 of the Current Report on Form 8-K dated May 26, 1994. 2.2 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiary, Wehran/Emcon Northeast, Inc. into Registrant effective December 20, 1994, incorporated by reference from Exhibit 2.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "1994 10-K"). 2.3 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiary, Wehran Engineering Corporation, into Registrant effective December 23, 1994, incorporated by reference from Exhibit 2.3 of the 1994 10-K. 2.4 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiary, EA Associates, into Registrant effective December 31, 1994, incorporated by reference from Exhibit 2.4 of the 1994 10-K. 2.5 Certificate of Ownership reflecting the merger of * Registrant's wholly-owned subsidiaries, EMCON Northwest, Inc., EMCON Southeast, Inc., EMCON Baker-Shiflett, Inc., and Eldredge Engineering Associates, Inc., into Registrant effective December 31, 1994, incorporated by reference from Exhibit 2.5 of the 1994 10-K. 13 EMCON (Index to Exhibit Continued) Seqentially Exhibit Numbered Number Page - ------ ------------ 10.1 Standard Commercial Lease dated August 1, 1985, * between Archer Business Complex and Registrant (the "ABC Lease"), incorporated by reference from Exhibit 10.5 of the Registrant's Registration Statement on Form S-1 (File No. 33-16337) effective September 16, 1987 (the "Form S-1 Registration Statement"). 10.2 Amendment to the ABC Lease between Archer Business * Complex and Registrant dated September 30, 1992, incorporated by reference from Exhibit 10.10 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1992 (the "1992 10-K"). 10.3 Second and Third Amendments to the ABC Lease between * Archer Business Complex and Registrant dated October 4, 1993 and January 1, 1994, respectively, incorporated by reference from Exhibit 10.2 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (the "1993 10-K"). 10.4 Standard Commercial Lease dated August 1, 1986, * between the Royal Partnership and Sweet-Edwards & Associates, Inc. (since merged into the Registrant) incorporated by reference from Exhibit 10.9 of the Form S-1 Registration Statement. 10.5 EMCON 1986 Incentive Stock Option Plan and *(1) Amendment, incorporated by reference from Exhibit 10.15 of the Form S-1 Registration Statement. 10.6 Form of Agreement pursuant to Salary Continuation *(1) Plan, incorporated by reference from Exhibit 10.17 of the Form S-1 Registration Statement. 10.7 Schedule identifying Agreements pursuant to Salary *(1) Continuation Plan between Registrant and certain employees incorporated by reference from Exhibit 10.7 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "1994 10-K"). 14 EMCON (Index to Exhibit Continued) Sequentially Exhibit Numbered Number Page - ------ ------------- 10.8 Form of Indemnity Agreement between the Registrant * and each of the Registrant's officers and directors, incorporated by reference from Exhibit 10.20 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1988 (the "1988 10-K"). 10.9 EMCON 1988 Stock Option Plan, amended by shareholder *(1) approval on May 25, 1994, including form of Nonqualified Stock Option Agreement (Outside Directors), incorporated by reference from Exhibit 10.9 of Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994 (the "June 30, 1994 10-Q"). 10.10 EMCON Employee Stock Purchase Plan amended by 18(1) shareholder approval on May 24, 1995 as part of this submission as document type EX-10.10. 10.11 EMCON Restricted Stock Plan incorporated by *(1) reference from Exhibit 10.15 of the Annual Report on Form 10-K for the fiscal year ended December 31, 1990. 10.12 EMCON Deferred Compensation Plan effective January *(1) 1, 1994 incorporated by reference from Exhibit 10.12 of the 1993 10-K. 10.13 Trust Agreement for the EMCON Deferred Compensation *(1) Plan and Salary Continuation Plan Trust dated February 29, 1994 between Registrant and Wells Fargo Bank, N.A. incorporated by reference from Exhibit 10.13 of the 1993 10-K. 10.14 Credit Agreement between The Bank of California, * N.A. and Registrant dated September 20, 1991 with Amendment dated May 31, 1992 incorporated by reference from Exhibits 10.11 and 10.12 of the 1992 10-K. 15 EMCON (Index to Exhibit Continued) Sequentially Exhibit Numbered Number Page - ------ ------------- 10.15 Second Amendment to Credit Agreement between The * Bank of California, N.A. and Registrant dated effective May 31, 1992 incorporated by reference from Exhibit 10.13 of Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1993. 10.16 Third Amendment to Credit Agreement between The Bank * of California, N.A. and Registrant dated effective June 2, 1994, incorporated by reference from Exhibit 10.16 of the June 30, 1994 10-Q. 10.17 Fourth Amendment to Credit Agreement between the 32 Bank of California, N.A. and Registrant dated effective May 31, 1995, as part of this submission as document type EX-10.17. 10.18 Letter Agreement between Thorley D. Briggs and *(1) Registrant dated September 15, 1993 incorporated by reference from Exhibit 10.18 of Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 (the "September 30, 1993 10-Q"). 10.19 Letter of Agreement between H. Lee Fortier and *(1) Registrant dated March 14, 1994 incorporated by reference from Exhibit 10.21 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994. 10.20 Letter of Agreement between James M. Felker and *(1) Registrant dated December 7, 1992, incorporated by reference from Exhibit 10.16 of the 1992 10-K. 10.21 Letter Agreement between Thorley D. Briggs and *(1) Registrant dated July 19, 1994, incorporated by reference from Exhibit 10.20 of the 1994 10-K. 10.22 Letter Agreement between James M. Felker and *(1) Registrant dated October 31, 1994, incorporated by reference from Exhibit 10.21 of the 1994 10-K. 16 EMCON (Index to Exhibit Continued) Sequentially Exhibit Numbered Number Page - ------ ------------ 11.1 Computation of Income Per Share. Incorporated as 35 part of this submission as document type Ex-11.1. 27 Financial Data Schedule. Incorporated as part of 36 this submission as document type EX-27. - ------------ * Incorporated by reference (1) Management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 14(c) of the instructions to Form 10-K. 17 EX-10.10 2 EMPLOYEE STOCK PURCHASE PLAN EMCON EMPLOYEE STOCK PURCHASE PLAN (As Amended February 24, 1995) 1. Purpose. The EMCON Employee Stock Purchase Plan (the "Plan") is established to provide eligible employees of EMCON and any current or future parent or subsidiary corporations of EMCON which the Board of Directors of EMCON (the "Board") determines should be included in the Plan (collectively referred to as the "Company"), with an opportunity to acquire a proprietary interest in the Company by the purchase of common stock of EMCON. (EMCON and any parent or subsidiary corporation designated by the Board as a participating corporation shall be individually referred to herein as a "Participating Company." For purposes of the Plan, a parent corporation and a subsidiary corporation shall be as defined in sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the "Code").) It is intended that the Plan shall qualify as an "employee stock purchase plan" under section 423 of the Code (including any future amendments or replacements of such section), and the Plan shall be so construed. Any term not expressly defined in the Plan but defined for purposes of section 423 of the Code shall have the same definition herein. An employee participating in the Plan (a "Participant") may withdraw such Participant's accumulated payroll deductions and direct cash payments (if any) therein at any time during an Offering Period (as defined below). Accordingly, each Participant is, in effect, granted an option pursuant to the Plan (a "Purchase Right") which may or may not be exercised at the end of an Offering Period and which is intended to qualify as an option described in section 423 of the Code. 2. Administration. The Plan shall be administered by the Board and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board. Any subsequent references to the Board shall also mean the committee if a committee has been appointed. The Board shall have the sole and absolute discretion to determine from time to time what parent corporations and/or subsidiary corporations shall be Participating Companies. All questions of interpretation of the Plan or of any Purchase Right shall be determined by the Board and shall be final and binding upon all persons having an interest in the Plan and/or any Purchase Right. Subject to the provisions of the Plan, the Board shall determine all of the relevant terms and conditions of Purchase Rights granted pursuant to the Plan; provided, however, that all Participants granted Purchase Rights pursuant to the Plan shall have the same rights and privileges within the meaning of section 423(b)(5) of the Code. All expenses incurred in connection with the administration of the Plan shall be paid by the Company. 18 3. Share Reserve. The maximum number of shares which may be issued under the Plan shall be Seven Hundred Twenty-five Thousand (725,000) shares of EMCON's authorized but unissued common stock (the "Shares"). In the event that any Purchase Right for any reason expires or is cancelled or terminated, the Shares allocable to the unexercised portion of such Purchase Right may again be subjected to a Purchase Right. 4. Eligibility. Any employee of a Participating Company is eligible to participate in the Plan except the following: (a) employees who have not completed six (6) months of continuous employment with the Company as of the commencement of an Offering Period; (b) employees who are customarily employed by the Company for less than twenty (20) hours a week; (c) employees whose customary employment with the Company is for not more than five (5) months in any calendar year; and (d) employees who own or hold options to purchase or who, as a result of participation in the Plan, would own or hold options to purchase, stock of the Company possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company within the meaning of section 423(b)(3) of the Code. 5. Offering Dates. (a) Offering Periods. Except as otherwise set forth below, the Plan shall be implemented by sequential offerings (individually an "Offering") of twelve (12) months duration (an "Offering Period"). An Offering Period shall commence on the first day of February and end on the last day of January of the following year. The first Offering Period shall commence on February 1, 1990. A new employee who first becomes eligible to participate in the Plan after the beginning of an Offering Period may commence participation in such Offering Period on the following May 1, August 1, or November 1 that first occurs after becoming eligible. A new employee who elects not to participate in the Plan on the first entry date of the first Offering Period after becoming eligible shall not be eligible to participate in such Offering Period but may participate in any subsequent Offering provided such employee is still eligible to participate in the Plan as of the commencement of such subsequent Offering. Notwithstanding the foregoing, the Board may establish a different term for one or more Offerings and/or different commencing and/or ending dates for such Offerings. 19 The first day of an Offering Period shall be the "Offering Date" for such Offering Period. In the event the first and/or last day of an Offering Period is not a business day, the Company shall specify the business day that will be deemed the first or last day, as the case may be, of the Offering Period. (b) Purchase Periods. Each Offering Period shall consist of two (2) consecutive purchase periods of six (6) months duration (the "Purchase Period"), except for a new employee who commences participation in the Plan on either a May 1 or November 1, in which case such employee's initial Purchase Period shall be three (3) months duration. The last day of each Purchase Period shall be the "Purchase Date" for such Purchase Period. Therefore, for Offering Periods commencing on the first day of February, the first Purchase Date shall be the last day of July of the same year and the second Purchase Date shall be the last day of January of the following year. Notwithstanding the foregoing, the Board may establish a different term for one or more Purchase Periods and/or different commencing dates and/or Purchase Dates for such Purchase Periods. In the event the first and/or last day of a Purchase Period is not a business day, the Company shall specify the business day that will be deemed the first or last day, as the case may be, of the Purchase Period. (c) Governmental Approval; Shareholder Approval. Notwithstanding any other provision of the Plan to the contrary, any Purchase Right granted pursuant to the Plan shall be subject to (i) obtaining all necessary governmental approvals and/or qualifications of the sale and/or issuance of the Purchase Rights and/or the Shares, and (ii) obtaining shareholder approval of the Plan. Notwithstanding the foregoing, shareholder approval shall not be necessary in order to grant any Purchase Right granted on the Offering Date of the Plan's initial Offering Period; provided, however, that the exercise of any such Purchase Right shall be subject to obtaining shareholder approval of the Plan. 6. Participation in the Plan. (a) Initial Participation. An eligible employee shall become a participant in the Plan (a "Participant") on the first Offering Date after satisfying the eligibility requirements and delivering to the Company not later than the close of business on the last business day before such Offering Date (the "Subscription Date") an enrollment agreement indicating the employee's election to participate in the Plan and authorizing payroll deductions. An eligible employee who does not deliver an enrollment agreement to the Company on or before the Subscription Date shall not participate in the Plan for that Offering Period or for any subsequent Offering Period unless such eligible employee subsequently enrolls in the Plan by complying with the provisions of paragraph 4 and by filing an enrollment agreement with the Company on or before the Subscription Date for such subsequent Offering Period. The Company may, from time to time, change the Subscription Date as deemed advisable by the Company in its sole discretion for proper administration of the Plan. 20 (b) Continued Participation. Participation in the Plan shall continue until (i) the Participant terminates employment as provided in paragraph 12, or (ii) the end of the Offering Period during which the Participant ceases to be eligible as provided in paragraph 4. At the end of an Offering Period, each Participant in such terminating Offering Period shall automatically participate in the first subsequent Offering Period according to the same elections contained in the Participant's enrollment agreement effective for the Offering Period which has just ended, provided such Participant is still eligible to participate in the Plan as provided in paragraph 4. However, a Participant may file an enrollment agreement with respect to such subsequent Offering Period if the Participant desires to change any of the Participant's elections contained in the Participant's then effective enrollment agreement. 7. Right to Purchase Shares. Except as set forth below, during an Offering Period each Participant in such Offering Period shall have a Purchase Right consisting of the right to purchase that number of whole Shares arrived at by dividing Twenty-Five Thousand Dollars ($25,000) by the fair market value of the Shares on the Offering Date of such Offering Period. 8. Purchase Price. The purchase price at which Shares may be acquired at the end of an Offering pursuant to the exercise of all or any portion of a Purchase Right granted under the Plan (the "Offering Exercise Price") shall be set by the Board; provided, however, that the purchase price shall not be less than eighty-five percent (85%) of the lesser of (a) the fair market value of the Shares on the Offering Date of such Offering Period, or (b) the fair market value of the Shares at the time of exercise of all or any portion of the Purchase Right. Unless otherwise provided by the Board prior to the commencement of an Offering Period, the Offering Exercise Price shall be eighty-five percent (85%) of the lesser of (a) the fair market value of the Shares on the Offering Date of such Offering Period or (b) the fair market value of the Shares at the time of exercise of all or any portion of the Purchase Right. The fair market value of the Shares on the Offering Date or on the date of exercise will be the closing price quoted on the National Association of Securities Dealers Automated Quotations System on such date. 9. Payment of Purchase Price. Shares which are acquired pursuant to the exercise of all or any portion of a Purchase Right for a given Offering Period may be paid for only by means of payroll deductions from the Participant's Compensation accumulated during the Offering Period. For purposes of the Plan, a Participant's "Compensation" with respect to an Offering shall include base pay and overtime. Except as set forth below, the amount of Compensation to be withheld from a Participant's Compensation during each pay period shall be determined by the Participant's enrollment agreement. 21 (a) Election to Change Amount of Withholding. During an Offer may not elect to increase or decrease the amount withheld from his or her Compensation. At the beginning of each subsequent Offering Period, a Participant may change the amount of Compensation to be withheld by delivering to the Company not later than the Subscription Date a new enrollment agreement. (b) Limitations on Payroll Withholding. The amount of payroll withholding with respect to the Plan for any Participant during any pay period shall be at least one percent (1%) but shall not exceed five percent (5%) of the Participant's Compensation for such pay period. Amounts shall be withheld in whole percentages only and shall be reduced by any amounts contributed by the Participant and applied to the purchase of Company stock pursuant to any other employee stock purchase plan qualifying under section 423 of the Code. (c) Payroll Withholding. Payroll deductions shall commence on the first payday following the Offering Date and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in the Plan. (d) Participant Accounts. Individual accounts shall be maintained for each Participant. All payroll deductions from a Participant's Compensation shall be credited to such account and shall be deposited with the general funds of the Company. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose. (e) No Interest Paid. Interest shall not be paid on sums withheld from a Participant's Compensation. (f) Exercise of Purchase Right. On each Purchase Date of an Offering Period, each Participant whose participation in the Offering has not terminated on or before such last day shall automatically acquire pursuant to the exercise of the Participant's Purchase Right the number of whole Shares arrived at by dividing the total amount of the Participant's accumulated payroll deductions for the Purchase Period by the Offering Exercise Price; provided, however, in no event shall the number of Shares purchased by the Participant exceed the number of Shares subject to the Participant's Purchase Right. No Shares shall be purchased on behalf of a Participant whose participation in the Offering or the Plan has terminated on or before the date of such exercise. (g) Return of Cash Balance. Any cash balance remaining in the Participant's account shall be refunded to the Participant as soon as practical after the Purchase Date. In the event the cash to be returned to a Participant pursuant to the preceding sentence is an amount less than the amount necessary to purchase a whole Share, the Company may establish procedures whereby such cash is maintained in the Participant's account and applied toward the purchase of Shares in the subsequent Purchase or Offering Period. 22 (h) Withholding. At the time the Purchase Right is exercised, in whole or in part, or at the time some or all of the Shares are disposed of, the Participant shall make adequate provision for foreign, federal and state tax withholding obligations of the Company, if any, which arise upon exercise of the Purchase Right and/or upon disposition of Shares. The Company may, but shall not be obligated to, withhold from the Participant's Compensation the amount necessary to meet such withholding obligations. (i) Company Established Procedures. The Company may, from time to time, establish or change (i) a minimum required withholding amount for participation in any Offering, (ii) limitations on the frequency and/or number of changes in the amount withheld during an Offering, (iii) an exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, (iv) payroll withholding in excess of or less than the amount designated by a Participant in order to adjust for delays or mistakes in the Company's processing of enrollment agreements, (v) the date(s) and manner by which the fair market value of the Shares is determined for purposes of the administration of the Plan, and/or (vi) such other limitations or procedures as deemed advisable by the Company in the Company's sole discretion which are consistent with the Plan and section 423 of the Code. (j) Expiration of Purchase Right. Any portion of a Participant's Purchase Right remaining unexercised after the end of the Offering Period to which such Purchase Right relates shall expire immediately upon the end of such Offering Period. 10. Limitations on Purchase of Shares; Rights as a Shareholder. (a) Fair Market Value Limitation. Notwithstanding any other provision of the Plan, no Participant shall be entitled to purchase Shares under the Plan (or any other employee stock purchase plan within the meaning of section 423 of the Code which is sponsored by EMCON or a parent or subsidiary corporation of EMCON) at a rate which exceeds $25,000 in fair market value, determined as of the Offering Date for each Offering Period (or such other limit as may be imposed by the Code), for each calendar year in which the Participant participates in the Plan (or any other employee stock purchase plan within the meaning of section 423 of the Code which is sponsored by EMCON or a parent or subsidiary corporation of EMCON). 23 (b) Allocation of Shares. In the event the number of Shares which might be purchased by all Participants in the Plan exceeds the number of Shares available in the Plan, the Company shall make a pro rata allocation of the remaining Shares in as uniform a manner as shall be practicable and as the Company shall determine to be equitable. (c) Rights as a Shareholder and Employee. A Participant shall have no rights as a shareholder by virtue of the Participant's participation in the Plan until the date of the issuance of a stock certificate for the Shares being purchased pursuant to the exercise of the Participant's Purchase Right. No adjustment shall be made for cash dividends or distributions or other rights for which the record date is prior to the date such stock certificate is issued. Nothing herein shall confer upon a Participant any right to continue in the employ of the Company or interfere in any way with any right of the Company to terminate the Participant's employment at any time. 11. Withdrawal from the Plan. A Participant may withdraw from the Plan by signing a written notice of withdrawal on a form provided by the Company for such purpose and delivering such notice to the Company. Withdrawals made after a Purchase Date of an Offering Period shall not affect shares acquired by the Participant on a Purchase Date. In the event a Participant voluntarily elects to withdraw from the Plan, the Participant may not resume participation in the Plan during the same Offering Period, but may participate in any subsequent Offering under the Plan by again satisfying the requirements of paragraph 6. The Company may impose, from time to time, a requirement that the notice of withdrawal be on file with the Company for a reasonable period prior to the effectiveness of the Participant's withdrawal from the Plan. 12. Termination of Employment. Termination of a Participant's employment with the Company for any reason, including retirement or death or the failure of a Participant to remain an employee eligible to participate in the Plan, shall terminate the Participant's participation in the Plan immediately. A Participant whose participation has been so terminated may again become eligible to participate in the Plan by again satisfying the requirements of paragraphs 4 and 6. 13. Repayment of Payroll Deductions. In the event a Participant's interest in the Plan or any Offering therein is terminated for any reason, the balance held in the Participant's account shall be returned as soon as practical after such termination to the Participant (or, in the case of the Participant's death, to the Participant's legal representative) and all of the Participant's rights under the Plan shall terminate. Such account balance may not be applied to any other Offering under the Plan. No interest shall be paid on sums returned to a Participant pursuant to this paragraph 13. 24 14. Transfer of Control. A "Transfer of Control" shall be deemed to have occurred in the event any of the following occurs.with respect to the Control Company. For purposes of applying this paragraph 14, the "Control Company" shall mean the Participating Company whose stock is subject to the Purchase Right. (a) the direct or indirect sale or exchange by the shareholders of the Control Company of all or substantially all of the stock of the Control Company where the shareholders of the Control Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Control Company; (b) a merger in which the shareholders of the Control Company before such merger do not retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the Control Company; or (c) the sale, exchange, or transfer of all or substantially all of the Control Company's assets (other than a sale, exchange, or transfer to one (1) or more corporations where the shareholders of the Control Company before such sale, exchange, or transfer retain, directly or indirectly, at least a majority of the beneficial interest in the voting stock of the corporation(s) to which the assets were transferred). In the event of a Transfer of Control, the Board, in its sole discretion, shall either (i) provide that Purchase Rights granted under the Plan shall be fully exercisable to the extent of each Participant's account balance for the Offering Period as of a date prior to the Transfer of Control, as the Board so determines or (ii) arrange with the surviving, continuing, successor, or purchasing corporation, as the case may be, that such corporation assume the Company's rights and obligations under the Plan. All Purchase Rights shall terminate effective as of the date of the Transfer of Control to the extent that the Purchase Right is neither exercised as of the date of the Transfer of Control nor assumed by the surviving, continuing, successor, or purchasing corporation, as the case may be. 15. Capital Changes. In the event of changes in the common stock of the Company due to a stock split, reverse stock split, stock dividend, combination, reclassification, or like change in the Company's capitalization, or in the event of any merger, sale or other reorganization, appropriate adjustments shall be made by the Company in the Plan's share reserve, the number of Shares subject to a Purchase Right and in the purchase price per share. 16. Non-Transferability. A Purchase Right may not be transferred in any manner otherwise than by will or the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. 25 17. Reports. Each Participant who exercised all or part of the Participant's Purchase Right for a Purchase Period shall receive as soon as practical after the last day of such Purchase Period a report of such Participant's account setting forth the total payroll deductions accumulated, the number of Shares purchased and the remaining cash balance to be refunded or retained in the Participant's account pursuant to paragraph 9(g), if any. 18. Plan Term. This Plan shall continue until terminated by the Board or until all of the Shares reserved for issuance under the Plan have been issued. 19. Restriction on Issuance of Shares. The issuance of shares pursuant to the Purchase Right shall be subject to compliance with all applicable requirements of federal or state law with respect to such securities. The Purchase Right may not be exercised if the issuance of shares upon such exercise would constitute a violation of any applicable federal or state securities laws or other law or regulations. In addition, no Purchase Right may be exercised unless (i) a registration statement under the Securities Act of 1933, as amended, shall at the time of exercise of the Purchase Right be in effect with respect to the shares issuable upon exercise of the Purchase Right, or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Purchase Right may be issued in accordance with the terms of an applicable exemption from the registration requirements of said Act. As a condition to the exercise of the Purchase Right, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 20. Legends. The Company may at any time place legends or other identifying symbols referencing any applicable federal and/or state securities restrictions and any provision convenient in the administration of the Plan on some or all of the certificates representing shares of stock issued under the Plan. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to a Purchase Right in the possession of the Participant in order to effectuate the provisions of this paragraph. 21. Transfer Restrictions. The Company, in its absolute discretion, may impose such restrictions on the transferability of the shares purchasable upon the exercise of a Purchase Right as it deems appropriate and any such restriction shall be set forth in the respective enrollment agreement and may be referred to on the certificates evidencing such shares. The Company may require the employee to give the Company prompt notice of any disposition of shares of stock acquired by exercise of a Purchase Right within two years from the date of granting such Purchase Right or one year from the date of exercise of such Purchase Right. The Company may direct that the certificates evidencing shares acquired by exercise of a Purchase Right refer to such requirement to give prompt notice of disposition. 26 22. Amendment or Termination of the Plan. The Board may at any time amend or terminate the Plan, except that (i) such termination shall not affect Purchase Rights previously granted under the Plan except as permitted by the Plan, and (ii) no amendment may adversely affect a Purchase Right previously granted under the Plan (except to the extent permitted by the Plan or as may be necessary to qualify the Plan as an employee stock purchase plan pursuant to section 423 of the Code). In addition, an amendment to the Plan must be approved by the shareholders of the Company, within the meaning of section 423 of the Code, within twelve (12) months of the adoption of such amendment if such amendment would authorize the sale of more shares than are authorized for issuance under the Plan or would change the definition of the corporations that may be designated by the Board as a corporation the employees of which are eligible to participate in the Plan. Notwithstanding any other provision of the Plan to the contrary, the Board may at any time amend the Plan; provided, however, that if such amendment affects the rights and privileges of Purchase Rights to be offered under the Plan, each Participant with an outstanding Purchase Right shall have the right to exercise such outstanding Purchase Right on the effective date of the amendment and to participate in the Plan for the remaining term of such outstanding Purchase Right pursuant to the terms and conditions of the Plan as amended. If in accordance with the preceding sentence a Participant elects to exercise such outstanding Purchase Right and to commence participation in the Plan as amended on the effective date of such amendment, the Participant shall be deemed to have received a new Purchase Right on such effective date, and such effective date shall be deemed to be the Offering Date for such new Purchase Right. IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the foregoing EMCON Employee Stock Purchase Plan was duly adopted by the Board of Directors of the Company on November 15, 1989 and last amended on February 24, 1995. 27 Plan History ------------ November 15, 1989 Board of Directors adopted the Plan with a share reserve of 250,000 shares. May 30, 1990 The shareholders approved the Plan with a share reserve of 250,000 shares. August 6, 1991 The Board approved a 3-2 stock split of the Common Stock of the Company which increased the initial 250,000 share reserve to 375,000 shares. February 24, 1995 The Board amended the Plan to increase the share reserve by 350,000 shares from 375,000 shares to 725,000 shares. May 24, 1995 The shareholders approved the share reserve increase. 28 ENROLLMENT FORM EMCON EMPLOYEE STOCK PURCHASE PLAN As an employee of EMCON or one of its wholly owned subsidiaries, I hereby elect to participate in the Employee Stock Purchase Plan (the "Plan") of EMCON ("the "Company") and enroll to purchase shares of the Company's common stock (the "Shares") as determined in accordance with the terms of the Stock Purchase Plan. I hereby authorize payroll deductions in the amount of % (1% to 5%) of my base pay and any overtime from each paycheck throughout the "Offering Period" (as defined in the Plan) in accordance with the terms of the Plan. The amount deducted each pay period must be between 1% and 5% of base pay and any overtime and must be stated in whole percentages. I understand that these payroll deductions will be accumulated for the purchase of shares of common stock of the Company at the applicable purchase price determined in accordance with the Plan. I further understand that, except as otherwise set forth in the Plan, shares will be purchased for me automatically on the last day of each purchase period unless I withdraw from the Plan by giving written notice to the Company or unless I terminate employment or otherwise become ineligible to participate in the Plan. I understand that I will automatically participate in each subsequent Offering Period under the Plan until such time as I file with the Company a notice of withdrawal from the Plan or I terminate employment or otherwise become ineligible to participate in the Plan. Shares purchased for me under the Plan should be issued in the name set forth below. I understand that Shares may be issued either in my name alone or together with my spouse. If a spouse is listed, please indicate whether the Shares should be issued in joint tenancy or as community property. NAME: _________________________________________ ADDRESS: _______________________________________ _______________________________________ MY SOCIAL SECURITY NUMBER: _____________________ I am familiar with the terms and provisions of the Plan and hereby agree to participate in the Plan subject to all of its terms and provisions. I understand that the Board of Directors of the Company reserves the right to amend the Plan and my right to purchase stock under the Plan as may be necessary to qualify the 29 Plan as an employee stock purchase plan as defined in section 423 of the Internal Revenue Code of 1986, as amended. I understand that the effectiveness of this subscription agreement is dependent upon my eligibility to participate in the Plan. Date:___________________ Signature:___________________ 30 NOTICE OF WITHDRAWAL EMCON EMPLOYEE STOCK PURCHASE PLAN I hereby elect to withdraw from the current offering (the "Offering") to purchase the common stock of EMCON (the "Company") under the Employee Stock Purchase Plan (the "Plan"), and I request that all payroll deductions credited to my account under the Plan with respect to the Offering (if any), and not previously used to purchase shares of common stock of the Company under the Plan, be paid to me as soon as is practical. I understand that this Notice of Withdrawal automatically terminates my interest in the Offering. As to participation in future offerings of stock under the Plan, I elect as follows: ________ I elect to participate in future offerings under the Plan. I understand that by making the election set forth above I will automatically participate in each subsequent Offering under the Plan until such time as I file with the Company a notice of withdrawal from the Plan or any such subsequent offering on such form as may be established from time to time by the Company or I terminate employment or otherwise become ineligible to participate in the Plan. ________ I elect not to participate in future offering under the Plan. I understand that by making the election set forth above I terminate my interest in the Plan and that no further payroll deductions will be made unless I elect in accordance with the Plan to become a participant in another offering under the Plan. ________ I understand that if no election is made as to participation in future offerings under the Plan, I will be deemed to have elected to participate in such offerings. Date:_____________________ Signature:_____________________ 31 EX-10.17 3 FOURTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.17 THE BANK OF CALIFORNIA FOURTH AMENDMENT TO CREDIT AGREEMENT THIS FOURTH AMENDMENT ("Amendment") is made effective as of the 31st day of May, 1995, by and between EMCON, a California corporation ("Borrower") and THE BANK OF CALIFORNIA, N.A., a national banking association ("Bank"). RECITALS A. Borrower is currently indebted to Bank pursuant to the terms and conditions of that certain Credit Agreement dated September 20, 1991 as amended May 31, 1993 and June 2, 1994 (the "Agreement"); B. Borrower and Bank have agreed to amend the Agreement to reflect certain changes in the terms and conditions set forth therein. NOW, THEREFORE, the parties hereto agree as follows: 1. The definition of "Termination Date" appearing in Article One of the Agreement is hereby deleted in its entirety, and the following substituted therefor: "Termination Date' means the earlier of (a) the date Bank may terminate making Advances or extending credit pursuant to the rights of Bank under Article 7; or (b) May 31, 1996 for the Line of Credit." 2. Section 3.8 of the Agreement is hereby deleted in its entirety, and the following substituted therefor: "3.8 No Subsidiaries. Borrower is not a majority owner of or in a control relationship with any other business entity, except Columbia Analytical Services, Inc.; EMCON Alaska, Inc.; Monterey Landfill Gas Corporation; Yolo Landfill Gas Corporation; Aquila Construction Company; Wehran Construction, Inc.; Wehran Technological Services, Inc.; Wehran-New York, Inc.; WECON Services Corporation; Wehran Puerto Rico, the share of each of which are owned 100% by Borrower, and ET Environmental Corp., the shares of which are owned 50% by Borrower (collectively, the `Subsidiaries'). 32 CONDITIONS PRECEDENT Required Delivery. The obligation of Bank to extend any Amendment is subject to the condition that, on or before the date of any Advance and or extension of credit, there shall have been delivered to Bank, each in form and substance satisfactory to Bank, and duly executed as required by Bank: (a) The Amendment; (b) Any and all Loan Documents Bank may require to evidence any Lien granted to Bank in connection with this Amendment; (c) Payment in full no later than June 15, 1995, a non-refundable fee of $15,000.00 for this Agreement; (d) Such other documents, instruments or agreements Bank may require to evidence the Amendment. GENERAL AMENDMENT PROVISIONS A. Except as specifically provided herein, all terms and conditions of the Agreement remain in full force and effect, without waiver or modification. All terms defined in the Agreement shall have the same meaning when used in this Amendment, and this Amendment and the Agreement shall be read together as one document. Where any provisions of the Agreement amended by this Amendment appear in a promissory note tied to the Agreement, the same provisions in said promissory note shall be deemed likewise amended. B. Borrower hereby confirms all representations and warranties contained in the Agreement and reaffirms all covenants set forth therein. Further, Borrower certifies that, as of the date of this Amendment, there exists no Event of Default as defined in the Agreement, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to become effective as of the date and year first written above. THE BANK OF CALIFORNIA, N.A. By: /s/ Marie Wiseman --------------------------- Marie Wiseman Vice President EMCON, a California corporation By: /s/ Eugene M. Herson --------------------------- Eugene M. Herson President By: /s/ R. Michael Momboisse --------------------------- R. Michael Momboisse Chief Financial Officer 33 THE BANK OF CALIFORNIA EXHIBIT "A" TO ADDENDUM TO CREDIT AGREEMENT BORROWER SUBSIDIARIES Columbia Analytical Services, Inc.; EMCON Alaska, Inc.; Monterey Landfill Gas Corporation; Yolo Landfill Gas Corporation; Aguila Construction Company; Wehran Construction, Inc.; Wehran Technological Services, Inc.; Wehran-New York, Inc.; WECON Services Corporation; Wehran Puerto Rico; and ET Environmental Corp. Initials: /s/ -------- 34 EX-11.1 4 COMPUTATION OF INCOME PER SHARE EXHIBIT 11.1 EMCON COMPUTATION OF INCOME PER SHARE (In thousands except per share data)
Three months ended Six months ended June 30, June 30, 1995 1994 1995 1994 Net income ................................. $ 711 $ 370 $1,108 $ 558 Proforma interest income related to modified treasury stock method ....... 54 23 109 56 ------ ------ ------ ------ Adjusted net income ........................ $ 765 $ 393 $1,217 $ 614 ====== ====== ====== ====== Weighted average number of common shares outstanding during the period .............. 8,245 8,109 8,235 7,702 Common equivalent share from outstanding stock options using the modified treasury stock method ............................ 680 404 679 473 Incremental shares to reflect full dilution (1) ............................ 0 0 0 0 ------ ------ ------ ------ Total shares for purposes of calculating diluted income per share (1) ............... 8,925 8,513 8,914 8,175 ====== ====== ====== ====== Primary income per share ................... $ 0.09 $ 0.05 $ 0.14 $ 0.08 ====== ====== ====== ====== Fully diluted income per share ............. $ 0.09 $ 0.05 $ 0.14 $ 0.08 ====== ====== ====== ======
- ----------------------- (1) This calculation is submitted in accordance with Regulation S-K Item 601(b)(11) although not required by footnote 2 to paragraph 14 to APB opinion No. 15, because it results in dilution of less than 3%. 35 EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows included in the Company's Form 10-Q for the six month period ended June 30, 1995, and is qualified in its entirety by reference to such financial statements and the notes thereto. U.S. DOLLARS 6-MOS DEC-31-1995 JAN-1-1995 JUN-30-1995 1 3,808,000 2,017,000 39,105,000 1,125,000 0 47,211,000 38,240,000 20,135,000 78,274,000 12,766,000 0 41,142,000 0 0 (9,000) 78,274,000 52,729,000 52,729,000 20,036,000 20,036,000 30,884,000 195,000 31,000 1,583,000 475,000 1,108,000 0 0 0 1,108,000 .14 .14