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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 29, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-9037
INTERNATIONAL TECHNOLOGY CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0001212
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
23456 Hawthorne Boulevard
Torrance, California 90505
(Address of principal executive offices) (ZIP CODE)
Registrant's telephone number, including area code: (310) 378-9933
The undersigned registrant hereby amends the following items of its Annual
Report for the fiscal year ended March 29, 1996 on Form 10-K as set forth in the
pages attached hereto.
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PART I
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
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The following table provides information as of July 25, 1996 regarding the
Company's executive officers and the positions they hold with the Company. The
officers are appointed annually by the Board of Directors to serve at the
discretion of the Board.
<TABLE>
<CAPTION>
Term as First elected as
director director or officer
Name Age Position(1) expires of the Company
- ------------------------------ ---- ------------------------------------------ -------- -------------------
<S> <C> <C> <C> <C>
Anthony J. DeLuca(1) 49 President and Acting Chief Executive
Officer 1997 1990
Franklin E. Coffman 54 Senior Vice President, Government and -- 1984
Commercial Program Development
James R. Mahoney 57 Senior Vice President, Technical
Operations and Corporate Development -- 1991
Raymond J. Pompe 62 Senior Vice President, Project Operations -- 1988
Eric Schwartz 49 Senior Vice President, Law and -- 1992
Administration, General Counsel
and Secretary
</TABLE>
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(1) Robert B. Sheh resigned as President and Chief Executive Officer and a
director of the Company as of July 1, 1996, but will be treated as an
employee of the Company through June 26, 1998. As of July 1, 1996, Anthony
J. DeLuca was named as President and Acting Chief Executive Officer and a
director of the Company.
Mr. Coffman joined the Company in October 1984 as Vice President,
Government Programs and was named Senior Vice President, Government and
Commercial Program Development, in March 1995. Prior to joining the Company, Mr.
Coffman served in various capacities for the Department of Energy including
Deputy Assistant Secretary of Waste Management, Director of the Office of
Advanced Nuclear Systems and Projects, and Director of the Division of Fusion
Development and Technology. Previously, he was employed in the Atomic Energy
Commission as Chief, Energy Research Development Agency, Fusion Systems and
Applications -Applications Studies Branch, Washington, D.C. and as a health
physicist.
Mr. DeLuca was named President and Acting Chief Executive Officer and a
director of the Company as of July 1, 1996. Prior thereto, Mr. DeLuca had
been Senior Vice President and Chief Financial Officer of the Company since
March 1990. Before joining the Company Mr. DeLuca had been a senior Partner at
the public accounting firm Ernst & Young LLP.
Mr. Mahoney, who joined the Company in January 1991 as Senior Vice
President and Director of Technology was named Senior Vice President, Corporate
Development and Sales in April 1992, and Senior Vice President, Technical
Operations and Corporate Development in March 1995. Prior to joining the
Company, Mr. Mahoney was Director of the National Acid Precipitation Assessment
Program, a U.S.
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government research and assessment program, from 1988 to 1991. From 1984 to
1987, Mr. Mahoney served in various environmental managerial capacities with
Bechtel Group, Incorporated, a major construction firm.
Mr. Pompe joined the Company in 1988 as Vice President, Construction and
Remediation and was named Senior Vice President, Project Operations, in March
1995. Prior to joining the Company, Mr. Pompe was employed by Dravo Corporation,
a major construction firm, from 1956 to 1988 in various executive capacities,
most recently as Senior Vice President responsible for construction projects.
Mr. Schwartz joined the Company in October 1992 as Senior Vice President,
General Counsel and Secretary. Prior to joining the Company, Mr. Schwartz served
in various capacities for Tosco Corporation, an energy company, from 1978 to
1992, including that of Executive Vice President, Finance, Administration and
General Counsel, a member of its Board of Directors and a consultant. From 1972
to 1978, Mr. Schwartz was associated with the law firm of Cleary, Gottlieb,
Steen & Hamilton.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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The directors of the Company serve for three-year terms which are staggered
to provide for the election of approximately one-third of the Board members each
year. Set forth in the following table is certain information about the
directors.
<TABLE>
<CAPTION>
Director of
Term to the Company
Name Age Position expire since
- ------------------------- --- ----------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Donald S. Burns(1)(2) 70 Director 1997 1989
Kirby L. Cramer(3) 59 Director 1996 1995
Ralph S. Cunningham(1)(3) 55 Director 1997 1981
Anthony J. DeLuca 49 Director, President and Acting Chief 1997 1996
Executive Officer
E. Martin Gibson(1)(3) 58 Director and Chairman of the Board 1998 1994
(non-officer position)
James C. McGill (1)(2) 52 Director 1996 1990
W. Scott Martin(2) 46 Director 1996 1994
Henry E. Riggs(2) 61 Director 1998 1995
Jack O. Vance(3) 71 Director 1998 1987
</TABLE>
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(1) Member of Nominating Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
BACKGROUND OF THE DIRECTORS
Mr. Burns has been Chairman, President and Chief Executive Officer of
Prestige Holdings, Ltd., a property management and business consulting firm,
since 1978. Mr. Burns serves on the Boards of Directors of ESI Corporation and
International Rectifier Corporation.
2
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Mr. Cramer became a director of the Company on November 2, 1995. He is the
Chairman Emeritus of Hazleton Laboratories Corporation, a contract biological
and chemical research laboratory, which was acquired by Corning Incorporated in
1987. He is also Chairman of Northwestern Trust Company and is the President of
Keystone Capital Company, an investment company. Mr. Cramer is a member of the
University of Washington Foundation and also is Chairman of the Advisory Board
of the University of Washington School of Business Administration. He is the
past President and Trustee Emeritus of the Darden School Foundation of the
University of Virginia. In addition, Mr. Cramer serves on the Boards of
Directors of Immunex Corporation, Unilab Corporation, The Commerce Bank of
Washington, N.A., Northwestern Trust Company, Landec Corporation, Advanced
Technology Laboratories and Applied Bioscience International.
Since May 1, 1995, Dr. Cunningham has served as President and Chief
Executive Officer of CITGO Petroleum Corporation. From May 1994 to May 1995, he
served as the Vice Chairman of the Board of Huntsman Corporation and Huntsman
Specialty Chemicals Corporation. Prior to joining Huntsman in 1994 he served as
the President of Texaco Chemical Company from 1990 to 1994 when Texaco Chemical
Company was acquired by Huntsman Corporation in 1994. From 1989 to 1990, he was
Chairman and Chief Executive Officer of Clark Oil Refining Corporation. In 1980,
he joined Tenneco Oil Processing and Marketing as Executive Vice President and
served as President of that company from 1982 to 1989. Dr. Cunningham served as
the Company's Chairman of the Board of Directors from May 5, 1994 to January 5,
1995. Such position was a non-officer, non-employee position. Dr. Cunningham
serves as a director of Viridan, Inc. (formerly Sherritt, Inc.), Enterprise
Products Company, Huntsman Corporation, CITGO Petroleum Corporation and Bank of
Oklahoma.
Mr. DeLuca was named President and Acting Chief Executive Officer and a
director of the Company as of July 1, 1996. Prior thereto, Mr. DeLuca had
been Senior Vice President and Chief Financial Officer of the Company since
March 1990. Before joining the Company, Mr. DeLuca had been a senior partner at
the public accounting firm Ernst & Young LLP.
Mr. Gibson became a director of the Company on October 11, 1994 and was
elected Chairman of the Board of Directors, a non-officer, non-employee
position, on April 6, 1995. From 1990 until December 1994, Mr. Gibson served as
Chairman of Corning Life Sciences, Inc., a subsidiary of Corning Incorporated.
Mr. Gibson served in various other senior management capacities with Corning
Incorporated during his 32 year career there, including as a Senior Vice
President and General Manager of Corning Medical and Scientific Division from
1980 until 1983, and as Group President of Corning Consumer Products and
Laboratory Sciences from 1983 until 1990. From 1983 to 1994, Mr. Gibson served
on the Board of Directors of Corning Incorporated. Mr. Gibson also serves on the
Boards of Directors of Hardinge, Inc. and NovaCare, Inc.
Mr. Martin has been President of the Tulsa Loan Production Office of the
First Bank & Trust Company, Wagoner, Oklahoma, since September 1994. He was the
President, Chief Executive Officer and a member of the Board of Directors of
WestStar Bank in Tulsa, Oklahoma, from 1984 until September 1994. He has also
served as a member of the Boards of Directors of First Bank & Trust Company,
Wagoner, Oklahoma, since 1974; of First Bank of Chandler, Chandler, Oklahoma,
since 1977; and of First National Bank, Burkburnett, Texas, since 1983.
Mr. McGill is currently, and has been for at least five years, a private
investor. He served as Chairman of McGill Environmental Systems, Inc. from 1970
to 1987. Mr. McGill serves on the Board of Trustees of the University of Tulsa
and on the Boards of Directors of four private corporations that are engaged in
tax consulting, health care, pipeline construction and golf.
3
<PAGE>
Mr. Riggs became a director of the Company on November 2, 1995. He has been
the President of Harvey Mudd College in Claremont, California since August 1,
1988. He was Vice President for Development of Stanford University from 1983 to
1988, and was Chairman of the Stanford University Department of Industrial
Engineering and Engineering Management from 1978 to 1982. He is currently a
director of several mutual funds managed by The Capital Group.
Mr. Vance was a director of McKinsey & Company from 1960 until he retired
on December 31, 1989. He currently serves as Managing Director of Management
Research, Inc., a management consulting firm. Mr. Vance also serves as a member
of the Boards of Directors of International Rectifier Corporation, The Olson
Company, Vencor, Inc., ESCORP, University Restaurant Group, FCG Enterprises,
Inc. and Semtech Corporation.
See also "Executive Officers of the Company" in Part I, Item 4A of this
report for certain information concerning the Company's executive officers.
COMPLIANCE WITH SECURITIES REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
directors, certain officers of the Company and persons holding more than 10% of
the Company's Common Stock to file reports concerning their ownership of Common
Stock by dates established under the Act and also requires that the Company
disclose any noncompliance with those requirements during fiscal year 1996.
Based solely upon a review of reports delivered to the Company, all Section
16(a) filing requirements were satisfied, except that (i) Mr. Murray Hutchison,
who resigned from the Board of Directors in July 1995, filed one late report
with respect to three transactions during October 1995 involving the sale of an
aggregate of 23,480 shares of Common Stock in the aggregate, and (ii) Mr. James
C. McGill filed one late report with respect to his wife's inheritance of 1,000
of the Company's Depositary Shares (the "Depositary Shares"). Mr. McGill
disclaims beneficial ownership of such Depositary Shares.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION TABLE
The following table sets forth the annual, long-term compensation and other
compensation for services in all capacities to the Company for fiscal years
1996, 1995 and 1994 of those persons who were, as of March 29, 1996, the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company (the "Named Officers").
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------
Annual Compensation Awards
---------------------------------------- --------------------------
Other Annual Restricted Securities All Other
Name and Compen- Stock Underlying Compen-
Principal Position Year Salary($) Bonus($)(4) sation($)(5) Awards($)(6) Options (#) sation($)(7)
- ---------------------------- ---- --------- ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert B. Sheh (1) 1996 $450,000 $ 26,578 $ 0 $475,000 0 $ 52,100
President and 1995 450,000 225,000 0 74,993 150,000 34,519
Chief Executive Officer 1994 450,000 0 175,449 0 50,000 103,219
Anthony J. DeLuca (2) 1996 270,400 12,776 0 296,875 0 17,732
Senior Vice President 1995 270,400 108,160 0 173,550 77,000 16,519
and Chief Financial Officer 1994 268,667 0 0 0 22,000 34,759
James R. Mahoney 1996 260,000 12,285 0 118,750 0 28,579
Senior Vice President, 1995 256,925 104,000 0 172,163 77,000 20,330
Technical Operations and 1994 232,834 0 5,630 0 22,000 32,420
Corporate Development
Eric Schwartz 1996 250,000 11,813 0 268,750 0 17,575
Senior Vice President, 1995 250,000 100,000 0 33,330 77,000 11,488
Law and Administration 1994 245,834 0 0 0 22,000 2,828
General Counsel and
Secretary
Raymond J. Pompe(3) 1996 206,691 9,923 0 118,750 0 16,250
Senior Vice President 1995 192,992 57,000 0 156,498 35,000 11,328
Project Operations 1994 165,692 0 0 0 18,000 8,423
---- -------- -------- -------- -------- ------- --------
</TABLE>
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(1) Mr. Sheh resigned as President and Chief Executive Officer and a director of
the Company as of July 1, 1996, but will be treated as an employee of
the Company through June 26, 1998. See "Termination of Employment
Arrangements - Sheh Agreement."
(2) As of July 1, 1996, Mr. DeLuca was named as President and Acting Chief
Executive Officer and a director of the Company.
(3) Mr. Pompe, who joined the Company on September 1, 1988, was promoted to the
position of Senior Vice President, Project Operations in March 1995.
(4) Bonus amounts are reported in the fiscal year they are earned or accrued,
even though the actual cash payment for the fourth quarter may be made in
the next fiscal year. All bonus amounts reported for fiscal year 1995
include all cash bonus amounts paid, earned or accrued for the fiscal year
even
5
<PAGE>
though the actual cash payment for the fourth quarter were actually
paid in fiscal year 1996. In lieu of additional cash, each Named Officer
also received an award of restricted stock in fiscal year 1996 attributable
to the fiscal year 1995 incentive compensation plan. The value of such
restricted stock awards is reported in this table under Restricted Stock
Awards in 1995. The total value of bonuses, including the aforementioned
restricted stock awards, earned in fiscal year 1995, by each of the Named
Officers are as follows: Mr. Sheh, $299,993; Mr. DeLuca, $144,210; Mr.
Mahoney, $138,663; Mr. Schwartz, $133,330; and Mr. Pompe, $75,998.
(5) The dollar value of perquisites and other personal benefits, if any, for
each of the Named Officers, except Mr. Sheh and Mr. Mahoney in 1994 was less
than the reporting thresholds established by the SEC. The amount shown for
Mr. Sheh in fiscal year 1994 includes (i) $58,171 for a tax gross up on the
relocation expenses reported under Other Annual Compensation, and (ii)
$95,794 for club memberships; all in accordance with terms of agreements
between the Company and Mr. Sheh. Of the $95,794 reported for club
memberships, $25,000 was a one-time non-refundable admission fee and $59,400
is a membership fee. Mr. Sheh was permitted to retain such membership upon
his resignation as President and Chief Executive Officer. See "Termination
of Employment Arrangements - Sheh Agreement." The amount shown for Mr.
Mahoney for fiscal year 1994 is a tax gross up on relocation expenses
reported under Other Annual Compensation; all in accordance with the terms
of agreements between the Company and Mr. Mahoney. The amount shown for Mr.
Sheh in fiscal year 1995 includes $18,903 of imputed interest on an
interest-free loan to purchase a residence. See "Termination of Employment
Arrangements - Sheh Agreement."
(6) 50,000 shares of restricted stock were awarded to each of Messrs. DeLuca,
Mahoney and Pompe on March 2, 1995, with a fair market value of $2.75 per
share on the date of grant. 50,000 shares of restricted stock were awarded
to Mr. Schwartz on June 1, 1995, with a fair market value of $3.00 per share
on the date of the grant. The shares vest in 20% increments over five years
provided that Messrs. Mahoney, DeLuca, Pompe and Schwartz remain employed by
the Company on the vesting dates. In lieu of cash, each Named Officer
received awards of restricted stock in connection with a fiscal year 1995
incentive compensation plan. A total of 63,371 shares of restricted stock
were awarded to the Named Officers on July 5, 1995 with a fair market value
of $3.125 per share. The shares awarded were as follows: Mr. Sheh, 23,998
shares; Mr. DeLuca, 11,536 shares; Mr. Mahoney, 11,092 shares; Mr. Schwartz,
10,666 shares; and Mr. Pompe, 6,079 shares. The restrictions on the shares
will lapse three years from the date of award provided that each Named
Officer remains employed by the Company at that date. On March 28, 1996, the
following number of restricted shares were issued to the Named Officers,
with a fair market value of $2.375 per share on the date of grant: Mr. Sheh,
200,000 shares (which shares were returned to the Company pursuant to Mr.
Sheh's separation agreement with the Company (see "Termination of Employment
Arrangements - Sheh Agreement")); Mr. DeLuca, 125,000 shares; Mr. Mahoney,
50,000 shares; Mr. Schwartz, 50,000 shares; and Mr. Pompe, 50,000 shares.
The restrictions on the shares will lapse upon the earlier of: (i)
attainment of an average $4.00 or greater price of the Company's Common
Stock for any period of sixty consecutive calendar days; (ii) four years
from the date of issuance of the restricted shares; or (iii) upon death,
disability or retirement of the holder or a change of control (as defined).
(7) For 1994, the amount shown for Mr. Sheh includes $83,679 in moving expenses
in accordance with the terms of an agreement between the Company and Mr.
Sheh, $10,000 for partial principal forgiveness on a relocation loan to
purchase a residence and $9,540 of life insurance premiums in excess of
$50,000. The amount shown for Mr. DeLuca includes $23,400 paid for accrued
but unused vacation, $1,925 of life insurance premiums in excess of $50,000
and $9,434 for the
6
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Company's contribution to the Company's Retirement Plan, a defined
contribution plan. Plan participants are fully vested in the plan following
six years of service. The amount shown for Mr. Mahoney includes $13,091 in
previously unreimbursed moving expenses in connection with his relocation to
Southern California, $10,000 for partial principal forgiveness on a
relocation loan to purchase a residence, $9,119 for the Company's
contribution to the Company's Retirement Plan and $210 of life insurance
premiums in excess of $50,000. The amounts shown for Messrs. Pompe and
Schwartz include $1,878 and $2,828, respectively, of life insurance premiums
in excess of $50,000. For 1995, the amount shown for Mr. Sheh includes
$6,572 for the Company's contribution to the Company's Retirement Plan,
$10,000 for partial principal forgiveness on a relocation loan to purchase a
residence and $17,947 of life insurance premiums in excess of $50,000. The
amount shown for Mr. DeLuca includes $6,608 for the Company's contribution
to the Company's Retirement Plan, $5,200 paid for accrued but unused
vacation and $4,711 of life insurance premiums in excess of $50,000. The
amount shown for Mr. Mahoney includes $6,599 for the Company's contribution
to the Company's Retirement Plan, $3,731 of life insurance premiums in
excess of $50,000 and $10,000 for partial principal forgiveness on a
relocation loan to purchase a residence. The amounts shown for Mr. Schwartz
and Mr. Pompe represent $4,916 and $4,711, respectively, of life insurance
premiums in excess of $50,000 and the Company's contributions to the
Company's Retirement Plan. For 1996, the amount shown for Mr. Sheh includes
$9,003 for the Company's fixed and 401(k) Company matching contributions to
the Company's Retirement Plan, $10,000 for partial forgiveness on a
relocation loan to purchase a principal residence and $20,034 of life
insurance premiums in excess of $50,000. The amounts shown for Messrs.
DeLuca, Schwartz and Pompe represent $5,798, $5,177 and $5,706,
respectively, of life insurance premiums in excess of $50,000 and the
Company's contributions to the Company's Retirement Plan for the Company's
fixed and 401(k) Company matching contributions. The amount shown for Mr.
Mahoney includes $7,498 for the Company's Contributions to the Company's
Retirement Plan for the Company's fixed and 401(k) Company matching
contributions, $10,000 for partial forgiveness on a relocation loan to
purchase a principal residence and $5,990 of life insurance premiums in
excess of $50,000. Although required to be reported as income, the Named
Officers pay the cost for all life insurance premiums for coverage in excess
of one and one-half times their salary, as do all salaried employees. In
addition, each of the Named Officers received in fiscal year 1996 a
contribution to the Company's Restoration Plan, a non-qualified supplemental
retirement plan, as follows: Mr. Sheh, $13,063; Mr. DeLuca, $5,475; Mr.
Mahoney, $5,091; Mr. Schwartz, $4,722; and Mr. Pompe, $3,334. STOCK OPTION
GRANTS IN LAST FISCAL YEAR No stock options were granted to any of the Named
Officers during the last fiscal year. No stock appreciation rights ("SARs")
were granted during the last fiscal year or at any time under either the
1983 Stock Incentive Plan (the "1983 Plan") or the 1991 Stock Incentive Plan
(the "1991 Plan").
7
<PAGE>
AGGREGATED OPTION EXERCISES DURING LAST FISCAL YEAR AND OPTION VALUES AT END OF
LAST FISCAL YEAR
The following table provides information with respect to the exercise of
stock options during the fiscal year ended March 29, 1996 by the Named Officers,
and with respect to unexercised "in-the-money" stock options outstanding as of
March 29, 1996. In-the-money stock options are options for which the exercise
price is less than the market price of the underlying stock at the end of the
fiscal year. No executive officer or any other employee of the Company held or
exercised any SARs at any time during fiscal year 1996.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year End In-the-Money Options at
Shares Acquired (in shares) Fiscal Year End($)(2)
on Value ------------------------------ ---------------------------
NAME Exercise Realized($) Exercisable Unexercisable(3) Exercisable Unexercisable
--------------- ----------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. Sheh (1).... 0 $0 250,000 200,000 $0 $0
Anthony J. DeLuca..... 0 0 107,250 78,750 0 0
James R. Mahoney...... 0 0 85,250 76,750 0 0
Eric Schwartz......... 0 0 67,750 81,250 0 0
Raymond J. Pompe...... 0 0 36,020 43,250 0 0
</TABLE>
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(1) Mr. Sheh resigned as President and Chief Executive Officer and a director
of the Company as of July 1, 1996, but will be treated as an employee of the
Company through June 26, 1998. See "Termination of Employment Arrangements -
Sheh Agreement."
(2) Represents the difference between the $2.50 closing market price of the
Company's Common Stock at March 29, 1996, minus the exercise price of the
options.
(3) Messrs. DeLuca, Mahoney and Schwartz's options with respect to 7,500 shares,
6,000 shares and 6,000 shares, respectively, have vested as a result of the
passage of time but may not be exercised unless the Company's stock price
increases to certain predetermined levels. Because this condition has not
been satisfied and the options therefore are not vested, such options are
not included in the "Beneficial Ownership of Shares" table in Item 12.
COMPENSATION OF DIRECTORS
Retainer Fees. Non-employee directors receive a retainer fee of $5,000 per
quarter, $1,000 for each Board or committee meeting attended, $500 for each
telephonic Board or committee meeting attended (reduced from $1,000 previously),
$500 per day for travel on business days and reimbursement of air travel and
other expenses incurred in connection with attending Board or committee
meetings. Committee chairmen receive $1,500 for each committee meeting attended
and $750 for each telephonic committee meeting attended (reduced from $1,500
previously). The fees paid for meeting attendance are limited to no more than
one committee meeting for all committee meetings held in tandem with a Board
meeting, regardless of the actual number of committee meetings attended.
Additionally, in order to more closely align the compensation of the Board
members with the interests of Company's stockholders, effective with the third
quarter of fiscal year 1996, the quarterly retainer fee payable to each director
for the third quarter of each fiscal year is paid in the form of shares of
Common Stock, rather than in cash. Such shares are purchased by the Company in
the open market and reissued to directors in order to avoid dilution to the
Company's stockholders.
8
<PAGE>
Chairman of the Board. Mr. E. Martin Gibson was elected on April 6, 1995 as
Chairman of the Board, which is a non-officer, non-employee position. In lieu of
the non-employee director fees described above, Mr. Gibson receives compensation
at the rate of $120,000 per year. Mr. Gibson serves as a member or ex-officio
member of all committees of the Board and spends significant time on Company
matters.
Stock Options. Prior to expiration of the 1991 plan on March 31, 1996, each
non-employee director also received automatic grants of nonqualified stock
options under the 1991 plan, to purchase 20,000 shares of Common Stock upon his
initial election as a director plus options to purchase an additional 10,000
shares of Common Stock at each subsequent annual meeting after having served at
least six months. Because the 1991 Plan has expired, no additional awards may be
made including option grants to the non-employee directors. The non-employee
director options that are outstanding have an exercise price equal to the fair
market value of Common Stock at the date of grant; become exercisable in
installments of 25% on each of the first four anniversaries of the date of
grant; have a five-year term; and terminate when the holder ceases to be a
director unless due to death, disability or retirement. All such grants were
subject to the limitation that a non-employee director may not hold, at any
time, nonqualified stock options to purchase a number of shares that, when added
to all shares previously purchased by such director under the 1983 plan or 1991
plan, exceeds 50,000 shares. At the time the 1991 Plan expired, there were
502,205 shares remaining available for grant under the 1991 Plan, none of which
were or will be granted.
Retirement Plan. Non-employee directors qualify for five years of
retirement payments if on retirement (i) they have five years of Board service
(in which case payments would begin at age 70, or upon retirement if the
director is between 70 and 73 when he retires) or (ii) they have ten years of
Board service (in which case payments would begin at age 65, or upon retirement
if the director is between 65 and 73 when he retires). However, directors who
served or have served continuously from December 4, 1984 to retirement are not
subject to such requirements and have qualified for the retirement plan,
provided that they retire at the conclusion of the annual meeting following the
date they reach age 75 unless the Board otherwise provides. In the event of an
eligible director's death, the director's beneficiary will be entitled to
receive a lump sum payment of the amount that would otherwise have been payable
to the director, less any amounts previously paid under the plan. In the event
of a director's disability or a change of control (as defined in the plan)
pursuant to which a director elects not to remain on the Board, the service and
age requirements are waived. Payment will be made in the normal manner upon
disability or in a lump sum if a director elects not to remain on the Board in
the event of a change of control. The annual retirement amount is equal to the
retainer fee and the meeting and committee fees paid for a normal schedule of
meetings during a fiscal year (or the actual schedule of meetings during the 12-
month period prior to such director's retirement, if such schedule would result
in higher retirement benefits), as determined in accordance with the Board's
retirement plan. Additionally, former employees of the Company become eligible
to participate in the plan once they have completed five years of service as a
non-employee director.
TERMINATION OF EMPLOYMENT ARRANGEMENTS
Severance Benefit Agreements. The Company currently maintains change in
control severance benefit agreements (the "Severance Agreements") with certain
executive officers. The Severance Agreements generally have a two-year term. The
persons with whom the company has entered into Severance Agreements are Anthony
J. DeLuca, James R. Mahoney and Eric Schwartz expiring on April 2, 1998,
September 15, 1997 and September 15, 1997, respectively.
9
<PAGE>
The Severance Agreements provide, upon the occurrence of certain events,
for the payment of lump sum cash compensation equal to 2.99 times the executive
officer's annual base salary and the highest aggregate cash bonus paid to the
executive officer in the preceding three fiscal years (subject to reduction in
certain circumstances, including the limitation that the Company's aggregate
severance liability shall not exceed 5% of the Company's market capitalization
(as defined in the Severance Agreements). The Company is obligated to pay such
compensation to the executive officer if a change in control of the Company as
defined in the Severance Agreements occurs and the officer's employment
subsequently is terminated by the Company or by the officer for specified
reasons. The Severance Agreements also provide that the Company will arrange in
such event to provide the officer for two years with disability, life, accident
and health insurance substantially similar to those insurance benefits being
received by the officer at the time of the termination of employment. The
Severance Agreements generally have a two-year term if no change in control of
the Company occurs. If there is a change in control of the Company, the
Severance Agreements remain in effect for three years from the date of the
change in control if it has not been approved by the Board of Directors and for
two years if the change in control has been approved by the Board of Directors.
If the Severance Agreements had been triggered as of July 1, 1996, the lump sum
cash compensation payable to Messrs. DeLuca, Mahoney and Schwartz would have
been $915,716, $848,826 and $869,285, respectively.
The purpose of the Severance Agreements is to continue to attract and
retain well-qualified executives and key personnel who are an integral part of
the management of the Company and whose performance is considered critical to
the future success of the Company. To this end, the Severance Agreements are
intended to protect the continued employment of such executives and key
personnel which would be at risk in the event of a change in control and to
provide an incentive to such executives and key personnel to remain in the
employ of the Company, notwithstanding the uncertainty in job security caused by
an actual or threatened change in control.
Sheh Agreement. Mr. Robert B. Sheh resigned as President and Chief
Executive Officer and a director of the Company as of July 1, 1996. Pursuant to
the terms of an agreement between the Company and Mr. Sheh, Mr. Sheh will
continue to be treated as an employee of the Company until June 26, 1998, but
will have no further duties or responsibilities to the Company. Pursuant to the
agreement, until June 26, 1998, Mr. Sheh will continue to be paid $450,000 per
annum and will receive a car allowance of $5,850 per annum. Mr. Sheh will also
receive a one-time payment of $40,300 for accrued but unused vacation.
Additionally, a relocation loan made by the Company to Mr. Sheh with an
outstanding principal amount of $150,000 was forgiven. Mr. Sheh will retain a
club membership in his name for which the Company has previously paid admission
and membership fees. Mr. Sheh remains eligible for certain insurance benefits
and is entitled to certain other benefits until the earlier of June 26, 1998 or
the date on which Mr. Sheh becomes a full-time employee of another company.
Under the agreement, 23,998 shares of restricted Common Stock awarded to Mr.
Sheh in July 1995 will become fully vested on June 26, 1998, and options to
purchase a total of 450,000 shares of Common Stock will continue to vest in
accordance with the terms of the applicable stock option agreements and will
become fully vested on April 27, 1998. Finally, 200,000 shares of restricted
stock awarded to Mr. Sheh in March 1996 were returned to the Company.
Hart Agreement. Mr. Larry M. Hart resigned as Senior Vice President and
Chief Operating Officer of the Company effective as of October 1, 1995. Pursuant
to the terms of an agreement between the Company and Mr. Hart, Mr. Hart will
remain an employee of the Company until the earlier of his resignation of
employment, his obtaining full-time, permanent employment with another company,
or November 1, 1996. Pursuant to the agreement, the Company paid Mr. Hart an
aggregate of $535,770 in salary and severance payments. Additionally, a
relocation loan made by the company to Mr. Hart
10
<PAGE>
remains outstanding, with no interest accruing or payable from October 1, 1995
until September 30, 1996. The loan will become due and payable upon the earlier
of the sale of the principal residence purchased with the relocation loan or
October 1, 1997. Additionally, pursuant to the agreement, Mr. Hart remains
eligible for certain insurance benefits, until the termination of his employment
and is entitled to certain other benefits. Finally, under the agreement, 15,998
shares of restricted Common Stock and options to purchase a total of 280,000
shares of Common Stock will become fully vested upon Mr. Hart's termination of
his employment.
11
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth information as of July 10, 1996 with respect
to beneficial ownership of (i) the Company's Common Stock and (ii) the Company's
Depositary Shares, each representing 1/100 of a share of 7% Cumulative
Convertible Exchangeable Preferred Stock, par value $100.00 per share (the
"Preferred Stock"), by (a) each person known by the Company to be the beneficial
owner of 5% or more of the outstanding Common Stock or Depositary Shares and as
of July 10, 1996, (b) each director, (c) the Named Officers listed in the
Summary Compensation Table in Item 11, and (d) all directors and persons serving
as executive officers as a group.
<TABLE>
<CAPTION>
Amount and nature
Amount and nature of Percent of Common of beneficial Percent of
beneficial ownership of Stock beneficially ownership of Depositary Shares
Name and Address Common Stock(1)(2) owned(2) Depositary Shares beneficially owned
- ---------------- ----------------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
Wisconsin Investment
Board (3)..................... 3,551,800 9.93% -- --
Dimensional Fund Advisors....... 1,884,300 5.27 -- --
Inc. (4)
Donald S. Burns................. 26,481 * -- --
Kirby L. Cramer................. 43,808 * 10,000 *
Ralph S. Cunningham............. 16,981 * -- --
E. Martin Gibson................ 28,904 * 5,000 *
W. Scott Martin................. 48,981( 5) * -- --
James C. McGill................. 93,614( 6) * 1,000 *
Henry E. Riggs.................. 20,000 * -- --
Robert B. Sheh (7).............. 628,002 1.70 5,000 *
Jack O. Vance................... 18,331( 8) * -- --
Anthony J. DeLuca............... 315,257 * -- --
James R. Mahoney................ 233,547 * -- --
Raymond J. Pompe................ 160,802 * -- --
Eric Schwartz................... 211,635 * 1,200 *
All directors and executive
officers as a group
(15 persons).................. 1,975,705 5.40% 22,200 *
</TABLE>
- ----------
* Less than 1%
(1) The number of shares of the Common Stock beneficially owned includes shares
of the Common Stock in which the persons set forth in the table have either
investment or voting power. Unless otherwise indicated, all of such
interests are owned directly, and the indicated person or entity has sole
voting and investment power, subject to community property laws where
applicable. The number of shares beneficially owned also includes shares
that the following individuals have the right to acquire within sixty days
of July 10, 1996 upon exercise of stock options (and conversion of
Depositary Shares in the case of Messrs. Cramer, Gibson, McGill, Sheh and
Schwartz) in the following amounts: (i) 25,000 shares as to Mr. Burns, (ii)
0 shares upon exercise of options and 42,808 shares upon conversion of
Depositary Shares as to Mr. Cramer, (iii) 12,500 shares as to
12
<PAGE>
Dr. Cunningham, (iv) 7,500 shares upon exercise of options and 21,404 shares
upon conversion of the Depositary Shares as to Mr. Gibson, (v) 12,500 shares
as to Mr. Martin, (vi) 25,000 shares upon exercise of options and 4,281
shares upon conversion of the Depositary Shares as to Mr. McGill, (vii) 0
shares as to Mr. Riggs, (viii) 362,500 shares upon exercise of options and
21,404 shares upon conversion of Depositary Shares as to Mr. Sheh, (ix)
15,000 shares as to Mr. Vance, (x) 132,000 shares as to Mr. DeLuca, (xi)
110,000 shares as to Mr. Mahoney, (xii) 43,000 shares as to Mr. Pompe and
(xiii) 92,500 shares upon exercise of options and 5,136 shares upon
conversion of Depositary Shares as to Mr. Schwartz.
(2) For the purposes of determining the number of shares of Common Stock
beneficially owned as well as the percentage of outstanding Common Stock
held by each person or group set forth in the table, the number of shares is
divided by the sum of the number of outstanding shares of the Common Stock
on July 10, 1996 plus (i) the number of shares of Common Stock subject to
options exercisable currently or within 60 days of July 10, 1996 by such
person or group, and/or (ii) shares of Common Stock into which persons who
hold Depositary Shares or other securities may convert the Preferred Stock
represented by such Depositary Shares (or otherwise obtain Common Stock), in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934,
as amended ("Rule 13d-3(d)(1)").
(3) Such information is derived solely from a Schedule 13G filed by such
beneficial owner with the Securities and Exchange Commission (the "SEC")
dated February 7, 1996. The address of the Wisconsin Investment Board set
forth in its Form 13G is P.O. Box 7842, Madison, Wisconsin 53707.
(4) Such information is derived solely from a Schedule 13G dated February 7,
1996 filed by such beneficial owner with the SEC. The address of Dimensional
Fund Advisors Inc. set forth in its Form 13G is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401.
(5) Includes 5,000 shares owned by Martcon, Inc., a company owned by Mr. Martin.
Mr. Martin disclaims beneficial ownership of such shares.
(6) Includes 4,000 shares of Common Stock and 1,000 Depositary Shares
(convertible into 4,281 shares of Common Stock) owned by Mr. McGill's wife,
as to which Mr. McGill has no voting or dispositive power, and 5,000 shares
owned by McGill Resources, Inc., a company owned by Mr. McGill. Mr. McGill
disclaims beneficial ownership of all such shares.
(7) Mr. Sheh resigned as President and Chief Executive Officer and a director of
the Company as of July 1, 1996, but will be treated as an employee of the
Company through June 26, 1998. See "Termination of Employment Arrangements -
Sheh Agreement" in Item 11.
(8) Includes 300 shares owned by Mr. Vance as a custodian under the California
Uniform Gifts to Minors Act. Mr. Vance disclaims beneficial ownership of
such shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------
Relocation Loans. In certain circumstances, the Company has granted and may
in the future grant interest-free loans to executive officers, officers and
certain other employees principally for real estate purchases in connection with
Company-initiated transfers to a new location. All loans are approved by the
compensation committee and are secured by the principal residence of the
individual. Mr. James R.
13
<PAGE>
Mahoney, Senior Vice President, entered into a relocation loan arrangement with
the Company with an original principal amount of $200,000 and secured by a deed
of trust on his personal residence. The loan will remain interest free so long
as Mr. Mahoney remains an employee. Beginning December 31, 1991 and on each
December 31st thereafter until the due date of the loan, 5% of the original
principal amount (to a maximum of 50% of the original principal amount) was
scheduled to be forgiven by the Company, provided Mr. Mahoney remains employed
by the Company. The loan to Mr. Mahoney is due and payable on December 31, 2000.
Additionally, Mr. Mahoney has agreed to repay the remaining 50% of the original
principal amount in installments related to the issuance of awards under the
Company's incentive compensation plan. Since no bonuses were awarded or paid
under the Company's incentive compensation plan during fiscal years 1993 and
1994, Mr. Mahoney was not required to make any installment payments to the
Company in those years. During the fiscal year ended March 29, 1996, (i) Mr.
Mahoney repaid $7,549 of the loan, and (ii) the maximum amount owed by Mr.
Mahoney to the Company under the loan was $150,000. As of March 29, 1996, the
principal amount outstanding for Mr. Mahoney's loan was $132,451.
Indemnification. The General Corporation Law of the State of Delaware, the
state of incorporation of the Company, and the bylaws of the Company provide for
indemnification of directors and officers. Section 145 of the Delaware General
Corporation Law provides generally that a person sued as a director, officer,
employee or agent of a corporation may be indemnified by the corporation for
reasonable expenses, including attorneys' fees, if, in cases other than actions
brought by or in the right of the corporation, he or she has acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the corporation (and in the case of a criminal proceeding, had
no reasonable cause to believe that his or her conduct was unlawful). Section
145 provides that no indemnification for any claim or matter may be made, in the
case of an action brought by or in the right of the corporation, if the person
has been adjudged to be liable, unless the Court of Chancery or other court
determines that indemnity is fair and reasonable despite the adjudication of
liability. Indemnification is mandatory in the case of a director, officer,
employee or agent who has been successful on the merits, or otherwise, in
defense of a suit against him or her. The determination of whether a director,
officer, employee or agent should be indemnified must be made by a majority of
disinterested directors, independent legal counsel or the stockholders.
Directors and officers of the Company are covered under policies of
directors' and officers' liability insurance. The directors and all officers
serving the Company as Senior Vice President or in a higher position are parties
to Indemnity Agreements (the "Indemnity Agreements"). The Indemnity Agreements
provide indemnification for the directors and covered officers in the event the
directors' and officers' liability insurance does not cover a particular claim
for indemnification or if such a claim or claims exceed the limits of such
coverage. The Indemnity Agreements are generally intended to provide
indemnification for any amounts a director or covered officer is legally
obligated to pay because of claims arising out of the director's or officer's
service to the Company.
Additionally, in 1987 the Company's Certificate of Incorporation was
amended with the approval of stockholders to provide that its directors are not
to be liable to the Company or its stockholders for monetary damages for breach
of fiduciary duty to the fullest extent permitted by law. This provision is
intended to allow the Company's directors the benefit of the Delaware General
Corporation Law which provides that directors of Delaware corporations may be
relieved of monetary liabilities for breach of their fiduciary duty of care,
except under certain circumstances, including breach of the director's duty of
loyalty, acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law or any transaction from which the director derived
an improper personal benefit.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
- --------
ON FORM 8-K
3. Exhibits
These exhibits are numbered in accordance with the Exhibit Table
of Item 601 of Regulation S-K.
Exhibit
Number Description
------ -----------
10(iii) 17. Separation Agreement dated as of July 1, 1996
between Registrant and Robert B. Sheh. (9)
18. Separation Agreement dated October 1, 1995 between
Registrant and Larry M. Hart. (9)
________________
(9) Filed as a management compensation plan or arrangement per
Item 14(a)(3) of the Securities Exchange Act.
15
<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 Amendment No. 1 on Form 10-K/A
to its Form 10-K for the year ended March 29, 1996 to be signed on its behalf by
the undersigned, thereunto duly authorized in Torrance, California on the 29th
day of July, 1996.
INTERNATIONAL TECHNOLOGY CORPORATION
By: /s/ Anthony J. DeLuca
--------------------------------
Anthony J. DeLuca
President and Acting Chief Executive
Officer
16
<PAGE>
EXHIBIT 10.1
SEPARATION AGREEMENT
This Separation Agreement (hereinafter the "Agreement") is entered into as
of the 1st day of July, 1996, by and between Robert B. Sheh (hereafter "Sheh"),
an individual, and International Technology Corporation, a Delaware corporation
(the "Company").
RECITALS
A. WHEREAS, Sheh has been employed by the Company, has held the position
of President and Chief Executive Officer of the Company, and has held positions
as an officer and director of subsidiaries of the Company;
B. WHEREAS, Sheh and the Company wish to finally and forever resolve all
matters between them relative to Sheh's employment and his entitlement to
severance pay and other additional forms of compensation and benefits, and to
provide for the termination of the employment relationship;
C. NOW, THEREFORE, in consideration of the aforementioned recitals and the
mutual covenants and conditions set forth below and in full settlement of any
and all claims for lost compensation including, without limitation, all claims
for back pay, severance pay, accrued vacation pay, continuation of health or
other benefits or any other payment in the nature of compensation attributable
to Sheh's employment by the Company or any of its subsidiaries, and any and all
other claims which were or could have been raised by either party prior to the
date of this Agreement, Sheh and the Company hereby agree as follows:
AGREEMENT
1. Resignation and Termination of Employment. Sheh hereby resigns as an
-----------------------------------------
officer and director of the Company and of all subsidiaries of the Company;
provided, however that Sheh shall continue to be treated as an employee of the
Company until June 26, 1998. Notwithstanding the foregoing, Sheh shall have no
duties or responsibilities to the Company after his resignation except such
duties as may arise under the terms of this Agreement.
2. Salary and Car Allowance. Through June 26, 1998, the Company will pay
------------------------
Sheh at the rate of $450,000 per annum, less payroll deductions, in equal bi-
weekly payments. In addition to such amount, Sheh shall receive payment of
$5,850 per annum, less payroll deductions, as a car allowance, payable in equal
bi-weekly payments.
3. Vacation Pay. The Company will pay Sheh the sum of $40,300 promptly
------------
upon the expiration of seven (7) days after the execution of this Agreement by
Sheh, representing accrued vacation pay through his resignation; and thereafter
no further vacation pay shall accrue or be payable.
4. Relocation Loan and Country Club Membership.
-------------------------------------------
(a) Sheh is indebted to the Company in the amount of $150,000 in
connection with a relocation loan. Such indebtedness, and any interest accrued
and unpaid as of
1
<PAGE>
the date hereof is hereby forgiven and canceled; and the Company shall promptly
take all appropriate steps to reconvey the deed of trust securing such
indebtedness.
(b) Sheh shall be entitled, at no cost, to retain his membership in Los
Angeles Country Club, which was paid for by the Company. All ongoing membership
dues and other fees and costs associated with such membership shall be the
responsibility of Sheh.
5. Welfare Benefits. Until the earlier of June 26, 1998, or such date as
----------------
Sheh shall become a full-time employee of another person, Sheh shall continue,
to the same extent and on the same basis as other executive employees of the
Company, to be eligible to participate in the Company's Group Medical Insurance
Plan and the Corporate Executive Medical Plan (together, the "Medical Plan");
the Company's Group Life and Accidental Death and Dismemberment Plan (the "Life
Plan"); and the Company's short and long term disability plans (together, the
"Disability Plan"). During such period, Sheh and the Company shall pay their
respective costs for such benefits in accordance with the terms and conditions
of the applicable plans. Assuming Sheh has not become a full-time employee of
another person on or prior to June 26, 1998, then, after such date: (a) in
connection with the Medical Plan, Sheh may elect to continue participation in
such plan pursuant to the terms of Section 4980B(f) of the Internal Revenue Code
of 1986 and, to the extent consistent therewith, the terms of such Plan; but (b)
shall no longer participate in the Life Plan and Disability Plan.
6. Retirement Plans. Sheh shall continue to participate in the IT
----------------
Corporation Retirement Plan, the IT Corporation Restoration Plan and the IT
Corporation Deferred Compensation Plan through June 26, 1998, as a regular
employee of the Company, treating such date as his date of employment
termination with the Company for all purposes under such.
7. Restricted Stock Award. The parties acknowledge that on July 5, 1995
----------------------
Sheh was granted by the Company 23,998 shares of restricted stock pursuant to
the Special Turn-A-Round Plan (Fiscal 1995 Management Incentive Plan) and on
March 28, 1996 Sheh was granted by the Company 200,000 additional shares of
restricted stock of the Company. Notwithstanding any terms to the contrary in
the restricted stock agreement pertaining to the 23,998 shares granted July 5,
1995, such shares shall be fully vested on June 26, 1998 and shall not be
subject to forfeiture by reason of the termination of Sheh's employment with the
Company. On Sheh's execution of this Agreement, the 200,000 shares granted
March 28, 1996 shall be relinquished by Sheh and transferred back to the
Company.
8. Stock options. The parties acknowledge that Sheh, has unexercised
-------------
options covering 250,000 shares of common stock of the Company granted on July
29 1992, 50,000 shares granted on June 3, 1993 and 150,000 shares granted on
April 29, 1994 under the Company's stock incentive plans. All such options
shall continue to vest in accordance with the terms of the applicable stock
option agreements and shall be fully vested in Sheh, notwithstanding any terms
to the contrary in the stock option agreements evidencing such options, on April
27, 1998. Sheh shall have the right to exercise the vested options in
accordance with the terms of the applicable Stock Option Agreements during the
remaining term of the options; provided, however, that
2
<PAGE>
notwithstanding any terms to the contrary in the stock option agreements
evidencing such options, such options shall not terminate by reason of the
termination of Sheh's employment with the Company.
9. Expenses Related to Seeking Employment. The Company will provide Sheh
--------------------------------------
with an outplacement service at a cost not to exceed $25,000.
10. Other Expenses. The Company shall reimburse Sheh for reasonable
--------------
business expenses incurred by Sheh prior to his resignation, in accordance with
the Company's standard practices.
11. Sole Entitlement. Sheh agrees that his sole entitlement to
----------------
compensation, payments of any kind, monetary and/or nonmonetary benefits and/or
perquisites with respect to his employment with, his services rendered to, and
all other matters between Sheh and the Company or between Sheh and any
subsidiary of the Company, is as expressly set forth in this Agreement. It is
expressly agreed that the Severance Benefit Agreement dated July 29, 1994, as
amended, and the offer of employment letter dated July 14, 1992 by and between
Sheh and the Company are hereby terminated and are of no force and effect
whatsoever.
12. Releases by Sheh. Sheh does hereby and forever release and discharge
----------------
the Company and the past and present parent, subsidiary and affiliated
corporations of the Company as well as the successors, shareholders, officers
and directors of corporate shareholders, officers, directors, heirs,
predecessors, assigns, agents, employees, attorneys and representatives of each
of them, past or present, from any and all cause or causes of action, actions,
judgments, liens, indebtedness, damage, losses, claims, liabilities, and demands
of whatsoever kind or character, known or unknown, suspected to exist or not
suspected to exist, anticipated or not anticipated, whether or not heretofore
brought before any state or federal court or before any state or federal agency
or other governmental entity, whether statutory or common law, including without
limitation on the generality of the foregoing, any and all claims, demands or
causes of action attributable to, connected with, or incidental to the
employment of Sheh by the Company or any subsidiary of the Company, the
separation of that employment and any dealings between the parties concerning
Sheh's employment or any other matter existing prior to the date of execution of
this Agreement, excepting only any claims or causes of action arising out of
willful misconduct, dishonesty, or gross negligence of the Company, or those
obligations to be performed hereunder. This release is intended to apply to any
claims arising from federal, state or local laws which prohibit discrimination
on the basis of race, national origin, sex, religion, age, marital status,
pregnancy, handicap, disability, ancestry, sexual orientation, family or
personal leave or any other form of discrimination, or to laws such as workers'
compensation laws, which provide rights and remedies for injuries sustained in
the workplace or any common law claims of any kind, including, but not limited
to, breach of privacy, misrepresentation, defamation, wrongful termination,
tortious infliction of emotional distress, loss of consortium and breach of
fiduciary duty, violation of public policy and any other common law claim of any
kind whatever, any claims for severance pay, sick leave, family leave, vacation,
life insurance, bonuses, health insurance, disability or medical insurance or
any other fringe benefit or compensation,
3
<PAGE>
and all rights and claims arising under the Employee Retirement Income Security
Act of 1974 ("ERISA"), or pertaining to ERISA regulated benefits.
13. Releases by Company. The Company does hereby release and forever
-------------------
discharge Sheh from any and all cause or causes of action, actions, judgments,
liens, indebtedness, damages, losses, claims, liabilities, and demands of
whatsoever kind of character, known or unknown, suspected to exist or not
suspected to exist, anticipated or not anticipated, whether or not heretofore
brought before any state or federal court or before any state or federal agency
or other governmental entity, whether statutory or common law, heretofore or
hereafter arising out of, connected with or incidental to any dealings between
the parties prior to the date of this Agreement, including without limitation on
the generality of the foregoing, any and all claims, demands or causes of action
attributable to, connected with, or incidental to the employment of Sheh by the
Company or any subsidiary of the Company, the separation of that employment and
any dealings between the parties concerning Sheh's employment or any other
matter existing prior to the date of execution of this Agreement, excepting only
any claims or causes of action arising out of willful misconduct, dishonesty, or
gross negligence of Sheh, or those obligations to be performed hereunder.
14. Unknown Claims. Sheh and Company specifically waive the benefits of
--------------
the provisions of section 1542 of the Civil Code of the State of California and
any other analogous state or federal law or regulation. Said Section 1542 of
the California Civil Code reads as follows:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor."
15. Continuing Fiduciary Obligations and Unfair Competition.
-------------------------------------------------------
(a) Sheh acknowledges that he is obliged by contract and by operation
of law to maintain the confidentiality of the Company's trade secrets and other
confidential information not publicly known, and covenants and agrees that he
shall not use or divulge, disclose, or communicate to any other person, firm, or
corporation, any of the Company's trade secrets or confidential information
except as disclosure shall be compelled by judicial process. Nothing contained
in this paragraph is intended to preclude Sheh from working for a competitor of
the Company or from using non-trade secrets and/or non-confidential information
learned by him in the course of his employment with the Company.
(b) Sheh agrees that he shall not, for a period of two years from his
resignation, directly or indirectly (i) recruit, solicit or induce, or attempt
to induce any officer or employee (other than employees engaged in secretarial
or purely ministerial functions) of Company or any of its affiliates, to
terminate or fail to renew their employment or contract with, or otherwise cease
their relationship with, the Company or any of its affiliates or (ii) hire any
such person recruited in violation of (i) immediately above.
4
<PAGE>
16. Prohibition Against Defamation and Willful Disparagement. The Company
--------------------------------------------------------
and Sheh agree that they will not orally or in writing defame or willfully
disparage the other, or in the case of the Company, any subsidiary or affiliated
corporation of the Company, the Company itself, or any employee, officer or
director of the Company or any subsidiary or affiliate of the Company, except as
required by compulsion of law to truthfully testify. It is the intention of the
parties that any inquiries from potential employers of Sheh as to Sheh's job
performance, his interpersonal and other management skills and the reason for
his departure from employment at the Company be responded to by the appropriate
Company officers or members of the Company's Board of Directors in a manner that
provides a favorable recommendation of Sheh to such inquiring potential
employer. In any such communication to a prospective employer of Sheh, the
reason for Sheh's departure shall be given as "for personal reasons".
17. Litigation. Sheh agrees to cooperate with the Company in connection
----------
with any future or currently pending litigation, including without limitation,
by making himself available to testify in actions as reasonably requested by the
Company. In the event that Sheh is required to spend more than an insignificant
amount of time in any such activities, he shall be compensated at an hourly rate
of $220 per hour. In the event Sheh is named as a defendant in any litigation
or other proceeding involving the Company where Sheh is required to defend
himself with respect to events which relate to or occurred during his employment
with the Company or any subsidiary of the Company, or to his service as an
officer or director of the Company, to the extent that Sheh is not otherwise
covered by any insurance policy maintained by the Company, the Company shall be
responsible for providing a defense to, and indemnify, Sheh, to the same extent
and under the same conditions as if he were a director or officer of the
Company.
18. Legal Advice. Each party has received independent legal advice from
------------
his or its attorneys with respect to the advisability of making the settlement
provided for herein, with respect to the advisability of executing this
Agreement and with respect to the meaning of California Civil Code Section 1542.
19. Factual Investigation. Each party to this Agreement has made such
---------------------
investigation of the facts pertaining to the matters resolved by this Agreement
and of all the matters pertaining thereto as he or it deems necessary.
20. Later Discovered Facts. Each party hereto is aware that he or it may
----------------------
hereafter discover claims or facts in addition to or different from those he or
it now knows or believes to be true with respect to the matters resolved herein.
Nevertheless, it is the intention of each party to fully, finally and forever
settle and release all such matters and all claims relative thereto which may
exist or may heretofore have existed between them.
21. Confidentiality. This Agreement and its provisions are intended to be
---------------
confidential. Accordingly, except as may be required to satisfy the Company's
public disclosure or financial or accounting requirements or as may be compelled
by court order, neither the Company nor Sheh shall disclose or publicize to any
person, firm or corporation the terms of this Agreement without the consent of
the other party. As
5
<PAGE>
reasonably necessary, Sheh may discuss this Agreement with his wife, attorney,
financial advisor, tax advisor, benefit advisor or compensation advisor and
Company may discuss this Agreement with its attorneys, officers, directors and
managers provided, however, that each agrees to be bound by the terms of this
paragraph to keep the information confidential. It shall not be a breach of this
confidentiality provision for Sheh to advise any employer or prospective
employer of the limitations set forth in paragraph 15 above.
22. Assignment. Each of the parties represents and warrants that he or it
----------
has not heretofore assigned, transferred or granted or purported to assign,
transfer or grant any claims, matters, demands or causes of action herein
released, disclaimed, discharged or terminated, and agrees to indemnify and hold
harmless any other party from and against any and all costs, expense, loss or
liability incurred as a consequence of any such assignment.
23. Recitals and Paragraph Headings. Captions and paragraph headings are
-------------------------------
used herein for convenience only, are no part of this Agreement and shall not be
used in interpreting or construing it.
24. Additional Documents. The parties will execute all such further and
--------------------
additional documents and undertake all such other actions as shall be
reasonable, convenient, necessary or desirable to carry out the provisions of
this Agreement.
25. No Admissions. This Agreement effects the settlement of claims which
-------------
are denied, disputed and/or contested and nothing contained herein shall be
construed as an admission by any party hereto of any liability of any kind to
any other party. Each of the parties hereto denies any liability in connection
with any claim and intends merely to avoid the uncertainties and costs of
litigation and buy his or its peace.
26. California Law. This Agreement was negotiated, executed and delivered
--------------
within the State of California, and the rights and obligations of the parties
hereto shall be construed and enforced in accordance with and governed by the
laws of the State of California. Should any litigation arise concerning this
Agreement, it will be filed only in a court in the County of Los Angeles, State
of California, and then only if consistent with the parties' obligations under
paragraph 34 in regard to arbitration.
27. Entire Agreement. This Agreement constitutes a single integrated
----------------
contract expressing the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions with respect to the subject matter hereof.
There are no other agreements, written or oral, express or implied, between the
parties hereto, concerning the subject matter hereof, except as set forth
herein. This Agreement may be amended only by an agreement in writing.
28. Binding Effect. This Agreement is binding upon and shall inure to the
--------------
benefit of the parties hereto, their heirs, assignees and successors in interest
(including successors in any reorganization or merger with any other entity).
29. Construction of Agreement. Each party has cooperated in the drafting
-------------------------
and preparation of this Agreement, and, accordingly, in any construction or
interpretation of this Agreement, the same shall not be construed against any
party by reason of the source of drafting.
6
<PAGE>
30. Costs and Attorneys' Fees. Each party is to bear its own costs and
-------------------------
attorneys' fees incurred in connection with the matters resolved by this
Agreement and in connection with the negotiation and the preparation of this
Agreement. However, in the event of litigation or arbitration relating to or
for the enforcement of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs actually incurred.
31. Taxes. Sheh acknowledges his responsibility for any and all taxes due
-----
with respect to the sums paid to him under this Agreement, represents that he
has received independent advice concerning his tax obligations, and states that
he has not relied upon representations or advice, if any, of the Company or
their counsel concerning the taxable or nontaxable nature of the sums payable
hereunder. Sheh agrees that he will indemnify and hold the Company harmless
from any and all claims for taxes, penalties and/or interest based upon the
payments to be made under this Agreement.
32. Counterparts. This Agreement may be executed in counterparts. When
------------
each party has signed and delivered at least one such counterpart, each
counterpart shall be deemed an original, and, when taken together with other
signed counterparts, shall constitute one Agreement which shall be binding upon
and effective as to all parties. No counterpart shall be effective until all
parties hereto have executed and exchanged an executed counterparts hereof.
33. No Waiver. The failure to enforce at any time any of the provisions
---------
of this Agreement, or to require at any time performance by the other party of
any of the provisions hereof, shall in no way be construed to be a waiver of
such provisions or to affect either the validity of this Agreement or any part
hereof or the right of either party thereafter to enforce each and every
provision in accordance with the terms of this Agreement.
34. Arbitration. Except in connection with an action by the Company for
-----------
injunctive or other equitable relief, any controversy, dispute, or claim between
the parties of this Agreement or any party released pursuant to it, including
any claim arising out of, in connection with, or in relation to the
interpretation, performance or breach of this Agreement shall be resolved
exclusively by arbitration conducted in Los Angeles, California, in accordance
with the then most applicable rules of the American Arbitration Association. In
the event the parties are unable to agree upon an arbitrator, the parties shall
select a single arbitrator from a list designated by the American Arbitration
Association of seven arbitrators, all of whom shall either be (a) retired judges
of the Superior or Appellate Courts resident in Los Angeles or Orange Counties
who are members of the "independent list" of retired judges or (b) members of
the National Academy of Arbitrators who are attorneys and are resident within 50
miles of the Company's headquarters. Four of the seven panel members proposed
by the American Arbitration Association shall be retired judges and three shall
be arbitrators, all of whom meet the qualifications set forth below. If the
parties are unable to select an arbitrator from the list provided by the
American Arbitration Association, then the parties shall each strike names
alternatively from the list, with the first strike being determined by lot.
After each party has used three strikes, the remaining name on the
7
<PAGE>
list shall be the arbitrator. This agreement to resolve any disputes by binding
arbitration shall extend to claims against any shareholder of the Company, any
subsidiary or affiliate of the Company, any officers, directors, employees, or
agents of the Company and shall apply as well to claims arising out of state and
federal statutes and local ordinances as well as to claims arising under the
common law. In the event the parties are unable to agree upon a location for the
arbitration, the location (within Los Angeles County) shall be determined by the
arbitrator. The parties intend that this Agreement to arbitrate be valid,
enforceable and irrevocable and that it provide the exclusive remedy with
respect to all disputes within its scope.
35. Sheh's Understanding. Sheh states that he has carefully read this
--------------------
Agreement, that it has been fully explained to him by his attorney, that he
fully understands its final and binding effect and understands that he is
releasing certain rights and entitlements, that the only promises made to him to
sign the Agreement are those stated above, and that he is signing this Agreement
voluntarily.
36. Age Discrimination in Employment Act Waiver. The waiver given below
-------------------------------------------
is given only in exchange for consideration in addition to anything of value to
which Sheh is already entitled. The waiver set forth below does not waive
rights or claims which may arise after the date of execution of this Agreement.
Sheh acknowledges that (i) this entire Agreement is written in a manner
calculated to be understood by Sheh (ii) that he has been advised in writing to
consult with an attorney before executing this Agreement, and (iii) he was given
a period of 21 days within which to consider the Agreement, and (iv) to the
extent he executes this Agreement before the expiration of the 21 day period, he
does so knowingly and voluntarily and only after consulting with an attorney.
Sheh shall have the right to cancel and revoke this Agreement during a period of
7 days following his execution of the Agreement and this Agreement shall not
become effective, and no money shall be paid hereunder until the expiration of
such 7-day period. The 7-day period of revocation shall commence upon the date
of Sheh's execution of this Agreement. In order to revoke this Agreement, Sheh
shall deliver to the Company, prior to the expiration of said 7-day period, a
written notice of cancellation.
In addition to the release set forth at Paragraph 12 hereof, Sheh hereby
voluntarily and knowingly waives all rights or claims arising under the Federal
Age Discrimination in Employment Act.
37. Obligations of Company Which Survive Sheh's Death. The obligations of
-------------------------------------------------
the Company set forth in paragraphs 2, 3 and 4, and no others, shall survive
Sheh's death. Upon Sheh's death, the Company will make a cash payment
equivalent to its cost of providing the welfare and retirement benefits Sheh
would have received but for his death pursuant to paragraphs 5 and 6, subject to
the exception in the following sentence. Payments pursuant to the obligations
set forth in paragraphs 2, 3, 4, 5 and 6 shall be made to Sheh's wife, Mary C.
Sheh, or to his estate in the event she shall no longer be living; except that
in the event Mary C. Sheh shall no longer be living, the payment in respect of
welfare benefits shall not be made.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
8
<PAGE>
EXECUTION AND ACKNOWLEDGMENT BY ROBERT B. SHEH
- ----------------------------------------------
I received this Separation Agreement on July 24, 1996. I understand that I
have twenty-one (21) days thereafter within which to consider this Agreement
with my legal counsel. I freely choose to sign this Separation Agreement this
24 day of July, 1996. I understand that I will have seven (7) days thereafter
within which to revoke my acceptance of this Separation Agreement and that the
Separation Agreement shall not be effective under the expiration of that seven
(7) day period. Executed at Torrance, California, this 24th day of July, 1996.
/s/ Robert B. Sheh
--------------------------------------
ROBERT B. SHEH
EXECUTION AND ACKNOWLEDGMENT BY
INTERNATIONAL TECHNOLOGY CORPORATION
Dated: July 26, 1996
At: Torrance, California
INTERNATIONAL TECHNOLOGY CORPORATION
By: /s/ Anthony J. Deluca
________________________________
APPROVED AS TO FORM AND SUBSTANCE:
Date: July 25, 1996
___________________________________
/s/ Don M. Pearson of
Argue Pearson Harbison & Myers
Attorneys for Robert B. Sheh
9
<PAGE>
SEPARATION AGREEMENT
This Separation Agreement (hereinafter the "Agreement") is entered into by
Larry M. Hart (hereafter "Hart"), an individual, and International Technology
Corporation, a Delaware corporation, and its subsidiaries and affiliates
(collectively referred to as the "Company").
RECITALS
A. WHEREAS, Hart has been employed by the Company, has held the position
of Senior Vice President and Chief Operating Officer of the Company principally
supervising the Company's daily operations;
B. WHEREAS, Hart and the Company wish to finally and forever resolve all
matters between them relative to Hart's employment and his entitlement to
severance pay and other additional forms of compensation and benefits, and to
provide for the termination of the employment relationship;
C. NOW, THEREFORE, in consideration of the aforementioned recitals and
the mutual covenants and conditions set forth below and in full settlement of
any and all claims for allegedly lost compensation including, without
limitation, all claims for back pay, severance pay, accrued vacation pay,
continuation of health or other benefits or any other payment in the nature of
compensation allegedly attributable to Hart's employment by the Company, and any
and all other claims which were or could have been raised by either party prior
to the date of this Agreement, Hart and the Company hereby agree as follows:
AGREEMENT
1. Resignation and Termination of Employment. Effective as of October
-----------------------------------------
1, 1995, Hart resigns as an officer of the Company. The Company accepts Hart's
resignation. Hart shall perform no further duties for the Company after October
1, 1995 except such duties as may arise under the terms of this Agreement.
Hart's employment by the Company will terminate upon the earlier of his
resignation from employment or his obtaining full time, permanent employment
with another company. In no event shall Hart's employment continue beyond
November 1, 1996.
2. Salary. Effective as of October 1, 1995 through December 31, 1995,
------
the Company will pay Hart at the rate of $305,850 per annum, less payroll
deductions, in equal bi-weekly payments. On January 2, 1996, the Company will
pay to Hart $258,795 less applicable payroll deductions, in a lump sum.
3. Severance Pay and Bonus. The Company will pay to Hart a severance
-----------------------
payment of $199,995 less payroll deductions in a lump sum
<PAGE>
on January 2, 1996. This severance payment is in lieu of and extinguishes all
rights to any bonus payments for the second quarter of the fiscal year 1996 and
thereafter.
4. Vacation Pay. The parties acknowledge that all accrued vacation has
------------
been used by Hart and vacation will cease to accrue on and after October 1,
1995.
5. Miscellaneous Payment. The Company will pay Hart the sum of $5,600 at
---------------------
the expiration of the 7 day period of revocation contained in paragraph 44 of
this Agreement.
6. Benefits. Hart shall continue, to the same extent as other executive
--------
employees of the Company, to be eligible to participate in the following group
of benefits. Hart and the Company shall pay their respective costs for the
following group benefits in accordance with the Company's benefits plan.
(a) Group Medical Insurance. The Company's group medical insurance
-----------------------
plan and the corporate executive medical plan.
(b) Group Life and Accidental Death and Dismemberment.
-------------------------------------------------
(c) Short Term and Long Term Disability Insurance.
---------------------------------------------
(d) In each case, the Company's obligation to continue to pay its
costs of these benefits shall cease upon termination of Hart's employment in
accordance with paragraph 1 hereof.
(e) After January 2, 1996 Hart agrees to remit to the Company in a
timely manner the employee's portion of any applicable insurance premium until
such time as Hart terminates employment pursuant to the provisions of paragraph
1 hereof.
7. Retirement Plans. Hart shall cease to participate in Company's
----------------
qualified and non-qualified retirement plans on September 30, 1995.
8. Restricted Stock Award. The parties acknowledge that on July 5, 1995,
----------------------
pursuant to a Restricted Stock and Escrow Agreement, Hart was granted by Company
15,998 shares of restricted Common Stock of the Company. On Hart's termination
of employment in accordance with paragraph 1 hereof, the shares will fully vest
and all restrictions imposed upon the shares shall terminate as if Hart had
retired from the Company.
9. Stock Options. The parties acknowledge that Hart has unexercised
-------------
options covering 180,000 shares of common stock of the Company granted on
November 15, 1993 and 100,000 shares of common stock of the Company granted on
April 29, 1994 under the Company's 1991 Stock Incentive Plan. All said unvested
options shall be fully vested in Hart, notwithstanding any terms to the contrary
in
2
