<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 1998
REGISTRATION NO. 333-46183
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
INTERNATIONAL TECHNOLOGY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4955 33-0001212
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION) ----------------
2790 MOSSIDE BOULEVARD ANTHONY J. DELUCA
MONROEVILLE, PENNSYLVANIA 15146-2792 CHIEF EXECUTIVE OFFICER AND PRESIDENT
(412) 372-7701 2790 MOSSIDE BOULEVARD
(ADDRESS, INCLUDING ZIP CODE, AND MONROEVILLE, PENNSYLVANIA 15146-2792
TELEPHONE NUMBER, INCLUDING AREA CODE, (412) 372-7701
OF REGISTRANT'S PRINCIPAL EXECUTIVE (NAME, ADDRESS, INCLUDING ZIP CODE,
OFFICES) AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE OF PROCESS)
----------------
COPIES TO:
PETER F. ZIEGLER, ESQ. JOSEPH B. FRUMKIN, ESQ. THOMAS C. DANIELS, ESQ.
KAREN E. BERTERO, ESQ. SULLIVAN & CROMWELL JONES DAY REAVIS & POGUE
GIBSON, DUNN & CRUTCHER LLP 125 BROAD STREET NORTH POINT
333 SOUTH GRAND AVENUE NEW YORK, NEW YORK 10004 901 LAKESIDE AVENUE
LOS ANGELES, CALIFORNIA 90071 (212) 558-4000 CLEVELAND, OHIO 44114
(213) 229-7000 (216) 586-3939
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and the
effective time of the merger (the "Merger") of IT-Ohio, Inc., an Ohio
corporation ("Merger Sub") and a wholly owned subsidiary of International
Technology Corporation, a Delaware corporation ("ITC"), with and into OHM
Corporation, an Ohio corporation ("OHM"), pursuant to the Agreement and Plan
of Merger, dated as of January 15, 1998 (the "Merger Agreement"), among OHM,
ITC and Merger Sub attached as Annex A to the Joint Proxy Statement/Prospectus
forming part of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
WILL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
WILL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>
[LOGO OF INTERNATIONAL TECHNOLOGY CORPORATION]
2790 MOSSIDE BOULEVARD
MONROEVILLE, PENNSYLVANIA 15146-2792
March , 1998
To the Stockholders of International Technology Corporation:
Stockholders of International Technology Corporation, a Delaware corporation
("ITC"), are cordially invited to attend a Special Meeting of Stockholders of
ITC at [the DoubleTree Hotel, located at 1000 Penn Avenue, Pittsburgh,
Pennsylvania 15222, on Wednesday, April 29, 1998, at 11:00 a.m., Eastern time]
(including any adjournments or postponements thereof, the "ITC Special
Meeting").
At the ITC Special Meeting, stockholders will be asked, in order to fulfill
the rules of the New York Stock Exchange, Inc., to consider and vote upon the
issuance of common stock of ITC pursuant to the Agreement and Plan of Merger,
dated as of January 15, 1998 (the "Merger Agreement"), providing for the
merger (the "Merger") of IT-Ohio, Inc., an Ohio corporation and a wholly owned
subsidiary of ITC ("Merger Sub"), with and into OHM Corporation, an Ohio
corporation ("OHM"), pursuant to which OHM will become a wholly owned
subsidiary of ITC. Under the terms of the Merger Agreement, each outstanding
share of common stock of OHM will be converted into a combination of cash and
common stock of ITC, determined pursuant to the Merger Agreement. The Merger
Agreement and the Merger are discussed in more detail in the accompanying
Joint Proxy Statement/Prospectus and the annexes thereto (the "Proxy
Statement/Prospectus"). Please review the Proxy Statement/Prospectus
carefully.
The Merger is the second and final step in the acquisition of OHM by ITC
pursuant to the terms of the Merger Agreement. The first step provided for in
the Merger Agreement was a tender offer (the "Offer") by Merger Sub for
13,933,000 shares of OHM common stock, which was consummated on February 25,
1998. As a result of the Offer and related transactions, ITC indirectly owns
through Merger Sub 13,933,000 shares of OHM common stock, representing
approximately 54% of the outstanding shares.
Stockholders also will be asked to consider and vote upon (a) a proposal to
approve amendments to ITC's 1996 Stock Incentive Plan (i) to increase the
number of authorized shares issuable thereunder upon consummation of the
Merger and (ii) to change the date of annual automatic increases in the number
of authorized shares issuable thereunder (the "Plan Amendments") and (b) a
proposal to amend ITC's Certificate of Incorporation to eliminate provisions
therein that provide for a classified board of directors with respect to
directors elected by common stockholders (the "Charter Amendment").
The affirmative vote of the holders of shares of capital stock representing
a majority of the voting power of ITC entitled to vote thereon and present or
represented by proxy at the ITC Special Meeting with respect to the issuance
of ITC common stock pursuant to the Merger Agreement is a condition to the
consummation of the Merger. The affirmative vote of the holders of shares of
capital stock representing a majority of the voting power of ITC entitled to
vote thereon and present or represented by proxy at the ITC Special Meeting is
required to approve the Plan Amendments. The affirmative vote of the holders
of shares of capital stock representing two-thirds of the total voting power
of all outstanding shares of voting stock of ITC is required to approve the
Charter Amendment.
ITC has retained the investment banking firm of Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") to act as ITC's financial advisor in connection
with the transactions contemplated by the Merger Agreement. DLJ delivered its
written opinion, dated January 14, 1998, to the Board of Directors of ITC (the
"ITC Board") to the effect that, based upon and subject to certain matters
stated therein, as of the date of such opinion, the consideration to be paid
by ITC pursuant to the Merger Agreement is fair to ITC from a financial
<PAGE>
point of view. A copy of the opinion of DLJ, which sets forth a description of
the assumptions made, matters considered and limitations on the review
undertaken, is included in the enclosed Proxy Statement/Prospectus as Annex B
thereto, and you are urged to, and should, read such opinion in its entirety.
THE ITC BOARD BELIEVES THAT THE ISSUANCE OF COMMON STOCK OF ITC PURSUANT TO
THE MERGER AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF, ITC AND ITS
STOCKHOLDERS. THE ITC BOARD UNANIMOUSLY APPROVED SUCH ISSUANCE, THE PLAN
AMENDMENTS AND THE CHARTER AMENDMENT AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF SUCH MATTERS.
We urge you to complete, sign and date the enclosed proxy card and return it
in the enclosed return envelope, whether or not you plan to attend the ITC
Special Meeting. Your vote is important.
Sincerely,
/s/ Anthony J. Deluca
Anthony J. DeLuca
Chief Executive Officer and President
International Technology Corporation
Monroeville, Pennsylvania
<PAGE>
[LOGO OF INTERNATIONAL TECHNOLOGY CORPORATION]
2790 MOSSIDE BOULEVARD
MONROEVILLE, PENNSYLVANIA 15146-2792
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A Special Meeting of Stockholders (including any adjournments or
postponements thereof, the "ITC Special Meeting") of International Technology
Corporation (the "Company") will be held at [the DoubleTree Hotel, located at
1000 Penn Avenue, Pittsburgh, Pennsylvania 15222, on Wednesday, April 29,
1998, at 11:00 a.m., Eastern time], for the following purposes:
1. To consider and vote upon the issuance of common stock, $0.01 par value
(the "Common Stock"), of the Company pursuant to the Agreement and Plan
of Merger, dated as of January 15, 1998 (the "Merger Agreement"),
relating to the merger (the "Merger") of IT-Ohio, Inc., an Ohio
corporation and a wholly owned subsidiary of the Company ("Merger Sub"),
with and into OHM Corporation, an Ohio corporation ("OHM"), pursuant to
which each outstanding share of common stock, $0.10 par value, of OHM
would be converted into a combination of cash and shares of Common
Stock, all as more fully set forth in the accompanying Joint Proxy
Statement/Prospectus and in the Merger Agreement, a copy of which is
included as Annex A thereto.
2. To consider and vote upon amendments to the Company's 1996 Stock
Incentive Plan to: (a) increase the number of authorized shares issuable
thereunder after the consummation of the Merger; and (b) change the date
of annual automatic increases in the number of authorized shares
issuable thereunder (the "Plan Amendments").
3. To consider and vote upon an amendment to the Company's Certificate of
Incorporation to eliminate provisions therein that provide for a
classified board of directors with respect to directors elected by
common stockholders (the "Charter Amendment").
4. To transact such other business as may properly come before the ITC
Special Meeting.
The approval of the issuance of shares of Common Stock pursuant to the
Merger Agreement and the approval of the Plan Amendments will require the
affirmative vote of the holders of shares of capital stock representing a
majority of the voting power of the Company entitled to vote thereon and
present or represented by proxy at the ITC Special Meeting. The approval of
the Charter Amendment will require the affirmative vote of the holders of
shares of capital stock representing not less than two-thirds of the voting
power of the Company entitled to vote thereon and present or represented by
proxy at the ITC Special Meeting. The approval of the issuance of the shares
of Common Stock is a condition to the consummation of the Merger. Holders of
shares of Common Stock are entitled to one vote per share, and holders of
shares of the Company's Cumulative Convertible Participating Preferred Stock
(the "Convertible Preferred Stock") are entitled to the number of votes equal
to the number of shares of Common Stock into which such shares of Convertible
Preferred Stock are convertible on the date of such vote. Only holders of any
such shares of Common Stock or Convertible Preferred Stock at the close of
business on March , 1998 (the "ITC Record Date") will be entitled to notice
of and to vote at the ITC Special Meeting.
<PAGE>
As of the ITC Record Date, directors and executive officers of the Company
and their affiliates were beneficial owners of approximately % of the
outstanding voting power of the Company. The directors and executive officers
have advised the Company that they and their affiliates intend to vote all
shares of capital stock beneficially owned by them, including 45,271 shares of
Convertible Preferred Stock representing approximately 38% of the voting
power, in favor of the issuance of shares of Common Stock pursuant to the
Merger Agreement, the Plan Amendments and the Charter Amendment. The holders
of shares of Convertible Preferred Stock have entered into an agreement with
OHM and the Company pursuant to which they have agreed, among other things, to
vote in favor of the issuance of shares of Common Stock pursuant to the Merger
Agreement.
By Order of the Board of Directors,
/s/ James G. Kirk
James G. Kirk Secretary
March , 1998
Monroeville, Pennsylvania
WHETHER OR NOT YOU EXPECT TO ATTEND THE ITC SPECIAL MEETING IN PERSON,
PLEASE SIGN AND RETURN THE ACCOMPANYING PROXY. YOU MAY REVOKE OR CHANGE YOUR
PROXY AT ANY TIME PRIOR TO THE VOTING. IF YOU ATTEND THE MEETING YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON. PLEASE RESPOND AS SOON AS POSSIBLE.
2
<PAGE>
[LOGO OF OMH CORPORATION]
16406 U.S. ROUTE 224 EAST
FINDLAY, OHIO 45840
March , 1998
To the Shareholders of OHM Corporation:
Shareholders of OHM Corporation, an Ohio corporation ("OHM"), are cordially
invited to attend a Special Meeting of Shareholders of OHM at [the DoubleTree
Hotel, located at 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222, on
Wednesday, April 29, 1998, at 12:00 p.m., Eastern time] (including any
adjournments or postponements thereof, the "OHM Special Meeting").
At the OHM Special Meeting, shareholders will be asked to consider and vote
upon a proposal to adopt the Agreement and Plan of Merger, dated as of January
15, 1998 (the "Merger Agreement"), providing for the merger (the "Merger") of
IT-Ohio, Inc., an Ohio corporation ("Merger Sub") and a wholly owned
subsidiary of International Technology Corporation, a Delaware corporation
("ITC"), with and into OHM, pursuant to which OHM will become a wholly owned
subsidiary of ITC. Under the terms of the Merger Agreement, each outstanding
share of common stock of OHM will be converted into a combination of common
stock of ITC and cash, determined pursuant to the Merger Agreement. Based upon
the number of shares of OHM common stock outstanding as of March 18, 1998 and
the number of shares of OHM common stock purchased by Merger Sub in the Offer
and by OHM in the Repurchase (each as defined below), at the effective time of
the Merger each outstanding share of OHM common stock would be converted into
1.081 shares of ITC common stock and $2.58 in cash. The Merger Agreement and
the Merger are discussed in more detail in the accompanying Joint Proxy
Statement/Prospectus and the annexes thereto (the "Proxy
Statement/Prospectus"). Please review the Proxy Statement/Prospectus
carefully.
The Merger is the second and final step in the acquisition of OHM by ITC
pursuant to the terms of the Merger Agreement. The first step provided for in
the Merger Agreement was a tender offer (the "Offer") by Merger Sub for
13,933,000 shares of OHM common stock, which was consummated on February 25,
1998. Further, pursuant to the Merger Agreement and the Second Amended and
Restated Share Repurchase Agreement, dated as of February 17, 1998, among ITC,
OHM, Waste Management, Inc., a Delaware corporation ("WMX"), Rust Remedial
Services Holding Company, Inc., a Delaware corporation ("Rust Services"), and
Rust International, Inc., a Delaware corporation and a 60% owned subsidiary of
WMX, OHM repurchased (the "Repurchase") from Rust Services 2,557,231 shares of
OHM common stock for $11.50 in cash per share. In connection with the
consummation of the Offer, OHM made a pro rata distribution to its
shareholders of shares of common stock of NSC Corporation held by OHM (the
"NSC Distribution").
The affirmative vote of the holders of a majority of the outstanding shares
of OHM common stock on the proposal to adopt the Merger Agreement is a
condition to the consummation of the Merger. As a result of the Offer and the
Repurchase, ITC indirectly owns through Merger Sub 13,933,000 shares of OHM
common stock, representing approximately 54% of the outstanding shares, which
is sufficient to cause the Merger Agreement to be adopted without the
affirmative vote of any other shareholder.
OHM has retained the investment banking firm of BT Alex. Brown Incorporated
("BT Alex. Brown") to act as OHM's financial advisor in connection with the
Offer and the Merger. BT Alex. Brown delivered to the Board of Directors of
OHM (the "OHM Board") a written opinion dated January 14, 1998 to the effect
that, as of such date and based upon and subject to certain matters in such
opinion, the aggregate consideration to be received by the holders of OHM
common stock in the Offer, the Merger and the NSC Distribution was fair, from
a financial point of view, to such holders. A copy of the opinion of BT Alex.
Brown, which sets forth,
<PAGE>
among other things, assumptions made, matters considered and limitations on
the review undertaken, is included in the enclosed Proxy Statement/Prospectus
as Annex C thereto, and you are urged to, and should, read such opinion
carefully in its entirety.
THE OHM BOARD HAS DETERMINED THAT THE TRANSACTIONS CONTEMPLATED BY THE
MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, OHM AND ITS
SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR ADOPTION OF
THE MERGER AGREEMENT.
The affirmative vote of a majority of the outstanding shares of OHM common
stock is required to adopt the Merger Agreement, so failure to vote by an OHM
shareholder will have the same effect as a vote against the adoption of the
Merger Agreement. Accordingly, we urge you to complete, sign and date the
enclosed proxy card and return it in the enclosed return envelope, whether or
not you plan to attend the OHM Special Meeting. Your vote is important.
Sincerely,
/s/ Anthony J. DeLuca
Anthony J. DeLuca
Chief Executive Officer and President
OHM Corporation
Findlay, Ohio
<PAGE>
OHM CORPORATION
16406 U.S. ROUTE 224 EAST
FINDLAY, OHIO 45840
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 29, 1998
----------------
To the Shareholders of
OHM Corporation:
A Special Meeting of Shareholders (including any adjournments or
postponements thereof, the "OHM Special Meeting") of OHM Corporation, an Ohio
corporation (the "Company"), will be held at [the DoubleTree Hotel, located at
1000 Penn Avenue, Pittsburgh, Pennsylvania 15222, on Wednesday, April 29,
1998, at 12:00 p.m., Eastern time] for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of January 15, 1998 (the "Merger Agreement"), relating
to the merger (the "Merger") of IT-Ohio, Inc., an Ohio corporation
("Merger Sub") and a wholly owned subsidiary of International Technology
Corporation ("ITC"), with and into OHM, pursuant to which each
outstanding share of common stock, $0.10 par value per share, of OHM
will be converted into a combination of shares of common stock, $0.01
par value, of ITC and cash, all as more fully set forth in the
accompanying Proxy Statement/Prospectus and in the Merger Agreement, a
copy of which is included as Annex A thereto; and
2. To transact such other business as may properly come before the OHM
Special Meeting.
Only shareholders of record at the close of business on , 1998 will be
entitled to vote at the OHM Special Meeting. MERGER SUB BENEFICIALLY OWNS AND
HAS THE RIGHT TO VOTE AT THE OHM SPECIAL MEETING 13,933,000 SHARES OF OHM
COMMON STOCK, WHICH IS SUFFICIENT TO CAUSE THE MERGER AGREEMENT TO BE ADOPTED
WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER SHAREHOLDER.
If the Merger is effected, holders of shares of OHM's common stock will have
the right to dissent to the Merger and to obtain payment for their shares by
complying with the provisions of Sections 1701.84 et seq. of the Ohio General
Corporation Law, a copy of which is attached as Annex D to the accompanying
Proxy Statement/Prospectus. In order to preserve their rights, shareholders
who wish to exercise their statutory appraisal rights must submit a written
demand for appraisal not later than ten days after the OHM Special Meeting and
comply with the other procedural requirements of Sections 1701.84 et seq.
By Order of the Board of Directors
/s/ Steven E. Harbour
Steven E. Harbour
Vice President, Legal and Secretary
Findlay, Ohio
March , 1998
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR WILL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 27, 1998
INTERNATIONAL TECHNOLOGY CORPORATION
AND
OHM CORPORATION
----------
JOINT PROXY STATEMENT
----------
INTERNATIONAL TECHNOLOGY CORPORATION
----------
PROSPECTUS
----------
This Joint Proxy Statement/Prospectus, and the annexes hereto (together, the
"Proxy Statement/Prospectus"), is being furnished to the holders of common
stock, par value $0.01 per share (the "ITC Common Stock"), and all other voting
stock of International Technology Corporation, a Delaware corporation ("ITC"),
in connection with the solicitation of proxies by the Board of Directors of ITC
(the "ITC Board of Directors") for use at a Special Meeting of Stockholders of
ITC to be held at [the DoubleTree Hotel, located at 1000 Penn Avenue,
Pittsburgh, Pennsylvania 15222, on Wednesday, April 29, 1998, at 11:00 a.m.,
Eastern time] (including any and all adjournments or postponements thereof, the
"ITC Special Meeting").
This Proxy Statement/Prospectus also is being furnished to the holders of
common stock, par value $0.10 per share (the "OHM Common Stock"), of OHM
Corporation, an Ohio corporation ("OHM"), in connection with the solicitation
of proxies by the Board of Directors of OHM (the "OHM Board of Directors") for
use at a Special Meeting of Shareholders of OHM to be held at [the DoubleTree
Hotel, located at 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222, on
Wednesday, April 29, 1998, at 12:00 p.m., Eastern time] (including any and all
adjournments or postponements thereof, the "OHM Special Meeting").
This Proxy Statement/Prospectus relates, among other things, to the merger
(the "Merger") of IT-Ohio, Inc., an Ohio corporation and a wholly owned
subsidiary of ITC ("Merger Sub"), into OHM, pursuant to the Agreement and Plan
of Merger, dated as of January 15, 1998 (the "Merger Agreement"), among OHM,
ITC and Merger Sub, a copy of which is attached as Annex A to this Proxy
Statement/Prospectus. Upon consummation of the Merger, OHM will be a wholly
owned subsidiary of ITC (the "Surviving Corporation"). In the Merger, each
outstanding share of OHM Common Stock (other than shares owned by OHM,
including 2,557,231 shares acquired by OHM in the Repurchase (as defined
herein), or by its subsidiaries, shares owned by ITC, Merger Sub or any of
their subsidiaries or Dissenting Shares (as defined herein), collectively, the
"Excluded Shares"), all of which will be canceled) will be converted into the
right to receive a combination of cash and ITC Common Stock determined pursuant
to the Merger Agreement and as described herein. The foregoing will be referred
to collectively as the "Merger Consideration." Cash will be paid in lieu of
issuance of any fractional shares of ITC Common Stock.
Consummation of the Merger is subject to various conditions, including (a)
the approval of the issuance of shares of ITC Common Stock pursuant to the
Merger by holders of shares of capital stock representing a majority of the
voting power entitled to vote thereon present or represented by proxy at the
ITC Special Meeting and (b) the adoption of the Merger Agreement by a majority
of the outstanding shares of OHM Common Stock at the OHM Special Meeting. The
Merger is the second and final step in the acquisition of OHM by ITC pursuant
to the terms of the Merger Agreement. The first step provided for in the Merger
Agreement was a tender offer (the "Offer") by Merger Sub for 13,933,000 shares
of OHM Common Stock, which was consummated on February 25, 1998, and the
repurchase (the "Repurchase") of 2,557,231 shares from Rust Remedial Services
Holding Company, Inc., a Delaware corporation ("Rust Services"), pursuant to
the Second Amended and Restated Share Repurchase Agreement, dated as of
February 17, 1998 (the "Repurchase Agreement"), among ITC, OHM, Waste
Management, Inc., a Delaware corporation ("WMX"), Rust Services and Rust
International, Inc., a Delaware corporation ("Rust"). In the Merger, OHM will
become a wholly owned subsidiary of ITC. If the Merger is not consummated, it
is expected that OHM will continue to conduct its business and operations
substantially as they have been conducted subsequent to the consummation of the
Offer, with OHM being a majority owned subsidiary of ITC.
If the Merger is consummated, shareholders of OHM will have certain rights
under the Ohio General Corporation Law (the "OGCL") to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their shares
of OHM Common Stock ("Dissenting Shares"). Shareholders who wish to perfect
such rights must comply with the procedures set forth in Section 1701.85 of the
OGCL. Unless the shareholder and OHM agree on the fair cash value per
Dissenting Share, either may request the Ohio trial court to determine whether
the shareholder is entitled to be paid the fair cash value of any Dissenting
Shares. See "The Merger--Appraisal Rights."
This Proxy Statement/Prospectus, along with the documents and portions of
documents incorporated herein by reference, also constitutes the prospectus of
ITC filed as part of the Registration Statement relating to the shares of ITC
Common Stock to be issued to OHM shareholders in the Merger. ITC Common Stock
is traded on the New York Stock Exchange (the "NYSE") and the Pacific Exchange
(the "PE") under the symbol "ITX." On March , 1998, the closing sales price
for ITC Common Stock as reported on the NYSE Composite Transactions reporting
system was $ per share.
All information contained in this Proxy Statement/Prospectus with respect to
ITC and Merger Sub has been provided by ITC. All information contained in this
Proxy Statement/Prospectus with respect to OHM has been provided by OHM. This
Proxy Statement/Prospectus and the accompanying forms of proxy are first being
mailed to securityholders of ITC and OHM on or about March , 1998. A
securityholder who has given a proxy may revoke it at any time prior to its
exercise. See "The ITC Special Meeting--Record Date; Voting Rights; Proxies"
and "The OHM Special Meeting--Record Date; Voting Rights; Proxies."
----------
THE ACQUISITION OF SHARES OF ITC COMMON STOCK IN THE MERGER IS SUBJECT TO
CERTAIN RISKS. SEE "RISK FACTORS" ON PAGE 17.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is March , 1998.
<PAGE>
ITC has filed a Registration Statement on Form S-4 (such Registration
Statement and all exhibits relating thereto and any amendments thereof, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") with respect to the issuance of shares of ITC Common Stock
pursuant to the Merger Agreement. This Proxy Statement/Prospectus does not
contain all the information set forth in the Registration Statement of which
this Proxy Statement/Prospectus is a part. Reference is made to such
Registration Statement for further information with respect to ITC and the
shares of ITC Common Stock offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission or attached as an
annex hereto.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS AND, IF SO GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR THE SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES
OFFERED BY THIS PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN
ANY JURISDICTION TO OR FROM ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION OF AN OFFER, OR PROXY SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR THE
ISSUANCE OR SALE OF ANY SECURITIES HEREUNDER WILL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH HEREIN OR INCORPORATED BY REFERENCE HEREIN SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
ITC and OHM are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith each files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information
statements and other information filed with the Commission by ITC or OHM can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at the
regional offices of the Commission located at 500 West Madison Street, Room
1400, Chicago, Illinois 60606 and at 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, DC
20549 at prescribed rates. Electronic filings made through the Electronic Data
Gathering, Analysis and Retrieval System are publicly available through the
Commission's web site (http://www.sec.gov). In addition, material filed by ITC
can be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York, 10005, and the PE, 301 Pine Street, San Francisco, California, 94104, on
which the shares of ITC Common Stock are listed. Material filed by OHM can be
inspected at the offices of the NYSE at the address set forth in the preceding
sentence.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by ITC with the Commission (File No. 1-9037)
are by this reference incorporated in and made a part of this Proxy
Statement/Prospectus: (i) ITC's Annual Report on Form 10-K for the fiscal year
ended March 28, 1997, as amended; (ii) ITC's Quarterly Reports on Form 10-Q
for the fiscal quarters ended June 27, 1997, September 26, 1997 and December
26, 1997, as amended; (iii) ITC's Current Reports on Form 8-K filed on June
19, 1997 and January 20, 1998; and (iv) the description of ITC Common Stock
contained in ITC's Registration Statement on Form 8-A filed September 1, 1992,
together with any amendment or report filed with the Commission for the
purpose of updating such description.
The following documents filed by OHM with the Commission (File No. 1-9654)
are by this reference incorporated in and made a part of this Proxy
Statement/Prospectus: (i) OHM's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997; and (ii) OHM's Current Reports on Form 8-K, filed on
January 21, 1998, March 5, 1998 and March 10, 1998.
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All reports and other documents filed by ITC or OHM pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Proxy Statement/Prospectus and prior to the ITC Special Meeting and OHM
Special Meeting will be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein will be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus and the Registration Statement of which it is
a part to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement/Prospectus.
COPIES OF ALL DOCUMENTS THAT ARE INCORPORATED HEREIN BY REFERENCE (NOT
INCLUDING THE EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS OR INTO THIS PROXY
STATEMENT/PROSPECTUS) WILL BE PROVIDED WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED, UPON A WRITTEN OR ORAL REQUEST TO, IN THE CASE OF DOCUMENTS
RELATING TO ITC, INTERNATIONAL TECHNOLOGY CORPORATION, ATTENTION: HARRY J.
SOOSE, 2790 MOSSIDE BOULEVARD, MONROEVILLE, PENNSYLVANIA 15146-2792, TELEPHONE
NUMBER (412) 372-7701, OR, IN THE CASE OF DOCUMENTS RELATING TO OHM, OHM
CORPORATION, ATTENTION: TREASURER, 16406 U.S. ROUTE 224 EAST, FINDLAY, OHIO
45840, TELEPHONE NUMBER (419) 423-3529. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1998.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Proxy Statement/Prospectus, including
the documents incorporated herein by reference, that are not statements of
historical facts, are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and information relating to
ITC and OHM, which statements and information are based on the beliefs of the
managements of ITC or OHM, as applicable, as well as assumptions made by and
information currently available to the managements of ITC or OHM, as
applicable. When used in this Proxy Statement/Prospectus, the words
"anticipate," "believe," "estimate," "expect," "project," "imply," "intend"
and similar expressions, as they relate to ITC, OHM, Merger Sub or the
managements of any of them, identify forward-looking statements. Such forward-
looking statements reflect the current views of ITC or OHM, as applicable,
with respect to future events and are subject to certain risks, uncertainties
and assumptions relating to the operations and results of operations of ITC or
OHM following the Merger, including as a result of competitive factors and
pricing pressures, shifts in market demand and general economic conditions,
assumed cost savings and other synergistic benefits of the Merger and other
factors. See "Risk Factors." Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results or outcomes may vary materially from those described herein as
anticipated, believed, estimated, expected, projected, implied or intended.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 2
FORWARD-LOOKING STATEMENTS.................................................. 3
SUMMARY..................................................................... 6
The Companies............................................................. 6
Risk Factors.............................................................. 6
The ITC Special Meeting................................................... 6
Recommendation of the Board of Directors of ITC........................... 7
Opinion of ITC's Financial Advisor........................................ 7
The OHM Special Meeting................................................... 8
Recommendation of the Board of Directors of OHM........................... 8
Opinion of OHM's Financial Advisor........................................ 8
The Merger................................................................ 9
Interests of Certain Persons in the Merger................................ 11
Certain Federal Income Tax Consequences................................... 11
Comparative Per Share Prices.............................................. 11
Comparison of Stockholder and Shareholder Rights.......................... 11
Selected Historical Financial Data........................................ 12
Selected Unaudited Pro Forma Consolidated Financial Data.................. 15
GENERAL INFORMATION......................................................... 16
THE COMPANIES............................................................... 16
ITC and Merger Sub........................................................ 16
OHM....................................................................... 16
RISK FACTORS................................................................ 17
Risk of Fixed Exchange Ratio.............................................. 17
Leverage.................................................................. 17
Risks of Achievement of Synergies and Integration of Operations........... 17
Closure of Inactive Disposal Sites and Potential CERCLA Liabilities....... 18
History of Losses......................................................... 19
Recoverability of Investment in Quanterra................................. 19
Potential Adverse Impact of Pending Litigation............................ 20
Control of Board of Directors............................................. 20
Dependence on Environmental Regulations and Regulatory Uncertainties...... 20
Increased Competitive Environment and Certain Market Conditions........... 21
Dependence on Government Market and Risks of Government Contracting....... 21
Expanding Environmental Contractor Liabilities and Regulatory Risks;
Potential Inadequacy of ITC's Insurance and Risk Management Programs..... 22
Thermal Treatment Market Uncertainties.................................... 22
Fluctuations in Operating Results and Stock Price......................... 23
Payment of Dividends...................................................... 23
THE ITC SPECIAL MEETING..................................................... 24
Time, Date and Place...................................................... 24
Purposes of the ITC Special Meeting....................................... 24
Record Date; Voting Rights; Proxies....................................... 24
Solicitation of Proxies................................................... 25
Quorum.................................................................... 25
Required Vote............................................................. 25
Reasons for the Merger; Recommendation of the Board of Directors of ITC
with respect to the Merger............................................... 25
Opinion of ITC's Financial Advisor........................................ 26
THE OHM SPECIAL MEETING..................................................... 31
Time, Date and Place...................................................... 31
Purposes of the OHM Special Meeting....................................... 31
Record Date; Voting Rights; Proxies....................................... 31
Solicitation of Proxies................................................... 31
Quorum.................................................................... 32
Required Vote............................................................. 32
Appraisal Rights.......................................................... 32
Reasons for the Merger; Recommendation of the Board of Directors of OHM... 32
Opinion of OHM's Financial Advisor........................................ 34
THE MERGER.................................................................. 39
General................................................................... 39
Effective Time............................................................ 39
Merger Consideration...................................................... 39
Conversion of Shares; Procedures for Exchange of Certificates............. 39
Appraisal Rights.......................................................... 40
Background of the Merger.................................................. 41
Management of OHM after the Merger........................................ 43
Plans for OHM............................................................. 43
Effect on Employee Benefits Plans......................................... 43
Financing Arrangements Related to the Merger.............................. 44
Certain Federal Income Tax Consequences................................... 45
Accounting Treatment...................................................... 46
Certain Legal Matters..................................................... 47
Federal Securities Law Consequences....................................... 47
Stock Exchange Listing.................................................... 48
Delisting and Deregistration of OHM Common Stock.......................... 48
</TABLE>
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TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<S> <C>
THE MERGER AGREEMENT........................................................ 49
General................................................................... 49
The Offer................................................................. 49
The Merger................................................................ 49
Terms of the Merger....................................................... 49
Fractional Shares......................................................... 50
Interests of Certain Persons in the Merger................................ 51
H. Wayne Huizenga Options................................................. 53
WMX Warrants.............................................................. 53
Surrender and Payment..................................................... 53
Conditions to Consummation of the Merger.................................. 54
Representations and Warranties............................................ 55
Conduct of Business....................................................... 55
No Solicitation of Transactions........................................... 56
Indemnification........................................................... 56
Board Representation...................................................... 57
Employee Benefit Plans.................................................... 57
Termination; Fees and Expenses............................................ 58
Amendment; Waiver......................................................... 58
PRICE RANGE OF COMMON STOCK................................................. 59
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS....................... 60
DESCRIPTION OF ITC CAPITAL STOCK............................................ 69
Common Stock.............................................................. 69
Preferred Stock........................................................... 70
Cumulative Voting......................................................... 71
Transfer Agent and Registrar.............................................. 71
COMPARISON OF STOCKHOLDER AND SHAREHOLDER RIGHTS............................ 72
General................................................................... 72
Size and Classification of the Board of Directors......................... 72
Removal of Directors; Filling Vacancies on the Board of Directors......... 73
Duties of Directors....................................................... 73
Limitation on Directors' Liability........................................ 74
Indemnification of Officers and Directors................................. 74
Cumulative Voting......................................................... 74
Stockholder Action by Written Consent..................................... 75
Special Meetings of Stockholders.......................................... 75
Required Vote for Authorization of Certain Actions........................ 75
Amendment of Corporate Charter, Bylaws and Regulations.................... 76
Appraisal and Dissenters' Rights.......................................... 77
Conflict-of-Interest Transactions......................................... 77
Dividends and Other Distributions......................................... 77
State Anti-Takeover Statutes.............................................. 78
OHM....................................................................... 78
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............. 80
Certain Stockholders of ITC............................................... 80
Certain Shareholders of OHM............................................... 83
CERTAIN TRANSACTIONS........................................................ 83
MANAGEMENT OF THE SURVIVING CORPORATION AND EXECUTIVE COMPENSATION.......... 84
PROPOSAL TO AMEND THE ITC 1996 STOCK INCENTIVE PLAN......................... 84
PROPOSAL TO AMEND THE ITC CHARTER........................................... 85
OTHER MATTERS............................................................... 86
LEGAL MATTERS............................................................... 86
EXPERTS..................................................................... 86
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS............................ 86
STOCKHOLDER OR SHAREHOLDER PROPOSALS........................................ 87
Annex A--Agreement and Plan of Merger, dated as of January 15, 1998, among
OHM Corporation, International Technology Corporation and IT-Ohio,
Inc. ............................................................... A-1
Annex B--Opinion of Donaldson, Lufkin & Jenrette Securities Corporation..... B-1
Annex C--Opinion of BT Alex. Brown Incorporated............................. C-1
Annex D--Excerpt from Ohio General Corporation Law Relating to Appraisal
Rights.............................................................. D-1
Annex E--Form of International Technology Corporation's 1996 Stock
Incentive Plan, as Amended and Restated............................. E-1
Annex F--Form of Amendment to International Technology Corporation's
Certificate of Incorporation........................................ F-1
</TABLE>
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SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement/Prospectus. This summary does not contain a complete
statement of all material information relating to the Merger Agreement and the
Merger and is subject to, and is qualified in its entirety by, the more
detailed information and financial statements contained or incorporated by
reference in this Proxy Statement/Prospectus. This Proxy Statement/Prospectus
should be read carefully in its entirety. Certain capitalized terms used in
this summary are defined elsewhere in this Proxy Statement/Prospectus.
THE COMPANIES
ITC and Merger Sub. As used herein, the term "ITC" refers to International
Technology Corporation and its consolidated subsidiaries, including Merger Sub
but excluding OHM (as defined herein), which became an approximate 54% owned
subsidiary of ITC on February 25, 1998, unless the context otherwise requires.
ITC provides a wide range of environmental management services and
technologies, including the assessment, engineering and remediation of
situations involving hazardous materials and pollution prevention and
minimization. ITC was incorporated in Delaware in 1983; the earliest antecedent
of ITC commenced operations in California in 1926. The principal executive
offices of ITC are located at 2790 Mosside Boulevard, Monroeville, Pennsylvania
15146-2792, and its telephone number at such offices is (412) 372-7701. Merger
Sub was incorporated in Ohio on January 13, 1998 for the purpose of
consummating the Offer and the Merger and has not conducted any unrelated
activities since its organization. Merger Sub's principal executive offices are
located at 11499 Chester Road, Cincinnati, Ohio 45246, and its telephone number
at such offices is (513) 782-4700.
OHM. As used herein, the term "OHM" refers to OHM Corporation and its
consolidated subsidiaries, unless the context otherwise requires. OHM is one of
the largest providers of technology-based, on-site hazardous waste remediation
services in the United States. OHM has been in the environmental services
business since 1969. OHM has successfully completed approximately 31,000
projects involving contaminated groundwater, soil and facilities. The principal
executive offices of OHM are located at 16406 U.S. Route 224 East, Findlay,
Ohio 45840, and its telephone number at such offices is (419) 423-3529.
RISK FACTORS
See "Risk Factors" for a description of certain risks to be considered in
deciding how to vote upon the matters to be presented at the ITC Special
Meeting and the OHM Special Meeting.
THE ITC SPECIAL MEETING
Time, Place and Date
The ITC Special Meeting will be held at [the DoubleTree Hotel, located at
1000 Penn Avenue, Pittsburgh, Pennsylvania 15222, on Wednesday, April 29, 1998,
at 11:00 a.m., Eastern time].
Purposes of the ITC Special Meeting
At the ITC Special Meeting, in order to fulfill the rules of the NYSE,
holders of shares of capital stock of ITC entitled to vote thereon will
consider and vote upon (a) the issuance of ITC Common Stock pursuant to the
Merger Agreement, (b) the amendment of ITC's 1996 Stock Incentive Plan (the
"Incentive Plan") to (i) increase the number of authorized shares of ITC Common
Stock issuable thereunder upon consummation of the Merger and (ii) change the
date of annual automatic increases in such number (the "Plan Amendments") and
(c) the amendment of ITC's Certificate of Incorporation (the "ITC Charter") to
eliminate provisions therein that provide for a classified board of directors
with respect to directors elected by common stockholders (the "Charter
Amendment"). Stockholders will also consider and vote upon any other matter
that may properly come before the ITC Special Meeting. The approval of the
stockholders of ITC of the issuance of ITC Common Stock pursuant to the Merger
Agreement is a condition to the consummation of the Merger.
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Vote Required; Record Date
The issuance of shares of ITC Common Stock pursuant to the Merger Agreement
and the Plan Amendments will require approval by the affirmative vote of the
holders of shares of capital stock of ITC representing a majority of the voting
power of ITC entitled to vote thereon and present or represented by proxy at
the ITC Special Meeting. The Charter Amendment will require approval by the
affirmative vote of the holders of shares of capital stock representing two-
thirds of the total voting power of all outstanding shares of voting stock of
ITC. Holders of shares of ITC Common Stock are entitled to one vote per share,
and holders of shares of ITC's Cumulative Convertible Participating Preferred
Stock, par value $100 per share (the "Convertible Preferred Stock"), voting
together with the ITC Common Stock as a single class, are entitled to a number
of votes equal to the number of votes which could be cast by the holders of the
number of shares of ITC Common Stock into which such shares are convertible on
the date of such vote, which equals 5,928,854. Only holders of such shares at
the close of business on March , 1998 (the "ITC Record Date") are entitled to
notice of and to vote at the ITC Special Meeting. See "The ITC Special
Meeting." As of the ITC Record Date, directors and executive officers of ITC
and their affiliates were beneficial owners of approximately % of the
outstanding voting power of ITC, including approximately 38% attributable to
affiliates of the holders of shares of Convertible Preferred Stock. All of such
directors and executive officers have advised ITC that they and their
affiliates intend to vote all shares beneficially owned by them in favor of the
issuance of shares of ITC Common Stock pursuant to the Merger Agreement, the
Plan Amendments and the Charter Amendment.
Additionally, pursuant to the Parent Voting Agreement, dated as of January
15, 1998 (the "Parent Voting Agreement"), among ITC, OHM and the holders of the
Convertible Preferred Stock (the "Parent Stockholders") which are entitled to
cast approximately 38% of the votes entitled to be cast at the ITC Special
Meeting, the Parent Stockholders have agreed, among other things, to vote all
shares of Convertible Preferred Stock held by them in favor of the issuance of
shares of ITC Common Stock pursuant to the Merger Agreement and have delivered
to OHM an irrevocable proxy to vote all shares of Convertible Preferred Stock
and any other shares of capital stock of ITC acquired by them prior to the
Effective Time in a manner consistent with the provisions of the Parent Voting
Agreement.
Quorum
The presence in person or by properly executed proxy of holders of a majority
of all of the shares of capital stock of ITC entitled to vote thereat is
necessary to constitute a quorum at the ITC Special Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF ITC
THE ITC BOARD OF DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, ITC AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. THE
ITC BOARD OF DIRECTORS ALSO UNANIMOUSLY APPROVED THE PLAN AMENDMENTS AND THE
CHARTER AMENDMENT. THE ITC BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF ITC APPROVE THE ISSUANCE OF SHARES OF ITC COMMON STOCK PURSUANT
TO THE MERGER AGREEMENT, THE PLAN AMENDMENTS AND THE CHARTER AMENDMENT. See
"The ITC Special Meeting--Recommendation of the Board of Directors of ITC;
Reasons for the Merger," "The Merger--Background of the Merger," "Proposal to
Amend the ITC 1996 Stock Incentive Plan" and "Proposal to Amend the ITC
Charter."
OPINION OF ITC'S FINANCIAL ADVISOR
Donaldson, Lufkin & Jenrette Securities Corporation, financial advisor to ITC
("DLJ"), has delivered its written opinion, dated January 14, 1998, to the ITC
Board of Directors to the effect that as of such date and
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based on, and subject to, the assumptions, limitations and qualifications set
forth in such opinion, the consideration to be paid by ITC pursuant to the
Merger Agreement is fair to ITC from a financial point of view. DLJ's opinion
does not constitute a recommendation as to how any stockholder of ITC should
vote at the ITC Special Meeting. STOCKHOLDERS OF ITC ARE URGED TO, AND SHOULD,
READ IN ITS ENTIRETY THE FULL TEXT OF THE WRITTEN OPINION OF DLJ ATTACHED AS
ANNEX B TO THIS PROXY STATEMENT/PROSPECTUS FOR THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF REVIEW BY DLJ. See "The ITC
Special Meeting--Opinion of ITC's Financial Advisor."
THE OHM SPECIAL MEETING
Time, Place and Date
The OHM Special Meeting will be held at [the DoubleTree Hotel, located at
1000 Penn Avenue, Pittsburgh Pennsylvania 15222, on Wednesday, April 29, 1998,
at 12:00 p.m., Eastern time].
Purposes of the OHM Special Meeting
At the OHM Special Meeting, holders of shares of OHM Common Stock will
consider and vote upon a proposal to adopt the Merger Agreement. As a result of
the Merger, OHM will become a wholly owned subsidiary of ITC and shares of OHM
Common Stock will be converted into the Merger Consideration. Shareholders will
also consider and vote upon any other matter as may properly come before the
OHM Special Meeting.
Vote Required; Record Date
The adoption of the Merger Agreement will require approval by the affirmative
vote of the holders of a majority of the outstanding shares of OHM Common Stock
entitled to vote thereon. Holders of shares of OHM Common Stock are entitled to
one vote per share. Only holders of shares of OHM Common Stock at the close of
business on March , 1998 (the "OHM Record Date") will be entitled to notice
of and to vote at the OHM Special Meeting. Merger Sub beneficially owns and has
the right to vote at the OHM Special Meeting 13,933,000 shares of OHM Common
Stock, or approximately 54% of the outstanding shares, which is sufficient to
cause the Merger Agreement to be adopted without the affirmative vote of any
other shareholder. See "The OHM Special Meeting."
Quorum
The presence in person or by properly executed proxy of holders of a majority
of all of the outstanding shares of OHM Common Stock entitled to vote thereat
is necessary to constitute a quorum at the OHM Special Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF OHM
THE OHM BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, OHM AND
ITS SHAREHOLDERS. ACCORDINGLY, THE OHM BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS ADOPT THE MERGER AGREEMENT. See "The OHM Special
Meeting--Recommendation of the Board of Directors of OHM; Reasons for the
Merger," "The Merger--Background of the Merger" and "The Merger Agreement--
Interests of Certain Persons in the Merger."
OPINION OF OHM'S FINANCIAL ADVISOR
BT Alex. Brown Incorporated ("BT Alex. Brown"), financial advisor to OHM, has
delivered its written opinion to the OHM Board of Directors, dated January 14,
1998, to the effect that, as of such date and based
8
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upon and subject to certain matters in such opinion, the aggregate
consideration to be received by the holders of shares of OHM Common Stock in
the Offer, the Merger and the pro rata distribution to OHM shareholders of all
shares of common stock of NSC Corporation ("NSC") held by OHM (the "NSC
Distribution") was fair, from a financial point of view, to such holders. The
full text of BT Alex. Brown's written opinion, which sets forth among other
things, assumptions made, matters considered and limitations on the review
undertaken, is attached hereto as Annex C. Each OHM shareholder should read
such opinion carefully in its entirety. The opinion of BT Alex. Brown is
directed only to the matters set forth therein and does not constitute a
recommendation to any OHM shareholder as to how such shareholder should vote at
the OHM Special Meeting. See "The Merger--Opinion of OHM's Financial Advisor."
SHAREHOLDERS OF OHM ARE URGED TO, AND SHOULD, READ IN ITS ENTIRETY THE FULL
TEXT OF THE WRITTEN OPINION OF BT ALEX. BROWN ATTACHED AS ANNEX C TO THIS PROXY
STATEMENT/PROSPECTUS.
THE MERGER
Effective Time of the Merger
The Merger will become effective upon the date on which a Certificate of
Merger (the "Merger Certificate") has been duly filed with the Secretary of
State of the State of Ohio (the "Effective Time"). The Effective Time is
currently expected to occur as soon as practicable following the closing of the
Merger (the "Closing") which will take place on the first business day after
the fulfillment or waiver of the conditions to closing set forth in the Merger
Agreement or such other date agreed to by ITC and OHM. See "The Merger--
Effective Time" and "The Merger Agreement--Conditions to Consummation of the
Merger."
Merger Consideration
At the Effective Time, each issued and outstanding share of OHM Common Stock
(other than Excluded Shares), will be canceled and converted automatically into
a combination of shares of ITC Common Stock and cash, determined pursuant to
the Merger Agreement. Based upon the number of shares of OHM Common Stock
outstanding as of March 18, 1998 and the number of shares of OHM Common Stock
purchased by Merger Sub in the Offer and by OHM in the Repurchase, at the
Effective Time each outstanding share of OHM Common Stock would be converted
into the right to receive 1.081 shares of ITC Common Stock and $2.58 in cash.
Exchange of Stock Certificates
As soon as reasonably practicable after the Effective Time, the Surviving
Corporation will cause BankBoston, N.A. (c/o Boston EquiServe, L.P.), or
another agent designated by ITC, in its capacity as exchange agent for the
Merger (the "Exchange Agent"), to mail a transmittal letter to each OHM
shareholder of record at the Effective Time (other than holders of Excluded
Shares). The transmittal letter will contain instructions with respect to the
surrender of certificates formerly representing OHM Common Stock to be
exchanged for the Merger Consideration, any unpaid dividends or other
distributions and cash in lieu of fractional shares of ITC Common Stock.
Holders of certificates which prior to the Effective Time represented OHM
Common Stock will not be entitled to receive any payment of dividends or other
distributions with respect to ITC Common Stock, if any, until such certificates
have been surrendered for certificates representing ITC Common Stock. No
interest will be paid or accrued on any amount payable upon surrender of
certificates representing OHM Common Stock. See "The Merger--Conversion of
Shares; Procedures for Exchange of Certificates."
SHAREHOLDERS SHOULD NOT FORWARD CERTIFICATES FOR OHM COMMON STOCK TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. SHAREHOLDERS
SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
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Appraisal Rights
Under the OGCL, holders of shares of OHM Common Stock are entitled to
appraisal rights with respect to the Merger. In the event the Merger is
effected, any Dissenting Shares will not be converted into the right to receive
the Merger Consideration unless the holder of such shares fails to perfect or
otherwise loses such holder's right to such appraisal. If such holder fails to
perfect or loses such right to appraisal, each Dissenting Share of such holder
will be treated as a share of OHM Common Stock that has been converted, as of
the Effective Time, into the right to receive the Merger Consideration in
accordance with the terms of the Merger Agreement. Under the General
Corporation Law of the State of Delaware (the "DGCL"), the holders of shares of
ITC Common Stock are not entitled to appraisal rights with respect to the
Merger. See "The Merger--Appraisal Rights" and "Comparison of Stockholder and
Shareholder Rights--Appraisal and Dissenters' Rights."
Governmental Approvals Required
The Offer was subject to the pre-merger notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). On
January 15, ITC and OHM each filed a pre-merger notification form with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") under the HSR Act with respect
to the Offer. Early termination of the waiting period with respect to such
filings was granted on January 26, 1998. See "The Merger--Certain Legal
Matters."
Accounting Treatment
The acquisition of OHM by ITC, which includes the Merger, will be accounted
for under the "purchase" method of accounting in accordance with generally
accepted accounting principles ("GAAP").
Stock Exchange Listing
Pursuant to applications filed by ITC, the shares of ITC Common Stock to be
issued in the Merger have been authorized for listing on the NYSE and the PE,
subject to official notice of issuance.
Conditions to the Merger; Termination
The obligations of ITC and OHM to consummate the Merger are subject to
various conditions, including, without limitation: (a) the absence of any
injunction, whether temporary, preliminary or permanent, or other order by any
federal or state court which prevents the consummation of the Merger; (b) the
effectiveness of the Registration Statement under the Securities Act; (c) the
approval by the stockholders of ITC of the issuance of shares of ITC Common
Stock pursuant to the Merger Agreement; (d) the adoption of the Merger
Agreement by the shareholders of OHM; (e) the approval for listing on the NYSE,
subject to official notice of issuance, of the ITC Common Stock to be issued in
connection with the Merger and, if the Offer has not been consummated, (f) the
expiration or termination of the applicable waiting periods under the
HSR Act; (g) the representations and warranties contained in the Merger
Agreement shall be true and correct; and (h) ITC, Merger Sub and OHM shall have
performed in all material respects the obligations to be performed by them
under the Merger Agreement prior to the Effective Time. See "The Merger
Agreement--Conditions to Consummation of the Merger."
Termination Fee; Expenses
Pursuant to the Merger Agreement, if (a) under certain circumstances, OHM
enters into an agreement with respect to an Acquisition Proposal (as defined
herein) or any entity other than ITC becomes the beneficial owner of a majority
of the outstanding shares of OHM Common Stock and OHM consummates an alternate
transaction within one year of such termination, (b) ITC terminates the Merger
Agreement due to the withdrawal or modification in a manner adverse to ITC or
Merger Sub of the approval or recommendation by the OHM Board
10
<PAGE>
of Directors of the Merger Agreement or the Merger or the failure by the OHM
Board of Directors to reaffirm such approval or recommendation upon request by
ITC or (c) OHM terminates the Merger Agreement as a result of a Superior
Proposal, OHM will pay ITC a fee of $15.0 million (the "Termination Fee").
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the OHM Board of Directors with respect
to the Merger Agreement and the transactions contemplated thereby, shareholders
of OHM should be aware that certain members of OHM management and the OHM Board
of Directors have interests in the Merger that are in addition to the interests
of the shareholders of OHM generally. These interests arise from, among other
things, certain severance arrangements, employee benefit and bonus plans,
indemnification arrangements and other matters which ITC will assume or has
agreed to provide after the Merger. See "The Merger Agreement--Interests of
Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of shares of ITC Common Stock and cash as the Merger
Consideration will be a taxable event for federal income tax purposes and may
also be a taxable transaction under applicable state, local or foreign tax
laws. A shareholder who receives the Merger Consideration pursuant to the
Merger will recognize gain or loss for federal income tax purposes equal to the
difference between the sum of (a) the fair market value of the ITC Common Stock
at the Effective Time and (b) the cash received and such shareholder's adjusted
tax basis in the shares of OHM Common Stock exchanged in the Merger. See "The
Merger--Certain Federal Income Tax Consequences."
THE TAX CONSEQUENCES DISCUSSED ABOVE MAY NOT APPLY TO CERTAIN CATEGORIES OF
HOLDERS OF SHARES OF OHM COMMON STOCK SUBJECT TO SPECIAL TREATMENT UNDER THE
CODE, SUCH AS FOREIGN HOLDERS AND HOLDERS WHOSE SHARES WERE ACQUIRED AS
COMPENSATION. HOLDERS OF OHM COMMON STOCK ARE URGED TO CONSULT THEIR TAX
ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER UNDER
FEDERAL, STATE, LOCAL OR OTHER TAX LAWS (INCLUDING ANY TAX RETURN FILING OR
OTHER TAX REPORTING REQUIREMENTS).
COMPARATIVE PER SHARE PRICES
On January 14, 1998, the last day of trading prior to the public announcement
of the Merger Agreement, the closing prices of ITC Common Stock and OHM Common
Stock as reported on the NYSE Composite Transactions reporting system were $7
15/16 per share and $9 1/8 per share, respectively. On March , 1998, the date
immediately prior to the printing of this Proxy Statement/Prospectus, the
closing prices of ITC Common Stock and OHM Common Stock as reported on the NYSE
Composite Transactions reporting system were $ per share and $ per share,
respectively. Based on the closing prices of ITC Common Stock on January 14,
1998 and March , 1998, the value of shares of ITC Common Stock to be received
in the Merger would have been $11.06 and $ , respectively. See "Price Range of
Common Stock and Dividend Information." The Merger Agreement does not contain
any provision for adjustment to the Merger Consideration based on fluctuations
in the market prices of ITC Common Stock or OHM Common Stock. See "Risk
Factors--Risk of Fixed Exchange Ratio."
COMPARISON OF STOCKHOLDER AND SHAREHOLDER RIGHTS
The rights of shareholders of OHM currently are governed by Ohio law, the
Amended and Restated Articles of Incorporation of OHM (the "OHM Charter") and
the Regulations of OHM (the "OHM Regulations"). Upon consummation of the
Merger, shareholders of OHM will become stockholders of ITC, which is a
Delaware
11
<PAGE>
corporation, and their rights as stockholders of ITC will be governed by
Delaware law, the ITC Charter and the Bylaws of ITC, as amended (the "ITC
Bylaws"). For a discussion of various differences between the rights of
shareholders of OHM and the rights of stockholders of ITC, see "Comparison of
Stockholder and Shareholder Rights."
SELECTED HISTORICAL FINANCIAL DATA
The following tables present selected historical financial data of ITC and
OHM. Historical financial data of ITC and OHM for each of the annual periods
presented has been extracted from the audited historical financial statements
of ITC and OHM, respectively, previously filed with the Commission. Historical
financial data of ITC and OHM for the interim periods presented has been
extracted from unaudited historical financial statements of ITC and OHM,
respectively, previously filed with the Commission.
The following information should be read in conjunction with the historical
financial statements of ITC and OHM incorporated by reference in this Proxy
Statement/Prospectus.
12
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data is derived from ITC's
consolidated financial statements. Historical results should not be taken as
necessarily indicative of the results that may be expected for any future
period. This consolidated data should be read in conjunction with the
consolidated financial statements and notes thereto contained in ITC's Annual
Report on Form 10-K for the fiscal year ended March 28, 1997, incorporated by
reference herein. Share and per share data have been restated to reflect ITC's
one-for-four reverse stock split effective November 21, 1996.
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED FISCAL YEAR ENDED
------------------------- --------------------------------------------------
MARCH 31,
DECEMBER 26, DECEMBER 27, MARCH 28, MARCH 29, ----------------------------
1997 1996 1997 1996 1995 1994 1993
------------ ------------ --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
INFORMATION
Revenues................ $306,178 $266,419 $362,131 $400,042 $423,972 $392,803 $410,539
Loss from continuing
operations (net of
preferred stock
dividends)............. (7,441) (13,455) (13,693) (3,654) (7,880) (3,241) (2,082)
Basic net loss per share
from continuing
operations............. (0.76) (1.48) (1.48) (0.41) (0.89) (0.37) (0.25)
Weighted average
shares................. 9,791 9,091 9,227 8,982 8,889 8,691 8,383
OTHER FINANCIAL
INFORMATION
Working capital......... $ 99,890 $109,642 $110,705 $ 89,174 $ 73,838 $ 63,522 $ 60,281
Total assets............ 324,497 344,598 342,531 315,314 362,152 359,203 369,178
Long-term debt.......... 69,784 70,869 65,874 65,611 80,189 68,625 115,811
Long-term accrued
liabilities............ 9,670 18,511 16,004 30,223 45,207 38,993 52,470
Stockholders' equity.... 163,463 168,846 168,853 140,865 145,921 160,548 106,178
</TABLE>
No cash dividends were paid on common shares for any period.
- --------
(1) Special and non-recurring charges include: (i) for the three quarters ended
December 26, 1997, a $3,943,000 charge for the settlement of the Helen
Kramer Superfund project; (ii) for the three quarters ended December 26,
1997 and the year ended March 28, 1997, a restructuring charge of
$2,611,000 and $8,043,000, respectively; (iii) for the three quarters ended
December 26, 1997, a non-cash charge of $1,800,000 to sell its California-
based projects remediation services business; (iv) for the year ended
March 31, 1995, a $1,090,000 pre-tax gain on settlement of Motco
litigation; (v) for the year ended March 31, 1995, ITC recorded a charge of
$3,800,000 to provide for potential settlement and defense costs related to
certain class action stockholder litigation; and (vi) for the year ended
March 31, 1994, ITC recorded a $2,500,000 non-cash charge for the write-off
investment in a treatment facility.
(2) ITC reported equity in net loss of Quanterra of $26,416,000 and $9,827,000
for the years ended March 29, 1996 and March 31, 1995, respectively.
(3) The results of operations for the year ended March 31, 1995 reflect the
accounting for discontinued operations of certain businesses.
13
<PAGE>
OHM CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following selected consolidated financial data is derived from OHM's
consolidated financial statements. Historical results should not be taken as
necessarily indicative of the results that may be expected for any future
period. This consolidated data should be read in conjunction with the
consolidated financial statements and notes thereto contained in OHM's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, incorporated
by reference herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------------
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
INFORMATION
Revenues................ $526,691 $550,984 $457,925 $323,381 $242,401
Income (loss) from
continuing operations.. (21,197) 11,515 6,807 (7,616) 4,407
Net income (loss) per
share:
Basic.................. (0.78) 0.43 0.31 (0.49) 0.36
Diluted................ (0.78) 0.43 0.30 (0.49) 0.35
Weighted average number
of common shares
outstanding:
Basic................ 27,210 26,820 22,211 15,582 12,250
Diluted.............. 27,210 26,840 22,413 15,582 12,454
OTHER FINANCIAL
INFORMATION
Working capital......... $ 77,058 $ 94,342 $129,156 $116,464 $ 69,985
Total assets............ 319,779 336,537 376,506 272,546 215,357
Long-term debt.......... 50,041 52,972 104,111 127,279 71,113
Stockholders' equity.... 156,896 174,572 160,492 76,920 82,743
</TABLE>
- -------
(1) Special charges include: (i) for the year ended December 31, 1997, OHM
recorded a $22,726,000 charge (net of income tax benefit of $15,151,000)
for the settlement and write-down of certain claims and litigation and
establishment of reserves for the consolidation of certain laboratory and
operational functions. In addition OHM recorded a $12,089,000 (net of
$2,860,000 income tax benefit) charge to reduce the carrying value of its
NSC investment to reflect the likely value to be realized given OHM's
intention to divest this investment; (ii) for the year ended December 31,
1995, OHM recorded a $2,312,000 charge (net of income tax benefit of
$1,542,000) for integration costs related to the acquisition of the
hazardous and nuclear waste remediation service business (the "Division")
of Rust; and (iii) for the year ended December 31, 1994, OHM recorded a
special charge of $15,000,000 (net of income tax benefit of $10,000,000) to
establish a reserve for accounts receivable, primarily where such accounts
are in litigation.
(2) Effective June 1, 1997, OHM acquired all of the outstanding stock of Beneco
Enterprises, Inc., a Utah corporation ("Beneco"), for an aggregate purchase
price of $14,700,000. The acquisition of Beneco has been accounted for
using the purchase method and, accordingly, the acquired assets and assumed
liabilities, including goodwill, have been recorded at their estimated fair
values as of June 1, 1997. OHM's consolidated financial statements for the
year ended December 31, 1997 include the results of Beneco since June 1,
1997. See the section entitled "Note 2 to Consolidated Financial
Statements" in OHM's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, which is incorporated herein by reference.
(3) On May 30, 1995, OHM completed the acquisition of substantially all of the
assets and certain liabilities of the Division in exchange for 9,668,000
shares of OHM Common Stock, or approximately 37% of the outstanding shares
of OHM Common Stock. The acquisition of the Division has been accounted for
using the purchase method and, accordingly, the acquired assets and assumed
liabilities, including goodwill, have been recorded at their estimated fair
values as of May 30, 1995. OHM's consolidated financial statements for the
year ended December 31, 1995 include the results of operations for the
Division since May 30, 1995. See the section entitled "Note 2 to the
Consolidated Financial Statements" in OHM's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, incorporated herein by reference.
14
<PAGE>
SELECTED UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated financial data at December 26,
1997 and for the nine month period and the year ended December 26, 1997 and
March 28, 1997, respectively, for ITC and OHM, respectively, gives effect to
the Offer, the Repurchase, the NSC Distribution and the Merger, with Merger
Consideration equal to 1.05258 shares of ITC Common Stock and $2.81657 in cash
for each share of OHM Common Stock based on the number of shares of OHM Common
Stock outstanding as of December 31, 1997 (27,425,046 shares). The acquisition
is accounted for using the purchase method of accounting for business
combinations. The unaudited pro forma consolidated financial data are not
necessarily indicative of future operations or the actual results that would
have occurred had the Offer, the Repurchase, the NSC Distribution and the
Merger been consummated at the beginning of the periods presented.
The following unaudited pro forma consolidated statement of income data for
the nine months ended December 26, 1997 and the fiscal year ended March 28,
1997 assumes that the Merger occurred at the beginning of the periods
presented. The following unaudited pro forma consolidated balance sheet data as
of December 26, 1997 assumes the Merger occurred as of that date. See
"Unaudited Pro Forma Consolidated Financial Statements."
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
DEC. 26, 1997 MAR. 28, 1997
----------------- -----------------
<S> <C> <C>
INCOME STATEMENT INFORMATION
Revenues.................................. $724,371 $913,115
Net loss applicable to common stock....... (25,739) (14,380)
Basic net loss per share from continuing
operations............................... (1.21) (0.69)
Weighted average number of common and
common equivalent shares outstanding..... 21,248 20,736
<CAPTION>
DEC. 26, 1997
-----------------
<S> <C> <C>
OTHER FINANCIAL INFORMATION
Working capital........................... $ 89,219 --
Total assets.............................. 782,541 --
Long-term debt............................ 309,716 --
Stockholders' equity...................... 238,299 --
</TABLE>
15
<PAGE>
GENERAL INFORMATION
This Proxy Statement/Prospectus is being furnished to stockholders of ITC in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of ITC for use at the ITC Special Meeting. The ITC Special Meeting
will be held at [the DoubleTree Hotel, located at 1000 Penn Avenue,
Pittsburgh, Pennsylvania 15222, on Wednesday, April 29, 1998, at 11:00 a.m.,
Eastern time].
This Proxy Statement/ Prospectus is also being furnished to shareholders of
OHM in connection with the solicitation of proxies by and on behalf of the
Board of Directors of OHM for use at the OHM Special Meeting. The OHM Special
Meeting will be held at [the DoubleTree Hotel, located at 1000 Penn Avenue,
Pittsburgh, Pennsylvania 15222, on Wednesday, April 29, 1998, at 12:00 p.m.,
Eastern time].
This Proxy Statement/Prospectus and the related forms of proxy for each of
ITC and OHM are first being mailed to their stockholders and shareholders,
respectively, on or about , 1998.
THE COMPANIES
ITC AND MERGER SUB
ITC provides a wide range of environmental management services and
technologies, including the assessment, engineering and remediation of
situations involving hazardous materials and pollution prevention and
minimization. ITC's services are provided to a broad array of governmental and
commercial entities predominantly in the U.S. market. Additionally, ITC
pursues selected international business opportunities. ITC's business strategy
is to provide its environmental services on a full-service basis, particularly
by focusing on its capabilities to manage complex environmental issues from
the initial assessment of the level and extent of contamination through the
design, engineering and execution of a solution which minimizes the client's
total cost. Demand for ITC's services is heavily influenced by the level of
enforcement of environmental laws and regulations, funding levels for
government projects and spending patterns of commercial clients. In recent
years, ITC has worked on several hundred Superfund sites for various
governmental and commercial clients.
ITC is incorporated under the laws of the State of Delaware. Its principal
executive offices are located at 2790 Mosside Boulevard, Monroeville,
Pennsylvania 15146-2792, telephone number (412) 372-7701.
Merger Sub is a wholly owned subsidiary of ITC, and was incorporated under
the laws of the State of Ohio on January 13, 1998 for the purpose of
consummating the Offer and the Merger. Merger Sub conducted no business prior
to entering into the Merger Agreement. Merger Sub's principal executive
offices are located at 11499 Chester Road, Cincinnati, Ohio 45246, telephone
number (513) 782-4700.
OHM
OHM, and its predecessors, is one of the largest providers of technology-
based, on-site hazardous waste remediation services in the United States. OHM
has been in the environmental services business since 1969. OHM has
successfully completed approximately 31,000 projects involving contaminated
groundwater, soil and facilities. OHM provides a wide range of environmental
services, primarily to government agencies and to large chemical, petroleum,
transportation and industrial companies. OHM has worked for the United States
Environmental Protection Agency, the Department of Defense (including the U.S.
Army Corps of Engineers and the U.S. Departments of the Air Force, Army and
Navy), the Department of Energy, a number of state and local governments and a
majority of the Fortune 100 industrial and service companies. In addition to
its technology-based, on-site remediation services, OHM also offers a broad
range of other services, including site assessment, engineering, remedial
design and analytical testing. Service is provided through 30 regional
offices, one fixed laboratory at its headquarters facility in Findlay, Ohio,
eight mobile laboratories and approximately 2,800 pieces of mobile treatment
and related field equipment.
OHM is incorporated under the laws of the State of Ohio. The principal
executive offices of OHM are located at 16406 U.S. Route 224 East, Findlay,
Ohio 45840, telephone number (419) 423-3529.
16
<PAGE>
RISK FACTORS
The ITC Common Stock offered hereby is speculative in nature and involves a
high degree of risk. In addition to the other information included elsewhere
in this Proxy Statement/Prospectus, the following factors should be considered
carefully in evaluating an investment in the ITC Common Stock as a result of
the Merger.
RISK OF FIXED EXCHANGE RATIO
The number of shares of ITC Common Stock into which the OHM Common Stock
will be converted in the Merger is a fixed number and is not subject to
adjustment in the event of any increase or decrease in the price of either the
ITC Common Stock or the OHM Common Stock. The price of either the ITC Common
Stock or the OHM Common Stock at the Effective Time may vary significantly
from the respective prices as of January 15, 1998, the date the Merger
Agreement was signed, and at the date of this Proxy Statement/Prospectus and
at the dates of the ITC Special Meeting and the OHM Special Meeting. Such
variations may be the result of changes in the business, operations or
prospects of ITC or OHM, market assessments of the likelihood that the Merger
will be consummated and the time thereof, regulatory considerations, general
market and economic conditions and other factors. Because the Effective Time
may occur at a date later than the dates of the ITC Special Meeting and the
OHM Special Meeting, there can be no assurance that the price of either the
ITC Common Stock or the OHM Common Stock on the date of such meetings will be
indicative of such prices at the Effective Time. Accordingly, the market value
of the shares of ITC Common Stock that shareholders of OHM will receive in the
Merger may vary significantly from the market values of shares of ITC Common
Stock and OHM Common Stock as of the date of this Proxy Statement/Prospectus,
and may be greater or less than the $11.50 per share paid for shares of OHM
Common Stock in the Offer. Based on the closing price of ITC Common Stock on
the NYSE on March , 1998, the value of the Merger Consideration to be
received in the Merger for each share of OHM Common Stock would have been
$ . Shareholders of OHM are urged to obtain current market quotations for
the ITC Common Stock.
LEVERAGE
ITC has in the past and may in the future have a significant amount of
indebtedness. In order to finance its acquisition of OHM, ITC has entered into
the Credit Facilities (as defined herein). See "The Merger--Financing
Arrangements Related to the Merger." On a pro forma basis giving effect to the
Merger and the incurrence of debt under the Credit Facilities as of December
26, 1997, ITC's total long-term debt, including the current portion thereof,
would have been $321.9 million, and its total stockholders' equity would have
been $238.3 million. See "Unaudited Pro Forma Combined Condensed Financial
Statements." The ability of ITC to meet its debt service obligations is
dependent upon its future operating performance and its ability to effect
additional debt and/or equity financings, including additional borrowings
under the Credit Facilities, which in turn is subject to economic, financial,
competitive, business and other factors including factors beyond ITC's
control.
ITC's leverage could also limit its ability to obtain necessary project and
other financing and any necessary bonding and to withstand competitive
pressure and adverse economic conditions (including a downturn in business or
increased inflation or interest rates) or to take advantage of significant
business opportunities that may arise, including strategic acquisitions or
joint ventures.
RISKS OF ACHIEVEMENT OF SYNERGIES AND INTEGRATION OF OPERATIONS
ITC's management believes that it will be able to achieve certain after-tax
cost savings and other synergistic benefits as a result of combining ITC and
OHM in the Merger. However, there can be no assurance that such benefits will
be realized. Regardless of the level of savings actually realized, the level
of savings in 1998 will be affected by transaction costs, presently expected
to aggregate approximately $63.4 million for ITC and OHM. Additionally, the
future success of ITC will depend in part upon its ability to integrate and
operate OHM successfully with its business. The integration process will
require the dedication of management resources,
17
<PAGE>
which may temporarily distract attention from the day-to-day business of ITC.
The future success of ITC will also depend in part on its ability to retain
and assimilate qualified employees of OHM. There can be no assurance that ITC
will be able to efficiently integrate and operate OHM with its business or
retain or assimilate qualified employees of OHM. A failure to do so could have
a material adverse effect on ITC's results of operations or financial
condition. Furthermore, ITC's business strategy calls for continued growth
through acquisitions. Identifying and pursuing future acquisition
opportunities will require a significant amount of management time and skill.
There can be no assurance that ITC will be able to identify suitable
acquisition candidates, consummate any acquisition on acceptable terms or
successfully integrate acquired business operations (including by realization
of anticipated cost savings and synergies). Future acquisitions may entail the
payment of consideration in excess of book value, may result in the issuance
of additional shares of ITC Common Stock or the incurrence of additional
indebtedness and could have a dilutive effect on ITC's net income per share.
CLOSURE OF INACTIVE DISPOSAL SITES AND POTENTIAL CERCLA LIABILITIES
In December 1987, the ITC Board of Directors adopted a strategic
restructuring program that included a formal plan to divest its
transportation, treatment and disposal operations. Pursuant to this program,
two of ITC's four inactive treatment, storage and disposal sites in Northern
California have been formally closed and the other two are in the process of
formal closure.
Impact of Uncertainty in Closure Cost Estimates
Closure and post-closure costs associated with ITC's inactive disposal sites
are incurred over a significant number of years and are subject to a number of
variables including, among others, completion of negotiations regarding
specific site closure and post-closure plans with applicable regulatory
agencies. ITC has estimated the impact of closure and post-closure costs in
the provision for loss on disposition; however, closure and post-closure costs
could be higher than estimated if regulatory agencies were to require closure
and/or post-closure procedures significantly different than those in the plans
developed by ITC or if there are additional delays in the closure plan
approval process. As of December 26, 1997, ITC's consolidated balance sheet
included accrued liabilities of $13,517,000 to complete the closure and post-
closure of its inactive disposal sites and the potentially responsible party
("PRP") matters discussed below. The referenced accrued liabilities represent
ITC's estimate as of December 26, 1997 of remaining closure and post-closure
costs and expenditures with respect to possible PRP liabilities under
applicable environmental liability statutes and are included in ITC's
provision for loss on the disposition of discontinued operations. From
December 1987 through March 31, 1995, ITC cumulatively recorded a provision
for loss on disposition of transportation, treatment and disposal discontinued
operations (including the initial provision and two subsequent adjustments) in
the amount of $160,192,000, net of income tax benefit of $32,879,000. Closure
plans for ITC's Panoche facility were approved on March 18, 1998. The approved
plans for the Panoche facility are generally consistent with ITC's proposed
plans. However, if implementation of the approved plans are delayed by
litigation or appeals, ITC's cost to close the site would increase, which
could have a material adverse impact on the consolidated financial condition,
liquidity or results of operations of ITC. Based on a recent evaluation of the
costs to complete the closure and post-closure of its disposal sites,
including Panoche, ITC anticipates that previous cost estimates will be
increased by approximately $6 to $8 million.
Uncertainties in Carrying Value of Long Term Assets
The carrying value of the long-term assets of transportation, treatment and
disposal discontinued operations of $40,048,000 at December 26, 1997 is
principally comprised of residual land at the inactive disposal sites and
assumes that sales will occur at market prices estimated by ITC based on
certain assumptions (entitlements, development agreements, etc.), taking into
account market value information provided by independent real estate
appraisers. ITC previously formulated development plans and entered into an
agreement with a developer for some of this property as a part of a larger
development in the local area. The entitlement process has been delayed for
several years pending approval of ITC's closure plan for its adjacent disposal
facility and local community review of growth strategy. This local community
review is
18
<PAGE>
proceeding and has initially recommended, on a non-binding basis, strategies
for limiting growth in the area. These growth-limiting recommendations have
been incorporated in a draft general plan and environmental impact report
which have been released for public comment for a period ending in March 1998.
Ultimately, if ITC's development plans are materially restricted or acceptable
entitlements are not obtained, the carrying value of this property could be
significantly impaired. In regard to any of the residual land, there is no
assurance as to the timing of sales or ITC's ability to ultimately liquidate
the land for the sale prices assumed. Consequently, if the assumptions used to
determine such prices are not realized, the value of the land could be
materially different from the current carrying value which could, in turn,
require an increase in the provision for loss on disposition of discontinued
operations.
Impact of Possible PRP Liabilities
There are several disposal sites, including the GBF Pittsburgh Superfund
site, at which ITC has been named a PRP under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA" or "Superfund") or
has otherwise been identified as responsible for site cleanup and at which the
U.S. Environmental Protection Agency (the "USEPA") or the Department of Toxic
Substances Control of the Environmental Protection Agency of the State of
California ("DTSC") are investigating certain transportation and disposal
activities conducted by ITC and other companies. ITC has been, and from time
to time may be, named as a PRP at other sites as a result of its
transportation, treatment and disposal discontinued operations.
Summary
The accrued liability for discontinued operations is based on various
assumptions and estimates and is reevaluated periodically in light of current
developments. ITC believes that the provision (including the accrued
liabilities of $13,500,000) as of December 26, 1997 (as noted above) was
reasonable; however, the ultimate effect of the divestiture on the
consolidated financial condition of ITC is dependent upon future events, the
outcome of which cannot be determined at this time. Outcomes significantly
different from those used to estimate the provision for loss could result in a
material adverse effect on the consolidated financial condition of ITC. Based
on a recent evaluation of the costs to complete the closure and post-closure
of its disposal sites, including Panoche, ITC anticipates that previous cost
estimates will be increased by approximately $6 to $8 million.
For further information, see the "Notes to Consolidated Financial
Statements, Discontinued Operations" section of ITC's Annual Report on Form
10-K for the fiscal year ended March 28, 1997 and ITC's Quarterly Reports on
Form 10-Q for the quarters ended June 27, 1997, September 26, 1997 and
December 26, 1997, which are incorporated herein by reference.
HISTORY OF LOSSES
ITC incurred losses applicable to common stockholders from continuing
operations in each of the five fiscal years 1993 through 1997 and for the
three quarters ended December 26, 1997 in the amounts of $2.1 million, $3.2
million, $7.9 million, $3.7 million, $13.7 million and $7.4 million,
respectively. Operating income for the last three fiscal years was offset by
the equity in the net loss reported by Quanterra (as defined herein) and by
certain special charges. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quanterra" and "--Loss from
Continuing Operations" set forth in ITC's Annual Report on Form 10-K for the
fiscal year ended March 27, 1997, which is incorporated herein by reference.
No assurance can be given that ITC will not continue to incur losses from
continuing operations.
RECOVERABILITY OF INVESTMENT IN QUANTERRA
In June 1994, ITC and an affiliate of Corning Incorporated ("Corning")
combined the two companies' environmental analytical services businesses into
a newly formed 50%/50% jointly-owned company ("Quanterra"). In connection with
the formation of Quanterra, an integration plan was implemented to eliminate
redundant laboratory facilities and duplicative overhead and systems. ITC's
portion of the charge for integration was $9,264,000, including $2,869,000
incurred directly by ITC. In January 1996, ITC and Corning completed an
agreement to recapitalize Quanterra which resulted in a change in Quanterra's
ownership to 19% by ITC and
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81% by Corning. In the quarter ended December 29, 1995, ITC reported a pre-tax
charge of $24,595,000 related to the recapitalization transaction. At December
26, 1997, ITC's investment in Quanterra was $16,300,000. While Quanterra has
recently neared break-even operations, it has experienced net losses over the
past three years and ITC will monitor the value of its investment in Quanterra
on an ongoing basis and will recognize any impairment in value should it
occur.
POTENTIAL ADVERSE IMPACT OF PENDING LITIGATION
ITC, from time to time, is required to defend a number of litigation and
investigatory matters. These matters include contractual and tort claims
arising from services performed by ITC and government audits and
investigations related to government contracts performed by ITC. Litigation is
unpredictable by nature and if one or more of such matters were adversely
decided against ITC, it could have a material adverse effect on the
consolidated financial condition and results of operations of ITC. For further
information, see "Notes to Consolidated Financial Statements, --Discontinued
Operations, --Commitments and Contingencies" included in ITC's Annual Report
on Form 10-K for the fiscal year ended March 28, 1997, which is incorporated
herein by reference.
CONTROL OF BOARD OF DIRECTORS
In November 1996, certain entities affiliated with TC Group, L.L.C.
("Carlyle") or with respect to which Carlyle affiliates act as investment
manager (all such entities are also referred to herein as the "Parent
Stockholders") acquired 45,000 shares of Convertible Preferred Stock and
warrants (the "Carlyle Warrants") to purchase 1,250,000 shares of ITC Common
Stock. As a result of a paid-in-kind dividend paid on February 20, 1998, the
Parent Stockholders now hold 45,271 shares of Convertible Preferred Stock. The
Parent Stockholders hold approximately 38% of the voting power of ITC prior to
the consummation of the Merger (approximately 43% assuming exercise of the
Carlyle Warrants) and approximately 21% (approximately 24% assuming exercise
of the Carlyle Warrants) of the voting power thereafter. The terms of the
Convertible Preferred Stock provide that, until November 20, 2001, the holders
of the Convertible Preferred Stock have the right to elect a majority of the
ITC Board of Directors, provided that such holders continue to hold at least
20% of the voting power of ITC. As a result, the Parent Stockholders are in a
position to control the strategic direction of ITC, to elect and dismiss ITC's
officers and to approve and disapprove significant transactions. See "Notes to
Consolidated Financial Statements, Preferred Stock, Carlyle Investment," set
forth in ITC's Annual Report on Form 10-K for the fiscal year ended March 28,
1997, incorporated herein by reference.
DEPENDENCE ON ENVIRONMENTAL REGULATIONS AND REGULATORY UNCERTAINTIES
Substantially all of ITC's revenue is generated either directly or
indirectly as a result of federal and state laws, regulations and programs
related to the environment. Accordingly, changes in these laws or regulations,
or in governmental policies regarding the funding, implementation or
enforcement of the programs, could have a material adverse effect on ITC's
business.
There is at present considerable uncertainty in the regulatory framework in
which ITC operates including the legislative status of principal environmental
laws and the direction of implementing regulations. For example, the
reauthorization of CERCLA has been delayed for several years. While CERCLA's
Superfund taxing authority originally expired in December 1995, and CERCLA's
authority to expend funds originally expired in September 1994, Congress
appropriated to the USEPA funds sufficient to conduct the Superfund program on
an interim basis through September 30, 1998. Moreover, the Congressional
Budget Office projects that the USEPA has enough appropriated but unobligated
funds to allow USEPA to operate at current levels for approximately two fiscal
years after September 30, 1998, should CERCLA's taxing authority not be
reauthorized by then.
ITC believes that failure of Congress to reauthorize CERCLA, and proposed
substantial changes in and continuing uncertainty concerning the details of
the legislation, cleanup standards, and remedy selection, have resulted in
project delays and/or the failure of clients to initiate or proceed with
projects. A number of changes
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to CERCLA have been previously proposed as a part of the reauthorizing
legislation. Amendments to repeal CERCLA's retroactive liability provisions
have been introduced. It has also been proposed that CERCLA's preference for
permanent treatment remedies such as incineration be changed to favor
confinement and containment remedies. (See "Thermal Treatment Market
Uncertainties" below.) Standards for acceptable cleanups have also been the
subject of proposals for change. Although several bills to reauthorize CERCLA
have been introduced in this session of Congress, including some which propose
to maintain or increase previous funding levels, controversy over the details
of the legislation indicate that there is no clarity when CERCLA may be
reauthorized, what changes would be included in any reauthorization, or what
funding levels might be.
In response to Congressional and private sector pressure and, in part, to
avoid more sweeping legislative changes, the USEPA has attempted to relax
regulatory requirements and enforcement. For example, the USEPA has attempted,
through various regulatory initiatives, to make it easier to redevelop
"brownfields," i.e., lightly to moderately contaminated urban sites.
Brownfields sites nationally have been estimated to number in the hundreds of
thousands. Similar legislation has also been introduced, and a number of
states have initiated similar programs. While ITC believes such programs offer
additional opportunities, the ultimate impact of such programs cannot yet be
predicted.
Although the impact of these proposed changes upon ITC's business cannot yet
be fully predicted, the proposed changes in regulations and reduced
enforcement of current environmental laws appear to have decreased the demand
for certain of ITC's services, as customers anticipate and adjust to the
potential changes. ITC believes that it generally has benefited from increased
environmental regulations affecting business, and from more active enforcement
of those regulations. However, proposed changes could also result in increased
demand for certain of ITC's services if regulatory changes decrease the cost
of remediation projects or result in more funds being spent for actual
remediation. The ultimate impact of the proposed changes will depend upon a
number of factors, including the overall strength of the U.S. economy and
customers' views on the cost-effectiveness of remedies available under the
changed regulations.
INCREASED COMPETITIVE ENVIRONMENT AND CERTAIN MARKET CONDITIONS
The environmental management industry is very competitive and increased
competition, combined with changes in client procurement procedures, has
resulted in market trends over the past several years toward lower contract
margins, a client preference for fixed-price or unit-price contracts and
unfavorable changes in contract terms and conditions in areas such as
indemnification of the client by ITC of liabilities for damage or injury to
third parties and property and for environmental fines and penalties.
Additionally, certain of ITC's competitors benefit from certain economies of
scale and have better access to bonding and insurance markets at a lower cost.
The entry of large systems contractors and international construction and
engineering firms into the environmental management industry has materially
increased the level of competition for major federal governmental contracts
and programs, which have been the primary source of ITC's revenue in the past
several years. Over the past several years, there has been consolidation in
the industry as certain of the larger corporations have acquired smaller firms
which, although reducing the number of industry competitors to some degree,
has increased the number of stronger competitors. ITC's ability to maintain or
improve upon gross margins is heavily dependent on increasing utilization of
professional staff, properly executing projects and successfully bidding new
contracts at adequate margin levels. There can be no assurance that ITC's
revenues and results of operations will not be adversely affected by these and
other competitive factors.
DEPENDENCE ON GOVERNMENT MARKET AND RISKS OF GOVERNMENT CONTRACTING
For the fiscal year ended March 28, 1997, approximately 59% of ITC's
revenues was derived from federal government contracts, and, on a combined
basis, approximately 66% of the combined revenues of ITC and OHM for the
twelve months ended March 28, 1997 was derived from federal government
contracts. After the Merger, it is expected that approximately 67% of the
combined revenues of ITC and OHM will be derived from federal government
contracts and approximately 7% will be derived from state and local government
contracts for the period ending December 25, 1998. Over at least the next two
fiscal years, ITC expects that the percentage of
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revenues attributable to such clients will continue to be substantial. In
addition to its dependence on governmental contracts, ITC also faces the risks
associated with such contracting, which include substantial civil and criminal
fines and penalties for, among other matters, failure to follow procurement
integrity and bidding rules, employing improper billing practices or otherwise
failing to follow cost accounting standards, receiving or paying kickbacks or
filing false claims. Government contracting requirements are complex, highly
technical and subject to varying interpretation. As a result of its government
contracting business, ITC has been, is, and expects in the future to be, the
subject of audits and investigations by government agencies. In addition to
potential damage to ITC's business reputation, the failure to comply with the
terms of one or more of its government contracts could also result in ITC's
suspension or debarment from future governmental contract projects for a
significant period of time. The fines and penalties which could result from
noncompliance with appropriate standards and regulations, or ITC's suspension
or debarment, could have a material adverse effect on ITC's business.
EXPANDING ENVIRONMENTAL CONTRACTOR LIABILITIES AND REGULATORY RISKS; POTENTIAL
INADEQUACY OF ITC'S INSURANCE AND RISK MANAGEMENT PROGRAMS
All facets of ITC's business are conducted in the context of a rapidly
developing and changing statutory and regulatory framework which creates
significant risks for ITC, including potentially large civil and criminal
liabilities from violations of environmental laws and regulations and
liabilities to customers and to third parties for damages arising from
performing services for clients. There have also been efforts to expand the
reach of various environmental statutes to make contractor firms responsible
for cleanup costs by claiming that environmental contractors are owners or
operators of hazardous waste facilities or that they arranged for treatment,
transportation or disposal of hazardous substances. Many clients contracting
for environmental management services seek to shift to contractors a number of
the risks of such projects, including the risk of completing the project in
the event the contamination is either more extensive or difficult to resolve
than originally anticipated, and possible liabilities for damages or injuries
to third parties and property stemming from the release of hazardous materials
or otherwise and for environmental fines and penalties. ITC has from time to
time been involved in claims and litigation involving such disputes.
Furthermore, the USEPA and other federal agencies have constricted
significantly the circumstances under which it will indemnify its contractors
against liabilities incurred in connection with certain projects. ITC has
adopted a range of insurance and risk management programs designed to reduce
potential liabilities, including insurance policies, programs to seek
indemnity where possible in its contracts, other contract administration
procedures, and employee health, safety, training and environmental monitoring
programs. In addition, as a result of the substantial increase over the past
several years in the percentage of ITC's revenue derived from work for
governmental agencies, ITC has developed a company-wide government contracts
compliance program. There can be no assurance that such programs will be
adequate to protect ITC from such risks and in the case of insurance, that
ITC's insurance program will continue to be available or that the dollar
amount of any liability that ITC may incur will not exceed the policy limits
of its coverage.
THERMAL TREATMENT MARKET UNCERTAINTIES
A portion of ITC's revenues (approximately 4% in the first three quarters of
fiscal year 1998) was derived from a large thermal remediation contract
utilizing ITC's Hybrid Thermal Treatment System(R) ("HTTS") incineration
technology. Thermal treatment as a remedy under CERCLA continues to come under
legislative and regulatory pressures as well as commercial pressures due to
its relatively high cost. If ITC is unable to permit and use thermal treatment
on future remediation projects in the United States due to either regulatory
or market factors, ITC would have to find alternative uses for its HTTS
equipment, such as foreign installations. ITC has been aggressively pursuing
opportunities outside the United States to deploy the HTTS equipment and
related technology. If these opportunities do not develop, there could be a
negative effect to ITC. At December 26, 1997, ITC's HTTS equipment had a net
book value of approximately $10,100,000 and this equipment is idle as of the
date of this Proxy Statement/Prospectus.
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FLUCTUATIONS IN OPERATING RESULTS AND STOCK PRICE
ITC's future operating results and stock price could be subject to
fluctuations and volatility. Fluctuations may be due to factors specific to
ITC, to changes in analysts' estimates, or to factors affecting the
environmental services industry or the securities markets in general. Any
decrease in revenues or quarterly results, or failure to meet market
expectations, could have an effect on the price of ITC Common Stock in any
given period. In addition, realization of ITC's deferred tax asset
($27,121,000 net of a valuation allowance of $11,297,000 as of December 26,
1997) is subject to ITC having a sufficient level of taxable income.
PAYMENT OF DIVIDENDS
ITC has not and does not intend to pay dividends on the ITC Common Stock,
and ITC currently intends to retain any earnings or other cash resources
(after payment of dividends with respect to preferred stock) to finance future
growth. Additionally, the Credit Facilities prohibit the payment of cash
dividends on the ITC Common Stock. The Convertible Preferred Stock and ITC's
7% Cumulative Convertible Exchangeable Preferred Stock (the "7% Preferred
Stock") rank prior to the ITC Common Stock as to payment of dividends. See
"Description of ITC Capital Stock--Preferred Stock."
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THE ITC SPECIAL MEETING
TIME, DATE AND PLACE
The ITC Special Meeting will be held at [the DoubleTree Hotel, located at
1000 Penn Avenue, Pittsburgh, Pennsylvania 15222 on Wednesday, April 29, 1998,
at 11:00 a.m., Eastern time].
PURPOSES OF THE ITC SPECIAL MEETING
At the ITC Special Meeting, holders of shares of capital stock of ITC
entitled to vote thereon will consider and vote upon (a) the issuance of
shares of ITC Common Stock pursuant to the Merger Agreement, in order to
fulfill the rules of the NYSE, (b) the Plan Amendments and (c) the Charter
Amendment, and such other matters as may properly come before the ITC Special
Meeting.
THE ITC BOARD OF DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, ITC AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. THE
ITC BOARD OF DIRECTORS ALSO UNANIMOUSLY APPROVED THE PLAN AMENDMENTS AND THE
CHARTER AMENDMENT. THE ITC BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF ITC APPROVE THE ISSUANCE OF SHARES OF ITC COMMON STOCK
PURSUANT TO THE MERGER AGREEMENT, THE PLAN AMENDMENTS AND THE CHARTER
AMENDMENT.
RECORD DATE; VOTING RIGHTS; PROXIES
The ITC Board of Directors has fixed the close of business on March , 1998
as the ITC Record Date for determining holders entitled to notice of and to
vote at the ITC Special Meeting.
As of the ITC Record Date, there were shares of ITC Common Stock issued
and outstanding, each of which entitles the holder thereof to one vote and
45,271 shares of Convertible Preferred Stock issued and outstanding, each of
which entitles the holder thereof to the number of votes equal to the number
of shares of ITC Common Stock into which such shares are convertible on the
date of such vote. Each share of Convertible Preferred Stock is currently
convertible into approximately 130.96 shares of ITC Common Stock, or an
aggregate of approximately 5,928,854 shares. All shares of ITC Common Stock
and Convertible Preferred Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. IF NO INSTRUCTIONS ARE INDICATED,
SUCH SHARES OF ITC COMMON STOCK AND CONVERTIBLE PREFERRED STOCK WILL BE VOTED
IN FAVOR OF THE ISSUANCE OF SHARES OF ITC COMMON STOCK PURSUANT TO THE MERGER
AGREEMENT, THE PLAN AMENDMENTS AND THE CHARTER AMENDMENT. ITC does not know of
any matters other than as described in the Notice of Special Meeting that are
to come before the ITC Special Meeting. If any other matter or matters are
properly presented for action at the ITC Special Meeting, the persons named in
the enclosed form of proxy and acting thereunder will have the discretion to
vote on such matters in accordance with their best judgment, unless such
authorization is withheld. A stockholder who has given a proxy may revoke it
at any time prior to its exercise by giving written notice thereof to the
Secretary of ITC by signing and returning a later dated proxy, by filing a
duly executed revocation or by voting in person at the ITC Special Meeting;
however, mere attendance at the ITC Special Meeting will not in and of itself
have the effect of revoking the proxy.
Votes cast by proxy or in person at the ITC Special Meeting will be
tabulated by the election inspectors appointed for the ITC Special Meeting and
will determine whether or not a quorum is present. The election inspectors
will treat abstentions as shares that are present for purposes of determining
the presence of a quorum and as votes against the proposals to approve the
issuance of shares of ITC Common Stock, the Plan Amendments and the Charter
Amendment. Similarly, the election inspectors will treat broker non-votes as
shares that are present for purposes of determining the presence of a quorum
and as votes against the proposals to approve the issuance of shares of ITC
Common Stock, the Plan Amendments and the Charter Amendment. The term "broker
non-votes" refers to shares held by a broker in street name which are present
by proxy but are
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not voted on a matter pursuant to rules prohibiting brokers from voting on
non-routine matters, such as approval of the issuance of shares of ITC Common
Stock, the Plan Amendments and the Charter Amendment, without instructions
from the beneficial owner of the shares.
SOLICITATION OF PROXIES
The solicitation of proxies with respect to the ITC Special Meeting is made
by the ITC Board of Directors and the cost of solicitation will be borne by
ITC. Solicitation other than by mail may be made personally, by telephone or
by facsimile, by regularly employed officers and employees of ITC who will not
be additionally compensated therefor. ITC will request persons holding stock
in their names for others, such as trustees, brokers and nominees, to forward
proxy material to their principals and request authority for the execution of
the proxy and will reimburse such persons for their expenses in so doing. In
addition, ITC has engaged the services of MacKenzie Partners, Inc. with
respect to proxy soliciting matters at an expected cost not to exceed
$7,500.00 to ITC.
QUORUM
The presence in person or by properly executed proxy of holders of a
majority of all of the shares of capital stock of ITC entitled to vote thereat
is necessary to constitute a quorum at the ITC Special Meeting.
REQUIRED VOTE
As a condition to the consummation of the Merger and a prerequisite to the
listing on the NYSE of the shares of ITC Common Stock to be issued pursuant to
the Merger Agreement, the issuance of shares of ITC Common Stock pursuant to
the Merger Agreement must be approved by a majority of the votes cast on such
proposal. If the Merger is not consummated, it is expected that OHM will
continue to conduct its business and operations substantially as they have
been conducted subsequent to the consummation of the Offer, with OHM being a
majority owned subsidiary of ITC. The Plan Amendments also must be approved by
a majority of the votes cast on such proposal. Pursuant to the ITC Charter,
the Charter Amendment must be approved by two-thirds of the votes cast on such
proposal.
As of the ITC Record Date, directors and executive officers of ITC and their
affiliates were beneficial owners of approximately 45% of the outstanding
voting power of ITC, including approximately 38% attributable to affiliates of
the Parent Stockholders. The directors and executive officers have advised ITC
that they and their affiliates intend to vote all shares beneficially owned by
them in favor of the issuance of shares of ITC Common Stock pursuant to the
Merger Agreement, the Plan Amendments and the Charter Amendment. Additionally,
the holders of shares of Convertible Preferred Stock have entered into an
agreement with OHM and the Company pursuant to which they have agreed, among
other things, to vote in favor of such issuance.
THE MATTERS TO BE CONSIDERED AT THE ITC SPECIAL MEETING ARE OF GREAT
IMPORTANCE TO THE STOCKHOLDERS OF ITC. ACCORDINGLY, STOCKHOLDERS ARE URGED TO
READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF ITC WITH
RESPECT TO THE MERGER
THE ITC BOARD OF DIRECTORS BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, ITC AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. THE
ITC BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS APPROVE THE
ISSUANCE OF SHARES OF ITC COMMON STOCK PURSUANT TO THE MERGER AGREEMENT.
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In reaching its conclusion to approve the Offer and the Merger and to
unanimously recommend that ITC stockholders vote FOR approval of the issuance
of ITC Common Stock pursuant to the Merger Agreement, the ITC Board of
Directors considered a number of factors including the following:
1. The business, financial position, results of operations and prospects
of ITC and OHM and potential synergies resulting from the combination of
the companies (with net cost reductions estimated at $25.0 million).
2. The strategic fit between the businesses of OHM and ITC.
3. The current economic and market conditions and the nature of the
environmental industry, including the likelihood that the environmental
industry will experience continued consolidation, and the possibility that
continued growth and profitability may become increasingly more difficult
for ITC if it does not grow through acquisitions.
4. The expectation that the combination of the companies would be
accretive to ITC's net earnings in 1998 (excluding one-time transaction-
related costs or charges) and thereafter.
5. The historical market prices for the OHM Common Stock and the ITC
Common Stock.
6. The presentations by DLJ to the ITC Board of Directors relating to the
proposed transaction.
7. Recent trading prices for the OHM Common Stock and the ITC Common
Stock.
8. The terms of the Merger Agreement, the Repurchase Agreement and the
Company Voting Agreement.
The ITC Board of Directors did not assign relative weight to the factors
noted above or determine that any factor was of particular importance. Rather,
the ITC Board of Directors viewed its position and recommendation as being
based on the totality of the information presented to and considered by it.
OPINION OF ITC'S FINANCIAL ADVISOR
ITC selected DLJ as its financial advisor because it is a nationally
recognized investment banking firm that has substantial experience in the
environmental services industry and is familiar with ITC, OHM and their
respective businesses. As part of its investment banking business, DLJ is
regularly engaged in the valuation of businesses and securities in connection
with mergers, acquisitions, underwritings, sales and distributions of listed
and unlisted securities, private placements and valuations for estate,
corporate and other purposes.
THE FULL TEXT OF THE WRITTEN OPINION OF DLJ, DATED JANUARY 14, 1998, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX B TO
THIS PROXY STATEMENT/PROSPECTUS. ITC STOCKHOLDERS ARE URGED TO READ THIS
OPINION IN ITS ENTIRETY FOR INFORMATION WITH RESPECT TO THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE OTHER MATTERS CONSIDERED AND LIMITS OF THE REVIEW
BY DLJ IN RENDERING SUCH OPINION. THE SUMMARY OF THE OPINION OF DLJ SET FORTH
IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO THE FULL TEXT OF SUCH OPINION.
In its role as financial advisor to ITC, DLJ was asked by ITC to render an
opinion (the "DLJ Opinion") to the ITC Board of Directors as to the fairness
to ITC, from a financial point of view, of the consideration to be paid by ITC
for OHM pursuant to the Merger Agreement. On January 14, 1998, DLJ delivered a
written opinion to the ITC Board of Directors that as of the date of such
opinion and subject to the assumptions, limitations and qualifications set
forth therein, the consideration to be paid by ITC pursuant to the Merger
Agreement was fair to ITC from a financial point of view.
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The DLJ Opinion was prepared for the ITC Board of Directors and is directed
only to the fairness of the consideration paid by ITC, in the Offer and the
Merger, from a financial point of view; it does not constitute a
recommendation to any stockholder on how to vote at the ITC Special Meeting
with respect to the issuance of ITC Common Stock pursuant to the Merger
Agreement nor does it constitute an opinion as to the price at which the ITC
Common Stock will actually trade at any time. DLJ did not, and was not
requested by the ITC Board of Directors to, make any recommendation as to the
form or amount of consideration to be paid to holders of OHM Common Stock in
the Merger, which issues were resolved in arm's-length negotiations between
ITC and OHM. No restrictions or limitations were imposed by ITC upon DLJ with
respect to the investigations made or the procedures followed by DLJ in
rendering its opinion.
In arriving at its opinion, DLJ reviewed drafts of the Merger Agreement, the
Repurchase Agreement and the Schedule 14D-1 filed by ITC and Merger Sub with
respect to the Offer. DLJ also reviewed financial and other information that
was publicly available or furnished to DLJ by ITC and OHM, including
information provided during discussions with their respective managements.
Included in the information provided during discussions with the respective
managements were certain financial projections of OHM for the period beginning
January 1, 1997 and ending December 31, 2000 prepared by the management of OHM
and certain financial projections of ITC and OHM, each for the period
beginning January 1, 1997 and ending December 31, 2002 prepared by the
management of ITC (which, in the case of OHM, were based on the OHM management
projections referred to above). In addition, DLJ compared certain financial
and securities data of ITC and OHM with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of ITC Common Stock and OHM Common Stock, reviewed prices
and premiums paid in certain other business combinations and conducted such
other financial studies, analyses and investigations as DLJ deemed appropriate
for purposes of rendering its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to DLJ from public sources, that was provided to DLJ by ITC and OHM or their
respective representatives, or that was otherwise reviewed by DLJ. In
particular, DLJ relied upon the estimates of the management of ITC of the
operating synergies achievable as a result of the Merger and upon its
discussion of such synergies with the management of OHM. With respect to the
financial projections supplied to DLJ, DLJ assumed that they have been
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the managements of ITC and OHM. DLJ did not assume
any responsibility for making any independent evaluation of any assets or
liabilities or for making any independent verification of any of the
information reviewed by it.
The DLJ Opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to
it as of, the date of its opinion. It should be understood that, although
subsequent developments may affect its opinion, DLJ does not have any
obligation to update, revise or reaffirm the DLJ Opinion.
The following is a summary of the analyses included in the presentation of
DLJ to the ITC Board of Directors dated January 9, 1998 in connection with
preparation of the DLJ Opinion.
Pro Forma Merger Analysis. DLJ analyzed certain pro forma effects resulting
from the Merger. DLJ reviewed the operating synergies contemplated to result
from the Merger in 1998 and 1999 from the combination of the operations of OHM
and ITC. DLJ analyzed the pro forma effect of such operating synergies on net
income and earnings per share for ITC. The analysis indicated that the pro
forma fully diluted earnings per share ("EPS") of ITC, assuming realization of
the annual operating synergies contemplated by ITC management to result from
the Merger, would be higher in the fiscal years ending 1998 and 1999 than
comparable projections for ITC as a stand-alone company during the same
periods.
Analysis of Certain Other Public Traded Companies. To provide contextual
data and comparative market information, DLJ compared selected historical
earnings and operating and financial ratios for OHM to corresponding data and
ratios of certain environmental services companies whose securities are
publicly traded. In conducting its analysis, DLJ compared the ratios implied
by the consideration to be paid by ITC in the Merger
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to the ratios implied from the market valuation of publicly traded companies
selected by DLJ (the "Environmental Services Companies") based upon
qualitative factors which DLJ deemed relevant based upon its experience in the
environmental services industry. The Environmental Services Companies
included: Dames & Moore Inc., Emcon, Fluor Daniel GTI, Harding Lawson
Associates Inc., ICF Kaiser International, ITC, Sevenson, Tetra Tech Inc., TRC
Companies, Inc., URS Corp., Roy F. Weston and ATC Group Services. Although DLJ
used these companies for comparison purposes, none of such companies is
directly comparable to OHM or ITC. Accordingly, a complete analysis of the
results cannot be limited to a quantitative review and involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the Environmental Services Companies and other factors
which could affect the public trading value of the Environmental Services
Companies as well as that of OHM. Data and ratios considered by DLJ included:
the ratio of Enterprise Value (as defined herein) to (i) latest twelve months
("LTM") revenue, (ii) LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA"), and (iii) LTM earnings before interest and taxes
("EBIT"); and (iv) the ratio of market price to earnings per share ("EPS").
"Enterprise Value" is defined as the sum of the principal amount of a
company's debt less excess cash ("Net Debt") plus the market value of its
equity securities. EBITDA was selected for analysis by DLJ because it is a
widely used estimate of cash flows generated by operations. EBIT was selected
by DLJ because it is a measure of operating performance. The ratio of
Enterprise Value to LTM revenue ranged from 0.2x to 1.6x with an average of
0.6x for the Environmental Services Companies. This compares to a ratio of
Enterprise Value to revenue for OHM of 0.7x. The ratio of Enterprise Value to
LTM EBITDA ranged from 3.0x to 12.7x with an average of 7.1x for the
Environmental Services Companies. This compares to a ratio of Enterprise Value
to EBITDA for OHM of 8.5x, not including the synergies referred to above. The
ratio of Enterprise Value to LTM EBIT ranged from 4.5x to 13.0x with an
average of 9.7x for the Environmental Services Companies. This compares to a
ratio of Enterprise Value to EBIT for OHM of 13.6x, not including the
synergies referred to above. The ratio of market price to 1997 EPS ranged from
9.3x to 40.6x with an average of 19.1x for the Environmental Services
Companies. This compares to a ratio of market price to 1997 EPS for OHM of
24.0x, not including the anticipated synergies referred to above. The ratio of
market price to 1998 estimated EPS ranged from 8.0x to 35.3x with an average
of 18.0x for the Environmental Services Companies. This compares to a ratio of
market price to 1998 estimated EPS for OHM of 19.6x not including the
anticipated synergies referred to above.
Transaction Analysis. DLJ compared the consideration to be paid in the Offer
and the Merger to publicly available information for selected transactions
involving the combination of selected environmental consulting/engineering and
remediation companies. The transactions reviewed (the "Comparative
Transactions") were: (i) Philip Services, Inc./Safety Kleen; (ii) Tetra Tech
Inc./Halliburton, NUS, Brown & Root; (iii) WPG Corp. Develop. Assoc./ATC Group
Services, Inc.; (iv) URS Corp./Woodward-Clyde; (v) OHM Corp./Beneco
Enterprises, Inc.; (vi) GTS Duratek Corp./Scientific Ecology; (vii)
Carlyle/ITC; (viii) Fluor Corporation/Groundwater Technology; (ix)
EMCON/Organic Waste Technology., Inc.; (x) Tyco International/Earth Technology
Corp.; (xi) Tetra Tech/PRC Environmental; (xii) OHM/Rust International;
(xiii) Dames & Moore Inc./Walk, Haydel; (xiv) Dames & Moore Inc./O-Brien-
Krietzberg; (xv) Earth Technology Corp./Hazwaste Industries; (xvi) Canonie
Environ. Ser./Riedel Environ. Services; (xvii) Foster Wheeler/Enserch. The
transactions selected are not intended to represent the complete list of
environmental consulting/engineering and remediation industry transactions
which have occurred during the last three years; rather they include only
transactions involving combinations of companies with operating
characteristics, size or financial performance characteristics which DLJ
believed to be comparable to those of OHM and ITC. DLJ reviewed the
consideration paid in such transactions in terms of the transaction offer
price per share multiplied by total common shares outstanding plus Net Debt
("Transaction Consideration") as a multiple of LTM revenues, LTM EBITDA and
LTM EBIT, not including the impact of any potential synergies. The ratio of
Transaction Consideration to revenues, computed for the Comparative
Transactions, had a range of 0.2x to 1.9x with an average of 0.6x, compared to
0.7x for the Offer and the Merger. The ratio of Transaction Consideration to
EBITDA, computed for the Comparative Transactions, had a range of 4.0x to
10.6x with an average of 7.8x, compared to 8.5x for the Offer and the Merger.
The ratio of Transaction Consideration to EBIT, computed for the Comparative
Transactions, had a range of 4.1x to 18.7x with an average of 12.6x, compared
to 13.6x for the Offer and the Merger.
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Stock Trading History. To provide contextual data and comparative market
data, DLJ examined the history of the trading prices and their relative
relationships for both ITC Common Stock and OHM Common Stock for the latest
fifty-two week period ended January 7, 1998. This information was presented
solely to provide DLJ with background information regarding the stock prices
of OHM and ITC over the periods indicated. DLJ noted that the high and low
prices for ITC Common Stock over the fifty-two week period ended January 7,
1998 were $9.56 and $6.38, respectively, and the high and low prices for OHM
Common Stock over the fifty-two week period ended January 7, 1998 were $9.50
and $6.81, respectively.
Discounted Cash Flow Analysis. DLJ also performed a discounted cash flow
analysis to evaluate the consideration. Using the information set forth in the
OHM and ITC projections, DLJ performed a stand-alone discounted cash flow
analysis for OHM. DLJ calculated the estimated "Free Cash Flow" for OHM stand-
alone based on projected unleveraged operating income adjusted for: (i) taxes;
(ii) certain projected non-cash items (i.e., depreciation and amortization);
(iii) projected changes in non-cash working capital; and (iv) projected
capital expenditures. DLJ analyzed the OHM projections and discounted the
stream of Free Cash Flows from calendar 1998 to calendar 2002 provided in such
projections back to December 31, 1997 using discount rates ranging from 10% to
13%. To estimate the residual value of OHM at the end of the projection
period, DLJ applied terminal multiples of 6.5x to 7.5x to the projected fiscal
2002 EBITDA and discounted such value estimates back to December 31, 1997
using discount rates ranging from 10% to 13%. DLJ then aggregated the present
values of the Free Cash Flows and the present value of the residual value to
derive a range of implied Enterprise Values for OHM. The range of implied
Enterprise Value of OHM stand-alone was then adjusted for its Net Debt to
yield an implied equity value of OHM. The range of equity values were then
divided by the fully diluted stand-alone shares to determine a range of equity
values per share for OHM stand-alone. The range of implied equity values per
share for OHM, based on the range of discount rates of 10% to 13% and the
range of terminal multiples of 6.5x to 7.5x, was $9.00 to $11.95 per share.
Other Considerations. DLJ also reviewed the value of ITC Common Stock to be
issued as part of the consideration in the Offer and the Merger. To provide
contextual data and comparative market information, DLJ compared ITC's trading
multiples to the same universe of publicly traded companies referred to above.
The ratio of Enterprise Value to LTM revenues for ITC was 0.5x. The ratio of
Enterprise Value to LTM EBITDA for ITC was 7.1x. The ratio of Enterprise Value
to LTM EBIT for ITC was 13.0x. In addition, the multiple of current stock
price to estimated calendar year 1998 EPS for ITC was 27.1x.
DLJ also performed a discounted cash flow analysis to evaluate ITC. Using
the information set forth in the ITC projections, DLJ performed a stand-alone
discounted cash flow analysis for ITC. DLJ calculated the estimated Free Cash
Flow for ITC stand-alone on the same basis as described above. DLJ analyzed
the ITC stand-alone projections and discounted the stream of Free Cash Flows
from calendar 1998 to calendar 2002 provided in such projections back to
December 31, 1997 using discount rates ranging from 10% to 13%. To estimate
the residual value of ITC stand-alone at the end of the forecast period, DLJ
applied terminal multiples of 6.5x to 7.5x to the projected fiscal 2002 EBITDA
and discounted such value estimates back to December 31, 1997 using discount
rates ranging from 10% to 13%. DLJ then aggregated the present values of the
Free Cash Flows and the present value of the residual value to derive a range
of implied Enterprise Values for ITC stand-alone. The range of implied
Enterprise Value of ITC was then adjusted for its Net Debt to yield an implied
equity value of ITC stand-alone. The range of equity values were then divided
by the fully diluted shares to determine a range of equity values per share of
ITC Common Stock for ITC. The range of implied equity values per share for
ITC, based on the range of discount rates of 10% to 13% and the range of
terminal multiples of 6.5x to 7.5x, was $9.94 to $13.99 per share.
The summary set forth above does not purport to be a complete description of
the analyses performed by DLJ but describes, in summary form, the principal
elements of the presentation of DLJ to the ITC Board of Directors in
connection with preparation of the DLJ Opinion. The preparation of a fairness
opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of these methods to
the particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. Each of the analyses conducted by DLJ was
carried out in order to provide a different
29
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perspective on the Merger and add to the total mix of information available.
DLJ did not form a conclusion as to whether any individual analysis,
considered in isolation, supported or failed to support an opinion as to
fairness, from a financial point of view. Rather, in reaching its conclusion,
DLJ considered the results of the analyses in light of each other and did not
place particular reliance or weight on any individual analysis and ultimately
reached its opinion based on the results of all analyses taken as a whole.
Accordingly, notwithstanding the separate factors summarized above, DLJ
believes that its analyses must be considered as a whole and that selecting
portions of its analysis and the factors considered by it, without considering
all analyses and factors, could create an incomplete or misleading view of the
evaluation process underlying its opinions. The analyses performed by DLJ are
not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Pursuant to the terms of an engagement letter dated December 22, 1997, ITC
has agreed to pay DLJ (i) a retainer fee of $100,000, (ii) a fee of $500,000
upon delivery of the DLJ Opinion, (iii) an additional fee of $100,000 for each
update of a prior DLJ Opinion and (iv) additional cash compensation, payable
at the consummation of the Merger, in an amount equal to $2,750,000 less any
amounts referred to above that were previously paid. ITC has also agreed to
reimburse DLJ promptly for all reasonable out-of-pocket expenses (including
the reasonable fees and out-of-pocket expenses of counsel) incurred by DLJ in
connection with its engagement, and to indemnify DLJ and certain related
persons against certain liabilities in connection with its engagement,
including liabilities under the federal securities laws. The terms of the fee
arrangement with DLJ, which DLJ and ITC believe are customary in transactions
of this nature, were negotiated at arm's length between ITC and DLJ, and the
ITC Board of Directors was aware of such arrangement.
DLJ has performed investment banking and other services for ITC in the past
and has been compensated for such services. These services have included a
strategic review of ITC which resulted in a $45.0 million investment in ITC by
Carlyle. In the ordinary course of business, DLJ may actively trade the
securities of both OHM and ITC for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities.
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THE OHM SPECIAL MEETING
TIME, DATE AND PLACE
The OHM Special Meeting will be held at [the DoubleTree Hotel, 1000 Penn
Avenue, Pittsburgh, Pennsylvania 15222, on Wednesday, April 29, 1998, at 12:00
p.m., Eastern time].
PURPOSES OF THE OHM SPECIAL MEETING
At the OHM Special Meeting, holders of shares of OHM Common Stock will
consider and vote upon a proposal to adopt the Merger Agreement and such other
matters as may properly come before the OHM Special Meeting.
THE OHM BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
DETERMINED THAT THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF OHM AND ITS
SHAREHOLDERS. ACCORDINGLY, THE OHM BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ADOPTION OF THE MERGER AGREEMENT.
RECORD DATE; VOTING RIGHTS; PROXIES
The OHM Board of Directors has fixed the close of business on , 1998
as the OHM Record Date for determining holders entitled to notice of and to
vote at the OHM Special Meeting.
As of the OHM Record Date, there were shares of OHM Common Stock issued
and outstanding, each of which entitles the holder thereof to one vote. All
shares of OHM Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. IF NO INSTRUCTIONS ARE INDICATED,
SUCH SHARES OF OHM COMMON STOCK WILL BE VOTED IN FAVOR OF ADOPTION OF THE
MERGER AGREEMENT. OHM does not know of any matters other than as described in
the Notice of Special Meeting that are to come before the OHM Special Meeting.
If any other matter or matters are properly presented for action at the OHM
Special Meeting, the persons named in the enclosed form of proxy and acting
thereunder will have the discretion to vote on such matters in accordance with
their best judgment, unless such authorization is withheld. A shareholder who
has given a proxy may revoke it at any time prior to its exercise by giving
written notice thereof to the Secretary of OHM by signing and returning a
later dated proxy, by filing a duly executed revocation or by voting in person
at the OHM Special Meeting; however, mere attendance at the OHM Special
Meeting will not in and of itself have the effect of revoking the proxy.
Votes cast by proxy or in person at the OHM Special Meeting will be
tabulated by the election inspectors appointed for the OHM Special Meeting and
will determine whether or not a quorum is present. The election inspectors
will treat abstentions as shares that are present for purposes of determining
the presence of a quorum and as votes against the proposal to adopt the Merger
Agreement. Similarly, the election inspectors will treat broker non-votes as
shares that are present for purposes of determining the presence of a quorum
and as votes against the proposal to adopt the Merger Agreement. The term
"broker non-votes" refers to shares held by a broker in street name which are
present by proxy but are not voted on a matter pursuant to rules prohibiting
brokers from voting on non-routine matters, such as the adoption of the Merger
Agreement, without instructions from the beneficial owner of the shares.
SOLICITATION OF PROXIES
The solicitation of proxies with respect to the OHM Special Meeting is made
by the OHM Board of Directors and the cost of solicitation will be borne by
OHM. Solicitation other than by mail may be made personally, by telephone or
by facsimile, by regularly employed officers and employees of OHM who will not
be additionally compensated therefor. OHM will request persons holding stock
in their names for others, such as trustees, brokers and nominees, to forward
proxy material to their principals and request authority for the execution of
the proxy and will reimburse such persons for their expenses in so doing.
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QUORUM
The presence in person or by properly executed proxy of holders of a
majority of all of the outstanding shares of OHM Common Stock entitled to vote
thereat is necessary to constitute a quorum at the OHM Special Meeting.
REQUIRED VOTE
THE ADOPTION OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF OHM COMMON STOCK ENTITLED
TO VOTE THEREON. SUCH APPROVAL IS A CONDITION TO THE CONSUMMATION OF THE
MERGER. AS OF THE OHM RECORD DATE, MERGER SUB BENEFICIALLY OWNS AND HAS THE
RIGHT TO VOTE AT THE OHM SPECIAL MEETING 13,933,000 SHARES OF OHM COMMON
STOCK, OR APPROXIMATELY 54% OF THE OUTSTANDING SHARES, WHICH IS SUFFICIENT TO
CAUSE THE MERGER AGREEMENT TO BE ADOPTED WITHOUT THE AFFIRMATIVE VOTE OF ANY
OTHER SHAREHOLDER.
APPRAISAL RIGHTS
If the Merger is effected, holders of shares of OHM Common Stock entitled to
vote at the OHM Special Meeting will have the right to dissent to the Merger
and to obtain payment for their shares of OHM Common Stock by complying with
the provisions of Section 1701.84 et seq. of the OGCL, a copy of which is
attached as Annex D to this Proxy Statement/Prospectus. Shareholders who wish
to exercise their statutory appraisal rights must submit a written demand for
appraisal not later than ten days after the OHM Special Meeting and comply
with the other procedural requirements of such Sections. Dissenting Shares
will not be converted into the right to receive the Merger Consideration
unless the holder thereof fails to perfect or otherwise loses such holder's
right to such appraisal. If, after the Effective Time, such holder fails to
perfect or loses any such right to appraisal, each Dissenting Share of such
holder will be treated as a share of OHM Common Stock that has been converted
as of the Effective Time into the right to receive the Merger Consideration in
accordance with the terms of the Merger Agreement.
THE MATTERS TO BE CONSIDERED AT THE OHM SPECIAL MEETING ARE OF GREAT
IMPORTANCE TO THE SHAREHOLDERS OF OHM. ACCORDINGLY, SHAREHOLDERS ARE URGED TO
READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF OHM
THE OHM BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
DETERMINED THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, OHM AND
ITS SHAREHOLDERS. ACCORDINGLY, THE OHM BOARD OF DIRECTORS RECOMMENDS THAT ITS
SHAREHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
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In determining to make its recommendation, the OHM Board of Directors
considered a number of factors, including, without limitation, the following:
1. The financial and other terms and conditions of the Offer, the Merger
and the Merger Agreement including, without limitation, the fact that the
terms of the Merger Agreement (i) permit OHM shareholders to receive cash
consideration approximately equal to the recent market price for the
Shares, while obtaining significant equity interest in ITC in order to
continue to have an equity interest in an environmental and hazardous waste
remediation business, and (ii) should not unduly discourage other parties
from making bona fide proposals subsequent to signing the Merger Agreement
and, if a Superior Proposal (as defined herein) were made, OHM, in the
exercise of its fiduciary duties in accordance with the Merger Agreement,
could determine to provide information to, engage in negotiations and,
subject to payment of the termination fee, enter into a transaction with
another party.
2. The familiarity of the OHM Board of Directors with the financial
condition, results of operations, competitive position, business and
prospects of OHM (as reflected in OHM's historical and projected
financial information), current economic and market conditions and the
nature of the industry in which it operates. In this regard, the OHM Board
of Directors considered OHM management's views with respect to the benefits
associated with increased size in the environmental and hazardous waste
business, the fact that OHM and ITC together would be better able to
compete with their larger competitors and the fact that operating synergies
expected to be achieved as a result of the Merger would permit ITC and OHM
to provide service under government contracts at lower overhead costs.
3. The presentation of BT Alex. Brown at the January 14, 1998 meeting of
the OHM Board of Directors and the written opinion of BT Alex. Brown, dated
January 14, 1998, to the effect that, as of such date and based upon and
subject to certain matters in such opinion, the aggregate consideration to
be received by the holders of shares of OHM Common Stock in the Offer, the
Merger and the NSC Distribution was fair, from a financial point of view,
to such holders. THE FULL TEXT OF BT ALEX. BROWN'S WRITTEN OPINION, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY BT ALEX. BROWN IN CONNECTION WITH SUCH OPINION, IS
ATTACHED AS ANNEX C TO THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED
HEREIN BY REFERENCE. SHAREHOLDERS ARE URGED TO READ SUCH OPINION CAREFULLY
IN ITS ENTIRETY. The opinion of BT Alex. Brown was presented for the
information of the OHM Board of Directors in connection with their
consideration of the Merger Agreement and is directed only to the fairness
of the aggregate consideration to be received by the holders of shares of
OHM Common Stock in the Offer, the Merger and the NSC Distribution. The
opinion does not constitute a recommendation to any shareholder as to how
to vote with respect to the Merger.
4. The historical market prices of, and recent trading activity in, the
OHM Common Stock, particularly the fact that the [Offer and the] Merger
(assuming the Merger Consideration will have a value of $11.50 per share)
will enable the shareholders of OHM to realize a premium of approximately
29.2% over the closing price of the OHM Common Stock on the last trading
day prior to the public announcement on January 15, 1998 of the Merger
Agreement, and at a premium of approximately 26.6% over the highest price
at which OHM Common Stock has traded in the year prior to such
announcement.
5. The possible alternatives to the Offer and the Merger, including the
prospects of OHM going forward as an independent entity, the range of
possible benefits to OHM shareholders of such alternatives and the timing
and the likelihood of actually accomplishing any of such alternatives.
6. The likelihood that the transactions contemplated by the Merger
Agreement will be consummated, including the fact that the obligations of
ITC and Merger Sub to consummate the Merger are not subject to the prior
consummation of the Offer and the fact that the obligations of ITC and
Merger Sub to consummate such transactions are not conditioned upon
financing and that commitments for all necessary financing had been
obtained.
In view of the wide variety of factors considered in connection with its
evaluation of the transactions contemplated by the Merger Agreement, the OHM
Board of Directors did not find it practicable to, and did not, quantify or
otherwise attempt to assign relative weights to the specific factors
considered in reaching its determinations.
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OPINION OF OHM'S FINANCIAL ADVISOR
OHM retained BT Alex. Brown on December 3, 1997 to act as OHM's financial
advisor in connection with the Offer and the Merger, including rendering its
opinion to the Board of Directors of OHM as to the fairness, from a financial
point of view, to the holders of shares of OHM Common Stock, of the aggregate
consideration to be received by such holders in the Offer, the Merger and the
NSC Distribution.
At the January 14, 1998 meeting of the OHM Board of Directors,
representatives of BT Alex. Brown made a presentation with respect to the
Offer, the Merger and the NSC Distribution and rendered to the OHM Board of
Directors its oral opinion, subsequently confirmed in writing as of the same
date, that, as of such date, and subject to the assumptions made, matters
considered and limitations set forth in such opinion and summarized below, the
aggregate consideration to be received by the holders of shares of OHM Common
Stock in the Offer, the Merger and the NSC Distribution was fair, from a
financial point of view, to such holders. No limitations were imposed by the
OHM Board of Directors upon BT Alex. Brown with respect to the investigations
made or procedures followed by it in rendering its opinion.
THE FULL TEXT OF BT ALEX. BROWN'S WRITTEN OPINION DATED JANUARY 14, 1998
(THE "BT ALEX. BROWN OPINION"), WHICH SETS FORTH, AMONG OTHER THINGS,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN,
IS ATTACHED HERETO AS ANNEX C AND IS INCORPORATED HEREIN BY REFERENCE. OHM
SHAREHOLDERS ARE URGED TO READ THE BT ALEX. BROWN OPINION IN ITS ENTIRETY. THE
BT ALEX. BROWN OPINION IS DIRECTED TO THE OHM BOARD OF DIRECTORS, ADDRESSES
ONLY THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, TO THE HOLDERS OF SHARES OF
OHM COMMON STOCK OF THE AGGREGATE CONSIDERATION TO BE RECEIVED BY SUCH HOLDERS
IN THE OFFER, THE MERGER AND THE NSC DISTRIBUTION AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY OHM SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE
AT THE OHM SPECIAL MEETING. THE BT ALEX. BROWN OPINION WAS RENDERED TO THE OHM
BOARD OF DIRECTORS FOR ITS CONSIDERATION IN DETERMINING WHETHER TO APPROVE THE
MERGER AGREEMENT. THE DISCUSSION OF THE BT ALEX. BROWN OPINION IN THIS PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE BT ALEX. BROWN OPINION.
In connection with the BT Alex. Brown Opinion, BT Alex. Brown reviewed
certain publicly available financial information and other information
concerning OHM and ITC and certain internal analyses and other information
furnished to it by OHM and ITC. BT Alex. Brown also held discussions with the
members of the senior managements of OHM and ITC regarding the businesses and
prospects of their respective companies and the joint prospects of a combined
company. In addition, BT Alex. Brown (i) reviewed the reported prices and
trading activity for the common stock of OHM, ITC and NSC, (ii) compared
certain financial and stock market information for OHM, ITC and NSC with
similar information for certain companies whose securities are publicly
traded, (iii) reviewed the financial terms of certain recent business
combinations, (iv) performed a discounted cash flow analysis, (v) reviewed the
terms of the Merger Agreement, and (vi) performed such other studies and
analyses and considered such other factors as it deemed appropriate. In
conducting its review and arriving at its opinion, BT Alex. Brown assumed and
relied upon, without independent verification, the accuracy, completeness and
fairness of the information furnished to or otherwise reviewed by or discussed
with it for purposes of rendering its opinion. With respect to the information
relating to the prospects of OHM and ITC provided to BT Alex. Brown by each
company, BT Alex. Brown assumed that such information was reasonably prepared
and reflected the best currently available judgments and estimates of the
respective managements of OHM and ITC as to the likely future financial
performances of their respective companies. BT Alex. Brown did not make and it
was not provided with an independent evaluation or appraisal of the assets of
OHM and ITC, nor has BT Alex.
Brown been furnished with any such evaluations or appraisals. Further, BT
Alex. Brown did not make an independent evaluation or appraisal of the
liabilities (including environmental liabilities) of OHM or ITC. The BT Alex.
Brown Opinion is based on market, economic and other conditions as they
existed and could be evaluated as of the date of the opinion letter.
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The following is a summary of the analyses performed and factors considered
by BT Alex. Brown in connection with rendering the BT Alex. Brown Opinion to
the OHM Board of Directors.
Historical Financial Position. In rendering its opinion, BT Alex. Brown
reviewed and analyzed the historical and current financial condition of OHM
and ITC, which included (i) an assessment of OHM's and ITC's recent financial
statements; (ii) an analysis of OHM's and ITC's revenue, growth and operating
performance trends; and (iii) an assessment of OHM's and ITC's margin changes
and leverage.
Historical Stock Price Performance. BT Alex. Brown reviewed and analyzed the
daily closing per share market prices and trading volumes for OHM Common Stock
and ITC Common Stock from January 1, 1993 to January 12, 1998 and the relative
stock price movement over this period. BT Alex. Brown also compared the
movement of the daily closing per share market prices of OHM Common Stock and
ITC Common Stock with the movement of the S&P 500 composite average over the
period from January 1, 1996 to January 12, 1998. BT Alex. Brown noted that, on
a relative basis, both OHM Common Stock and ITC Common Stock underperformed
the S&P 500 composite average over that period. BT Alex. Brown also compared
the movement of daily closing per share market prices of OHM Common Stock and
ITC Common Stock with the movement of an environmental services industry
composite average (consisting of OHM or ITC, as applicable, Dames & Moore
Group, Harding Lawson Associates Group Inc., ICF Kaiser International,
Sevenson Environmental Services Inc. and URS Corp) (the "Selected Companies")
over the period from January 1, 1996 to January 12, 1998. BT Alex. Brown noted
that, on a relative basis, both OHM Common Stock and ITC Common Stock
underperformed such environmental services composite average over that period.
This information was presented to give the OHM Board of Directors background
information regarding the respective stock prices of OHM and ITC over the
period indicated.
Analysis of Certain Publicly Traded Companies. BT Alex. Brown compared
certain financial information (based on the commonly used valuation
measurements described below) relating to OHM and OHM's proposed transaction
valuation to certain corresponding information for the Selected Companies.
Such financial information included, among other things, (i) common equity
market valuation; (ii) operating performance; (iii) ratios of equity market
value as adjusted for debt and cash ("Adjusted Value") to revenues, earnings
before interest expense, income taxes and depreciation ("EBITDA") and earnings
before interest expense and income taxes ("EBIT"), each for the latest
reported twelve-month period as derived from publicly available information,
and (iv) ratios of common equity market prices per share ("Equity Value") to
earnings per share ("EPS") and projected EPS. The financial information used
in connection with the multiples provided below with respect to OHM and the
Selected Companies was based on the latest reported twelve-month period as
derived from publicly available information and on estimated EPS for calendar
years 1997 and 1998 as reported by the Institutional Brokers Estimating System
("IBES"). BT Alex. Brown noted that, on a trailing twelve-month basis, the
multiple of Adjusted Value to revenues was 0.7x for OHM's proposed transaction
valuation, compared to a range of 0.2x to 0.8x, with a mean of 0.4x, for the
Selected Companies; the multiple of Adjusted Value to EBIT was 15.6x for OHM's
proposed transaction valuation, compared to a range of 3.4x to 13.1x, with a
mean of 8.1x for the Selected Companies; and the multiple of Adjusted Value to
EBITDA was 8.5x for OHM's proposed transaction valuation compared to a range
of 2.4x to 7.2x, with a mean of 5.4x, for the Selected Companies. BT Alex.
Brown further noted that the multiple of Equity Value to trailing twelve-month
EPS was 24.0x for OHM's proposed transaction valuation, compared to a range of
11.7x to 29.9x, with a mean of 17.6x, for the Selected Companies; the multiple
of Equity Value to projected calendar year 1997 EPS was 23.2x for OHM's
proposed transaction valuation, compared to a range of 11.9x to 15.8x, with a
mean of 13.5x, for the Selected Companies; and the multiple of Equity Value to
projected calendar year 1998 EPS was 19.1x for OHM's proposed transaction
valuation, compared to a range of 10.7x to 30.0x, with a mean of 16.3x, for
the Selected Companies. As a result of the foregoing procedures, BT Alex.
Brown noted that the multiples for OHM's proposed transaction valuation were
generally higher than the range of the multiples for the Selected Companies.
The IBES EPS estimate for OHM as of November 23, 1997 for calendar years 1997
and 1998 were $0.51 and $0.62, respectively.
In addition, BT Alex. Brown also compared certain financial information
(based on the commonly used valuation measurements described below) relating
ITC's current market value to certain corresponding
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information for the Selected Companies. Such financial information included,
among other things, (i) common equity market valuation; (ii) operating
performance; (iii) ratios of Adjusted Value to EBITDA and EBIT, each for the
latest reported twelve-month period as derived from publicly available
information; and (iv) ratios of Equity Value to EPS and projected EPS. The
financial information used in connection with the multiples provided below
with respect to ITC and the Selected Companies was based on the latest
reported twelve-month period as derived from publicly available information
and on estimated EPS for calendar years 1997 and 1998 as reported by IBES. BT
Alex. Brown noted that, on a trailing twelve-month basis, the multiple of
Adjusted Value to revenues was 0.5x for ITC, compared to a range of 0.2x to
0.8x, with a mean of 0.4x, for the Selected Companies; the multiple of
Adjusted Value to EBIT was 13.1x for ITC compared to a range of 3.4x to 10.7x,
with a mean of 7.7x, for the Selected Companies; and the multiple of Adjusted
Value to EBITDA was 7.2x for ITC compared to a range of 2.4x to 7.0x, with a
mean of 5.1x, for the Selected Companies. BT Alex. Brown further noted that
the multiple of Equity Value to trailing twelve-month EPS was not meaningful
for ITC (because ITC's EPS was negative), compared to a range of 11.7x to
29.9x, with a mean of 17.3x, for the Selected Companies; the multiple of
Equity Value to projected calendar year 1997 EPS was deemed to be not
meaningful for ITC, compared to a range of 11.9x to 15.8x, with a mean of
14.0x, for the Selected Companies; and the multiple of Equity Value to
projected calendar year 1998 EPS was 30.0x for ITC, compared to a range of
10.7x to 12.6x, with a mean of 11.9x, for the Selected Companies. As a result
of the foregoing procedures, BT Alex. Brown noted that the multiples for ITC
were generally higher than the range of the multiples for the Selected
Companies. The IBES EPS estimate for ITC as of December 24, 1997 for calendar
years 1997 and 1998 were $0.09 and $0.28, respectively.
Analysis of Selected Mergers and Acquisitions. BT Alex. Brown reviewed the
financial terms, to the extent publicly available, of 19 proposed, pending or
completed mergers and acquisitions in the environmental services industry (the
"Selected Transactions"). BT Alex. Brown calculated various financial
multiples and the premiums over market value based on certain publicly
available information for each of the Selected Transactions and compared them
to corresponding financial multiples and the premiums over market value for
the proposed transaction based on the aggregate consideration to be received
by the holders of OHM Common Stock in the Offer, the Merger and the NSC
Distribution. BT Alex. Brown noted that the multiple of aggregate purchase
price (the value of consideration paid for common equity adjusted for debt,
preferred stock and cash) to trailing twelve month revenues was 0.7x for the
proposed transaction versus a range of 0.3x to 1.3x, with a mean of 0.7x, for
the Selected Transactions; the multiple of aggregate purchase price to
trailing EBIT was 15.6x for the proposed transaction versus a range of 3.4x to
22.1x, with a mean of 12.8x, for the Selected Transactions; and the multiple
of aggregate purchase price to trailing EBITDA was 8.5x for the proposed
transaction versus a range of 5.2x to 12.7x, with a mean of 8.0x, for the
Selected Transactions. BT Alex. Brown further noted that the multiple of
equity purchase price to the last twelve months' net income was 24.0x for the
proposed transaction versus a range of 5.6x to 42.6x, with a mean of 20.7x,
for the Selected Transactions. BT Alex. Brown also noted that the Selected
Transactions were effected at ranges of the premium to the target's per share
market prices four weeks prior to announcement and one day prior to
announcement of (6.4)% to 95.2%, with a mean of 38.4%, and (6.4)% to 48.2%,
with a mean of 24.8%, respectively, versus premiums of 50.4% and 50.4%,
respectively, for the proposed transaction as compared to the per share market
prices four weeks prior to and one day prior to 1/12/98. All multiples for the
Selected Transactions were based on public information available at the time
of announcement of such transactions, without taking into account differing
market and other conditions during the period during which the Selected
Transactions occurred.
Discounted Cash Flow Analysis. BT Alex. Brown performed discounted cash flow
analyses for OHM using financial projections (for the period from January 1,
1998 to December 31, 2002) provided by the management of OHM. Management
prepared three sets of financial projections, each of which was based on
different assumptions regarding OHM's revenue growth rates in its DOE/nuclear
and outsourcing segments. In the first projection scenario, DOE/nuclear
revenues and outsourcing revenues were assumed to remain at current run rates
over the projection period ("Scenario 1"). In the second projection scenario,
DOE/nuclear revenues were assumed to remain at current run rates while
outsourcing revenues grow by 15% per year over the projection period
("Scenario 2"). In the third projection scenario, DOE/nuclear revenues were
assumed to grow
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at a 72% compounded annual growth rate while outsourcing revenues were assumed
to grow by 15% per year over the projection period ("Scenario 3"). For each
projection scenario, BT Alex. Brown aggregated the present value of the cash
flows from 1998 through 2002 with the present value of a range of terminal
values. The terminal values were computed based on projected EBITDA in
calendar year 2002 and a range of terminal multiples of 5.5x to 7.5x. All cash
flows were discounted at rates ranging from 11% to 15%. BT Alex. Brown arrived
at such discount rates based on its judgment of the weighted average cost of
capital of the Selected Companies, and arrived at such terminal values based
on its review of the trading characteristics of the common stock of the
Selected Companies. This analysis indicated a range of values for OHM Common
Stock of $6.38 to $9.66 per share for Scenario 1, $7.24 to $11.04 per share
for Scenario 2, and $8.64 to $13.34 per share for Scenario 3.
Pro Forma Combined Earnings Analysis. BT Alex. Brown analyzed certain pro
forma effects of the proposed transaction. Based on such analysis, BT Alex.
Brown computed the resulting accretion/dilution to the combined company's EPS
estimate for the fiscal years ending 1998 and 1999, pursuant to the proposed
transaction but before taking into account potential cost savings and other
synergies that OHM and ITC could achieve if the proposed transaction were
consummated and before nonrecurring costs relating to the proposed
transaction. The combined company's pro forma 1998 and 1999 EPS estimates were
based on IBES EPS and growth rate estimates for OHM and ITC. BT Alex. Brown
noted that before taking into account any potential cost savings and other
synergies and before certain nonrecurring costs relating to the proposed
transaction, the proposed transaction would be approximately 126% dilutive and
83% dilutive to the combined company's EPS for the fiscal years ending 1998
and 1999, respectively. BT Alex. Brown calculated the pre-tax synergies that
would be required for no EPS dilution in 1998 and 1999 (assuming no conversion
of the Convertible Preferred Stock) to be approximately $12.3 million and $9.6
million, respectively. BT Alex. Brown also noted that, on a pro forma basis,
each $5.0 million of pre-tax synergies would result in a $0.14 per share
increase in the combined company's EPS in 1998 and 1999. There can be no
assurance that the combined company will be able to realize cost savings and
synergies following the proposed transaction.
Analyses of NSC. BT Alex. Brown performed analyses with respect to NSC
utilizing methodologies equivalent to those utilized in performing the
historical financial position, historical stock price performance and certain
publicly traded companies analyses performed with respect to OHM and ITC.
Relevant Market and Economic Factors. In rendering its opinion, BT Alex.
Brown considered, among other factors, the condition of the U.S. stock
markets, and the current level of economic activity, particularly in the
environmental services industry.
No company used in the analysis of certain publicly traded companies or the
analysis of selected mergers and acquisitions summarized above is identical to
OHM, ITC or NSC, as applicable, or the proposed transaction. Accordingly, such
analyses must take into account differences in the financial and operating
characteristics of the companies in the analysis of certain publicly traded
companies and the companies in the Selected Transactions and other factors
that would affect the public trading value and acquisition value of the
companies in the analysis of certain publicly traded companies and the
companies in the Selected Transactions.
While the foregoing summary describes all analyses and factors that BT Alex.
Brown deemed material in its presentation to the OHM Board of Directors, it is
not a comprehensive description of all analyses and factors considered by BT
Alex. Brown. The preparation of a fairness opinion is a complex process
involving various determinations as to the most appropriate and relevant
methods of financial analysis and the applications of these methods to the
particular circumstances, and, therefore, such an opinion is not readily
susceptible to summary description. BT Alex. Brown believes that its analyses
must be considered as a whole and that selecting portions of its analyses and
of the factors considered by it, without considering all analyses and factors,
would create an incomplete view of the evaluation process underlying the BT
Alex. Brown Opinion. In performing its analyses, BT Alex. Brown considered
general economic, market and financial conditions, many of which are beyond
the
control of OHM and ITC. The analyses performed by BT Alex. Brown are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than those suggested by such analyses.
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Accordingly, such analyses and estimates are inherently subject to substantial
uncertainty. Additionally, analyses relating to the value of a business do not
purport to be appraisals or to reflect the prices at which the business
actually may be sold. Furthermore, no opinion is being expressed as to the
prices at which shares of ITC Common Stock or shares of NSC common stock may
trade at any future time.
Pursuant to a letter agreement dated December 3, 1997 between OHM and BT
Alex. Brown, the fees to date payable to BT Alex. Brown for rendering the BT
Alex. Brown Opinion have been $750,000, which amount will be credited against
the final fee of $1,750,000, payable by OHM in connection with the proposed
transaction. In addition, OHM has agreed to reimburse BT Alex. Brown for its
reasonable out-of-pocket expenses incurred in connection with rendering
financial advisory services, including fees and disbursements of its legal
counsel. OHM has agreed to indemnify BT Alex. Brown and its directors,
officers, agents, employees and controlling persons, for certain costs,
expenses, losses, claims, damages and liabilities related to or arising out of
its rendering of services under its engagement as financial advisor.
OHM retained BT Alex. Brown to act as its advisor based upon BT Alex.
Brown's role as a co-managing underwriter for OHM's public offering in
December 1993 and subsequent advisory services and based upon BT Alex. Brown's
qualifications, reputation, experience and expertise. BT Alex. Brown is an
internationally recognized investment banking firm and, as a customary part of
its investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for corporate and other
purposes. BT Alex. Brown may actively trade the equity securities of OHM, ITC
and NSC for its own account and for the account of its customers and
accordingly may at any time hold a long or short position in such securities.
BT Alex. Brown regularly publishes research reports regarding the
environmental services industry and the business and securities of OHM and
other publicly traded companies in the environmental services industry.
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THE MERGER
This section of the Proxy Statement/Prospectus and the next section,
entitled "The Merger Agreement," describe certain aspects of the Merger. To
the extent that it relates to the Merger Agreement, the following description
does not purport to be complete and is qualified in its entirety by reference
to the Merger Agreement, a copy of which is attached as Annex A to this Proxy
Statement/Prospectus and is incorporated herein by this reference.
Stockholders of ITC and shareholders of OHM are urged to read the Merger
Agreement in its entirety.
GENERAL
The Merger Agreement provides that the Merger will be consummated if the
stockholders of ITC approve the issuance of shares of ITC Common Stock
pursuant to the Merger Agreement, the shareholders of OHM approve the adoption
of the Merger Agreement and all other conditions to the Merger are satisfied
or waived. Upon consummation of the Merger, Merger Sub will be merged with and
into OHM and OHM, as the Surviving Corporation, will become a wholly owned
subsidiary of ITC. If the Merger is not consummated, it is expected that OHM
will continue to conduct its business and operations substantially as they
have been conducted subsequent to the consummation of the Offer, with OHM
being a majority owned subsidiary of ITC.
Based upon the capitalization of ITC and OHM as of March 18, 1998, the
shareholders of OHM will own approximately 57% of the outstanding shares of
ITC Common Stock and approximately 45% (approximately 43% assuming exercise of
the Carlyle Warrants) of the voting power of ITC following consummation of the
Merger, assuming, for this purpose only, that all shares of ITC Common Stock
and OHM Common Stock issuable upon exercise of outstanding ITC and OHM stock
options, respectively, are issued.
EFFECTIVE TIME
The Effective Time of the Merger will occur upon the date on which the
Merger Certificate is duly filed with the Secretary of State of the State of
Ohio. ITC and OHM will cause the execution and filing of the Merger
Certificate as soon as practicable after the Closing. The Merger Agreement
provides that the Closing will take place on the first business day after all
conditions contemplated by the Merger Agreement have been fulfilled or waived
(or such other date upon which ITC and OHM may agree). The Merger Agreement
may be terminated by ITC and Merger Sub or OHM under certain conditions. See
"The Merger Agreement--Conditions to the Consummation of the Merger" and "--
Termination; Fees and Expenses."
MERGER CONSIDERATION
At the Effective Time, each issued and outstanding share of OHM Common Stock
(other than Excluded Shares) will be canceled and converted into and became
exchangeable for the right to receive a combination of shares of ITC Common
Stock and cash, determined pursuant to the Merger Agreement. Based upon the
number of shares of OHM Common Stock outstanding as of March 18, 1998 and the
number of shares of OHM Common Stock purchased by Merger Sub in the Offer and
by OHM in the Repurchase, at the Effective Time each outstanding share of OHM
Common Stock would be converted into the right to receive 1.081 shares of ITC
Common Stock and $2.58 in cash. Cash will be paid in lieu of issuance of any
fractional shares of ITC Common Stock.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
The conversion of shares of OHM Common Stock into the right to receive
shares of ITC Common Stock will occur automatically at the Effective Time.
As soon as reasonably practicable after the Effective Time, a transmittal
letter will be mailed by the Exchange Agent to each holder of record of shares
of OHM Common Stock other than holders of Excluded Shares, informing such
shareholder of the procedures to follow in forwarding his or her OHM stock
certificates to the Exchange Agent. Upon receipt of such OHM stock
certificates and transmittal letter, the Exchange Agent
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will deliver a certificate representing the number of whole shares of ITC
Common Stock that such shareholder is entitled to receive, and a check in the
amount of any cash comprising the Merger Consideration, cash in lieu of
issuance of any fractional share of ITC Common Stock and any dividends or
other distributions to which such shareholder is entitled pursuant to the
terms of the Merger Agreement and in accordance with the transmittal letter.
If any Merger Consideration is to be delivered to a person other than the
OHM shareholder in whose name the certificate formerly representing shares of
OHM Common Stock is registered at the Effective Time in exchange for shares of
OHM Common Stock, it will be a condition of such exchange that the certificate
so surrendered be properly endorsed or otherwise in proper form for transfer
and that the OHM shareholder requesting such issuance either pay any transfer
or other tax required or establish to the satisfaction of ITC and the Exchange
Agent that such tax has been paid or is not applicable.
After the Effective Time, there will be no further transfers of shares of
OHM Common Stock on the stock transfer books of OHM. If a certificate
representing a share or shares of OHM Common Stock is presented for transfer,
it will be canceled and a certificate representing the appropriate number of
whole shares of ITC Common Stock and cash in lieu of fractional shares of ITC
Common Stock and any dividends and distributions will be issued in exchange
therefor.
After the Effective Time and until surrendered, shares of OHM Common Stock
will be deemed to represent only the right to receive upon such surrender a
certificate representing the number of whole shares of ITC Common Stock into
which such shares of OHM Common Stock are to be exchanged and cash in lieu of
any fractional shares of ITC Common Stock as contemplated by the Merger
Agreement. No dividends or other distributions, if any, payable to holders of
ITC Common Stock will be paid to the holders of certificates for shares of OHM
Common Stock until such certificates are surrendered. Upon surrender of such
certificates, all declared dividends and distributions which will have become
payable in respect of a record date after the Effective Time will be paid to
the holder of record of the whole shares of ITC Common Stock represented by
the certificate issued in exchange therefor, without interest.
SHAREHOLDERS OF OHM SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. SHAREHOLDERS OF OHM SHOULD
NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
APPRAISAL RIGHTS
Shareholders of OHM who wish to perfect their statutory right to appraisal
must comply with the procedures set forth in Section 1701.85 of the OGCL.
Unless the shareholder and OHM agree on the fair cash value per Dissenting
Share, either may request the Ohio trial court to determine whether the
shareholder is entitled to be paid the fair cash value of any Dissenting
Shares. The court, if appropriate, will make a finding as to the fair cash
value of a Dissenting Share and render judgment against OHM for its payment
with interest at such rate and from such date as the court considers
equitable. Fair cash value will be determined as of the day prior to the day
of the OHM Special Meeting and will be the amount which a willing seller and
willing buyer with neither any compulsion to sell or buy would accept or pay,
but in no event will the fair cash value exceed the amount demanded by the
shareholder. In computing this value, any appreciation or depreciation in
market value resulting from the transactions contemplated by the Merger
Agreement will be excluded.
THE FOREGOING SUMMARY OF THE APPRAISAL RIGHTS OF OHM SHAREHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY OHM
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SECTION 1701.85
INCLUDED HEREWITH AS ANNEX D. THE PRESERVATION AND EXERCISE OF APPRAISAL
RIGHTS ARE CONDITIONED ON STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
OGCL.
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BACKGROUND OF THE MERGER
The timing, terms and conditions of the Merger Agreement are the result of
arms-length negotiations between representatives of ITC and OHM. Set forth
below is a summary of the negotiations.
On November 20, 1996, the ITC stockholders approved an investment in the
aggregate amount of $45,000,000 by Carlyle in exchange for shares of newly
issued ITC Preferred Stock and warrants to purchase 1,250,000 additional
shares of ITC Common Stock. Since that time, ITC has been pursuing expansion
and diversification opportunities through the potential acquisition of other
companies in the environmental consulting, engineering and remediation
industry in order to create long-term value for its stockholders. As part of
this strategy, at a meeting in July 1997 with members of the management of ITC
and WMX, and representatives from Carlyle and DLJ, ITC expressed an interest
in WMX's various investments in the environmental consulting, engineering and
remediation industry. During the meeting the participants discussed WMX's
investment in approximately 35% of the outstanding Shares. Management of ITC
indicated they believed there would be significant cost savings created in a
combination of ITC and OHM and offered to explain more fully the benefits of a
combination to the OHM Board of Directors or to its management.
At a subsequent meeting in August 1997 with the same participants, the
management of ITC expressed an interest in pursuing a combination of ITC and
OHM in which ITC would issue stock in exchange for the outstanding stock of
OHM at existing market prices and described the anticipated synergies that
could be achieved as a result of such a combination. The representatives of
WMX agreed to convey ITC's interest in pursuing a combination with OHM to
OHM's management. In August 1997, representatives of WMX contacted DLJ and
indicated that the OHM Board of Directors might be interested in exploring
further a potential combination with several conditions: (i) the estimated
synergies that ITC had described would need to be evaluated; (ii) any
transaction proposed would need to offer a premium for OHM and have a
significant cash component; and (iii) all further discussions must be
conducted through OHM's management and its representatives.
During September 1997, the respective management teams of ITC and OHM and
representatives from Carlyle and DLJ had numerous discussions regarding the
likely synergies that could be created in a combination of ITC and OHM. On
September 25, 1997, OHM and ITC entered into a Confidentiality Agreement.
At a meeting in October 1997, representatives of ITC and OHM met to discuss
the potential synergies created by a combination. Both managements indicated
that they believed significant synergies could be achieved and that a
combination should be explored.
During October 1997, representatives of DLJ and Union Bancaire Privee
International, Inc., OHM's financial advisors ("UBP"), had several discussions
regarding potential transaction structures and the valuation of OHM. DLJ
indicated to UBP that ITC would consider offering $10.50 a share for OHM, with
50% of the consideration consisting of ITC Common Stock and 50% of the
consideration consisting of cash. UBP indicated that the OHM Board of
Directors would review ITC's indication of interest at its regularly scheduled
Board meeting on October 30, 1997. Following the Board meeting, UBP indicated
to DLJ that the OHM Board of Directors considered any transaction at the level
of ITC's interest to be inadequate and that a greater premium and cash
component would be required for OHM to be interested in negotiating a
transaction. After numerous telephonic discussions and several meetings in
November 1997 between representatives of OHM, UBP, ITC, Carlyle and DLJ, ITC
proposed, subject to due diligence of OHM by ITC and its lenders and to
negotiation of and agreement upon a definitive merger agreement, that it would
be prepared to offer $8.00 in cash and, subject to being able to undertake
significant due diligence, 0.424 shares of ITC Common Stock for each share of
OHM Common Stock, and ITC would allow OHM to distribute to its shareholders
its ownership in NSC.
On December 3, 1997, OHM engaged BT Alex. Brown to perform certain financial
advisory and investment banking services.
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OHM agreed to move forward on the foregoing basis. On December 8, 1997, OHM
and ITC began conducting due diligence sessions. Participants in these
sessions included representatives of OHM's and ITC's management and financial,
legal and accounting advisers as well as representatives from ITC's proposed
lending group. In December 1997, OHM, ITC and Carlyle and their respective
legal and financial advisors began negotiating a definitive merger agreement.
On December 17, 1998, the OHM Board of Directors met, at which meeting OHM's
management updated the OHM Board of Directors concerning the discussions with
ITC and OHM's counsel and financial advisors advised the OHM Board of
Directors concerning the proposed transaction.
On December 20, 1997, OHM's and ITC's counsel met to negotiate the terms of
the Merger Agreement. Discussions between OHM, ITC and their respective
counsel and financial advisors continued in late December 1997 and early
January 1998.
At an ITC Board of Directors meeting on January 9, 1998, certain members of
ITC's management presented a comprehensive analysis of the proposed
transaction. The presentation included an overview of OHM, as well as a
description of various aspects of its operations, financial condition and
market position. The ITC Board of Directors also discussed the anticipated
synergies that might be realized from a combination with ITC, consisting
primarily of certain corporate and operational overhead reductions, bid and
proposal and marketing cost reductions and enhanced staff utilization. During
the January 9, 1998 ITC Board of Directors meeting, DLJ described the
valuation methodologies used in connection with its preliminary evaluation of
the fairness to ITC, from a financial point of view, of the consideration to
be paid by ITC for OHM. The ITC Board of Directors conducted a review with
counsel of the provisions of the proposed draft of the Merger Agreement
including the termination fee payable in the event the Merger Agreement
transactions are not consummated for reasons specified in the Merger Agreement
and the terms and provisions of the proposed financing for the transaction.
The ITC Board of Directors also received a report on the due diligence review
conducted with respect to OHM. Management was directed to continue
negotiations with OHM and with ITC's lender group to attempt to finalize the
terms of both the Merger Agreement and an acceptable financing commitment.
Negotiations of the terms of the Merger Agreement were concluded in a series
of meetings and telephone conversations held through January 15, 1998. The
principal issues negotiated in connection with the Merger Agreement included
the scope of the representations and warranties, the conditions to Merger
Sub's obligation to complete the Offer, the circumstances under which a
termination fee would be payable to ITC and the amount thereof. ITC obtained a
financing commitment for the Offer on January 15, 1998.
At a meeting held on January 14, 1998, management presented a report on the
final negotiation of open issues and DLJ provided to the Board its opinion
that the consideration to be paid by ITC for OHM pursuant to the Merger
Agreement is fair to ITC, from a financial point of view. The ITC Board of
Directors then unanimously approved the Merger Agreement and the transactions
contemplated thereby, including the Merger and the Offer.
On January 14, 1998, the OHM Board of Directors met to consider the results
of the negotiation process and, after considering information provided by
OHM's management, counsel and financial advisors, unanimously (i) approved the
Offer and the Merger and determined that the transactions contemplated by the
Merger Agreement, including without limitation the Offer and the Merger, are
fair to, and in the best interests of, OHM and its shareholders and (ii) voted
to enter into the Merger Agreement, the Repurchase Agreement, the Company
Voting Agreement, the Parent Voting Agreement and the Option Termination
Agreement, and to recommend that shareholders accept the Offer and tender
their shares of OHM Common Stock.
Following the approval of the Boards of Directors of OHM and ITC, on January
15, 1998, OHM, ITC and Merger Sub entered into the Merger Agreement, and the
Repurchase Agreement, the Company Voting Agreement, the Parent Voting
Agreement and the Option Termination Agreement were executed by the parties
thereto.
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OHM, WMX, Rust, Rust Services and ITC amended the Repurchase Agreement as of
February 17, 1998 to provide that WMX tender such number of shares of OHM
Common Stock, in addition to the 2,142,141 shares which it initially tendered,
as was necessary to achieve the 13,933,000 share minimum condition in the
Offer. The Offer was consummated on February 25, 1998, and Merger Sub acquired
13,933,000 shares of OHM Common Stock in the Offer. As a result of the Offer
and the Repurchase, ITC indirectly holds through Merger Sub approximately 54%
of the outstanding shares of OHM Common Stock.
The OHM Board of Directors was reconstituted on March 4, 1998 in accordance
with the terms of the Merger Agreement. Pursuant to the Merger Agreement, the
OHM Board of Directors currently consists of five members, three of whom are
representatives of ITC and two of whom are continuing directors of OHM.
Anthony J. DeLuca, Daniel A. D'Aniello and Philip B. Dolan were appointed to
the OHM Board of Directors. Charles W. Schmidt and Richard W. Pogue remain on
the OHM Board of Directors. In conjunction with such change, Mr. DeLuca was
appointed Chairman of the Board, President and Chief Executive Officer of OHM.
MANAGEMENT OF OHM AFTER THE MERGER
The directors of Merger Sub at the Effective Time will be the initial
directors of the Surviving Corporation from and after the Effective Time. The
officers of OHM at the Effective Time will remain the officers of the
Surviving Corporation from and after the Effective Time.
PLANS FOR OHM
Following consummation of the Offer, ITC initiated the process of
integrating OHM's business into ITC's operations. ITC plans to reorganize OHM
into ITC's existing business line/project delivery organizational structure,
which is expected to produce administrative and operational efficiencies and
to result in the elimination of redundant positions in the combined
organization and the closure or consolidation of certain ITC and OHM
locations. Such integration and reorganization is anticipated to result in
approximately $25 million in net cost reductions, taking into account possible
loss of revenue, with approximately 50% of the cost reductions expected to be
realized in calendar 1998. Except for the Merger and as otherwise described
elsewhere herein, ITC and Merger Sub have no current plans or proposals that
would result in an extraordinary corporate transaction, such as a merger,
reorganization or consolidation of the Surviving Corporation with or into any
third entity, the sale or transfer of substantially all of the Surviving
Corporation's assets to a third party, a material change in the Surviving
Corporation's capitalization or dividend structure or any other material
changes in the Surviving Corporation's corporate structure or business to
reorganize the Surviving Corporation. Following the consummation of the Offer,
ITC intends to continue its evaluation and review the Surviving Corporation's
operations and the potential opportunities for synergies with ITC's
operations, and consideration of what, if any, additional changes would be
desirable in light of the results of such evaluations and reviews.
EFFECT ON EMPLOYEE BENEFITS PLANS
OHM maintains a number of employee benefit plans and compensation
arrangements in which eligible employees of OHM and certain of its affiliates
participate. ITC will provide the employees and retirees of OHM and its
subsidiaries, for a period commencing at the Effective Time and ending on the
second anniversary thereof, with compensation and benefits under employee
benefit plans that, in the aggregate, are no less favorable than those
currently provided by OHM and its subsidiaries. ITC will, and will cause the
Surviving Corporation to, honor all employee benefit obligations to current
and former employees of OHM under all compensation, employee benefit and
employee severance plans in existence on the date of the Merger Agreement and
all employment and severance agreements entered into by OHM or adopted by the
OHM Board of Directors prior to the Effective Time.
43
<PAGE>
FINANCING ARRANGEMENTS RELATED TO THE MERGER
In connection with the transactions contemplated by the Merger Agreement,
ITC and Merger Sub entered into a credit facility (the "Credit Facilities")
with Citicorp USA, Inc. ("Citicorp" and, in its capacity as administrative
agent, the "Administrative Agent"), BankBoston, N.A. ("BankBoston" and, in its
capacity as documentation agent, the "Documentation Agent") and Royal Bank of
Canada (in its capacity as co-agent together with the Administrative Agent and
the Documentation Agent, the "Agents"), individually and as agent banks for a
group of lenders arranged by Citicorp Securities, Inc. and BancBoston
Securities Inc. (the "Arrangers") and the lenders named therein. The Credit
Facilities provide for facilities of up to $240.0 million (the "Tender Offer
Credit Facilities"), consisting of an eighteen-month term loan of $80.0
million made to Merger Sub and an eighteen-month revolving credit facility of
up to $160.0 million available to ITC and its wholly owned subsidiary, IT
Corporation ("IT") . The proceeds of the loan made to Merger Sub and
$126.0 million under the revolving credit loans made to ITC under the Tender
Offer Credit Facilities were used to finance the Offer. The loans made under
the Tender Offer Credit Facilities do not amortize, and will be payable in
full at their maturity if not refinanced with proceeds of loans made under the
Merger Credit Facilities (as defined herein) or otherwise. Loans made under
the Tender Offer Credit Facilities bear interest at a rate equal to LIBOR plus
2.50% per annum (or Citibank's base rate plus 1.50% per annum) through June
25, 1998. If the loans continue to be outstanding on that date, the rate will
increase by 1.00% per annum, and will increase by an additional 0.50% per
annum on the corresponding date in each of the six succeeding months, if the
loans are still outstanding on those dates. As of March 18, 1998, the interest
rate for loans outstanding under the Tender Offer Credit Facilities was
8.1875%. The Tender Offer Credit Facilities are secured by a security interest
in substantially all of the assets of ITC and its subsidiaries (including the
shares of OHM Common Stock acquired by Merger Sub upon completion of the Offer
but excluding the assets of OHM and its subsidiaries).
The Credit Facilities also provide for credit facilities of up to $425.0
million that will be available in connection with the consummation of the
Merger (the "Merger Credit Facilities"). The Merger Credit Facilities consist
of an eight-year amortizing term loan of up to $228.0 million and a six-year
revolving credit facility of up to $150.0 million. Pursuant to the terms of
the commitments, on February 17, 1998, the Arrangers exercised their option to
reallocate $50.0 million from the revolving credit facility to the term loan.
The proceeds of loans to be made under the Merger Credit Facilities will be
used to finance the cash consideration, if any, to be paid in the Merger, to
pay related expenses and costs, to refinance ITC's, IT's and Merger Sub's
loans outstanding under the Tender Offer Credit Facilities and OHM's loans
outstanding under its existing credit facility provided by a group of lenders
for which Citicorp USA, Inc. is agent (under which approximately $41.8 million
was outstanding as of March 18, 1998), to provide working capital for ITC and
its subsidiaries (including OHM and its subsidiaries) after completion of the
Merger, and for general corporate purposes of ITC and its subsidiaries.
The Merger Credit Facilities will be secured by a security interest in
substantially all of the assets of ITC and its subsidiaries (including the
assets of OHM and its subsidiaries).
The availability of the Merger Credit Facilities is subject to the following
conditions: (i) the conditions to the Merger will have been satisfied, without
any waiver that is not approved by the Agents and the lenders; (ii) the Merger
Agreement will not have been amended, waived or modified in any material
respect without the approval of the Agents and the lenders; (iii) the Merger
will have been consummated in accordance with the terms of the Merger
Agreement; (iv) there will have occurred no material adverse change with
respect to ITC and OHM on a combined basis or any of their respective
principal operating subsidiaries on a stand-alone basis; and (v) certain other
conditions customary for credit facilities of this type. If the conditions to
availability of the Merger Credit Facility are not satisfied, the Agents and
lenders could elect not to fund the Merger Credit Facilities. Under such
circumstances, ITC would be required to arrange alternative financing to
consummate the Merger and refinance the other indebtedness. No assurance can
be given that ITC would successfully arrange any such alternative financing,
if required.
44
<PAGE>
The term loans made under the Merger Credit Facilities will bear interest at
a rate equal to LIBOR plus 2.50% per annum (or Citibank's base rate plus 1.50%
per annum), and revolving loans made under the Merger Credit Facilities will
bear interest at a rate equal to LIBOR plus 2.00% per annum (or Citibank's
base rate plus 1.00% per annum), through the date that is six months after
completion of the Merger, with adjustments thereafter based on the ratio of
ITC's consolidated total debt to consolidated EBITDA.
The term loan made under the Merger Credit Facilities will amortize on a
quarterly basis in aggregate annual installments of $4.5 million for the first
six years after the Merger (which was increased from $2.25 million as a result
of the reallocation), with the remainder payable in eight equal quarterly
installments in the seventh and eighth years after the Merger. ITC will also
be required to prepay the loans under the Merger Credit Facilities with the
net proceeds of asset sales and certain debt and equity financings, and with a
portion of ITC's consolidated excess cash flow. In addition, ITC will be
required by the terms of the Debentures to make annual redemptions in an
amount equal to approximately $4.3 million.
The Credit Facilities include certain representations and warranties and
covenants customary for facilities of this type, including: (i) financial
covenants consisting of a minimum fixed charge coverage ratio, a minimum
interest expense coverage ratio, a maximum leverage ratio, a minimum liquidity
requirement, a minimum EBITDA requirement (applicable only in 1998), a maximum
capital expenditure limitation and a minimum net worth requirement; (ii)
maintenance of cash concentration accounts and lockboxes; (iii) preservation
of corporate existence, compliance with laws, payment of taxes, maintenance of
properties and insurance and financial and other reporting requirements; and
(iv) limitations (subject to certain exceptions) on indebtedness, guarantees,
liens, lease obligations, mergers and acquisitions, sales of assets and other
fundamental changes, joint ventures and other investments, transactions with
affiliates, dividends and stock repurchases and redemptions, prepayment or
modification of debt, and certain hedging obligations. The Credit Facilities
also include customary events of default, including payment defaults, breaches
of representations and warranties, covenant defaults, cross defaults to other
indebtedness, bankruptcy events, defaults in satisfaction of money judgments,
material adverse change, certain events under the Employee Retirement Income
Security Act of 1974, as amended, and a change of control of the ITC
(including, among other things, (a) prior to the funding of the Merger Credit
Facilities, (1) the disposition of the Convertible Preferred Stock or the
Carlyle Warrants to a person other than the Parent Stockholders or certain
persons affiliated with the Parent Stockholders (the "Preferred Stock Group"),
and (2) the failure by the Convertible Preferred Stockholders to hold at least
20% of the voting power of ITC, enabling them to elect a majority of the ITC
Board of Directors, and (b) on or after the funding of the Merger Credit
Facilities, (1) the disposition of the Convertible Preferred Stock or the
Carlyle Warrants to a person other than the Preferred Stock Group at any time
prior to the delivery to the lenders of a compliance certificate covering any
four fiscal quarter period beginning after the date of the funding of the
Merger Credit Facilities indicating a senior debt leverage ratio of 2.75 to
one or less, (2) any person or group of persons other than the Preferred Stock
Group acquiring or having the right to acquire beneficial ownership of 35% or
more of the voting stock of ITC, and (3) the failure of directors of ITC in
office at the date of funding of the Merger Credit Facilities and directors
nominated by such directors to constitute a majority of the ITC Board of
Directors).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the Merger to ITC and its stockholders and to OHM and its
shareholders. The summary of federal income tax consequences set forth below
is for general information only and is based on the current provisions of the
Code, applicable Treasury Regulations, judicial decisions and administrative
rulings and practice, all of which are subject to change, possibly with
retroactive effect. The tax consequences to each shareholder will depend in
part upon such shareholder's particular situation. Special tax consequences
not described herein may be applicable to particular classes of taxpayers,
such as financial institutions, insurance companies, tax-exempt organizations,
broker-dealers, individuals who are not citizens or residents of the United
States and shareholders who acquired their shares of OHM Common Stock through
the exercise of an employee stock option or otherwise as compensation.
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<PAGE>
ALL SHAREHOLDERS OF OHM SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABILITY AND
EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS AND OF CHANGES IN SUCH TAX LAWS.
Treatment of OHM Shareholders. The receipt of the shares of ITC Common Stock
and cash as Merger Consideration will be a taxable event for federal income
tax purposes and may also be a taxable transaction under applicable state,
local or foreign tax laws. A shareholder who receives Merger Consideration
pursuant to the Merger will recognize gain or loss for federal income tax
purposes equal to the difference between the sum of (a) the fair market value
of the ITC Common Stock at the Effective Time and (b) the cash received and
such shareholder's adjusted tax basis in the shares of OHM Common Stock
exchanged in the Merger. Thus, a shareholder recognizing gain under the
foregoing rule could be in the position of incurring a tax liability as a
result of the Merger without a corresponding receipt of cash.
If the shares of OHM Common Stock constitute capital assets in the hands of
the shareholder, then gain or loss recognized with respect to the receipt of
the Merger Consideration pursuant to the Merger will be capital gain or loss.
Gain or loss will be calculated separately for each block of shares of OHM
Common Stock (i.e., a group of shares of OHM Common Stock with the same tax
basis and holding period) exchanged pursuant to the Merger. The initial tax
basis of any ITC Common Stock received pursuant to the Merger will be the fair
market value of such stock at the Effective Time.
The Taxpayer Relief Act of 1997 (the "1997 Act") created several new
categories of capital gains applicable to noncorporate taxpayers. Under prior
law, noncorporate taxpayers were generally taxed at a maximum rate of 28% on
net capital gain (generally, the excess of net long-term capital gain over net
short-term capital loss). Noncorporate taxpayers are now generally taxed at a
maximum rate of 20% on net capital gain attributable to the sale of property
held for more than eighteen months, and a maximum rate of 28% on net capital
gain attributable to the sale of property held for more than one year but not
more than eighteen months. The 1997 Act did not affect the treatment of short-
term capital gain or loss (generally, gain or loss attributable to capital
assets held for one year or less) and did not affect the taxation of capital
gains in the hands of corporate taxpayers.
Treatment of OHM, ITC and ITC Stockholders. The Merger will not be a taxable
event to either OHM, ITC or the ITC stockholders.
Backup Withholding. Under the Code, a holder of shares of OHM Common Stock
may be subject, under certain circumstances, to backup withholding at a 31%
rate with respect to the receipt of the Merger Consideration unless such
holder provides proof of an applicable exemption or a correct taxpayer
identification number, and otherwise complies with applicable requirements of
the backup withholding rules. Any amounts withheld under the backup
withholding rules are not an additional tax and may be refunded or credited
against the holder's federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
EACH SHAREHOLDER OF OHM IS URGED TO CONSULT HIS OR HER TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL OR OTHER TAX LAWS, AND
OF ANY CHANGES IN APPLICABLE TAX LAWS.
ACCOUNTING TREATMENT
The acquisition of OHM by ITC, which includes the Merger, will be accounted
for under the "purchase" method of accounting in accordance with GAAP.
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<PAGE>
CERTAIN LEGAL MATTERS
Antitrust. Pursuant to the requirements of the HSR Act, on January 15, 1998,
OHM and ITC each filed a Notification and Report Form for review under the HSR
Act with the FTC and the Antitrust Division in connection with the Offer.
Early termination of the waiting period with respect to such filings was
granted on January 26, 1998.
ITC and OHM do not believe that any additional governmental filings in the
United States, other than the Merger Certificate, are required with respect to
the Merger. Even though early termination was granted with respect to the HSR
Act waiting periods applicable to the Offer and Rust Services' acquisition of
shares of ITC Common Stock in the Merger, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking divestiture of substantial
assets of OHM or ITC. Consummation of the Merger is conditioned upon, among
other things, the absence of any preliminary or permanent injunction or other
order issued by any federal or state court in the United States which prevents
the consummation of the Merger.
ITC does not believe that consummation of the Merger will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if
such a challenge is made, of the result.
Environmental. ITC will be required to notify the DTSC with respect to the
impact, if any, of the Merger and the other transactions contemplated by the
Merger Agreement on ITC's requirements to provide financial assurance for the
closure and post-closure of its Northern California facilities (e.g., Panoche,
Vine Hill, Benson Ridge and Montezuma Hills), and may be required to provide
additional or alternate financial assurance.
FEDERAL SECURITIES LAW CONSEQUENCES
All shares of ITC Common Stock issued in connection with the Merger will be
freely transferable, except that any shares of ITC Common Stock received by
persons who are deemed to be "affiliates" (as such term is defined under the
Securities Act) of OHM prior to the Merger may be sold by them only in
transactions permitted by the resale provisions of Rule 145 under the
Securities Act with respect to affiliates of OHM or as otherwise permitted
under the Securities Act. Persons who may be deemed to be affiliates of a
party generally include individuals or entities that control, are controlled
by or are under common control with, such party and may include certain
officers and directors of such party as well as principal stockholders of such
party.
Pursuant to the Merger Agreement, the affiliates, directors and executive
officers of OHM are required to execute an agreement (an "Affiliate
Agreement") in which they will make certain representations about their
intentions to hold the shares of ITC Common Stock to be received in the Merger
and agree to certain restrictions on resale of such shares. In addition, each
of the affiliates, directors and executive officers of OHM will agree to waive
their statutory appraisal rights under the OGCL. The representations and
restrictions on resale are intended to comply with restrictions on resale of
securities imposed by federal securities laws.
Affiliates of OHM who also are not affiliates of ITC may not sell their
shares of ITC Common Stock acquired in connection with the Merger, except
pursuant to an effective registration statement under the Securities Act
covering such shares or in compliance with Rule 145 (or Rule 144 under the
Securities Act in the case of persons who become affiliates of ITC) or another
applicable exemption from the registration requirements of the Securities Act.
In general, under Rule 145, for one year following the Effective Time, an
affiliate (together with certain related persons) would be entitled to sell
shares of ITC Common Stock acquired in connection with the Merger only through
unsolicited "broker transactions" or in transactions directly with a "market
maker," as such terms are defined in Rule 144. Additionally, the number of
shares to be sold by an affiliate (together with certain related persons and
certain persons acting in concert) within any three-month period for purposes
of Rule 145 may not exceed the greater of 1% of the outstanding shares of ITC
Common Stock or the average weekly trading volume of such stock during the
four calendar weeks preceding such sale. Rule 145 would only remain available,
however, to affiliates only if ITC remained current with its informational
filings with the
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<PAGE>
Commission under the Exchange Act. One year after the Effective Time, an
affiliate would be able to sell such shares of ITC Common Stock without such
manner of sale or volume limitations provided that ITC was current with its
Exchange Act informational filings and such affiliate was not then an
affiliate of ITC. Two years after the Effective Time, an affiliate would be
able to sell such shares of ITC Common Stock without any restrictions so long
as such affiliate had not been an affiliate of ITC for at least three months
prior thereto. Affiliates of OHM who become affiliates of ITC will be subject
to the resale provisions of Rule 144, including the volume limitations set
forth above, for such time as they remain affiliates of ITC.
STOCK EXCHANGE LISTING
Pursuant to applications filed by ITC, the shares of ITC Common Stock to be
issued in connection with the Merger have been authorized for listing on the
NYSE and the PE, subject to official notice of issuance.
DELISTING AND DEREGISTRATION OF OHM COMMON STOCK
Applications will be made by ITC to delist the OHM Common Stock from the
NYSE and deregister the OHM Common Stock under the Exchange Act immediately
following the Effective Time.
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<PAGE>
THE MERGER AGREEMENT
GENERAL
The following description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached hereto as Annex A and is incorporated
herein by this reference. Stockholders of ITC and shareholders of OHM are
urged to read the Merger Agreement in its entirety.
THE OFFER
The Merger Agreement provides for the making of the Offer, which was
consummated on February 25, 1998. In the Offer, Merger Sub acquired 13,933,000
shares of OHM Common Stock for cash consideration of $11.50 per share. In
connection with the consummation of the Offer, OHM repurchased from Rust
Services 2,557,231 shares of OHM Common Stock pursuant to the Repurchase
Agreement. As a result of the Offer and the Repurchase, ITC indirectly holds
through Merger Sub approximately 54% of the outstanding OHM Common Stock.
THE MERGER
The Merger Agreement provides that, subject to the terms and conditions of
the Merger Agreement at the Effective Time, Merger Sub will be merged with and
into OHM as a result of which the separate existence of Merger Sub will cease
and OHM will continue as the Surviving Corporation. At the Effective Time, the
conversion of OHM Common Stock and the conversion of shares of the common
stock of Merger Sub pursuant to the Merger Agreement will be effected as
described below. The OHM Charter and Regulations will be the Articles of
Incorporation and Regulations of the Surviving Corporation, except that
Article FIRST of the OHM Charter will be amended to read in its entirety: "The
name of the Corporation shall be OHM Corporation." The directors of Merger Sub
at the Effective Time will be the initial directors of the Surviving
Corporation and the officers of OHM at the Effective Time will be the initial
officers of the Surviving Corporation, in each case from and after the
Effective Time, until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Articles of Incorporation and
Regulations.
TERMS OF THE MERGER
At the Effective Time, as a result of the Merger and without any action on
the part of the holder of any shares of capital stock of OHM or Merger Sub:
(a) each share of OHM Common Stock outstanding immediately prior to the
Effective Time (other than Excluded Shares) will be converted into and will
become exchangeable for the right to receive a combination of shares of ITC
Common Stock and cash, determined pursuant to the Merger Agreement. Based
upon the number of shares of OHM Common Stock outstanding as of March 18,
1998 and the number of shares of OHM Common Stock purchased by Merger Sub
in the Offer and by OHM in the Repurchase, at the Effective Time each
outstanding share of OHM Common Stock would be converted into the right to
receive 1.081 shares of ITC Common Stock and $2.58 in cash. Cash will be
paid in lieu of any fractional share of ITC Common Stock;
(b) each share of OHM Common Stock purchased in the Offer or otherwise
owned by ITC, Merger Sub or their subsidiaries or owned by OHM or any of
its subsidiaries and in each case not held on behalf of third parties at
the Effective Time will be canceled, retired and cease to exist, without
the payment of consideration thereof;
(c) each Dissenting Share for which appraisal rights have been properly
exercised will be entitled to receive the payment provided by Sections
1701.84 et seq. of the OGCL; and
(d) each issued and outstanding share of the common stock, par value
$0.10 per share, of Merger Sub will be converted into one share of common
stock of the Surviving Corporation.
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At the Effective Time, present holders of shares of OHM Common Stock will
cease to have any rights as holders of such shares, but will have the right to
receive shares of ITC Common Stock and cash in lieu of any fractional shares
of ITC Common Stock. After the Effective Time, the stock transfer books of OHM
will be closed and there will be no further transfers of shares of OHM Common
Stock. See "The Merger--Conversion of Shares; Procedures for Exchange of
Certificates" and "Comparison of Stockholder and Shareholder Rights."
FRACTIONAL SHARES
Fractional shares of ITC Common Stock will not be issued in connection with
the Merger. In lieu of any such fractional share, each holder of shares of OHM
Common Stock who would otherwise have been entitled to a fraction of a share
of ITC Common Stock upon surrender of certificates for exchange will receive a
cash payment in lieu thereof (without interest), which payment will represent
such holder's proportionate interest in a share of ITC Common Stock based on
the average closing price per share of ITC Common Stock on the NYSE for the
ten (10) trading days immediately prior to the Effective Time.
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<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The following table sets forth information, with respect to each director or
executive officer of OHM prior to the consummation of the Offer who will be
entitled to receive cash compensation in connection with the Merger with
respect to shares of OHM Common Stock or OHM Options owned. The table reflects
only the gross amount.
<TABLE>
<CAPTION>
DOLLAR AMOUNT DOLLAR AMOUNT
OF MERGER NUMBER OF OF MERGER
CONSIDERATION OPTIONS CONSIDERATION
SHARES FOR SHARES IN-THE- FOR IN-THE- TOTAL CASH
NAME OWNED(#) OWNED($) MONEY(#) MONEY OPTIONS($) CONSIDERATION($)
---- -------- ------------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Pamela K.M. Beall....... 0 $ 0 0 $ 0 $ 0
Vice President,
Treasurer and Assistant
Secretary
Robert J. Blackwell..... 20,479 268,684 0 0 268,684
Vice President,
Marketing and Strategic
Planning
Herbert A. Getz......... 0 0 0 0 0
Director
Ivan W. Gorr............ 9,197 120,665 0 0 120,665
Director
Dr. Fred H. Halvorsen... 0 0 0 0 0
Vice President, Health
and Safety
Kris E. Hansel.......... 1,982 26,004 0 0 26,004
Vice President and
Controller
Steven E. Harbour....... 0 0 0 0 0
Vice President, Legal
and Secretary
Dr. Charles D.
Hollister.............. 0 0 0 0 0
Director 0 0 0
William P. Hulligan..... 0 0 0 0 0
Director
James L. Kirk........... 0 0 0 0 0
Chairman, President and
Chief Executive Officer
Joseph R. Kirk.......... 0 0 0 0 0
Executive Vice
President and Director
James E. Koenig......... 150(1) 1,968 0 0 1,968
Director
Philip V. Petrocelli.... 20,177 264,722 0 0 264,722
Vice President, Western
Operations
Richard W. Pogue........ 1,000(2) 13,120 40,000 524,800 537,920
Director
Charles W. Schmidt...... 8,736 114,616 10,000 131,200 245,816
Director
Philip O. Strawbridge... 12,307 161,468 97,967 1,285,327 1,446,795
Vice President and
Chief Financial and
Administrative Officer
Michael A. Szomjassy.... 0 0 0 0 0
Vice President,
Eastern Operations
------ -------- ------- ---------- ----------
74,028 $971,247 147,967 $1,941,327 $2,912,574
====== ======== ======= ========== ==========
</TABLE>
- --------
(1) Includes 150 shares of OHM Common Stock held in trust for the benefit of
Mr. Koenig's brother as to which he disclaims beneficial ownership.
(2) Includes 1,000 shares of OHM Common Stock held in trust for the benefit of
Mr. Pogue's wife as to which he disclaims beneficial ownership.
(3) Except as set forth in the table above, no director or executive officer
is entitled to receive any cash compensation in connection with the Merger
for shares of OHM Common Stock owned or options to purchase shares of OHM
Common Stock.
(4) Each of the following persons tendered shares of OHM Common Stock owned
(or acquired upon exercise of OHM Options owned) and received total cash
consideration in the Offer in the number and amount indicated as follows:
(a) Ms. Beall, 69,067 shares, $794,271; (b) Mr. Blackwell, 147,118 shares,
$1,691,857; (c) Mr. Getz, 10,000 shares, $115,000; (d) Mr. Gorr, 31,409
shares $361,204; (e) Dr. Halvorsen, 40,300 shares, $463,450;
(f) Mr. Hansel, 57,981 shares, $666,782; (g) Mr. Harbour, 50,000 shares,
$575,000; (h) Dr. Hollister, 30,000 shares, $345,000; (i) Mr. Hulligan,
20,000 shares, $230,000; (j) Mr. James L. Kirk, 2,146,576 shares,
$24,685,624; (k) Mr. Joseph R. Kirk, 2,519,138 shares, $28,970,087; (l)
Mr. Koenig, 10,000 shares $115,000; (m) Mr. Petrocelli, 185,475 shares,
$2,132,963; (n) Mr. Pogue, 12,000 shares, $138,000; (o) Mr. Schmidt,
49,454 shares, $568,721; (p) Mr. Strawbridge, 26,463 shares, $304,325; and
(q) Mr. Szomjassy, 220,029 shares, $2,530,334.
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Indemnification. Pursuant to the Merger Agreement, ITC will, from and after
the Effective Time, indemnify and hold harmless, to the fullest extent
permitted under applicable law (and ITC will also advance expenses as incurred
to the fullest extent permitted under applicable law, provided the person to
whom expenses are advanced provides an undertaking to repay such advances if
it is ultimately determined that such person is not entitled to
indemnification), each present and former director and officer of OHM and its
subsidiaries against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, including
the transactions contemplated by the Merger Agreement, which is based in whole
or in part on, or arises in whole or in part out of the fact that such person
is or was a director or officer of OHM or any of its subsidiaries. In
addition, for not less than six years after the Effective Time, ITC and the
Surviving Corporation will maintain OHM's and its subsidiaries' existing
directors' and officers' liability insurance ("D&O Insurance"), subject to
certain maximum premium payments, provided that ITC may substitute therefor a
policy maintained for the benefit of ITC or any of its subsidiaries so long as
the terms are no less advantageous to the intended beneficiaries thereof than
the existing D&O Insurance or ITC or the Surviving Corporation may purchase a
six-year extended reporting endorsement under OHM's existing D&O Insurance
with certain restrictions.
Employment Agreements. The Offer resulted in a change in control of OHM for
purposes of employment agreements entered into by OHM prior to the execution
of the Merger Agreement with eight executive officers of OHM (the "Employment
Agreements"). As a result of the change in control, under the Employment
Agreements such executives will continue their employment with OHM in their
present positions for a period of approximately three years following the date
of the change in control. During the term of employment, each executive will
be entitled to receive a base salary and to continue to participate in
incentive and employee benefit plans at levels no less favorable to him or her
than existed prior to the change in control. In the event that OHM terminates
an executive's employment during the employment term, or the executive
terminates his or her employment under circumstances amounting to good reason
under the Employment Agreement, the executive will be entitled to receive a
lump sum payment, subject to an overall limitation which assures that payments
will not constitute "excess parachute payments" under federal income tax law.
[If the eight executive officers were terminated following the change in
control of OHM, such executives would receive aggregate payments pursuant to
the Employment Agreements equal to approximately $7,800,000. Of that total,
Mr. James L. Kirk would receive approximately $1,850,000, Mr. Petrocelli would
receive approximately $1,050,000, Mr. Szomjassy would receive approximately
$1,150,000, Mr. Strawbridge would receive approximately $1,000,000 and Mr.
Blackwell would receive approximately $960,000 and in each case plus payment
for certain benefits if such benefits are terminated. Such payments may be
limited by the overall limitation which assures that payments will not
constitute "excess parachute payments" under federal income tax law.]
OHM entered into an employment agreement with Joseph R. Kirk in August of
1996, for a term of five years. As a result of the change in control of OHM,
Mr. Kirk's employment has been terminated and he has received a lump sum
payment equal to the sum of $250,000 for the first year and $25,000 less for
each additional year remaining in the employment term.
Prior to the Effective Time, OHM will enter into an agreement with Dr. Fred
H. Halvorsen (which may be characterized as either a severance agreement or a
retention agreement) which will provide for a payment of $235,000 in
settlement for any claims he may have, including severance claims. The payment
equals approximately one year's base salary (plus bonus and payment for
certain other benefits) during the one-year period following the change in
control of OHM.
Restricted Stock Awards. Prior to the execution of the Merger Agreement, OHM
entered into restricted stock agreements ("Restricted Stock Agreements") with
five executive officers of OHM, including Mr. James L. Kirk, Mr. Petrocelli,
Mr. Szomjassy and Mr. Blackwell, pursuant to OHM's Incentive Stock Plan, which
is described more fully in OHM's Schedule 14D-9 filed with the Commission on
January 16, 1998 in respect of
52
<PAGE>
the Offer. In connection with the Merger, OHM has amended the Restricted Stock
Agreements to provide that each executive's restricted stock award will vest
prior to the commencement of the Offer. Absent such action by OHM, such
restricted stock awards would have vested upon the filing of the Schedule 14D-
1 in respect of the Offer.
Stock Option Awards. In connection with the Merger, the holders of OHM stock
options under OHM's 1986 Stock Option Plan and the Nonqualified Stock Option
Plan for Directors, including the executive officers of OHM and participating
directors, were entitled to elect to receive a cash payment in return for the
cancellation of their options. The cash payment for each OHM option equaled
the difference between $11.50 and the exercise price of such option,
multiplied by the number of shares of OHM Common Stock subject to such option.
Such payments will be made prior to the date of the Merger. If each executive
officer of OHM who is not also a director elects to receive the cash payment,
OHM will make aggregate payments equal to approximately $2,658,672. Of that
total, Mr. Petrocelli would receive approximately $573,403; Mr. Szomjassy
would receive approximately $682,109; Mr. Strawbridge would receive
approximately $399,897 and Mr. Blackwell would receive approximately $441,912.
If each non-executive director elects to receive the cash payment in lieu of
his options, OHM would make an aggregate payment to such directors in the
amount of $543,125. Mr. Joseph R. Kirk would be entitled to receive
approximately $493,750 in the event that he elects to receive the cash payment
in lieu of his options. Mr. James L. Kirk would be entitled to receive
approximately $1,169,622 in the event he elects to receive the cash payment in
lieu of his options.
Deferred Compensation Plans. OHM maintains the Retirement and Incentive
Compensation Plan (the "RICP"). The Merger will result in a change in control
of OHM for purposes of the RICP. Upon the change in control, all Matching
Contributions, Interest and Dividends (as defined in the RICP) will fully vest
and participants in the RICP, including all executive officers and certain
directors of OHM, will be paid the value of their RICP accounts. As of
December 31, 1997, the aggregate value of the unvested portion of the Matching
Contribution accounts of such persons was $358,783.
H. WAYNE HUIZENGA OPTIONS
Pursuant to a letter agreement, dated January 15, 1998 (the "Option
Termination Agreement"), between OHM and H. Wayne Huizenga, who held an option
to purchase up to 620,000 shares of OHM Common Stock at an exercise price of
$10.00 per share and an option to purchase up to 380,000 shares of OHM Common
Stock at an exercise price of $12.00 per share, such options were terminated
upon the acceptance by Merger Sub of shares of OHM Common Stock for payment in
the Offer, in exchange for the payment by OHM to Mr. Huizenga of $1,500,000 in
cash.
WMX WARRANTS
WMX holds warrants (the "WMX Warrants") to purchase 700,000 shares of OHM
Common Stock at an exercise price of $15.00 per share. Pursuant to the Merger
Agreement and the Repurchase Agreement, such WMX Warrants will be canceled at
the Effective Time without the payment of any separate consideration.
SURRENDER AND PAYMENT
As of the Effective Time, as required by the Merger Agreement, ITC will
deposit or will cause to be deposited with the Exchange Agent, or such other
agent as may be selected by ITC with OHM's prior approval, which will not be
unreasonably withheld for the benefit of the holders of shares of OHM Common
Stock other than Excluded Shares, certificates representing ITC Common Stock
and if applicable cash to be paid in lieu of fractional shares of ITC Common
Stock issuable in connection with the Merger. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation will cause the
Exchange Agent to mail to each holder of record of shares of OHM Common Stock
other than holders of Excluded Shares a letter of transmittal
53
<PAGE>
and instructions for surrendering the certificates representing shares of OHM
Common Stock, and each holder of shares of OHM Common Stock will be entitled
to receive, upon surrender to the Exchange Agent of one or more certificates
representing such shares, certificates representing the number of shares of
whole shares of ITC Common Stock into which such shares are converted in the
Merger and cash in consideration of fractional shares of ITC Common Stock, as
described above. ITC Common Stock into which OHM Common Stock will be
converted in the Merger will be deemed to have been issued at the Effective
Time.
No dividends or other distributions declared or made after the Effective
Time on ITC Common Stock with a record date after the Effective Date will be
paid to the holder of any unsurrendered certificates representing such OHM
Common Stock. Subject to the effect of applicable laws, upon such surrender,
there will be issued and/or paid to the person in whose name the certificates
representing such ITC Common Stock will be issued any dividends or other
distributions which will have become payable with respect to whole shares of
ITC Common Stock in respect of a record date on or after the Effective Time.
In no event will the person entitled to receive such dividends or other
distributions be entitled to receive interest on such dividends or other
distributions. In the event that any certificates representing shares of ITC
Common Stock are to be issued in a name other than that in which the
certificates representing shares of OHM Common Stock surrendered in exchange
therefor are registered, it will be a condition of such exchange that the
person requesting such exchange present to the Exchange Agent such
certificates with all documents required to evidence and effect such transfer
and evidence that any applicable stock transfer taxes have been paid.
Notwithstanding the foregoing, ITC, the Surviving Corporation, the Exchange
Agent or any other person will be liable to any former holder of shares of OHM
Common Stock, for any shares of ITC Common Stock (or dividends thereon) or
cash in lieu of fractional shares of ITC Common Stock delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
laws.
DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED TO
SHAREHOLDERS OF OHM AS SOON AS REASONABLY PRACTICABLE FOLLOWING THE EFFECTIVE
TIME AS TO THE METHOD OF EXCHANGING CERTIFICATES FORMERLY REPRESENTING SHARES
OF OHM COMMON STOCK FOR CERTIFICATES REPRESENTING SHARES OF ITC COMMON STOCK.
SEE "THE MERGER--CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF
CERTIFICATES." SHAREHOLDERS OF OHM SHOULD NOT SEND CERTIFICATES REPRESENTING
THEIR SHARES OF OHM COMMON STOCK TO OHM OR, PRIOR TO RECEIPT OF THE
TRANSMITTAL LETTER, TO THE EXCHANGE AGENT.
CONDITIONS TO CONSUMMATION OF THE MERGER
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of ITC, Merger Sub and OHM to consummate the Merger will be
subject to the fulfillment of each of the following conditions, any or all of
which may be waived in whole or in part by ITC, Merger Sub or OHM, as the case
may be:
(a) No United States or state court or other governmental entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the transactions contemplated by the
Merger Agreement (collectively, an "Order");
(b) The Registration Statement shall have been declared effective by the
Commission under the Securities Act. No stop order suspending the
effectiveness of the Registration Statement will have been issued by the
Commission and no proceedings for that purpose and no similar proceeding in
respect of the Proxy Statement will have been initiated or threatened by
the Commission;
(c) The Merger Agreement and the Merger shall have been adopted by the
holders of a majority of shares of OHM Common Stock and the issuance of
shares of ITC Common Stock pursuant to the Merger Agreement shall have been
approved by the requisite vote of the stockholders of ITC; and
(d) The ITC Common Stock to be issued in the Merger, upon exercise of the
OHM Options assumed by ITC in connection with the Merger and the Debentures
have been approved for listing, subject to official notice of issuance, on
the NYSE.
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<PAGE>
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of ITC,
Merger Sub and OHM relating to, among other things, the following matters
(which representations and warranties are subject, in certain cases, to
specified exceptions): (a) the due organization, existence and standing of,
and similar corporate matters with respect to, each of OHM, ITC and each of
their subsidiaries and Merger Sub; (b) each of OHM's, ITC's and Merger Sub's
capitalization; (c) the authorization, execution, delivery and enforceability
of the Merger Agreement by each such party and the consummation of the
transactions contemplated thereby; (d) the absence of any governmental or
regulatory authorization, consent or approval required to consummate the
Merger, other than filings and/or notices under the HSR Act, the Securities
Act, the Exchange Act, state securities or "blue sky" laws and the
requirements of the NYSE; (e) compliance with laws and regulations, a
violation of which could have a material adverse effect on ITC or OHM; (f)
reports and other documents filed with the Commission by ITC and OHM since
March 28, 1997 and December 31, 1997, respectively, and the accuracy of the
information contained therein; (g) the absence of certain changes or events
having a material adverse effect on the business, results of operations,
condition (financial or otherwise) or prospects of ITC or OHM since September
26, 1997 and September 30, 1997, respectively; (h) the absence of any breach,
default or violation of each of ITC's and OHM's corporate charter, bylaws or
regulations, including any anti-takeover provision, and of any obligation or
regulation to which ITC or OHM is bound; (i) the absence of any litigation
having a material adverse effect on ITC or OHM; (j) the disclosure of all ITC
and employee benefit plans and compliance in all material respects with
statutes governing their administration; (k) the disclosure of any
acceleration of benefits under any OHM employee benefit plans pursuant to the
transactions contemplated by the Merger Agreement; (l) disclosure of
information with respect to options to purchase shares of OHM Common Stock,
including price, vesting date and expiration; (m) material compliance with
environmental laws and the absence of environmental claims which would have a
material adverse effect on ITC or OHM; (n) compliance with tax laws and
regulations, including the absence of tax delinquencies; (o) the absence of
any material undisclosed liabilities; (p) the absence of beneficial ownership
of shares of OHM Common Stock by ITC or any of its subsidiaries; (q) the
absence of any brokerage or finders fees associated with the Merger (other
than to certain specified persons); (r) the availability of funds to ITC to
consummate the Offer and the Merger and pay all fees, expenses and costs in
connection with the Merger Agreement and the Repurchase Agreement; (s) the
vote of the holders of a majority of the outstanding shares of ITC and OHM,
respectively, to approve the Merger Agreement and the transactions
contemplated thereby; and (t) the absence of any material untrue statements in
the Registration Statement and this Proxy Statement/Prospectus.
CONDUCT OF BUSINESS
OHM. OHM agreed as to itself and its subsidiaries that, prior to the date on
which the Parent Representatives were elected to the OHM Board of Directors
and represented at least a majority of such directors, it would not take
certain actions. On March 4, 1998, OHM caused its board to be reconstituted to
consist of five members, three of whom, Anthony J. DeLuca, Daniel A. D'Aniello
and Philip B. Dolan, were designated as representatives of ITC and two of
whom, Charles W. Schmidt and Richard W. Pogue, continue as directors of OHM.
ITC. ITC has agreed that as to itself and its subsidiaries, prior to the
Effective Time (unless OHM otherwise approves in writing, which approval will
not be unreasonably withheld or delayed, and except as otherwise expressly
contemplated by the Merger Agreement), (a) the business of ITC and its
subsidiaries will be conducted in the ordinary and usual course consistent
with past practice, (b) it will use all reasonable best efforts to preserve
its business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates, (c) it will not (i) amend its charter
documents, articles, bylaws or regulations or those of its subsidiaries, (ii)
split, combine or reclassify its outstanding shares of capital stock or any of
its subsidiaries, or (iii) declare, set aside or pay any dividend payable in
cash, stock or property in respect of any capital stock other than dividends
from its direct or indirect wholly owned subsidiaries and other than regular
quarterly cash or payment in kind dividends on the Convertible Preferred
Stock, (d) neither ITC nor any of its subsidiaries will take any action that
would be reasonably likely to impede or delay the transactions contemplated by
the Merger Agreement or adversely affect the parties' ability
55
<PAGE>
to consummate such transactions or (e) neither ITC nor any of its subsidiaries
will authorize or enter into an agreement to do any of the foregoing.
NO SOLICITATION OF TRANSACTIONS
Pursuant to the Merger Agreement, OHM has agreed that neither it nor any of
its subsidiaries nor any officer, director or employee of OHM or its
subsidiaries will, and that it will direct and use its best efforts to cause
its and its subsidiaries' agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its subsidiaries) not
to, directly or indirectly through another person, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal
or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, OHM or any of
its subsidiaries (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal"). OHM has further agreed that neither it nor any of
its subsidiaries nor any of their respective officers, directors, or employees
will, and that it will direct and use its best efforts to cause its and its
subsidiaries' agents and representatives (including any investment banker,
attorney or accountant retained by it or any of its subsidiaries) not to,
directly or indirectly through another person, engage or participate in any
negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Acquisition Proposal,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; provided, however, that nothing contained in the Merger
Agreement prevents either OHM or the OHM Board of Directors at any time prior
to the purchase of shares of OHM Common Stock pursuant to the Offer from (a)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal; (b) providing information in response to a request
therefor by a person who has made an unsolicited bona fide written Acquisition
Proposal if the OHM Board of Directors receives from the person so requesting
such information an executed confidentiality agreement on terms substantially
similar to those set forth in the Confidentiality Agreement; (c) engaging in
any negotiations or discussion with any person who has made an unsolicited
bona fide written Acquisition Proposal; or (d) recommending such an
Acquisition Proposal to the shareholders of OHM, as the case may be, if and
only to the extent that, in each such case referred to in clause (b), (c) or
(d) above, the OHM Board of Directors (i) determines in good faith, taking
into consideration the advice of outside legal counsel, that such action is
likely to be required in order for its members to comply with their fiduciary
duties under applicable law and (ii) determines in good faith, after
consultation with its financial advisor, that such Acquisition Proposal is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the person making the proposal and
would, if consummated, result in a transaction more favorable to OHM
shareholders from a financial point of view than the transaction contemplated
by the Merger Agreement (any such Acquisition Proposal being referred to
herein as a "Superior Proposal"). OHM has agreed to notify ITC as promptly as
reasonably practicable (and in any event not later than one business day after
an inquiry or proposal is made) if any such inquiries or proposals (including
the identity of the party making such inquiry or proposal and the terms
thereof) are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, OHM
or such representatives.
INDEMNIFICATION
Pursuant to the Merger Agreement, ITC will, from and after the Effective
Time, indemnify and hold harmless, to the fullest extent permitted under
applicable law (and ITC will also advance expenses as incurred to the fullest
extent permitted under applicable law, provided the person to whom expenses
are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification),
each present and former director and officer of OHM and its subsidiaries
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, including
the transactions contemplated by the Merger Agreement, which is based or
arises out of the fact that such person is or was a director or officer of OHM
or any of its subsidiaries. In addition, for not less than six years after the
Effective Time, ITC and the Surviving Corporation will maintain OHM's and its
subsidiaries'
56
<PAGE>
existing directors' and officers' liability insurance ("D&O Insurance"),
subject to certain maximum premium payments, provided that ITC may substitute
therefor policies having at least the same coverage and containing terms which
are no less advantageous to the intended beneficiaries thereof than the
existing D&O Insurance with respect to matters existing or occurring at or
prior to the Effective Time or may purchase a six-year extended reporting
endorsement under OHM's existing D&O Insurance.
BOARD REPRESENTATION
Pursuant to the Merger Agreement, after consummation of the Offer, ITC was
entitled to designate a majority of the members of the OHM Board of Directors.
On March 4, 1998, all of the directors of OHM prior to such event, except
Charles W. Schmidt and Richard W. Pogue, resigned from the OHM Board of
Directors, and Anthony J. DeLuca, Daniel A. D'Aniello and Philip B. Dolan were
appointed to the OHM Board of Directors. In conjunction with such change, Mr.
DeLuca was named Chairman of the Board, President and Chief Executive Officer.
ITC has agreed that, promptly after the Effective Time of the Merger, ITC
will increase the size of its board or exercise its reasonable best efforts to
secure the resignation of present directors in order to cause two nominees of
OHM, Charles W. Schmidt and Richard W. Pogue (the "Nominees"), to be appointed
to the ITC Board of Directors and, subject to fiduciary obligations under
applicable law, will use its reasonable best efforts to cause the Nominees to
be elected (or remain in office) as directors of ITC (divided as evenly as is
possible among classes of directors) at the first annual meeting of
stockholders of ITC with a proxy mailing date after the Effective Time.
EMPLOYEE BENEFIT PLANS
Employee/Director Stock Options. Pursuant to the Merger Agreement, each
holder of an option to purchase a share of OHM Common Stock (each an "OHM
Option") granted under OHM's 1986 Stock Option Plan, the Directors Deferred
Fee Plan, the Incentive Stock Plan and the Nonqualified Stock Option Plan for
Directors (collectively, the "Stock Plans") was required to elect the
treatment of their OHM Options under the provisions of the Merger Agreement.
OHM Option holders were permitted to elect that, at the Effective Time, each
OHM Option, whether vested or unvested, exercisable or unexercisable, be
converted into the right to receive cash consideration equal to the product of
(x) (1) the excess of $11.50 over (2) the exercise price per share subject to
such OHM Option and (y) the number of shares subject to such OHM Option,
payable to the holder of such OHM Option. All such elections were made prior
to the expiration of the Offer. OHM was entitled to withhold from such cash
payment any amounts required to be withheld by applicable law. Each OHM Option
to which this paragraph applies was canceled and ceased to exist by virtue of
such payment.
Alternatively, OHM Option holders were permitted to elect that, at the
Effective Time, each OHM Option, whether vested or unvested, exercisable or
unexercisable, be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such OHM Option, a number of shares of
ITC Common Stock equivalent to the number of shares of OHM Common Stock that
could have been purchased immediately prior to the Effective Time under such
OHM Option multiplied by the Exchange Ratio (without regard to any adjustment
thereof and rounded up to the nearest whole number of shares of ITC Common
Stock), at a price per share of ITC Common Stock (rounded up to the nearest
whole cent) equal to (y) the aggregate exercise price for the Shares otherwise
purchasable pursuant to such OHM Option divided by (z) the Exchange Ratio
(without regard to any adjustment thereof); provided, however, that in the
case of any OHM Option to which Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") applies, the option price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise
of such option will be determined in accordance with the foregoing, subject to
such adjustments as are necessary in order to satisfy the requirements of
Section 424(a) of the Code. Pursuant to the Merger Agreement, ITC will assume
each OHM Option to which this second election applies in accordance with the
terms of the Stock Plans under which such OHM Option was issued and the stock
option agreement by which it is evidenced.
57
<PAGE>
At or prior to the Effective Time, ITC will take all corporate action
necessary to reserve for issuance a sufficient number of shares of ITC Common
Stock for delivery upon exercise of OHM Options assumed by it in accordance
with the Merger Agreement.
Other Benefit Plans. OHM maintains a number of employee benefit plans and
compensation arrangements in which eligible employees of OHM and certain of
its affiliates participate. ITC has agreed that following the Effective Time,
the employees of OHM and its subsidiaries who are employed by the Surviving
Corporation or its subsidiaries (the "Company Employees") will become eligible
to participate in the employee benefit plans and arrangements maintained by
ITC or its subsidiaries including, without limitation, severance plans, in the
same manner as similarly situated employees of ITC. ITC or its subsidiaries
will grant the Company Employees credit for all service credited by OHM for
purposes of eligibility, vesting and the determination of benefits under
vacation and severance pay plans. ITC will, and will cause the Surviving
Corporation to, honor in accordance with their terms all employee benefit
obligations to current and former employees under all compensation and
employee benefit and employee severance plans in existence on the date of the
Merger Agreement and all employment and severance agreements entered into by
OHM or adopted by the OHM Board of Directors prior to the Effective Time.
TERMINATION; FEES AND EXPENSES
The Merger Agreement provides that it may be terminated and the Merger may
be abandoned, (i) by the Board of Directors of either ITC or OHM after June
15, 1998 if prior thereto Merger Sub shall not have purchased shares of OHM
Common Stock pursuant to the Offer and the Effective Time shall not have
occurred; provided, that the party seeking termination is not in violation of
the terms of the Merger Agreement, or (ii) upon receiving an unsolicited
written offer with respect to a merger, consolidation or sale of all or
substantially all of OHM's assets or an unsolicited tender or exchange offer
for the shares of OHM Common Stock is commenced, the OHM Board of Directors
determines in good faith, taking into consideration the advise of outside
legal counsel, that approval, acceptance or recommendation of such transaction
is likely to be required in order for the members of the OHM Board of
Directors to comply with their fiduciary duties under applicable law, and
determines in good faith, after consultation with its financial advisor, that
such transaction is a Superior Proposal, and pays ITC the Termination Fee.
Pursuant to the Merger Agreement, if (i) ITC shall have terminated the
Merger Agreement due to the withdrawal or modification, in a manner adverse to
ITC or Merger Sub, of the approval or recommendation of the Merger Agreement
or the Merger by the OHM Board of Directors or (ii) OHM shall have terminated
the Merger Agreement as a result of a Superior Proposal, then, OHM will
promptly, but in no event later than two days after the date of such agreement
or the effective time of such termination as the case may be, pay ITC the
Termination Fee, provided, that the Termination Fee will not be paid to ITC if
ITC has materially breached any of its obligations under the Merger Agreement.
Whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement, the Merger and the other transactions
contemplated by the Merger Agreement, will be paid by the party incurring such
expense, except that expenses incurred in connection with the filing of this
Proxy Statement/Prospectus and the printing and mailing of such documents will
be borne by ITC.
AMENDMENT; WAIVER
The Merger Agreement provides that, subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties thereto may modify
or amend the Merger Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
The Merger Agreement also provides that the conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of each
such party and may be waived by such party in whole or in part to the extent
permitted by applicable law.
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PRICE RANGE OF COMMON STOCK
ITC Common Stock is listed on the NYSE and the PE under the symbol "ITX" and
OHM Common Stock is listed on the NYSE under the symbol "OHM." The following
table sets forth the high and low intra-day prices for ITC Common Stock and
OHM Common Stock on the NYSE Composite Transactions reporting system for the
periods indicated. ITC Common Stock prices shown are adjusted for a one-for-
four reverse stock split effective November 21, 1996. Following the Merger,
OHM Common Stock will cease to be traded on the NYSE, and there will be no
further market for such stock. (Quarters are for a calendar year.)
<TABLE>
<CAPTION>
ITC OHM
----------------- ----------------
HIGH LOW HIGH LOW
-------- -------- ------- --------
<S> <C> <C> <C> <C>
1996
First Quarter............................. $11 $8 $8 3/8 $6 7/8
Second Quarter............................ 14 8 1/2 9 3/8 6
Third Quarter............................. 12 7 1/2 8 6 3/8
Fourth Quarter............................ 11 1/2 8 3/8 9 1/4 7
1997
First Quarter............................. 8 7/8 6 3/4 9 1/8 7 3/4
Second Quarter............................ 8 1/4 6 3/8 8 5/8 7 1/4
Third Quarter............................. 9 1/4 6 13/16 8 5/8 6 13/16
Fourth Quarter............................ 9 9/16 7 9 1/2 7 5/16
1998
First Quarter (prior to Merger Agreement
announcement on January 15).............. 8 3/8 7 3/8 9 5/16 7 5/8
First Quarter (subsequent to Merger
Agreement announcement through March
)......................................
</TABLE>
The following tables set forth the high, low and closing sales prices as
reported on the NYSE Composite Transactions reporting system for ITC Common
Stock and OHM Common Stock on January 14, 1998, the last trading day prior to
the announcement of the Merger Agreement, and on February , 1998, the last
trading day prior to the printing of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
OHM
JANUARY 14, 1998 ITC OHM EQUIVALENT(A)
---------------- -------- -------- -------------
<S> <C> <C> <C>
High.................................... $8 3/8 $9 5/16 $11.63
Low..................................... 7 15/16 8 11/16 11.16
Close................................... 7 15/16 9 1/8 11.16
<CAPTION>
OHM
MARCH , 1998 ITC OHM EQUIVALENT(A)
------------- -------- -------- -------------
<S> <C> <C> <C>
High.................................... $ $ $
Low.....................................
Close...................................
</TABLE>
- --------
(a) The OHM equivalent share price was calculated as the sum of (a) the
product of the ITC share price multiplied by the estimated adjusted
exchange ratio of 1.081 shares of ITC Common Stock and (b) the per share
cash consideration of $2.58 (the exchange ratio and the cash consideration
were calculated based on the estimated outstanding number of shares of OHM
Common Stock as of March 18, 1998).
ITC has not paid a cash dividend on ITC Common Stock for the three years
ended March 28, 1997. ITC has no present intention to pay cash dividends on
ITC Common Stock for the foreseeable future in order to retain all earnings
for investment in ITC's business. The Convertible Preferred Stock and the 7%
Preferred Stock rank prior to the ITC Common Stock as to dividends.
Furthermore, ITC's credit agreements prohibit cash dividends on common stock.
OHM has not paid cash dividends to date and intends to retain future
earnings for use in the business.
59
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following pro forma financial information is filed as a part of this
Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Unaudited Pro Forma Consolidated Financial Statements.................... 61
Unaudited Pro Forma Consolidated Balance Sheet as of December 26, 1997... 62
Notes to Unaudited Pro Forma Consolidated Balance Sheet.................. 63
Unaudited Pro Forma Consolidated Statement of Operations for the Nine
Months ended
December 26, 1997....................................................... 65
Unaudited Pro Forma Consolidated Statement of Operations for the Fiscal
Year ended March 28, 1997............................................... 66
Notes to Unaudited Pro Forma Consolidated Statements of Operations....... 67
</TABLE>
60
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Consolidated Statements of Operations of ITC for the
fiscal year ended March 28, 1997 and the nine months ended December 26, 1997
(the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma
Consolidated Balance Sheet of ITC as of December 26, 1997 (the "Pro Forma
Balance Sheet" and together with the Pro Forma Statements of Operations, the
"Pro Forma Financial Statements"), have been prepared to illustrate the effect
of the Offer, Repurchase, NSC Distribution and the Merger. The Pro Forma
Financial Statements do not reflect anticipated cost savings from the OHM
acquisition, or any synergies that are anticipated to result from the OHM
acquisition, and there can be no assurance that any such cost savings or
synergies will occur. The Pro Forma Statements of Operations give pro forma
effect to the Offer, Repurchase, NSC Distribution and Merger as if they had
occurred on March 30, 1996. The Pro Forma Balance Sheet gives pro forma effect
to the Offer, Repurchase, NSC Distribution and the Merger as if they occurred
on December 26, 1997. The Pro Forma Financial Statements do not purport to be
indicative of the results of operations or financial position of ITC that
would have actually been obtained had such transactions been completed as of
the assumed dates and for the period presented, or which may be obtained in
the future. The pro forma adjustments are described in the accompanying notes
and are based upon available information and certain assumptions that ITC
believes are reasonable.
The Pro Forma Financial Statements should be read in conjunction with the
separate historical consolidated financial statements of ITC and OHM and the
related notes thereto, as well as "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of ITC and OHM, all of which
are incorporated by reference in this Proxy Statement/Prospectus.
A preliminary allocation of the purchase price has been made to major
categories of assets and liabilities in the accompanying Pro Forma Financial
Statements based on available information. The actual allocation of purchase
price and the resulting effect on income from operations may differ
significantly from the pro forma amounts included herein. These pro forma
adjustments represent ITC's preliminary determination of purchase accounting
adjustments and are based upon available information and certain assumptions
that ITC believes to be reasonable. Consequently, the amounts reflected in the
Pro Forma Financial Statements are subject to change, and the final amounts
may differ substantially.
61
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 26, 1997
<TABLE>
<CAPTION>
ITC OHM
DECEMBER 26, DECEMBER 31, PRO FORMA PRO FORMA
1997 1997 ADJUSTMENTS CONSOLIDATED
------------ ------------ ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash
equivalents........... $ 54,128 $ 31,784 $(55,912)(b) $ 30,000
Receivables, net....... 115,518 114,484 -- 230,002
Materials and supply
inventory at cost..... -- 11,685 -- 11,685
Prepaid expenses and
other current assets.. 5,588 11,209 -- 16,797
Deferred income taxes.. 10,370 11,166 -- 21,536
-------- -------- ---------
Total current assets.. 185,604 180,328 -- 310,020
Net property, plant, and
equipment.............. 39,135 58,210 (19,088)(a) 78,257
Investment in affiliated
company................ 16,300 8,421 (8,421)(a) 16,300
Intangible assets, net.. 12,029 46,364 228,014 (a) 286,407
Debt issuance and
financing costs........ 3,600 1,114 1,750 (c) 6,464
Deferred income taxes... 16,751 15,677 -- 32,428
Other assets............ 11,030 9,665 (8,078)(a) 12,617
Long-term assets of
discontinued
operations............. 40,048 -- -- 40,048
-------- -------- ---------
Total assets.......... $324,497 $319,779 $ 782,541
======== ======== =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------------------
Current liabilities:
Accounts payable....... $ 38,735 $ 72,692 $ -- $ 111,427
Accrued liabilities.... 29,699 26,501 -- 56,200
Billings in excess of
revenues.............. 1,978 1,530 -- 3,508
Short-term debt,
including current
portion of long-
term debt............. 4,134 8,064 -- 12,198
Transition accrual..... -- -- 5,200 (a) 5,200
Shareholder option
repurchase............ -- -- 1,500 (d) 1,500
Employee obligations... -- -- 19,600 (d) 19,600
Net current liabilities
of discontinued
operations............ 11,168 -- -- 11,168
-------- -------- ---------
Total current
liabilities.......... 85,714 108,787 -- 220,801
Long-term debt.......... 65,650 50,041 (65,000)(b) 50,691
Merger debt facility.... -- -- 228,000 (b) 228,000
Revolver................ -- -- 31,025 (b) 31,025
Long-term accrued
liabilities of
discontinued
operations, net........ 2,349 -- -- 2,349
Other long-term accrued
liabilities............ 7,321 4,055 -- 11,376
Commitments and
contingencies.......... -- -- -- --
Stockholders' equity:
Preferred stock........ 6,438 -- -- 6,438
Common stock........... 97 2,742 (2,627)(c) 212
Treasury stock at
cost.................. (74) -- -- (74)
Additional paid-in
capital............... 246,074 142,453 (52,582)(c) 335,945
Retained earnings
(deficit)............. (89,072) 11,701 (26,851)(c) (104,222)
-------- -------- ---------
Total stockholders'
equity............... 163,463 156,896 238,299
-------- -------- ---------
Total liabilities and
stockholders'
equity............... $324,497 $319,779 $ 782,541
======== ======== =========
</TABLE>
See accompanying notes.
62
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 26, 1997
(a) The estimated purchase price and preliminary adjustments to historical
book value of OHM as a result of the Offer, the Repurchase, the NSC
Distribution and the Merger together with the related financing are as follows
(dollars in thousands):
<TABLE>
<S> <C>
Purchase Price:
Estimated value of cash and common stock to be issued (see (b)
below)....................................................... $285,985
Asset acquisition costs....................................... 7,630
Book value of net assets acquired............................. (97,967)
--------
Purchase price in excess of net assets acquired............... $195,648
========
The book value of net assets acquired consists of:
Book value of OHM at December 31, 1997........................ $156,896
OHM repurchase of shares from WMX............................. (29,408)
OHM employee benefit accruals which will be charged to
expense...................................................... (19,600)*
Shareholder option repurchase................................. (1,500)
NSC Distribution.............................................. (8,421)
--------
$ 97,967
========
Preliminary allocation of purchase price in excess of net assets
acquired:
Write down to fair value duplicate management information
system and property, plant and equipment amounts............. $(19,088)
Transition accrual, including severance and lease termination
costs recognized in accordance with EITF 95-3................ (5,200)
Reduction of other assets to adjust accounting policies to a
consistent basis............................................. (8,078)
Estimated goodwill............................................ 228,014
--------
$195,648
========
(b) Reflects the financing for the Offer and Merger as follows (dollars in
thousands):
Sources of Financing:
Merger term loan facility..................................... $228,000
Merger revolver............................................... 31,025
Issuance of ITC common stock (par $115, paid-in capital
$94,841)..................................................... 94,956
Consolidated cash of ITC and OHM.............................. 85,912
--------
Total sources of financing.................................... $439,893
========
Uses of Financing Amounts:
Cash consideration for Offer (13,933,000 @ $11.50)............ $160,230
Equity consideration for Merger (10,934,815 OHM shares @
1.05258 = 11,509,767 ITC shares @ $8.25)**................... 94,956
Cash consideration for Merger (10,934,815 OHM shares @
$2.81657)**.................................................. 30,799
--------
Subtotal estimated value of cash and common stock to be issued
(see (a) above).............................................. 285,985
Repayment of existing ITC debt (current and long-term)........ 65,000
OHM repurchase of shares from WMX (2,557,231 shares @ $11.50
per share)................................................... 29,408
Working capital purposes...................................... 30,000
Fees and expenses including financing and stock issuance
costs........................................................ 29,500
--------
Total uses of financing amounts............................. $439,893
========
</TABLE>
- --------
* Amount to be recognized in OHM's historical income statement prior to the
Merger.
** Based on 27,425,046 shares of OHM Common Stock outstanding as of December
31, 1997.
63
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET--(CONTINUED)
The adjustment to long-term debt of $65,000 represents repayment of certain
existing ITC debt as detailed above. The repayment of this debt amount is
nondiscretionary and an integral part of the acquisition of OHM. The
consolidated cash of ITC and OHM of $85,912 net of amount to be retained for
working capital purposes of $30,000 represents the estimate of existing cash
to be used to finance the transaction of $55,912.
(c) The adjustments to common stock, paid-in capital and retained earnings
as a result of the Offer and Merger are as follows (dollars in thousands):
<TABLE>
<S> <C>
Common Stock:
OHM repurchase of WMX stock.................................... $ (256)
Elimination of OHM common stock................................ (2,486)
Issuance of ITC stock.......................................... 115
---------
$ (2,627)
=========
Paid-in Capital:
OHM repurchase of WMX stock (net of par)....................... $ (29,152)
Elimination of OHM paid-in capital............................. (113,301)
Stock issuance costs........................................... (4,970)
Value of ITC common stock issued (net of par).................. 94,841
---------
$ (52,582)
=========
</TABLE>
<TABLE>
<S> <C>
Retained Earnings:
Record OHM employee benefit costs.............................. $(19,600)*
Shareholder option repurchase.................................. (1,500)
NSC Distribution............................................... (8,421)
Elimination of OHM retained deficit (retained earnings as
reported reduced by NSC Distribution, Shareholder Option
Repurchase and OHM benefit costs)............................. 17,820
ITC bridge loan costs (Tender Offer Credit Facility)........... (3,750)
Refinancing costs (early payment premiums and related costs)... (7,800)
Write-off of ITC debt issuance related to refinanced debt...... (3,600)
--------
$(26,851)
========
The pro forma increase in debt issue costs of $1,750 consists of:
Write-off of ITC debt issue costs related to refinanced debt... $ (3,600)
Capitalized debt issue costs related to Merger Debt
Facilities.................................................... 5,350
--------
$ 1,750
========
(d) To record the following employee benefit costs and option repurchase in
OHM's historical income statement prior to closing related to the following
(dollars in thousands):
Change of control agreements..................................... $ 7,400
SERP............................................................. 2,300
Stock options.................................................... 8,400
Employment agreements............................................ 1,500
--------
Total employee obligations....................................... $ 19,600*
========
Shareholder option repurchase.................................... $ 1,500
========
</TABLE>
- --------
*Amount to be recognized in OHM's historical income statement prior to the
Merger.
64
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED DECEMBER 26, 1997
<TABLE>
<CAPTION>
ITC OHM
NINE-MONTH NINE-MONTH
PERIOD ENDED PERIOD ENDED
DECEMBER 26, DECEMBER 31, PRO FORMA PRO FORMA
1997 1997 ADJUSTMENTS COMBINED(A)
------------ ------------ ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues................ $306,178 $418,193 $ -- $724,371
Cost and expenses:
Cost of revenues...... 271,572 359,909 -- 631,481
Selling, general and
administrative
expenses............. 21,182 35,651 4,130 (b) 60,963
Special charges....... 8,554 37,877 -- 46,431
-------- -------- --------
Operating income
(loss)................. 4,870 (15,244) (14,504)
Interest, net........... (3,386) (3,477) (10,833)(c) (17,696)
Other, net.............. -- (166) (166)
Write-down of investment
in NSC................. -- (14,949) 14,949 (d) --
-------- -------- --------
Income (loss) before
income taxes........... 1,484 (33,836) (32,366)
(Provision) benefit for
income taxes........... (4,316) 11,201 4,351 (e) 11,236
-------- -------- --------
Net income (loss)....... (2,832) (22,635) (21,130)
Less preferred stock
dividends.............. (4,609) -- -- (4,609)
-------- -------- --------
Net loss applicable to
common stock........... $ (7,441) $(22,635) $(25,739)
======== ======== ========
Basic and diluted loss
per share.............. $ (1.21)(f)
========
Weighted average shares
assumed to be
outstanding (000s)..... 21,248
========
</TABLE>
See accompanying notes.
65
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 28, 1997
<TABLE>
<CAPTION>
ITC OHM
YEAR ENDED YEAR ENDED
MARCH 28, DECEMBER 31, PRO FORMA PRO FORMA
1997 1996 ADJUSTMENTS CONSOLIDATED(A)(G)
---------- ------------ ----------- ------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues................ $362,131 $550,984 $ -- $913,115
Cost and expenses:
Cost of revenues...... 323,993 478,924 -- 802,917
Selling, general and
administrative
expenses............. 33,431 49,250 6,455 (b) 89,136
Restructuring charge.. 8,403 -- -- 8,403
-------- -------- --------
Operating loss.......... (3,696) 22,810 12,659
Equity in net earnings
of affiliate........... -- 748 (748)(d) --
Other income (expense).. -- 296 -- 296
Interest, net........... (5,260) (6,963) (12,705)(c) (24,928)
-------- -------- --------
Loss from continuing
operations before
income taxes........... (8,956) 16,891 (11,973)
Benefit (provision) for
income taxes........... 179 (5,376) 7,706 (e) 2,509
-------- -------- --------
Net loss................ (8,777) 11,515 (9,464)
Less preferred stock
dividends.............. (4,916) -- -- (4,916)
-------- -------- --------
Net loss applicable to
common stock........... $(13,693) $ 11,515 $(14,380)
======== ======== ========
Basic and diluted loss
per share.............. $ (.69)(f)
========
Weighted average shares
assumed to be
outstanding (000s)..... 20,736
========
</TABLE>
See accompanying notes.
66
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
DECEMBER 26, 1997
(a) The Pro Forma Statements of Operations assume that the Merger occurred
on March 30, 1996. For purposes of the Pro Forma Statement of Operations for
the fiscal year ended March 28, 1997, OHM's historical statement of operations
for the year ended December 31, 1996 was consolidated with ITC's historical
statement of operations for the fiscal year ended March 28, 1997. For purposes
of the Pro Forma Statement of Operations for the nine-month period ended
December 26, 1997, OHM's historical statement of operations for the nine-month
period ended December 31, 1997 was consolidated with ITC's historical
statement of operations for the nine-month period ended December 26, 1997.
(b) The acquisition of OHM will be accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price will be
allocated to the tangible and intangible assets and liabilities of OHM based
upon their estimated fair values. For purposes of this presentation, these
estimated fair values are based upon preliminary valuations which are not yet
finalized. The actual allocation of purchase price and the resulting effect on
income from operations may differ significantly from the pro forma amounts
included herein. The following represents ITC's preliminary estimate of the
effect of the purchase adjustments and the reflection of consistent
application of ITC's accounting policies on the Pro Forma Statements of
Operations:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
MARCH 28, 1997 DECEMBER 26, 1997
-------------- -----------------
SG&A SG&A
-------------- -----------------
<S> <C> <C>
Depreciation.................................. $ (265) $ (597)
Amortization of intangibles and goodwill...... 5,701 4,276
Adjustment of OHM's accounting policies
to be consistent with ITC.................... 1,019 451
------ ------
Total increase (decrease)..................... $6,455 $4,130
====== ======
</TABLE>
The adjustments for estimated pro forma depreciation relate to the reduction
in depreciation as a result of the write-down to fair value of duplicate
management information systems and equipment. The adjustments to estimated pro
forma amortization relate to the increase in amortization expense resulting
from the increase of goodwill. Goodwill is being amortized over 40 years.
OHM has historically capitalized the cost associated with preparing large
proposals when the recoverability was evaluated as probable. The costs
associated with successful awards are then amortized over the life of the
related contract. ITC accounts for such costs by charging them to operations
as incurred. This adjustment conforms accounting policies to ITC's
methodology.
67
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS--(CONTINUED)
(c) Reflects adjustments for additional interest expense assuming the Merger
Credit Facilities were drawn upon on March 30, 1996. The change in interest
expense, in addition to amortization of deferred financing costs, reflects the
change in term loans and their rates based on LIBOR plus 2.5% per annum and
revolving loans at a rate equal to LIBOR plus 2% per annum (dollars in
millions):
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
MARCH 28, DECEMBER 26,
RATE AMOUNT 1997 1997
------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Merger Credit Facilities:
Term loan (LIBOR + 2.5%).......... 8.5% $228,000 $18,240 $13,680
Revolving credit facility (LIBOR +
2%).............................. 8% 31,025 2,482 1,861
OHM debt not refinanced............. various 58,105 5,186 3,889
ITC's debt not refinanced........... 8% 4,784 383 287
Amortization of capitalized
financing fees..................... 5,350 669 502
------- -------
Total pro forma interest expense.... 26,960 20,219
Less: Historical interest expense... 14,255 9,386
------- -------
Total pro forma interest expense
adjustment......................... $12,705 $10,833
======= =======
</TABLE>
(d) Remove NSC equity earnings and other amounts because its shares are
distributed concurrent with the Offer.
(e) Adjustment to reflect income taxes at an amount which would have been
recognized on a consolidated basis assuming the merged entity would generate
future taxable income sufficient to realize the deferred tax benefit
recognized. The difference between the statutory rate and the effective rates
are primarily related to nonrecognition of deferred tax benefits related to
nontax-deductible goodwill amortization.
(f) Basic and diluted loss per share has been calculated assuming the
estimated additional shares to be issued by ITC in the transaction were
outstanding as of the beginning of each period presented.
(g) Material nonrecurring charges (pre-tax) that result directly from the
transaction and will be included in income within twelve months after the
transaction that have not been considered in the Pro Forma Consolidated
Statement of Operations are as follows:
<TABLE>
<S> <C>
ITC bridge loan costs............................................. $ 3,750
Refinancing costs................................................. 7,800
Write-off of ITC debt issue costs related to refinanced debt...... 3,600
-------
$15,150
=======
</TABLE>
68
<PAGE>
DESCRIPTION OF ITC CAPITAL STOCK
The authorized capital stock of ITC consists of 50,000,000 shares of Common
Stock, par value $0.01 per share, of which 9,733,288 shares were issued and
outstanding as of January 13, 1998, and 180,000 shares of Preferred Stock, par
value $100 per share, of which 20,556 shares of 7% Preferred Stock and 45,271
shares of Convertible Preferred Stock were issued and outstanding as of March
, 1998.
In November 1996, ITC issued 45,000 shares of newly issued Convertible
Preferred Stock and the Carlyle Warrants (at the current exercise price of
$11.39 per share) to the Parent Stockholders. Holders of the Convertible
Preferred Stock hold approximately 38% of the voting power of ITC (43%
assuming exercise of the Carlyle Warrants). If the Merger is consummated, such
persons will hold approximately 21% of the voting power of ITC (24% assuming
exercise of the Carlyle Warrants). The purchase of the Convertible Preferred
Stock and the Carlyle Warrants was financed through the private sale of
interests in limited partnerships which themselves purchased the Convertible
Preferred Stock and the Carlyle Warrants.
Pursuant to the terms of the Convertible Preferred Stock, the holders of the
Convertible Preferred Stock are entitled to elect a majority of the ITC Board
of Directors, until November 20, 2001, which date is five years from the
consummation of the Investment (the "Five-Year Period"), provided, that such
holders continue to own at least 20% of the voting power of ITC. The
agreements pursuant to which the Parent Stockholders acquired the Convertible
Preferred Stock also provide that at least two of the directors elected by the
holders of shares of ITC Common Stock will have no employment or other
relationship with ITC or Carlyle, other than their positions as directors of
ITC. During the Five-Year Period, holders of the Convertible Preferred Stock
will not participate in elections of those directors elected only by the
holders of shares of ITC Common Stock (the "Common Stock Directors") and those
directors elected only by the Parent Stockholders (the "Preferred Stock
Directors") will not have the right to vote on the election of any director to
fill a vacancy among the Common Stock Directors. At the end of the Five-Year
Period, provided that the holders of Convertible Preferred Stock continue to
own at least 20% of the voting power of ITC, such holders will be entitled to
elect the largest number of directors which is a minority of the directors of
ITC and to vote with the holders of shares of ITC Common Stock (as a single
class) on the election of the remaining directors. Additionally, the holders
of Convertible Preferred Stock, in the event they no longer have the right to
elect at least a minority of the directors, will have the right (voting as a
class with holders of shares of 7% Preferred Stock and any other parity stock)
to elect two directors to the Board in the event ITC fails to make payment of
dividends on the Convertible Preferred Stock for six dividend periods. The
Preferred Stock Directors serve for annual terms. For a description of the
composition of the ITC Board of Directors see "Comparison of Stockholder and
Shareholder Rights--Size and Classification of Board of Directors."
COMMON STOCK
The outstanding shares of ITC Common Stock are, and the shares of ITC Common
Stock to be issued in connection with the Merger will be, validly issued,
fully paid and nonassessable. Holders of shares of ITC Common Stock are
entitled to one vote for each share held of record on all matters submitted to
a vote of the stockholders. The shares of ITC Common Stock have cumulative
voting rights with respect to the election of directors.
Holders of shares of ITC Common Stock do not have any preemptive rights or
rights to subscribe for additional securities of ITC. The ITC Common Stock is
neither redeemable nor convertible into other securities, and there are no
sinking fund provisions. Subject to the preferences applicable to any shares
of Preferred Stock outstanding at the time, holders of shares of ITC Common
Stock are entitled to dividends if, when and as declared by the ITC Board of
Directors from funds legally available therefore and are entitled, in the
event of liquidation, to share ratably in all assets remaining after payment
of liabilities and Preferred Stock preferences, if any.
69
<PAGE>
PREFERRED STOCK
Convertible Preferred Stock
Holders of shares of Convertible Preferred Stock generally have the right to
vote (on an as-converted basis) as a single class with the holders of shares
of Common Stock and other classes or series of stock entitled to vote as a
single class with the ITC Common Stock, on all matters submitted to a vote of
stockholders except (a) matters for which class voting is required by law or
under the ITC Charter and (b) with respect to the election of the Common Stock
Directors during the Five-Year Period. Holders of shares of Convertible
Preferred Stock vote as a separate class with respect to (i) the creation,
authorization or issuance of any class or series of shares ranking on parity
with or prior to the Convertible Preferred Stock as to dividends or
redemption, (ii) the increase in the authorized shares of, or issuance of any
shares of Convertible Preferred Stock, (iii) the amendment, alteration, waiver
of the application of, or repeal of an provision of the ITC Charter, the
entering into of any agreement or the taking of any corporate action which
would in any manner alter, change or otherwise adversely affect the powers,
rights or preferences of the Convertible Preferred Stock and (iv) the
reorganization, recapitalization, liquidation, dissolution or winding up of
ITC, the disposition of substantially all of its assets, property or business
or the merger or consolidation with or into any other corporation, if such
transaction would adversely affect the powers, rights or preferences of the
Convertible Preferred Stock. Holders of shares of Convertible Preferred Stock
are entitled to cumulative annual dividends. No dividends were payable through
November 20, 1997. Thereafter, dividends are payable quarterly in kind through
November 20, 1999 at the rate of 3% per annum and in cash thereafter at the
rate of 6% per annum. Holders of shares of Convertible Preferred Stock have
the right to participate with holders of shares of ITC Common Stock in any
dividends paid with respect to shares of ITC Common Stock into which their
shares of Convertible Preferred Stock may be converted, as described below.
Shares of Convertible Preferred Stock may at any time, at the option of the
holders of such shares, be converted into shares of ITC Common Stock. The
conversion price of the Convertible Preferred Stock is $7.59 per share,
subject to adjustment under certain circumstances. ITC will be entitled at its
option (as determined by a majority of the Common Stock Directors) to redeem
all of the Convertible Preferred Stock at its liquidation preference of
$1,000.00 per share plus accumulated and unpaid dividends on or after November
21, 2003.
7% Preferred Stock
Holders of shares of the 7% Preferred Stock are not entitled to vote on
matters submitted to stockholders, except that holders are entitled to vote as
a separate class to elect two directors if the equivalent of six or more
quarterly dividends (whether consecutive or not) on the 7% Preferred Stock is
in arrears. Such voting rights will continue until such time as the dividend
arrearage on the 7% Preferred Stock has been paid in full.
The 7% Preferred Stock ranks on parity as to dividends and liquidation with
the Convertible Preferred Stock, and prior to the ITC Common Stock. The
dividend per annum and liquidation preference for each share of 7% Preferred
Stock are $175 and $2,500, respectively. Dividends on the 7% Preferred Stock
are cumulative and payable quarterly. The 7% Preferred Stock is convertible at
the option of the holder into ITC Common Stock at a conversion price of $23.36
per share, subject to adjustment under certain circumstances. On any dividend
payment date, the 7% Preferred Stock is exchangeable at the option of ITC, in
whole but not in part, for 7% Subordinated Debentures Due 2008 in a principal
amount equal to $2,500 per share of 7% Preferred Stock. The 7% Preferred Stock
is redeemable at any time, at the option of ITC, in whole or in part,
initially at a price of $2,622.50 per share of 7% Preferred Stock and
thereafter at prices declining to $2,500 per share of 7% Preferred Stock on or
after September 30, 2003.
The 7% Preferred Stock has a special conversion right that becomes effective
in the event of certain significant transactions affecting ownership or
control of ITC. In such situations, the special conversion right would, for a
limited period, reduce the then prevailing conversion price to the market
value of the ITC Common Stock, except that the conversion right will not be
reduced below $3.17 per share. Generally and with certain exceptions, the
special conversion right becomes effective if (1) a person or group acquires
at least 50% of the total voting power of all classes of capital stock of ITC
entitled to vote generally in the election of directors of
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ITC, (2) ITC sells all or substantially all of its assets or (3) ITC
participates in a merger or consolidation in which ITC is not the surviving
corporation or the holders of shares of ITC Common Stock immediately prior to
such merger or consolidation do not hold, directly or indirectly, at least a
majority of the voting power of the surviving corporation after such
transaction. The form of consideration issued (cash, securities or other
property) upon exercise of the special conversion right by a holder of shares
of 7% Preferred Stock depends upon, among other things, the type of
transaction that gives rise to the special conversion right. The consummation
of the Merger will not trigger the special conversion right of the 7%
Preferred Stock.
CUMULATIVE VOTING
The ITC Charter includes a provision for cumulative voting with respect to
the election of the Common Stock Directors such that, in any election of such
directors, a holder of any class or series of stock then entitled to vote in
such election will be entitled to as many votes as will equal (a) the number
of votes which would be entitled to cash for the election of directors with
respect to his shares of stock multiplied by (b) the number of directors to be
elected in the election in which his class or series of shares is entitled to
vote, and each stockholder may cast all of such votes for a single director or
for any two or more of them as such stockholder may see fit.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the ITC Common Stock is BankBoston,
N.A. (c/o Boston EquiServe, L.P.).
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COMPARISON OF STOCKHOLDER AND SHAREHOLDER RIGHTS
GENERAL
As a result of the Merger, holders of OHM Common Stock will become holders
of ITC Common Stock and the rights of all such former holders of OHM Common
Stock will thereafter be governed by the ITC Charter, the ITC Bylaws and the
DGCL. The rights of the holders of OHM Common Stock are presently governed by
the OHM Charter, the OHM Regulations and the OGCL. The following summary,
which does not purport to be a complete statement of the general differences
among the rights of stockholders of ITC and shareholders of OHM, sets forth
certain differences between the DGCL and the OGCL, between the ITC Charter and
the OHM Charter and between the ITC Bylaws and the OHM Regulations. This
summary is qualified in its entirety by reference to the full text of each of
such documents, the DGCL and the OGCL. For information as to how such
documents may be obtained, see "Available Information."
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
Under the DGCL, unless the certificate of incorporation specifies the number
of directors, a board of directors may change the authorized number of
directors by an amendment to the bylaws if fixed therein, or in such manner as
may be provided therein. If the certificate of incorporation specifies the
number of directors, then that number can be changed only by amending the
certificate of incorporation. Under the OGCL, the number of directors may be
fixed or changed by the shareholders or by the directors if so authorized by
the articles of incorporation or the code of regulations.
ITC. Pursuant to the terms of the Investment, the holders of Convertible
Preferred Stock are entitled to elect a majority of the ITC Board of
Directors, until November 20, 2001, provided that such holders continue to
hold at least 20% of the voting power of ITC. The ITC Board of Directors
currently consists of seven directors, the four Preferred Stock Directors, who
are elected by the holders of Convertible Preferred Stock acting by written
consent and without a meeting of the holders of shares of ITC Common Stock,
and the remaining three Common Stock Directors, who are elected by the holders
of shares of ITC Common Stock. The Investment agreements also provide that at
least two of the directors elected by the holders of the ITC Common Stock will
have no employment or other relationship with ITC or Carlyle, other than their
positions as directors of ITC. During the Five-Year Period, holders of shares
of Convertible Preferred Stock will not participate in elections of the Common
Stock Directors and the Preferred Stock Directors will not have the right to
vote on the election of any director to fill a vacancy among the Common Stock
Directors. At the end of the Five-Year Period, provided that the holders of
Convertible Preferred Stock continue to hold at least 20% of the voting power
of ITC, the holders of Convertible Preferred Stock will be entitled to elect
the largest number of directors which is a minority of the directors of ITC
and to vote with the holders of shares of ITC Common Stock (as a single class)
on the election of the remaining directors. Additionally, the holders of
shares of Convertible Preferred Stock, in the event they no longer have the
right to elect at least a minority of the directors, will have the right
(voting as a class with holders of shares of 7% Preferred Stock and any other
parity stock) to elect two directors to the ITC Board of Directors in the
event ITC fails to make payment of dividends on the Convertible Preferred
Stock for six dividend periods. The three Common Stock Directors are divided
into three classes by the ITC Charter and serve for three-year terms. The four
Preferred Stock Directors serve for annual terms. Promptly after the Effective
Time, pursuant to the Merger Agreement Richard W. Pogue and Charles W. Schmidt
will be appointed to the ITC Board of Directors as Common Stock Directors. In
connection with such appointment, it is anticipated that the authorized number
of directors (both Common and Preferred Stock Directors) will be increased and
the ITC Board of Directors will be constituted such that the Preferred Stock
Directors continue to represent a majority of the ITC Board of Directors. The
ITC Board of Directors may consist of eleven members, six Preferred Stock
Directors and five Common Stock Directors. Alternatively, it may consist of
nine members, five Preferred Stock Directors and four Common Stock Directors.
Under such circumstances, it is anticipated that one of the current Common
Stock Directors would resign as such and would be reappointed to the ITC Board
of Directors as a Preferred Stock Director. If the Charter Amendment is
approved, the Common Stock Directors will no longer be divided into three
classes and will serve for annual terms.
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OHM. The OHM Regulations provide that the number of directors of OHM will be
fixed from time to time by the vote of the holders of a majority of the voting
shares represented at any annual or special meeting called for the purpose of
electing directors, or by resolution adopted by the affirmative vote of a
majority of the directors then in office, and such number will continue to be
the authorized number until changed by the shareholders or directors.
The OHM Board of Directors was reconstituted on March 4, 1998 in accordance
with the terms of the Merger Agreement. The OHM Board of Directors currently
consists of five members, three of whom are representatives of ITC and two of
whom are continuing directors of OHM, see "The Merger--Background of the
Merger," and, subsequent to the consummation of the Merger, the board of
directors of the Surviving Corporation will consist of the current directors
of Merger Sub, see "The Merger Agreement--The Merger."
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under the DGCL, any director or the entire board may be removed, with or
without cause, by the holders of a majority of the shares then entitled to
vote thereon, except, (a) unless the certificate of incorporation otherwise
provides, directors of a corporation with a classified board may be removed
only for cause by a vote of the holders of a majority of shares entitled to
vote at an election of directors and (b) in the case of a corporation with
cumulative voting, if less than the entire board is to be removed, no director
may be removed without cause if the votes cast against removal would be
sufficient for election if then cumulatively voted at an election of the
entire board, or, if the board is classified, at an election of such
director's class. The OGCL provides that directors may be removed by (x) the
directors if (i) by order of a court a director has been found to be of
unsound mind, or if he is adjudicated a bankrupt, or (ii) within sixty days
from the date of election, the director does not qualify by accepting in
writing his election or by acting at a meeting of directors or (y) the
shareholders, without assigning any cause, by the vote of the holders of a
majority of the voting power entitling them to elect directors.
ITC. The Preferred Stock Directors serve until the next annual meeting or
until their respective successors are elected and qualified. Any Preferred
Stock Director may be removed with or without cause by, and cannot be removed
other than by, the vote of the holders of a majority of the outstanding shares
of Convertible Preferred Stock, voting separately as a class, at a meeting
called for such purpose or by written consent in accordance with Section 228
of the DGCL. If the office of any Preferred Stock Director becomes vacant by
reason of death, resignation, retirement, disqualification or removal from
office or otherwise, the remaining Preferred Stock Directors, by majority
vote, may elect a successor, or, alternatively, the holders of a majority of
the outstanding shares of Convertible Preferred Stock, voting separately as a
class, at a meeting called for such purpose or by written consent in
accordance with Section 228 of the DGCL, may elect a successor. Any such
successor will hold office for the unexpired term in respect of which such
vacancy occurred. Upon any termination of the right of the holders of
Convertible Preferred Stock to vote for and elect Preferred Stock Directors,
the Preferred Stock Directors then serving on the ITC Board of Directors may
continue to hold their office for the remainder of their term. Only Common
Stock Directors will have the right to vote in the election of any person to
fill any vacancy created by the death, resignation, retirement,
disqualification or removal from office or otherwise of any Common Stock
Director and all such rights with respect to the Common Stock Directors will
be exercised for and on behalf of the ITC Board of Directors by a majority of
the Common Stock Directors.
OHM. The OHM Regulations do not contain provisions regarding the removal of
directors and, accordingly, the matter is governed by the OGCL. The OHM
Regulations provide that, whenever a vacancy will occur on OHM Board of
Directors, the remaining directors will constitute the directors of OHM until
such vacancy is filled or until the number of directors is changed pursuant to
OHM Regulations. A majority of the directors then in office may fill any
vacancy for the unexpired term where a director is removed, under certain
circumstances, or when the number of directors is increased.
DUTIES OF DIRECTORS
ITC. The DGCL does not contain a specific provision elaborating on the
duties of a board of directors with respect to the best interests of a
corporation. Delaware courts have permitted directors to consider various
constituencies provided that there be some rationally related benefit to
stockholders.
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OHM. Under the OGCL, a director of an Ohio corporation is required to
perform his or her duties as a director, including any duties as a member of a
committee of directors, in good faith, in a manner he or she reasonably
believes to be in or not opposed to the best interests of the corporation and
with the care that an ordinarily prudent person in a like position would use
under similar circumstances. In performing such duties, a director may rely on
information, opinions, reports or statements, including financial statements,
that were prepared or presented by any other directors, officers, employees,
counsel, public accountants or any directors' committee, upon which the
director reasonably believes provide an appropriate basis for such reliance.
LIMITATION ON DIRECTORS' LIABILITY
Section 102 of the DGCL allows a corporation to limit or eliminate the
personal liability of directors for breach of their fiduciary duty as a
director, subject to certain limitations. Section 1701.59(D) of the OGCL
provides that a director will only be liable to a corporation for any action
or omission proved by clear and convincing evidence in a court of law to have
been undertaken with deliberate intent to cause injury to the corporation or
with reckless disregard for the best interests of the corporation, unless the
articles or regulations of a corporation specifically state that such section
does not apply.
ITC. The ITC Charter contains a provision limiting the liability of
directors for monetary damages for breach of fiduciary duties as directors to
the fullest extent permitted by the DGCL. Under the DGCL, a director of a
corporation will be liable (a) for any breach of the director's duty of
loyalty to such corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (c) for intentional or negligent payment of unlawful dividends or
stock purchase or redemption or (d) for any transaction from which such
director derives an improper personal benefit.
OHM. The OHM Charter and Regulations do not specifically state that Section
1701.59(D) of the OGCL does not apply. Therefore, directors of OHM may only be
found liable for those actions or omissions described above.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the DGCL and Section 1701.13(E) of the OGCL provide that a
corporation may indemnify its officers and directors who were or are a party
to any action, suit or proceeding by reason of the fact that he or she was a
director, officer, or employee of the corporation; provided that such officers
and directors acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation. Under the OGCL,
a corporation must indemnify any such person to the extent he or she is
successful on the merits or otherwise.
ITC and OHM. The ITC Bylaws and OHM Regulations provide, in substance, that
any person made a party, or threatened to be made a party, to any type of
proceeding, by reason of the fact that he or she is or was a director or
officer of such corporation or that, being or having been such a director or
officer or an employee of such corporation, he or she is or was serving at the
request of an executive officer of such corporation as a director, officer,
employee or other agent of another corporation, will be indemnified and held
harmless by such corporation to the full extent permitted by the DGCL or the
OGCL, respectively, against all expense, liability and loss actually and
reasonably incurred by such person in connection therewith.
CUMULATIVE VOTING
In an election of directors governed by cumulative voting rights, each share
of stock otherwise having one vote is entitled to a number of votes equal to
the number of directors to be elected. A stockholder may then cast all such
votes for a single nominee or may allocate them among as many nominees as the
stockholder may choose. Without cumulative voting rights, the holders of a
majority of the shares present at an annual meeting or any special meeting
held to elect directors would have the power to elect all the directors to be
elected at that meeting, and it is possible that no person could be elected
without the support of holders of a majority of the shares voting at such
meeting.
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ITC. The ITC Charter provides for cumulative voting rights with respect to
the election of the Common Stock Directors in the manner described under
"Description of ITC Capital Stock--Cumulative Voting."
OHM. Under the OGCL, cumulative voting (unless eliminated by an amendment to
the articles of incorporation) is required to be available for the election of
directors, subject to certain conditions. The OHM Charter eliminates
cumulative voting for directors.
STOCKHOLDER ACTION BY WRITTEN CONSENT
Under the DGCL, unless otherwise provided in the certificate of
incorporation, stockholders may take action without a meeting, without prior
notice and without a vote, upon the written consent of stockholders having not
less than the minimum number of votes that would be necessary to authorize the
proposed action at a meeting at which all shares entitled to vote were present
and voted. Under the OGCL, unless prohibited by the articles of incorporation
or the code of regulations, shareholders may take action without a meeting,
without prior notice and without a vote, upon the written consent of all
shareholders who would be entitled to notice of the meeting held to consider
the subject matter thereof.
ITC. The ITC Charter provides that, in order for action to be taken by
stockholders by written consent, the ITC Board of Directors will fix a record
date to determine the stockholders entitled to consent to corporate action in
writing without a meeting. Such record date will not be more than 10 days
after the date upon which the resolution fixing the record date is adopted by
the ITC Board of Directors.
OHM. The OHM Regulations specifically provide that any action which may be
taken at a meeting of shareholders may be taken by written consent of all
shareholders entitled to notice of a meeting held for such purpose.
SPECIAL MEETINGS OF STOCKHOLDERS
Under the DGCL, special stockholder meetings may be called by the board of
directors an by any person(s) authorized by the certificate of incorporation
or the bylaws. Under the OGCL, a special meeting of shareholders may be called
by the chairman, the president, the directors by action at a meeting, a
majority of the directors acting without a meeting, persons owning 25% of the
outstanding shares entitled to a vote at such meeting (or a lesser or greater
proportion as specified in the articles or regulations but not greater than
50%) or the person(s) authorized to do so by the articles of incorporation or
the code of regulations.
ITC. The ITC Bylaws permit special meeting of stockholders to be called at
any time by the ITC Board of Directors, the Chairman of the Board or the
President, but not by any other person. Under the DGCL, unless the certificate
of incorporation or the bylaws provide otherwise, stockholders holding at
least a majority of the voting power are necessary to constitute a quorum for
the transaction of business at a special meeting. The ITC Bylaws provide that
the presence, in person or by proxy, of a majority of the voting stock
entitled to vote at a meeting constitutes a quorum for the transaction of
business at that meeting.
OHM. Pursuant to OHM Regulations, a special meeting of shareholders may be
called for any purpose or purposes at any time by the President or any Vice
President, by the OHM Board of Directors by action at a meeting or a majority
of the directors acting without a meeting or by shareholders holding 50% or
more of the then outstanding voting shares entitled to vote in an election of
directors. The OHM Regulations provide that the holders of a majority in
voting interest of shares outstanding and entitled to vote at a meeting,
present in person or by proxy, constitutes a quorum at such meeting.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
Under the DGCL, the recommendation of the board of directors and the
approval of a majority of the shares of a corporation entitled to vote thereon
present or represented by proxy are required to effect a merger or
consolidation or to sell, lease or exchange substantially all of a
corporation's assets. No vote of the stockholders
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of a corporation is required in connection with a merger if (a) the
corporation is the surviving corporation, (b) the merger agreement did not
amend the corporation's certificate of incorporation, (c) each share of stock
of the corporation outstanding immediately before the merger was an identical
outstanding or treasury share of the corporation after such merger and (d) the
number of shares of the corporation's common stock to be issued in the merger
(or to be issuable upon conversion of any convertible instruments to be issued
in the merger) did not exceed 20% of the shares of stock of the corporation
outstanding immediately before the merger. Under the OGCL, unless otherwise
provided in the articles of incorporation, any merger, consolidation or sale
of substantially all of the assets of the corporation require the approval of
the holders of shares entitling them to exercise at least two-thirds of the
voting power. The articles of incorporation may provide for a greater or
lesser vote, so long as the vote required is not less than a majority of the
voting power. The OGCL permits mergers without the approval of the
shareholders of the surviving corporation if, among other things, no charter
amendment is involved and no more than a specified maximum increase in
outstanding voting stock will result. Under the OGCL, the maximum permitted
increase is any amount less than one-sixth of a corporation's resulting shares
possessing voting power in the election of directors.
ITC. The ITC Charter and Bylaws do not contain any specific provisions
relating to such matters.
OHM. The OHM Charter requires approval by the affirmative vote of the
holders of a majority of the outstanding shares of OHM entitled to vote
thereon for any plan of merger or consolidation to which OHM is a party, or a
sale, lease or other disposition of all or substantially all of the assets of
OHM, other than with respect to a "Control Share Acquisition," which requires
the vote of a majority of the outstanding shares, excluding the votes of
"Interested Shares," except under certain circumstances, including pursuant to
a transaction that has received the prior authorization of the OHM Board of
Directors.
AMENDMENT OF CORPORATE CHARTER, BYLAWS AND REGULATIONS
Under the DGCL, an amendment to the certificate of incorporation generally
requires the recommendation of the board of directors, the approval of the
holders of a majority of all shares entitled to vote thereon, voting together
as a single class, and the holders of a majority of the outstanding stock of
each class entitled to vote thereon. The DGCL further provides that the board
of directors may amend the bylaws if the bylaws so provide. However, even if
the bylaws confer such power on the board of directors, under the DGCL, the
stockholders also have the power to amend the bylaws. The OGCL permits the
adoption of amendments to the articles of incorporation if such amendments are
approved at a meeting held for such purpose by the holders of shares entitling
them to exercise two-thirds of the voting power of the corporation, or such
lesser, but not less than a majority, or greater vote as specified in the
articles of incorporation. The OGCL further provides that the code of
regulations may be adopted, amended or repealed only by the approval of the
shareholders either at a meeting of shareholders by the affirmative vote of
the holders of shares entitling them to exercise a majority of the voting
power on such proposal or by written consent signed by holders of shares
entitling them to exercise two-thirds of the voting power on such proposal.
The articles or regulations may provide for amendment by a greater or lesser
proportion of the voting power, but not less than a majority.
ITC. Under the ITC Charter, the ITC Board of Directors is expressly
authorized to make, repeal, alter, amend or rescind the bylaws. The ITC Bylaws
provide that the bylaws may be altered, amended or repealed, and new bylaws
made by majority vote of the directors then in office. The ITC Bylaws (other
than certain sections relating to the number and election of directors and the
amendment of the bylaws) may also be altered, amended or repealed and new
bylaws made by the affirmative vote of the holders of not less than a majority
of the voting power of all outstanding shares of ITC at an annual meeting
without notice or at a special meeting where notice is provided. Those
sections relating to the number and election of directors and amendment of the
bylaws may only be altered, amended or repealed and new bylaws made by the
affirmative vote of the holders of not less than two-thirds of the total
voting power of all outstanding shares of ITC. Certain provisions of the ITC
Charter (relating to the authorized number of directors, classified board,
removal of directors without cause and cumulative voting) may not be repealed
or amended without the affirmative vote of the holders of not less than two-
thirds of the total voting power of all outstanding voting stock of ITC.
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OHM. The OHM Regulations may be altered, changed or amended in any respect
or superseded by new regulations in whole or part by the affirmative vote of
the holders of a majority of voting shares in person or by proxy at an annual
or special meeting called for such purpose, except certain sections which may
not be so amended except by the affirmative vote of the holders of 85% of such
shares.
APPRAISAL AND DISSENTERS' RIGHTS
The DGCL provides appraisal rights for certain mergers and consolidations.
Appraisal rights are not available to holders of (a) shares listed on a
national securities exchange or held of record by more than 2,000 stockholders
or (b) shares of the surviving corporation of a merger, if the merger did not
require the approval of the stockholders of such corporation, unless in either
case, the holders of such stock are required pursuant to the merger to accept
anything other than (i) shares of stock of the surviving corporation, (ii)
shares of stock of another corporation which are also listed on a national
securities exchange or held by more than 2,000 holders or (iii) cash in lieu
of fractional shares of such stock. Appraisal rights are not available for a
sale of assets or an amendment to the certificate of incorporation.
The OGCL provides appraisal rights to shareholders of record (a) of a
domestic corporation that is merged into a surviving or new entity, whether
domestic or foreign, (b) of the surviving corporation, in the case of a merger
into a domestic corporation, who are entitled to vote on the adoption of an
agreement of merger, with respect to the shares so entitled to vote thereon,
(c) of a domestic subsidiary corporation, other than the parent corporation,
that is being merged into its parent, whether domestic or foreign, (d) of the
acquiring corporation, in the case of a combination or a majority share
acquisition, who are entitled to vote on such transaction, with respect to the
shares so entitled to vote thereon and (e) of a domestic subsidiary
corporation into which one or more domestic corporations are being merged.
Pursuant to such rights, shareholders who validly exercise such rights may
demand the fair cash value of their shares. Unless the corporation and the
shareholders agree on the fair cash value, either may request that such value
be determined by the Ohio trial court.
ITC. Under the DGCL, the holders of shares of ITC Common Stock are not
entitled to any appraisal rights with respect to the Merger.
OHM. Under the OGCL, a holder of shares of OHM Common Stock is entitled to
appraisal rights with respect to the Merger; provided, that, such holder has
not voted in favor of the merger and has complied with the procedural
provisions of Section 1701.85 of the OGCL relating thereto.
CONFLICT-OF-INTEREST TRANSACTIONS
The DGCL and the OGCL generally permit transactions involving a corporation
and an interested director or officer of such corporation if (a) the material
facts are disclosed and a majority of disinterested directors consents, (b)
the material facts are disclosed and a majority of shares entitled to vote
thereon consents or (c) the transaction is fair to the corporation as of the
time it is authorized by the board of directors, a committee of the board of
directors or the stockholders.
ITC. The ITC Charter and Bylaws do not contain any provision relating to
transactions between ITC and its directors or other related parties.
OHM. The OHM Charter and Regulations do not contain any provisions relating
to transactions between OHM and its directors or other related parties.
DIVIDENDS AND OTHER DISTRIBUTIONS
The DGCL generally allows dividends to be paid out of surplus of the
corporation or in case there is no surplus, out of the net profits of the
corporation for the current fiscal year and/or the prior fiscal year. The OGCL
allows dividends to be paid in cash, property or shares of the corporation,
which dividends will be paid out of surplus of the corporation, subject to
certain limitations.
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ITC and OHM. Dividends on ITC Common Stock are payable at the discretion of
the ITC Board of Directors out of funds legally available therefor. The OHM
Charter contains similar provisions with respect to OHM Common Stock.
STATE ANTI-TAKEOVER STATUTES
A number of states have adopted "takeover" statutes that purport to apply to
attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or places of business in such states.
ITC. Section 203 of the DGCL prohibits a "business combination" (generally,
as defined in Section 203, includes mergers, sales and leases of assets,
issuances of securities and similar transactions) by a corporation or any of
its subsidiaries with an "interested stockholder" (generally, as defined in
Section 203, a beneficial owner of 15% or more of a corporation's voting
stock) within three years after the person or entity becomes an interested
stockholder, unless (a) prior to the person or entity becoming an interested
stockholder, the business combination or the transaction pursuant to which
such person or entity became an interested stockholder will have been approved
by the board of directors of such corporation, (b) upon consummation of the
transaction in which the person or entity became an interested stockholder,
the interested stockholder holds at least 85 percent of the voting stock of
such corporation (excluding for purposes of determining the number of shares
outstanding, share held by persons who are both officers and directors of such
corporation and shares held by certain employee benefit plans) or (c) the
business combination is approved by the board of directors of such corporation
and by the holders of at least two-thirds of the outstanding voting stock of
such corporation, excluding shares held by the interested stockholder.
OHM. Ohio Take-Over Act. Sections 1707.041, 1707.042, 1707.23 and 1707.26 of
the Ohio Revised Code (collectively, the "Ohio Take-Over Act") regulate tender
offers for any equity security of a subject company from a resident of Ohio
if, after the purchase, the offeror would directly or indirectly be the
beneficial owner of more than 10% of any class of issued and outstanding
equity securities of such company (a "control bid"). A subject company
includes an issuer, such as OHM, that either has its principal place of
business or principal executive offices located in Ohio or owns or controls
assets located in Ohio that have a fair market value of at least $1.0 million,
and that has more than 10% of its beneficial or record equity security holders
resident in Ohio, or has more than 10% of its equity securities owned,
beneficially or of record, by residents of Ohio, or has 1,000 beneficial or
record equity security holders who are resident in Ohio. A subject company,
however, need not be incorporated in Ohio.
The Ohio Take-Over Act prohibits an offeror from making a control bid for
securities of a subject company pursuant to a tender offer until the offeror
has filed specified information with the Ohio Division. In addition, the
offeror is required to deliver a copy of such information to the subject
company not later than the offeror's filing with the Ohio Division and to send
or deliver such information and the material terms of the proposed offer to
all offerees in Ohio as soon as practicable after the offeror's filing with
the Ohio Division.
Within five calendar days of such filing, the Ohio Division may, by order,
summarily suspend the continuation of the control bid if it determines that
the offeror has not provided all of the specified information or that the
control bid materials provided to offerees do not provide full disclosure of
all material information concerning the control bid. If the Ohio Division
summarily suspends a control bid, it must schedule and hold a hearing within
10 calendar days of the date on which the suspension is imposed and must make
its determination within three calendar days after the hearing has been
completed but no later than 14 calendar days after the date on which the
suspension is imposed. The Ohio Division may maintain its suspension of the
continuation of the control bid if, based upon the hearing, it determines that
all of the information required to be provided by the Ohio Take-Over Act has
not been provided by the offeror, that the control bid materials provided to
offerees do not provide full disclosure of all material information concerning
the control bid, or that the control bid is in material violation of any
provision of the Ohio securities laws. If, after the hearing, the Ohio
Division maintains
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the suspension, the offeror has the right to correct the disclosure and other
deficiencies identified by the Ohio Division and to reinstitute the control
bid by filing new or amended information pursuant to the Ohio Take-Over Act.
Merger Sub and ITC have filed the information required under the Ohio Take-
Over Statute and the jurisdiction of the Ohio Division has lapsed.
The Ohio Business Combination Law. The Ohio Business Combination Law
prohibits certain business combinations and other transactions (each, a
"Chapter 1704 Transaction"), such as the Merger, between an issuing public
corporation (such as OHM) and any "Interested Shareholder" (defined generally
as any person that, directly or indirectly, is entitled to exercise or direct
the exercise of 10% or more of the outstanding voting power of a corporation
in the election of directors) for a period of three years after the date the
person becomes an Interested Shareholder. After such three year period, a
Chapter 1704 Transaction between an issuing public corporation and such
Interested Shareholder is prohibited unless either certain "fair price"
provisions are complied with or the Chapter 1704 Transaction is approved by
certain supermajority shareholder votes.
The Ohio Business Combination Law restrictions do not apply to a Chapter
1704 Transaction with an Interested Shareholder if either the acquisition of
the corporation's shares that would cause the Interested Shareholder to become
an Interested Shareholder or the Chapter 1704 Transaction is approved by a
resolution of the board of directors of the corporation adopted prior to the
date on which the Interested Shareholder became an Interested Shareholder.
The OHM Board of Directors has approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, so that
the Ohio Business Combination Law does not apply to the acquisition of shares
of OHM Common Stock pursuant to the Offer or the Merger.
79
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN STOCKHOLDERS OF ITC
The following table sets forth information as of March , 1998 with respect
to beneficial ownership of (a) ITC Common Stock, (b) ITC's Depositary Shares,
each representing 1/100 of a share of 7% Preferred Stock (the "Depositary
Shares"), (c) Convertible Preferred Stock and (d) the Carlyle Warrants, by (w)
each person known by ITC to be the beneficial owner of 5% or more of the
outstanding ITC Common Stock, Depositary Shares, Convertible Preferred Stock
or Carlyle Warrants, (x) each director of ITC, (y) certain executive officers
of ITC and (z) all directors and persons serving as executive officers of ITC
as a group. All amounts have been adjusted to reflect the one-for-four reverse
stock split effective November 21, 1996.
<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND AMOUNT AND PERCENT OF
NATURE OF PERCENT OF NATURE OF PERCENT OF NATURE OF CONVERTIBLE
BENEFICIAL ITC COMMON BENEFICIAL DEPOSITARY BENEFICIAL PREFERRED
OWNERSHIP OF STOCK OWNERSHIP OF SHARES OWNERSHIP OF STOCK
ITC COMMON BENEFICIALLY DEPOSITARY BENEFICIALLY CONVERTIBLE BENEFICIALLY
NAME STOCK(1)(2) OWNED(2) SHARES OWNED PREFERRED STOCK OWNED
---- ------------ ------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
TCG Holdings, L.L.C..... 6,430,334(3) 38.02% 40,544 89.56%
Carlyle Investment
Management, L.L.C. .... 748,520(4) 4.42% 4,727 10.44%
OHM Corporation(5)...... 7,178,854 42.44% 45,271 100.00%
T. Rowe Price
Associates, Inc.(6).... 1,081,879 11.12%
T. Rowe Price Small Cap
Value Fund, Inc.(6).... 986,879 10.14%
Brahman
Stockholders(7)........ 933,350 9.60%
Wisconsin Investment
Board(8)............... 887,950 9.12%
Dimensional Fund
Advisors Inc.(9)....... 559,000 5.74%
Michael A. Roth & Brian
J. Stark(10)........... 553,400 5.69%
Daniel A.
D'Aniello(11).......... 0 --
Philip B. Dolan(11)..... 0 --
E. Martin Gibson........ 10,351 * 5,000 *
James C. McGill(12)..... 21,338 * 1,000 *
Robert F. Pugliese...... 2,966 *
James D. Watkins........ 2,966 *
Franklin E. Coffman..... 37,122 * 1,000 *
Anthony J. DeLuca....... 84,965 *
James G. Kirk........... 1,417 *
James R. Mahoney........ 62,237 *
Raymond J. Pompe........ 53,300 *
All directors and
executive officers as a
group
(11 persons)(13)....... 283,375 2.91%
</TABLE>
- --------
* Less than 1%
(1) The number of shares of ITC Common Stock beneficially owned includes
shares of ITC 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 60 days of
January 30, 1998 upon exercise of stock options (and conversion of
Depositary Shares in the case of Messrs. Gibson, McGill and Coffman) in
the following amounts: (i) 5,000 shares upon exercise of options and 5,351
shares upon conversion of the Depositary Shares as to Mr. Gibson, (ii)
3,750 shares upon exercise of options and
80
<PAGE>
1,070 shares upon conversion of the Depositary Shares as to Mr. McGill,
(iii) 27,457 shares as to Mr. DeLuca, (iv) 13,062 shares upon exercise of
options and 1,070 shares upon conversion of Depositary Shares as to Mr.
Coffman, (v) 22,937 shares as to Mr. Mahoney, (vi) 14,062 shares as to Mr.
Pompe and (vii) 1,417 shares as to Mr. Kirk.
(2) For the purposes of determining the number of shares of ITC Common Stock
beneficially owned, as well as the percentage of outstanding ITC Common
Stock held, by each person or group set forth in the table, the number of
such shares is divided by the sum of the number of outstanding shares of
ITC Common Stock on January 30, 1998 plus (i) the number of shares of ITC
Common Stock subject to options exercisable currently or within 60 days of
January 30, 1998 by such person or group, (ii) shares of ITC Common Stock
into which persons who hold Depositary Shares or Convertible Preferred
Stock may convert such security (or otherwise obtain ITC Common Stock),
and/or receive ITC Common Stock upon exercise of Warrants, in accordance
with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as
amended ("Rule 13d-3(d)(1)"). Depositary Shares may be converted at any
time into ITC Common Stock at the ratio of 1.0702 shares of ITC Common
Stock for each Depositary Share. The Convertible Preferred Stock may be
converted at any time into ITC Common Stock at the ratio of 131.75 shares
of ITC Common Stock for each share of Convertible Preferred Stock
(reflecting a conversion price of $7.59 per share of Convertible Preferred
Stock).
(3) Represents shares of ITC Common Stock issuable upon conversion of all
shares of Convertible Preferred Stock and exercise of all Carlyle Warrants
held by certain limited partnerships controlled by TCG Holdings, L.L.C., a
Delaware limited liability company ("TCG Holdings"), as set forth in more
detail in the following sentence. The cumulative TCG Holdings ownership
figure represents (i) 1,781,965 shares beneficially owned by Carlyle
Partners II, L.P., a Delaware limited partnership ("CPII"), (ii) 81,357
shares beneficially owned by Carlyle Partners III, L.P., a Delaware
limited partnership ("CPIII"), (iii) 1,504,210 shares beneficially owned
by Carlyle International Partners II, L.P., a Cayman Islands limited
partnership ("CIPII"), (iv) 81,042 shares beneficially owned by Carlyle
International Partners III, L.P., a Cayman Islands limited partnership
("CIPIII"), (v) 338,682 shares beneficially owned by C/S International
Partners, a Cayman Islands partnership ("C/SIP"), (vi) 1,907 shares
beneficially owned by Carlyle Investment Group, L.P., a Delaware limited
partnership ("CIG"), (vii) 2,366,299 shares beneficially owned by Carlyle-
IT International Partners, L.P., a Cayman Islands limited partnership
("CITIP"), (viii) 79,765 shares beneficially owned by Carlyle-IT
International Partners II, L.P., a Cayman Islands limited partnership
("CITIPII"), and (ix) 195,107 shares beneficially owned by Carlyle-IT
Partners, L.P., a Delaware limited partnership ("CITP"). TC Group, L.L.C.,
a Delaware limited liability company ("TC Group"), may be deemed to be the
beneficial owner of 6,430,335 shares of ITC Common Stock as the general
partner of CPII, CPIII, CIG, and CITP, and as the managing general partner
of CIPII, CIPIII, C/SIP, CITIP and CITIPII. TCG Holdings, as a member
holding a controlling interest in TC Group, may be deemed to share all
rights herein described belonging to TC Group. Furthermore, because
certain managing members of TCG Holdings are also managing members of
Carlyle Investment Management, L.L.C., a Delaware limited liability
company ("CIM"), TCG Holdings may be deemed the beneficial owner of the
shares of ITC Common Stock controlled by CIM (see footnote 4 below). The
principal business address of TC Group and TCG Holdings is c/o The Carlyle
Group, 1001 Pennsylvania Avenue, N.W., Suite 220 South, Washington DC
20004. The principal business address of CPII, CPIII, CIG, CITP and CIM is
Delaware Trust Building, 900 Market Street, Suite 200, Wilmington,
Delaware 19801. The principal business address of CIPII, CIPIII, C/SIP,
CITIP and CITIPII is Coutts & Co., P.O. Box 707, Cayman Islands, British
West Indies.
(4) Represents shares of ITC Common Stock issuable upon conversion of all
shares of Convertible Preferred Stock and exercise of all Carlyle Warrants
held by the State Board of Administration of the State of Florida over
which CIM holds sole voting and disposition power. Because certain
managing members of TCG Holdings are also managing members of CIM, CIM may
be deemed to be the beneficial owner of the shares of ITC Common Stock
controlled by TCG Holdings (see footnote 3 above).
(5) OHM may be deemed to be the beneficial owner of all shares of ITC Common
Stock controlled by TCG Holdings and CIM due to the terms of the Parent
Voting Agreement.
(6) Such information is derived solely from a Schedule 13G filed by such
beneficial owners (filing as joint filers) with the Commission dated
January 9, 1998. The address of such beneficial owners as set forth in
their Schedule 13G is 100 E. Pratt Street, Baltimore, Maryland 21202.
81
<PAGE>
(7) Such information is derived solely from a Schedule 13D filed by the
"Brahman Stockholders," which is comprised of the entities listed in the
following sentence (filing as joint filers), with the Commission
January 5, 1998, and amended by a filing with the Commission dated January
15, 1998. The cumulative Brahman Stockholders ownership figure represents
(i) 202,147 shares beneficially owned by Brahman Partners II, L.P., a
Delaware limited partnership ("Brahman II"), (ii) 238,878 shares
beneficially owned by Brahman Institutional Partners, L.P., a Delaware
limited partnership ("Brahman Institutional"), (iii) 399,475 shares
beneficially owned by BY Partners, L.P., a Delaware limited partnership
("BY Partners"), (iv) 840,500 shares beneficially owned by Brahman
Management, L.L.C., a Delaware limited liability company and the sole
general partner of Brahman II, BY Partners and Brahman Institutional
("Brahman Management"), (such amount being inclusive of the amounts
reported in (i)-(iii) above), (v) 492,325 shares beneficially owned by
Brahman Capital Corp., a Delaware corporation ("Brahman Capital"), (such
amount being inclusive of the 92,850 shares held for the discretionary
account that Brahman Capital manages for Brahman Partners II Offshore,
Ltd., a Cayman Islands exempted company, and 399,475 shares held by
BY Partners, (vi) 933,350 shares beneficially owned by Messrs. Peter A.
Hochfelder, Robert J. Sobel and Mitchell A. Kuflik, the executive officers
and directors of Brahman Capital and the sole members of Brahman
Management. Brahman Management, Brahman Capital and Messrs. Hochfelder,
Sobel and Kuflik own directly no shares of ITC Common Stock, but may be
deemed to beneficially own 933,350 shares.
(8) Such information is derived solely from a Schedule 13G filed by such
beneficial owner with the Commission dated February 10, 1997. The address
of the Wisconsin Investment Board set forth in its Schedule 13G is P.O.
Box 7842, Madison, Wisconsin 53707.
(9) Such information is derived solely from a Schedule 13G dated February 5,
1997 filed by such beneficial owner with the Commission. The address of
Dimensional Fund Advisors Inc., a registered investment adviser
("Dimensional"), set forth in its Schedule 13G is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401. Dimensional is deemed to have
beneficial ownership of 559,000 shares of ITC Common Stock as of December
31, 1997, all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
(10) Such information is derived solely from a Schedule 13G filed by such
beneficial owners (filing as joint filers) with the Commission dated
September 19, 1996. The address of Michael A. Roth and Brian J. Stark set
forth in their Schedule 13G is George J. Mazin Stark Investments, 150
West Market Street, Mequon, Wisconsin 53092. Shares beneficially owned by
such filers include 469,741 shares beneficially owned by Reliant Trading
upon the conversion of 438,928 shares of ITC's Depositary Shares and
83,659 shares beneficially owned by Shepherd Trading Limited upon the
conversion of 78,172 shares of ITC's Depositary Shares.
(11) Mr. D'Aniello is a Managing Member of TCG Holdings. Mr. D'Aniello's
interest in TCG Holdings is not controlling and thus Mr. D'Aniello
expressly disclaims any beneficial ownership in the shares of ITC Common
Stock beneficially owned by TCG Holdings. Mr. Dolan is an employee of The
Carlyle Group and holds no economic interest in either TC Group or TCG
Holdings, and as such expressly disclaims any beneficial ownership in the
shares of ITC Common Stock beneficially owned by any of such entities.
(12) Includes 1,000 shares of ITC Common Stock and 1,000 Depositary Shares
(convertible into 1,070 shares of ITC Common Stock) owned by Mr. McGill's
wife, as to which Mr. McGill has no voting or dispositive power, and
1,250 shares owned by McGill Resources, Inc., a company owned by Mr.
McGill. Mr. McGill disclaims beneficial ownership of all such shares.
Also includes 6,250 shares that may be purchased upon the exercise of
options that are currently exercisable or that will become exercisable
within 60 days of January 30, 1998.
(13) Includes 95,073 shares of ITC Common Stock that may be purchased upon the
exercise of options that are currently exercisable or that will become
exercisable within 60 days of July 31, 1997 and 7,000 Depositary Shares
(convertible into 7,491 shares of ITC Common Stock). Excludes shares
owned by Robert B. Sheh, who resigned as President and Chief Executive
Officer and a director of ITC effective July 1, 1996.
82
<PAGE>
CERTAIN SHAREHOLDERS OF OHM
The following table sets forth information as of March , 1998 with respect
to beneficial ownership of OHM Common Stock by (a) each person known by OHM to
be the beneficial owner of 5% or more of the outstanding OHM Common Stock, (b)
each director of OHM, (c) certain executive officers of OHM and (d) all
directors and persons serving as executive officers of OHM as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF OHM
OWNERSHIP OF OHM COMMON STOCK
NAME COMMON STOCK(1) BENEFICIALLY OWNED
---- ---------------- ------------------
<S> <C> <C>
IT-Ohio, Inc.(2)........................ 14,633,000(6) 55.06%
International Technology
Corporation(3)......................... 14,633,000(6) 55.06%
Anthony J. DeLuca(4).................... 14,633,000(6) 55.06%
Daniel A. D'Aniello(4).................. 14,633,000(6) 55.06%
Philip B. Dolan(4)...................... 14,633,000(6) 55.06%
Richard W. Pogue(5)..................... 1,000 *
Charles W. Schmidt...................... 8,736 *
Philip O. Strawbridge................... 12,307 *
All directors and executive officers as
a group
( persons)...........................
</TABLE>
- --------
* Less than 1%
(1) The number of shares of OHM Common Stock beneficially owned includes
shares of OHM 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.
(2) Such information is derived solely from a Schedule 13D with respect to
shares of OHM Common Stock purchased by Merger Sub in the Offer filed by
ITC with the Commission dated January 15, 1998, as amended. The address of
ITC as set forth in its Schedule 13D is 2790 Mosside Boulevard,
Monroeville, Pennsylvania 15146-2792.
(3) Merger Sub is a wholly owned subsidiary of ITC; thus, ITC may be deemed to
be the beneficial owner of the shares of OHM Common Stock held by Merger
Sub.
(4) Messrs. DeLuca, D'Aniello and Dolan, as the directors of Merger Sub and
directors of ITC, may be deemed to beneficially own the shares of OHM
Common Stock held by Merger Sub. Each of Messrs. DeLuca, D'Aniello and
Dolan disclaims beneficial ownership in such shares.
(5) Includes 1,000 shares of OHM Common Stock held in trust for the benefit of
Mr. Pogue's wife as to which he disclaims beneficial ownership.
(6) Such share number includes the WMX Warrants; pursuant to the Repurchase
Agreement, WMX provided an irrevocable proxy to ITC to vote its respective
shares at the OHM Special Meeting.
CERTAIN TRANSACTIONS
In 1991, ITC and OHM formed IT-OHM, a Louisiana joint venture (the "Joint
Venture"), in order to bid on the cleanup of the Bayou Bonfouca, located in
Slidell, Louisiana, and a National Priorities List Superfund site (the
"Site"). OHM contributed approximately $2.0 million in cash to and held a 32%
ownership interest in the Joint Venture. ITC contributed certain assets used
in the clean-up of the Site and held a 68% ownership interest in the Joint
Venture. The Joint Venture successfully submitted a lump sum/unit price bid of
approximately $109.0 million for the clean-up of the Site which included (i)
dredging the bottom of the Site to gather contaminated sediments; (ii)
dewatering the Site's contaminated sediments with OHM's dewatering treatment
technology; (iii) feeding such sediments into ITC's HTTS technology; and (iv)
placing the treated sediments, soils and dirt into an on-site landfill. The
Joint Venture successfully completed the project, including certain changes
resulting in total gross revenue of approximately $120.0 million.
83
<PAGE>
MANAGEMENT OF THE SURVIVING CORPORATION AND EXECUTIVE COMPENSATION
The information required herein concerning the directors of the Surviving
Corporation is hereby incorporated by reference to ITC's Annual Report on Form
10-K for the fiscal year ended March 28, 1997, as amended. The information
required herein concerning the executive officers of the Surviving Corporation
is hereby incorporated by reference to OHM's Annual Report on Form 10-K filed
March 20, 1997 for the fiscal year ended December 31, 1996, except that
information concerning Mr. Anthony J. DeLuca, who was elected Chief Executive
Officer and President of OHM on March 4, 1998, is incorporated by reference to
ITC's Annual Report on Form 10-K for the fiscal year ended March 28, 1997, as
amended.
PROPOSAL TO AMEND THE ITC 1996 STOCK INCENTIVE PLAN
The Incentive Plan was adopted by the ITC Board of Directors on September
17, 1996 and approved by ITC's stockholders at ITC's 1996 Annual Meeting of
Stockholders. Effective , 1998, the ITC Board of Directors amended the
Incentive Plan, subject to ratification by ITC's stockholders at the ITC
Special Meeting, in order to increase the number of shares of ITC Common Stock
available under the Incentive Plan, upon consummation of the Merger, and to
change the date of scheduled annual increases to the number of authorized
shares under the Incentive Plan. The Incentive Plan currently provides that
the aggregate number of shares of ITC Common Stock issuable thereunder shall
not exceed 250,000, subject to an increase of 2% of the number of shares of
ITC Common Stock issued and outstanding on April 1 of each of the years 1997
through 2001. The Plan Amendments will provide for a one-time increase of 2%
of the shares of ITC Common Stock issued at the Effective Time, and will
change the date of occurrence of the remaining scheduled annual increases from
April 1 of each such year to the first business day of each fiscal year of
ITC. As such, as of April 1, 1998, approximately 639,433 shares are issuable
under the Incentive Plan, and approximately 304,415 shares will be added to
such total upon consummation of the Merger. The following description of the
Incentive Plan is qualified by reference to the full text of the Incentive
Plan, as amended and restated, which is set forth in Annex E to this Proxy
Statement/Prospectus. The proposed substantive amendments are shown in upper
case type in Annex E.
The Incentive Plan provides for the grant to selected management and other
key employees of ITC and its subsidiaries, including executive officers and
non-employee directors, of stock grants, grants of restricted stock and
options to purchase authorized but unissued or reacquired ITC Common Stock.
The purpose of the Incentive Plan is to attract and retain persons of ability
and motivate them to advance the interests of ITC. A maximum of shares of
ITC Common Stock have been reserved for the grant of restricted stock and the
issuance upon the exercise of stock options which may be granted pursuant to
the Incentive Plan. The Incentive Plan provides for the grant of incentive
stock options and nonstatutory stock options. The Incentive Plan provides that
the options become exercisable at the rate of 25% per year, beginning one year
from the date of grant. The Incentive Plan also provides for a limited number
of shares to be issued to employees as stock grants, which may or may not have
accompanying restrictions.
The Incentive Plan is administered by a committee of the ITC Board of
Directors, as designated by the ITC Board of Directors (the "Committee"). The
ITC Board of Directors currently has designated the Compensation Committee as
the administrator of the Incentive Plan. The Committee has full power to
construe and interpret the Incentive Plan and to establish rules and
regulations for its administration. Only employees of ITC and its subsidiaries
are eligible to be granted options or to receive stock and restricted stock
grants under the Incentive Plan. The Committee will determine the employees to
whom, and the number of shares for which, incentive stock options or
nonstatutory options will be granted.
The exercise price of an option granted under the Incentive Plan will be
100% of the fair market value of the shares of ITC Common Stock subject to the
option at the time of grant of the option. The option exercise price may be
paid by delivery to ITC of cash, other property deemed acceptable by the
Committee or previously owned shares of capital stock of ITC or by a reduction
in the amount of shares or other property otherwise issuable pursuant to such
option. The Incentive Plan provides for equitable share and price adjustments
in the event of a stock dividend, stock split or similar change in
capitalization. Options awarded under the Incentive
84
<PAGE>
Plan are nontransferable, except by will or the laws of descent and
distribution. The Incentive Plan will terminate on November 20, 2001, unless
terminated earlier by the ITC Board of Directors. Options then outstanding
will remain in effect until exercise or expiration.
At the time an option is granted, no income is taxable to the optionee, and
ITC is not entitled to a compensation deduction.
The optionee generally does not recognize taxable income upon exercise of an
incentive stock option, and in such case ITC is not entitled to a compensation
deduction. Such exercise may, however, subject the optionee to the alternative
minimum tax. The optionee generally will recognize gain or loss on disposition
of ITC Common Stock acquired pursuant to an incentive stock option based on
the difference between the selling price and the option exercise price. If a
sale occurs more than one year from the date the ITC Common Stock was issued
and more than two years from the date the option was granted, such gain or
loss will be long-term capital gain or loss, and ITC will at no time be
entitled to a compensation deduction. Gain on a disqualifying disposition of
ITC Common Stock prior to the expiration of such holding periods generally is
taxable to the optionee as ordinary income to the extent that the market price
at the time of exercise exceeds the option price, and any excess is capital
gain.
The optionee will recognize ordinary income at the time a non-qualified
option is exercised in the amount by which the market price at the time of
exercise exceeds the option exercise price. The optionee will realize capital
gain or loss at the time of a sale of ITC Common Stock acquired pursuant to
the exercise of a non-qualified stock option based on the difference between
the selling price and the fair market value at the time of exercise.
ITC will be entitled to a compensation deduction upon a disqualifying
disposition of incentive stock option shares and upon the exercise of a non-
qualified stock option in the same amount and at the same time as the optionee
realizes ordinary income, subject to Section 162(m) of the Code.
The Incentive Plan provides that within 24 months of a "change in control"
of ITC (as determined by the Committee), all unvested options of an optionee
will immediately vest if the optionee's employment is terminated by ITC
without cause or if the optionee resigns for certain specified reasons during
such period. The ITC Board of Directors, without the approval of the
stockholders of ITC, may amend the Incentive Plan in any manner it deems to be
in the best interests of ITC. However, stockholder approval is required to,
among other things, increase the maximum number of shares subject to the
Incentive Plan or restrict the class of management and other key employees
eligible to be granted awards under the Incentive Plan.
The affirmative vote of the holders of a majority of the voting power of ITC
present or represented by proxy at the ITC Special Meeting will be required to
approve the Plan Amendments.
THE ITC BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE
FOR THE PLAN AMENDMENTS.
PROPOSAL TO AMEND THE ITC CHARTER
ITC stockholders are being asked to approve at the ITC Special Meeting an
amendment to the ITC Charter to eliminate the classified board of directors.
Article SEVENTH of the ITC Charter currently provides for three classes of
Common Stock Directors with one-third of the directors elected annually to
three-year terms (a "classified board"). This provision was designed to help
assure continuity of ITC policies and make management changes more gradual.
This provision also was designed to ensure that any person seeking to acquire
control of ITC would seek approval of the ITC Board of Directors, rather than
proceeding unilaterally. The proposed revision to the ITC Charter is set forth
in Annex F to this Proxy Statement/Prospectus.
85
<PAGE>
The ITC Board of Directors was restructured in November 1996 in connection
with the investment in ITC by Carlyle. Prior to such investment, the ITC Board
of Directors consisted of nine members, each of whom served for three-year
terms which were staggered to provide for the election of approximately one-
third of such members each year. Subsequent to such investment, the ITC Board
of Directors consists of seven members, four of whom are elected as Preferred
Stock Directors each year by the holders of shares of Convertible Preferred
Stock, acting by written consent without a meeting, and three of whom
constitute the current classified board of Common Stock Directors. Given such
restructuring, the ITC Board of Directors does not believe that the current
classified board of Common Stock Directors is in the best interest of ITC
stockholders in that only a limited number of Common Stock Directors can be
elected each year. The Charter Amendment, if approved, will enable the holders
of shares of ITC Common Stock to vote each year on the election of all
directors (other than the directors elected each year by the Convertible
Preferred Stockholders voting as a separate class).
The affirmative vote of the holders of not less than two-thirds of the total
voting power of all outstanding shares of voting stock of ITC will be required
to approve the Charter Amendment.
THE ITC BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE
FOR THE CHARTER AMENDMENT.
OTHER MATTERS
It is not expected that any matters other than those described in this Proxy
Statement/Prospectus will be brought before the ITC Special Meeting or the OHM
Special Meeting. If any other matters are presented, however, it is the
intention of the persons named in the ITC proxy or the OHM proxy to vote such
proxy in the sole discretion of the persons named in such proxy.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of ITC
Common Stock offered hereby will be passed upon for ITC by Gibson, Dunn &
Crutcher LLP, Los Angeles, California. Certain United States federal income
tax consequences of the Merger have been passed upon for OHM by Sullivan &
Cromwell, New York, New York.
EXPERTS
The consolidated financial statements of ITC and OHM appearing in ITC's and
OHM's Annual Reports (Form 10-K) for the years ended March 28, 1997 and
December 31, 1997, respectively, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein
and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
It has been the practice of ITC to engage Ernst & Young LLP for annual audit
services upon approval by the Board of Directors. Ernst & Young LLP has acted
as ITC's independent public accountant for more than 15 years and will act in
that capacity during the current fiscal year. It is anticipated that a
representative of Ernst & Young LLP will be present at the ITC Special Meeting
and will be afforded the opportunity to make a statement if desired and will
be available to respond to appropriate questions.
It is expected that representatives of Ernst & Young LLP will be present at
OHM Special Meeting and will be afforded the opportunity to make a statement
if desired and will be available to respond to appropriate questions.
86
<PAGE>
STOCKHOLDER OR SHAREHOLDER PROPOSALS
Any stockholder of ITC who wishes to submit a proposal for presentation to
the ITC Special Meeting or to ITC's 1998 Annual Meeting of Stockholders must
submit the proposal to International Technology Corporation, 2790 Mosside
Boulevard, Monroeville, Pennsylvania 15146-2792, Attention: Secretary, not
later than , 1998 or , 1998 for inclusion, if appropriate, in ITC's
proxy statement and form of proxy relating to the ITC Special Meeting or to
its 1998 Annual Meeting, respectively.
Any shareholder of OHM who wishes to submit a proposal for presentation to
the OHM Special Meeting or OHM's 1998 Annual Meeting of Shareholders must
submit the proposal to OHM Corporation, 16406 U.S. Route 224 East, Findlay,
Ohio 45840, Attention: Secretary, not later than , 1998, respectively, for
inclusion, if appropriate, in OHM's proxy statement and form of proxy relating
to its 1998 Annual Meeting; provided, that if the Merger is consummated, OHM
will not hold an Annual Meeting.
87
<PAGE>
INTERNATIONAL TECHNOLOGY CORPORATION
AND
OHM CORPORATION
ANNEXES TO THE PROXY STATEMENT/PROSPECTUS
Annex A--Agreement and Plan of Merger, dated as of January 15, 1998, among OHM
Corporation, International Technology Corporation and IT-Ohio, Inc.
Annex B--Opinion of Donaldson, Lufkin & Jenrette Securities Corporation
Annex C--Opinion of BT Alex. Brown Incorporated
Annex D--Excerpt from Ohio General Corporation Law Relating to Appraisal Rights
Annex E--Form of International Technology Corporation's 1996 Stock Incentive
Plan, as Amended and Restated
Annex F--Form of Amendment to International Technology Corporation's
Certificate of Incorporation
88
<PAGE>
ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AMONG
OHM CORPORATION,
INTERNATIONAL TECHNOLOGY CORPORATION
AND
IT-OHIO, INC.
DATED AS OF JANUARY 15, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
RECITALS
ARTICLE I
THE TENDER OFFER AND THE STOCK PURCHASE
<C> <S> <C>
1.1. Tender Offer........................................................ A-2
1.2. Company Action...................................................... A-2
1.3. The Share Repurchase................................................ A-3
1.4. Directors; Committees............................................... A-3
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger.......................................................... A-4
2.2. Closing............................................................. A-4
2.3. Effective Time...................................................... A-4
ARTICLE III
ARTICLES OF INCORPORATION, REGULATIONS AND
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1. The Articles of Incorporation....................................... A-4
3.2. The Regulations..................................................... A-4
3.3. Officers and Directors.............................................. A-4
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock............................................. A-5
4.2. Exchange of Certificates............................................ A-5
4.3. Dissenters' Rights.................................................. A-7
4.4. Adjustments to Prevent Dilution..................................... A-7
4.5. Treatment of Warrants and WH Options................................ A-7
4.6. Treatment of the Debentures......................................... A-8
4.7. NSC Spinoff......................................................... A-8
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company....................... A-8
5.2. Representations and Warranties of Parent and Merger Sub............. A-15
</TABLE>
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TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VI
COVENANTS
6.1. Company Interim Operations......................................... A-22
6.2. Parent Interim Operations.......................................... A-23
6.3. Acquisition Proposals.............................................. A-23
6.4. Meeting of the Company's Shareholders.............................. A-24
6.5. Meeting of Parent's Stockholders................................... A-24
6.6. Proxy Statement; Registration Statement............................ A-24
6.7. Filings; Other Action; Notification................................ A-25
6.8. Access............................................................. A-26
6.9. Stock Exchange Listing and De-listing.............................. A-26
6.10. Publicity.......................................................... A-26
6.11. Benefits........................................................... A-26
6.12. Expenses........................................................... A-28
6.13. Indemnification; Directors' and Officers' Insurance................ A-28
6.14. Debentures......................................................... A-30
6.15. Takeover Statutes.................................................. A-30
6.16. Agreement of Affiliates............................................ A-30
6.17. Legal Opinion...................................................... A-30
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of Parent and Merger Sub................. A-30
7.2. Conditions to Obligations of the Company........................... A-31
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent...................................... A-32
8.2. Termination by Either Parent or the Company........................ A-32
8.3. Termination by Parent.............................................. A-32
8.4. Termination by the Company......................................... A-33
8.5. Effect of Termination and Abandonment.............................. A-33
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival........................................................... A-34
9.2. Modification or Amendment.......................................... A-34
9.3. Waiver of Conditions............................................... A-34
9.4. Counterparts....................................................... A-34
9.5. Governing Law and Venue; Waiver of Jury Trial...................... A-34
9.6. Notices............................................................ A-35
9.7. Entire Agreement; No Other Representations......................... A-36
9.8. No Third Party Beneficiaries....................................... A-36
9.9. Obligations of Parent and of the Company........................... A-36
9.10. Severability....................................................... A-36
9.11. Interpretation..................................................... A-36
9.12. Assignment......................................................... A-36
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated as
of January 15, 1998, among OHM CORPORATION, an Ohio corporation (the
"Company"), INTERNATIONAL TECHNOLOGY CORPORATION, a Delaware corporation
("Parent"), and IT-OHIO, INC., an Ohio corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), the Company and Merger Sub sometimes
being hereinafter collectively referred to as the "Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Parent and the Company each have
determined that it is in the best interests of their respective shareholders
for Parent and the Company to combine their respective businesses upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such combination, it is proposed that Merger Sub
shall make a cash tender offer (the "Offer") to acquire 13,933,000 Shares (as
defined in Section 1.1(a)) for $11.50 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth herein; and
WHEREAS, also in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the
"Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Ohio General Corporation Law (the "OGCL"), and
upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Boards of Directors of Parent and the Company wish, as a part
of the transactions contemplated by this Agreement, to provide for the
purchase by the Company of 5,235,381 Shares (as defined in Section 1.1(a))
from Waste Management, Inc., a Delaware corporation ("WMX"), concurrently with
the payment to BankBoston, N.A., as Depositary for the Offer on behalf of
holders of Shares tendering into the Offer, of the aggregate purchase price
for all Shares purchased in the Offer in a manner that will increase the
aggregate number of Shares acquired for cash and make it possible for the
Merger Consideration (as defined in Section 4.1(a)) to consist solely or
primarily of shares of Parent Common Stock (as defined in Section 4.1(a)); and
WHEREAS, certain shareholders of Parent have entered into agreements with
the Company and Parent providing that such shareholders will vote or cause all
shares of 6% Preferred Shares (as defined in Section 5.2(c)) controlled by
them to be voted in favor of the issuance of shares of Parent Common Stock in
the Merger (as defined in Section 2.1); and
WHEREAS, certain shareholders of the Company have entered into agreements
with the Company and Parent providing that such shareholders will tender or
cause to be tendered in the Offer all or a specified number of Shares
controlled by them, and will vote or cause to be voted all Shares controlled
by them in favor of the Merger; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
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<PAGE>
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER AND THE STOCK PURCHASE
1.1. Tender Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Article VIII hereof and none of the events set
forth in Annex A hereto shall have occurred or be existing, within five
business days of the date hereof, Merger Sub will commence the Offer for
13,933,000 Shares at a price of $11.50 per Share, net to the seller in cash,
subject to the conditions set forth in Annex A hereto. Subject to the
conditions of the Offer set forth in Annex A hereto, Merger Sub will promptly
accept for payment and pay for all Shares that are validly tendered and not
withdrawn as soon as practicable after the later of 9:00 a.m. e.s.t. on
February 17, 1998 and the twentieth business day of the Offer. Merger Sub
shall not, without the prior written consent of the Company (such consent to
be authorized by the Board of Directors of the Company), decrease the price
per Share or change the form of consideration payable in the Offer, decrease
the number of Shares sought, change the conditions to the Offer, impose
additional conditions to the Offer or amend any other term of the Offer in any
manner adverse to the holders of Shares or extend the Offer if all of the
conditions to the Offer are satisfied or waived or waive the condition set
forth in paragraph (f) of Annex A to this Agreement. So long as this Agreement
is in effect and the conditions to the Offer have not been satisfied or
waived, at the request of the Company from time to time, Merger Sub shall
extend the Offer for a period not to exceed 10 business days after the
previously scheduled expiration date of the Offer; provided, however, in no
event shall Parent be obligated to extend the Offer beyond March 31, 1998.
(b) Parent agrees that the Offer to Purchase and related Letter of
Transmittal relating to the Offer (which together constitute the "Offer
Documents") shall, in all material respects, comply with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations thereunder and other applicable laws. The Company and
its counsel shall be given an opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC.
1.2. Company Action.
(a) The Company hereby approves of and consents to the Offer and represents
that its Board of Directors, at a meeting duly called and held on January 14,
1998, (i) unanimously determined that the transactions contemplated by this
Agreement, including without limitation the Offer and the Merger, are fair to
and in the best interests of the Company and its shareholders and unanimously
approved and adopted this Agreement and the Offer, the Merger and the other
transactions contemplated hereby (the "Transactions"), and (ii) unanimously
recommended that the shareholders of the Company accept the Offer and adopt
this Agreement.
(b) On the date of commencement of the Offer, the Company shall file with
the Securities and Exchange Commission (the "SEC") a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendation of the Company's Board of Directors described in Section
1.2(a); provided, however, that if the Board of Directors of the Company
determines in good faith, taking into consideration the advice of outside
legal counsel, that the amendment or withdrawal of such recommendation is
likely to be required in order for its members to comply with their fiduciary
duties under applicable law, then any such amendment or withdrawal, and any
related amendment of the Schedule 14D-9, shall not constitute a breach of this
Agreement. The Company shall disseminate the Schedule 14D-9 to the extent
required by Rule 14d-9 promulgated under the Exchange Act and any other
applicable federal securities laws. The Schedule 14d-9 shall, in all material
respects, comply with the requirements of the Exchange Act and the rules and
regulations thereunder and other applicable laws. Merger Sub and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 and
any amendment thereto prior to their being filed with the SEC.
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<PAGE>
(c) In connection with the Offer, the Company will cause its transfer agent
to furnish promptly to Merger Sub a list, as of a recent date, of the
shareholders of record of Shares and their addresses, as well as mailing
labels containing the names and addresses of all record holders of Shares and
lists of security positions of Shares held in stock depositories. The Company
will furnish Merger Sub with such additional information (including, but not
limited to, updated lists of holders of Shares and their addresses, mailing
labels and lists of security positions) and such other assistance as Parent or
Merger Sub or their agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares.
1.3. The Share Repurchase. The Company agrees that it shall, concurrently
with the payment to BankBoston, N.A., as Depositary for the Offer on behalf of
holders of Shares tendering into the Offer, of the aggregate purchase price
for all Shares purchased in the Offer, purchase from WMX, at a price of $11.50
per Share in cash, 5,235,381 Shares, all pursuant to the Share Repurchase
Agreement, dated the date hereof (the "Share Repurchase Agreement"), between
the Company and WMX (the "Share Repurchase").
1.4. Directors; Committees.
(a) If requested by Parent, the Company will, promptly following the
purchase by Merger Sub of Shares pursuant to the Offer, take all actions
necessary to cause persons designated by Parent to become directors of the
Company so that the total number of such persons equals not less than the
product of the total number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by the Parent Companies (as
hereinafter defined) bears to the total number of Shares then issued and
outstanding rounded up to the next greatest nearest whole number. In
furtherance thereof, the Company will increase the size of the Board, or use
its reasonable best efforts to secure the resignation of directors, or both,
as is necessary to permit Parent's designees to be elected to the Company's
Board of Directors; provided that at all times prior to the Effective Time,
the Company's Board of Directors shall consist of at least two members who are
neither officers, stockholders, designees nor affiliates of the Parent
Companies ("Parent Representatives"). At such time, the Company, if so
requested, will use its reasonable best efforts to cause persons designated by
Parent to constitute the same percentage of each committee of such board, each
board of directors of each Subsidiary (as hereinafter defined) of the Company
and each committee of each such board (in each case to the extent of the
Company's ability to elect such persons). The Company's obligations to appoint
designees of Parent to the Board of Directors of the Company shall be subject
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
The Company shall promptly take all actions required pursuant to such Section
and Rule in order to fulfill its obligations under this Section 1.4(a) and
shall include in the Schedule 14D-9, or in a separate Rule 14f-1 information
statement provided to shareholders, such information with respect to the
Company and its officers and directors and the Parent Representatives as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 1.4(a). Parent and Merger Sub will supply to the Company and will
be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(b) No action taken by the Board of Directors of the Company prior to the
Effective Time pursuant to Article VIII or Sections 9.2 or 9.3 shall be
effective unless such action is approved by the affirmative vote of at least a
majority of the directors of the Company who are not Parent Representatives.
A-3
<PAGE>
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 2.3) Merger Sub shall be merged with
and into the Company and the separate corporate existence of Merger Sub shall
thereupon cease (the "Merger"). The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Ohio, and the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger, except as set forth in Section 3.1. The Merger shall have the effects
specified in the OGCL.
2.2. Closing. The closing of the Merger (the "Closing") shall take place (i)
at the offices of Gibson, Dunn & Crutcher, LLP, 200 Park Avenue, New York, New
York at 10:00 A.M. on the first business day following the day on which the
last to be fulfilled or waived of the conditions set forth in Article VII
hereof shall be fulfilled or waived in accordance with this Agreement or (ii)
at such other place and time and/or on such other date as the Company and
Parent may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
2.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Ohio Certificate
of Merger") to be executed and filed with the Secretary of State of the State
of Ohio as provided in Section 1701.81 of the OGCL. The Merger shall become
effective on the date on which the Ohio Certificate of Merger has been duly
filed with the Secretary of State of the State of Ohio, and such time is
hereinafter referred to as the "Effective Time."
ARTICLE III
ARTICLES OF INCORPORATION, REGULATIONS AND OFFICERS AND DIRECTORS OF THE
SURVIVING CORPORATION
3.1. The Articles of Incorporation. Unless otherwise determined by Parent
prior to the Effective Time, the articles of incorporation of Merger Sub (the
"Articles") in effect at the Effective Time shall be the articles of
incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the OGCL, except that Article FIRST of the Articles
shall be amended to read in its entirety as follows:
"The name of the Corporation shall be OHM Corporation."
3.2. The Regulations. Unless otherwise determined by Parent prior to the
Effective Time, the regulations of Merger Sub in effect at the Effective Time
shall be the Regulations of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the OGCL.
3.3. Officers and Directors. The directors of Merger Sub and the officers of
the Company at the Effective Time shall, from and after the Effective Time, be
the directors and officers, respectively, of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Articles
and the Surviving Corporation's regulations.
A-4
<PAGE>
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holders of any shares of
capital stock of the Company or Merger Sub:
(a) Merger Consideration. Each share of Common Stock, par value $0.10 per
share, of the Company (each, a "Share" and, collectively, the "Shares") issued
and outstanding immediately prior to the Effective Time (other than (x) Shares
purchased in the Offer or otherwise owned by Parent, Merger Sub or any other
direct or indirect Subsidiary of Parent (collectively, the "Parent
Companies"), (y) Shares that are owned by the Company or any direct or
indirect Subsidiary of the Company and in each case not held on behalf of
third parties, or (z) Shares ("Dissenting Shares") that are owned by
shareholders ("Dissenting Shareholders") that have properly exercised
appraisal rights pursuant to Sections 1701.84 et seq. of the OGCL
(collectively, "Excluded Shares")) shall be converted into, and become
exchangeable for the right to receive (i) 1.394 (the "Exchange Ratio") fully
paid and non-assessable shares of Common Stock, $.01 par value per share, of
Parent (the "Parent Common Stock"); provided, however, that if the aggregate
number of Shares accepted for payment and paid for pursuant to the Offer and
purchased from WMX pursuant to the Repurchase Agreement is less than
19,168,381 Shares (the "Cash Share Number") (the number of Shares so paid for
and purchased being referred to herein as the "Purchased Share Number"), then
the Exchange Ratio shall be adjusted (the "Adjusted Exchange Ratio") and shall
be equal to the product obtained by multiplying the Exchange Ratio by a
fraction, (A) the numerator of which is equal to (x) the number of Shares
issued and outstanding immediately prior to the Effective Time (excluding
Excluded Shares other than Dissenting Shares) (the "Final Outstanding Number")
plus (y) the Purchased Share Number minus (z) the Cash Share Number and (B)
the denominator of which is the Final Outstanding Number and (ii) if the
Exchange Ratio has been adjusted pursuant to the immediately preceding
proviso, an amount in cash equal to a fraction, (A) the numerator of which is
the product of $11.50 and the amount by which the Cash Share Number exceeds
the Purchased Share Number and (B) the denominator of which is the Final
Outstanding Number. The consideration referred to in clauses (i) and (ii) of
this Section 4.1(a) is hereafter referred to collectively as the "Merger
Consideration." At the Effective Time, all Shares shall no longer be
outstanding and shall be cancelled and retired and shall cease to exist (in
the case of Excluded Shares other than Dissenting Shares, without the payment
of any consideration therefor), and each certificate (a "Certificate")
formerly representing any of such Shares, other than Excluded Shares, shall
thereafter represent only the right to receive the Merger Consideration and
the right, if any, to receive cash in lieu of fractional shares pursuant to
Section 4.2(e) and any distribution or dividends pursuant to Section 4.2(c).
(b) Capital Stock of Merger Sub. At the Effective Time, each share of Common
Stock, par value $0.10 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation.
4.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or shall
cause to be deposited, with an exchange agent selected by Parent with the
Company's prior approval, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of Shares (other than
Excluded Shares), certificates representing Parent Common Stock and (if
applicable) cash comprising the aggregate Merger Consideration payable in
accordance with Section 4.1(a) and, after the Effective Time, if applicable,
any cash, dividends or other distributions with respect to the Parent Common
Stock to be issued or paid pursuant to the last sentence of Section 4.2(c) in
exchange for Shares outstanding immediately prior to the Effective Time (other
than Excluded Shares) upon due surrender of the Certificates (or affidavits of
loss in lieu thereof) pursuant to the provisions of this Article IV (such
certificates for shares of Parent Common Stock and cash (if any) comprising
the Merger Consideration, together with the amount of any dividends or other
distributions payable with respect thereto, being hereinafter referred to as
the "Exchange Fund").
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<PAGE>
(b) Exchange Procedures. As soon as reasonably practicable following the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of record of Shares (other than holders of Excluded
Shares) (i) a letter of transmittal specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates (or affidavits of loss in lieu thereof) to the
Exchange Agent, such letter of transmittal to be in such form and have such
other provisions as Parent and the Company may reasonably agree, and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for (A) certificates representing shares of Parent Common Stock
comprising the Merger Consideration, (B) if applicable, cash comprising the
Merger Consideration, and (C) any unpaid dividends and other distributions and
cash in lieu of fractional shares. Subject to Section 4.2(g), upon surrender
of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing that
number of whole shares of Parent Common Stock that such holder is entitled to
receive pursuant to this Article IV, (y) a check in the amount (after giving
effect to any required tax withholdings) of (A) any cash comprising the Merger
Consideration, plus (B) any cash in lieu of fractional shares, plus (C) any
unpaid non-stock dividends and any other dividends or other distributions that
such holder has the right to receive pursuant to the provisions of this
Article IV, and the Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on any amount payable upon due surrender
of the Certificates. In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock, together with
a check for any cash to be paid upon due surrender of the Certificate and any
other dividends or distributions in respect thereof, may be issued and/or paid
to such a transferee if the Certificate formerly representing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid, in form and substance reasonably satisfactory
to Parent and the Exchange Agent. If any check or any certificate for shares
of Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person (as defined below) requesting such
exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock in a name other
than that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of Parent and the Exchange Agent that such tax
has been paid or is not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d))
or other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Shares; Voting. No dividends
or other distributions declared or made after the Effective Time with respect
to Parent Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any Certificate, there shall be issued
and/or paid to the former holder of such Certificate, without interest, the
dividends or other distributions payable with respect to whole shares of
Parent Common Stock with a record date on or after the Effective Time but with
a payment date prior to surrender.
(d) No Further Ownership Right in Shares. All shares of Parent Common Stock
issued upon the surrender for exchange of Certificates in accordance with the
terms of this Article IV (including any cash paid pursuant to this Article IV)
will be deemed, to the fullest extent permitted by applicable law, to have
been issued (and paid) in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. After the Effective Time,
there shall be no transfers on the stock transfer books of the Company of the
Shares that were outstanding immediately prior to the Effective Time.
(e) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Common Stock will be issued and any
holder of Shares entitled to receive a fractional share of Parent Common Stock
but for this Section 4.2(e) shall be entitled to receive a cash payment in
lieu thereof, which payment shall represent such holder's proportionate
interest in a share of Parent Common Stock based on the
A-6
<PAGE>
average closing price per share of Parent Common Stock on the New York Stock
Exchange, Inc. (the "NYSE") for the ten trading days immediately prior to the
Effective Time, as reported in the New York City edition of The Wall Street
Journal.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Parent Common
Stock) that remains unclaimed by the shareholders of the Company for six
months following the Effective Time shall be paid to Parent. Any shareholders
of the Company who have not theretofore complied with this Article IV shall
thereafter look only to Parent for payment of their shares of Parent Common
Stock and any cash, dividends and other distributions in respect thereof
payable and/or issuable pursuant to Section 4.1 and Section 4.2(c) upon due
surrender of their Certificates (or affidavits of loss in lieu thereof), in
each case, without any interest thereon. Notwithstanding the foregoing, none
of Parent, the Surviving Corporation, the Exchange Agent or any other Person
shall be liable to any former holder of Shares for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common
Stock and any cash, cash in lieu of fractional shares and any unpaid dividends
or other distributions in respect of the Shares represented by such
Certificate pursuant to this Agreement.
4.3 Dissenters' Rights. No Dissenting Shareholder shall be entitled to any
portion of the Merger Consideration or cash in lieu of fractional shares
thereof or any dividends or other distributions pursuant to this Article IV
unless and until such Dissenting Shareholder shall have failed to perfect or
shall have effectively withdrawn or lost such holder's right to dissent from
the Merger under the OGCL, and any Dissenting Shareholder shall be entitled to
receive only the payment provided by Sections 1701.85 et seq. of the OGCL with
respect to Shares owned by such Dissenting Shareholder. If any Person who
otherwise would be deemed a Dissenting Shareholder shall have failed to
properly perfect or shall have effectively withdrawn or lost the right to
dissent with respect to any Shares, such Shares shall thereupon be treated as
though such Shares had been converted into the right to receive the Merger
Consideration with respect to such Shares as provided in this Article IV. The
Company shall give Parent (i) prompt notice of any written demands for
appraisal, attempted withdrawals of such demands, and any other instruments
served pursuant to applicable law received by the Company relating to
shareholders rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demand for appraisal under the
OGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
4.4. Adjustments to Prevent Dilution. In the event that the Company changes
the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, or Parent changes the number of shares of Parent
Common Stock or securities convertible or exchangeable into or exercisable for
shares of Parent Common Stock, issued and outstanding prior to the Effective
Time as a result of a reclassification, stock split (including a reverse
split), stock dividend or distribution, recapitalization, merger, subdivision,
issuer tender or exchange offer, or other similar transaction, the Merger
Consideration shall be equitably adjusted.
4.5. Treatment of Warrants and WH Options. In consideration of the parties'
respective agreements to consummate the Transactions, the Company, Parent and
Merger Sub hereby agree as follows:
(a) Pursuant to the Share Repurchase Agreement, at the Effective Time, the
Warrants (as hereinafter defined) shall be cancelled and the Warrant Agreement
(as hereinafter defined) shall be terminated.
(b) Pursuant to that certain letter agreement, dated the date hereof,
between the Company and the holder of the WH Options (the "Option Termination
Agreement"), the WH Options shall be terminated on the earliest to
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occur of (i) the acceptance by Merger Sub of Shares for payment in the Offer,
or (ii) the Effective Time, in exchange for the payment by the Company to such
holder of $1,500,000 in cash.
4.6. Treatment of the Debentures. The Company's 8% Convertible Subordinated
Debentures due October 1, 2006 (the "Debentures") shall be treated as set
forth in Section 6.13.
4.7. NSC Spinoff. Concurrently with the acceptance by Merger Sub of Shares
for payment in the Offer, the Company shall pay a pro rata taxable
distribution (the "NSC Distribution"), to holders of record of the Shares as
of the close of business on the date immediately prior to the date Merger Sub
accepts Shares for payment in the Offer, of all of the shares of common stock,
par value $0.01 per share, of NSC Corporation held by the Company in a manner
reasonably satisfactory to Parent, and the Offer Documents shall not contain
any terms or conditions requiring holders of Shares to deliver NSC Corporation
shares to Parent. All corporate action on the part of the Company necessary to
effect the NSC Distribution shall be taken prior to the date on which Merger
Sub accepts Shares for payment pursuant to the Offer. The NSC Distribution is
an integral part of the plan of acquisition of the Company by Parent, with the
result that for federal income tax purposes the NSC Distribution will be
treated as a redemption of a pro rata portion of the Shares held by each
holder of Shares under the principle of Zenz v. Quinlivan, 213 F.2d 914 (6th
Cir. 1954).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. Except as set forth in
the corresponding sections or subsections of the disclosure letter delivered
to Parent by the Company on or prior to entering into this Agreement (the
"Company Disclosure Letter"), the Company hereby represents and warrants to
Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and
is qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the ownership or operation of its properties or
conduct of its business requires such qualification, except where any failure
to be so qualified or in good standing, individually or when taken together
with all other such failures, is not reasonably likely to have a Company
Material Adverse Effect (as defined below). The Company has made available to
Parent a complete and correct copy of the Company's and its Subsidiaries'
articles or certificates of incorporation and by-laws or regulations, each as
amended to the date hereof. The Company's and its Subsidiaries' articles or
certificates of incorporation and by-laws or regulations so delivered are in
full force and effect.
As used in this Agreement, the term (i) "Subsidiary" means, with respect to
the Company, Parent or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by
one or more of its respective Subsidiaries or by such party and any one or
more of its respective Subsidiaries, and (ii) "Company Material Adverse
Effect" means a material adverse effect on the financial condition,
properties, business or results of operations of the Company and its
Subsidiaries taken as a whole; provided, however, that to the extent that any
such effect results directly from the public announcement of the transactions
contemplated by this Agreement or actions taken by Parent or its Subsidiaries
after the date of this Agreement, such effect shall not be considered when
determining if a Company Material Adverse Effect has occurred.
(b) Capital Structure. The authorized capital stock of the Company consists
of 50,000,000 Shares, of which 27,554,547 Shares were outstanding as of the
close of business on January 14, 1998, 1,000,000 shares of
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Class A Preferred Stock, par value $10.00 per share, of which no shares were
outstanding as of the date of this Agreement, and 1,000,000 shares of Class B
Preferred Stock, par value $10.00 per share, of which no shares were
outstanding as of the date of this Agreement. All of the outstanding Shares
have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no Shares or shares of Class A Preferred Stock
or Class B Preferred Stock reserved for issuance, except that, as of January
14, 1998, there were 4,950,000 Shares reserved for issuance pursuant to the
Company's 1986 Stock Option Plan, Incentive Stock Plan and Nonqualified Stock
Option Plan for Directors, and Shares having a maximum aggregate offering
price of $2,400,000 reserved for issuance pursuant to the Company's Directors'
Deferred Fee Plan (such plan, collectively with such 1986 Stock Option Plan,
Incentive Stock Plan and Nonqualified Stock Option Plan for Directors, the
"Stock Plans"), 700,000 Shares subject to issuance upon exercise of the
warrants (the "Warrants") issued under the Warrant Agreement, dated May 30,
1995, among the Company, WMX and Rust International Inc., 1,000,000 Shares
subject to issuance upon exercise of the options set forth in the First Option
Agreement and Second Option Agreement, each dated as of March 28, 1995,
between the Company and H. Wayne Huizenga (the "WH Options"), and 2,395,834
Shares subject to issuance pursuant to the Debentures. The Company Disclosure
Letter contains a correct and complete list of each outstanding option to
purchase Shares under the Stock Plans (each a "Company Option"), including the
holder (each of whom is a current or former director, officer or employee of
the Company or its Subsidiaries), date of grant, exercise price and number of
Shares subject thereto. Each of the outstanding shares of capital stock or
other securities of each of the Company's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and, except for directors'
qualifying shares, owned by a direct or indirect wholly owned subsidiary of
the Company, free and clear of any lien, pledge, security interest, claim or
other encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities
of the Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Except for the Warrants, the WH Options and
the Debentures, the Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter ("Voting Debt"). The Company is
not the beneficial owner of any equity securities, except shares of capital
stock of the Company's Subsidiaries.
(c) Corporate Authority; Approval and Fairness. (i) The Company has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate, subject only to adoption of this Agreement by the
holders of a majority of the outstanding Shares (the "Company Requisite
Vote"), the Merger. This Agreement is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(ii) The board of directors of the Company has received the opinion of its
financial advisor, BT Alex. Brown Incorporated, to the effect that the
aggregate consideration to be received by the holders of the Shares in the
Offer, the Merger and the NSC Distribution is fair from a financial point of
view to such holders.
(d) Governmental Filings; No Violations. (i) Other than the filings and/or
notices (A) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, (B) to comply with state securities or
"blue sky" laws, including, without limitation, the filing required by Section
1707.041 of the Ohio Revised Code, and (C) required to be made with the NYSE,
no notices, reports or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any governmental
or regulatory authority, agency, commission, body or other governmental entity
(each, a
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"Governmental Entity"), in connection with the execution and delivery of this
Agreement by the Company and the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the ability
of the Company to consummate transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the Merger and the
other transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the articles of incorporation or
the regulations of the Company or the comparable governing instruments of any
of its Subsidiaries, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation reasonably likely to result in payments made by any party of
$1,000,000 or more in any calendar year and not otherwise terminable by the
other party thereto on 90 days' or less notice ("Contracts") binding upon the
Company or any of its Subsidiaries or any Law (as defined in Section 5.1(i))
or governmental or non- governmental permit or license to which the Company or
any of its Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any such Contract, except, in the case of
clause (B) or (C) above, for any breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect or prevent, materially delay
or materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Section 5.1(d) of the Company Disclosure
Letter sets forth, to the knowledge of the executive officers of the Company,
a correct and complete list of Contracts of the Company and its Subsidiaries
pursuant to which consents or waivers are or may be required prior to
consummation of the transactions contemplated by this Agreement (whether or
not subject to the exception set forth with respect to clauses (B) and (C)
above).
(e) Company Reports; Financial Statements. The Company has delivered to
Parent each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1996, including (i) the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, (ii) the
Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997, and September 30, 1997, and (iii) the Company's two Current
Reports on Form 8-K dated June 17, 1997, each in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC (collectively,
including any such reports filed subsequent to the date hereof, the "Company
Reports"). As of their respective dates, the Company Reports did not, and any
Company Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related
notes and schedules) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of income and of cash flows included in or
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results of
operations, retained earnings and changes in financial position, as the case
may be, of the Company and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to notes and normal year-end
audit adjustments that will not be material in amount or effect), in each case
in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except as may be noted
therein.
(f) Absence of Certain Changes. Except as disclosed in the Company Reports
filed prior to the date hereof, and except for the NSC Distribution and the
Share Repurchase and the transactions incident thereto, since September 30,
1997 the Company and its Subsidiaries have conducted their respective
businesses only in, and have not engaged in any material transaction other
than according to, the ordinary and usual course of such businesses and there
has not been (i) any change in the financial condition, properties, business
or results of operations of the Company and its Subsidiaries or any
development or combination of developments of which
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the executive officers of the Company have knowledge that, individually or in
the aggregate, has had or is reasonably likely to have a Company Material
Adverse Effect; (ii) any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or otherwise used
by the Company or any of its Subsidiaries, whether or not covered by
insurance; (iii) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company, except for
dividends or other distributions on its capital stock publicly announced prior
to the date hereof; or (iv) any change by the Company in accounting
principles, practices or methods. Since September 30, 1997, except as provided
for herein or as disclosed in the Company Reports filed prior to the date
hereof, there has not been any increase in the compensation payable or that
could become payable by the Company or any of its Subsidiaries to any of their
respective officers or any amendment of any of the Compensation and Benefit
Plans other than increases or amendments in the ordinary course of business.
(g) Litigation and Liabilities. Except as disclosed in the Company Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of the Company,
threatened against the Company or any of its Subsidiaries or (ii) obligations
or liabilities of the Company or any of its Subsidiaries, whether or not
accrued, contingent or otherwise and whether or not required to be disclosed,
including those relating to matters involving any Environmental Law (as
defined in Section 5.1(j)), or any other facts or circumstances of which the
executive officers of the Company have knowledge that could result in any
claims against, or obligations or liabilities of, the Company or any of its
Subsidiaries, except for those that are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
(h) Employee Benefits.
(i) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, directors, former employees or former directors of the
Company and its Subsidiaries (the "Compensation and Benefit Plans") and any
trust agreement or insurance contract forming a part of such Compensation and
Benefit Plans has been made available to Parent prior to the date hereof. The
Compensation and Benefit Plans are listed in Section 5.1(h) of the Company
Disclosure Letter and any "change of control" or similar provisions therein
are specifically identified in Section 5.1(h) of the Company Disclosure
Letter.
(ii) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect: (w)
all Compensation and Benefit Plans are in compliance with all applicable law,
including the Internal Revenue Code of 1986, as amended (the "Code") and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"); (x)
each Compensation and Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter; (y) as of the date
hereof, there is no pending or, to the knowledge of the executive officers of
the Company, threatened material litigation relating to the Compensation and
Benefit Plans; and (z) neither the Company nor any of its Subsidiaries has
engaged in a transaction with respect to any Compensation and Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject the Company or any of its Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by the Company or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any entity
which is considered one employer with the Company under Section 4001 of ERISA
or Section 414 of the Code (an "ERISA Affiliate"), except for such instances
as are
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not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. The Company and its Subsidiaries have not incurred
and do not expect to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E to Title IV of ERISA that would have,
individually or in the aggregate, a Company Material Adverse Effect. No notice
of a "reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof or will be required to be filed in connection
with the transactions contemplated by this Agreement.
(iv) The consummation of the Merger and the other transactions contemplated
by this Agreement will not (x) entitle any employees of the Company or its
Subsidiaries to severance pay, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans or (z) result in any breach or violation of, or
a default under, any of the Compensation and Benefit Plans.
(v) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect: (x)
no compensation payable by the Company or its Subsidiaries to any of its
employees under any existing Compensation and Benefit Plan (including by
reason of the transactions contemplated hereby) will be subject to
disallowance under Section 162(m) of the Code; and (y) any amount that could
be received (whether in cash or property or the vesting of property) by any
employee, officer, director or independent contractor of the Company or any of
its Subsidiaries who is a "disqualified individual" (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under any employment
arrangement would not be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code).
(vi) Except as specifically identified in Section 5.1(h) of the Company
Disclosure Letter, no Compensation and Benefit Plan provides or will provide
welfare benefits to former employees of the Company or any or its Subsidiaries
except as required under Code Section 4980B.
(i) Compliance with Laws; Permits. Except as set forth in the Company
Reports filed prior to the date hereof, the businesses of each of the Company
and its Subsidiaries have not been, and are not being, conducted in violation
of any federal, state, local or foreign law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity (collectively,
"Laws"), except for violations or possible violations that, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect or prevent or materially burden or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. No
material change is required in the Company's or any of its Subsidiaries'
processes, properties or procedures in connection with any such Laws, and the
Company has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date
hereof. The Company and its Subsidiaries each has all permits, licenses,
trademarks, patents, trade names, copyrights, service marks, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its business as presently conducted except
those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to
consummate the Merger and the other transactions contemplated by this
Agreement.
(j) Environmental Matters. Except as disclosed in the Company Reports and
except for such instances as would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect: (i) the
properties currently owned or operated by the Company and its Subsidiaries are
in compliance with all applicable Environmental Laws; (ii) the properties
currently owned or operated by the Company or any of its Subsidiaries are not
the subject of any pending or, to the knowledge of the executive officers of
the Company, threatened investigation or notice from any Governmental Entity
alleging the violation of any applicable Environmental Law; (iii) the Company
and its Subsidiaries have not received any notice of violation concerning the
operation of the business that has not been resolved; (iv) neither the Company
nor any Subsidiary is currently
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subject to any court order, administrative order or consent decree in
connection with any Environmental Law; (v) to the knowledge of the executive
officers of the Company, the properties currently owned or operated by the
Company or any of its Subsidiaries have not been used for the disposal of
Hazardous Substances; (vi) to the knowledge of the executive officers of the
Company, the properties currently owned or operated by the Company and its
Subsidiaries have not had any emissions or discharges of any Hazardous
Substances except as permitted under applicable Environmental Laws; (vii) the
properties currently owned or operated by the Company or any of its
Subsidiaries possess all material permits, licenses, authorizations and
approvals required under applicable Environmental Laws with respect to the
present conduct of the business; (viii) there are no circumstances that would
reasonably be expected to subject the Company or any of its Subsidiaries to
liability under any Environmental Law for the assessment, cleanup, response or
removal of any Hazardous Substance at any location; and (ix) in the 12 months
prior to the date of this Agreement, the Company and its Subsidiaries have
substantially complied at all times with the terms and conditions contained in
the "Waste Handling Activities" Section of the Company's June 1997 Contracts
Manual. As used herein the term "Environmental Law" means any federal, state
or local law, statute, ordinance, rule, regulation, code, license, permit,
order, decree or injunction enacted for the protection of the environment,
(including air, water, soil and natural resources) or otherwise regulating the
use, storage, handling, release or disposal of any hazardous or toxic
substance and the term "Hazardous Substance" means any hazardous substance
within the meaning of 101(14) of CERCLA, 42 U.S.C. (S) 9601(14) or any other
substance listed, defined, designated or classified as hazardous, toxic or
radioactive pursuant to any applicable Environmental Law.
(k) Taxes. Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect: (i)
The Company and its subsidiaries have filed completely and correctly in all
material respects all Tax Returns which are required by all applicable laws to
be filed by them, and have paid, or made adequate provision for the payment
of, all material Taxes which have or may become due and payable pursuant to
said Tax Returns and all other Taxes, governmental charges and assessments
received to date other than those Taxes being contested in good faith for
which adequate provision has been made on the most recent consolidated balance
sheet of the Company set forth in the Company Reports. The Tax Returns of the
Company and its Subsidiaries have been prepared, in all material respects, in
accordance with all applicable laws and generally accepted principles
applicable to taxation consistently applied; (ii) all material Taxes which the
Company and its Subsidiaries are required by law to withhold and collect have
been duly withheld and collected, and have been paid over, in a timely manner,
to the proper taxing authorities to the extent due and payable; (iii) the
Company and its Subsidiaries have not executed any waiver to extend, or
otherwise taken or failed to take any action that would have the effect of
extending, the applicable statute of limitations in respect of any Tax
liabilities of the Company or any of its Subsidiaries for the fiscal years
prior to and including the most recent fiscal year; (iv) neither the Company
nor any of its Subsidiaries is a "consenting corporation" within the meaning
of Section 341(f) of the Code; (v) the Company has at all times been taxable
as a Subchapter C corporation under the Code; (vi) the Company has never been
a member of any consolidated group (other than with the Company and its
Subsidiaries) for Tax purposes; (vii) the Company is not a party to any tax
sharing agreement or arrangement, other than with its Subsidiaries; (viii) no
liens for Taxes exist with respect to any of the assets or properties of the
Company, except for statutory liens for Taxes not yet due or payable or that
are being contested in good faith; (ix) all of the U.S. Federal income Tax
Returns filed by or on behalf of each of the Company and its Subsidiaries have
been examined by and settled with the Internal Revenue Service, or the statute
of limitations with respect to the relevant Tax liability expired, for all
taxable periods through and including the period ending on the date on which
the Effective Time occurs; (x) all Taxes due with respect to any completed and
settled audit, examination or deficiency litigation with any taxing authority
have been paid in full; (xi) there is no audit, examination, deficiency, or
refund litigation pending with respect to any Taxes and during the past three
years no taxing authority has given written notice of the commencement of any
audit, examination or deficiency litigation, with respect to any Taxes; (xii)
neither the Company nor any of its Subsidiaries is bound by any currently
effective private ruling, closing agreement or similar agreement with any
taxing authority relating to a material amount of Taxes; (xiii) except with
respect to like-kind exchanges pursuant to Section 1031 of the Code, the
Company shall not be required to include in a taxable period ending after the
Effective Time, any taxable income attributable to income that economically
accrued in a prior taxable period as
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a result of Section 481 of the Code, the installment method of accounting or
any comparable provision of state or local Tax law; (xiv) (A) no material
amount of property of the Company is "tax exempt property" within the meaning
of Section 168(h) of the Code, (B) no material amount of assets of the Company
is subject to a lease under Section 7701(h) of the Code, and (C) the Company
is not a party to any material lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect prior to the date of
enactment of the Tax Equity and Fiscal Responsibility Act of 1982; and (xv)
immediately following the Merger, the Company will not have any material
amount of income or gain that has been deferred under Treasury Regulation
Section 1.1502-13, or any material excess loss account in a Subsidiary under
Treasury Regulation Section 1.1502-19.
As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") includes all federal, state, local
and foreign income, profits, franchise, gross receipts, environmental, customs
duty, capital stock, severances, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production,
value added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(l) Labor Matters. Neither the Company nor any of its Subsidiaries is, as of
the date hereof, a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is the Company or any of its
Subsidiaries the subject of any material proceeding asserting that the Company
or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization
nor, except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, is there pending or, to
the knowledge of the executive officers of the Company, threatened, any
material labor strike, dispute, walk-out, work stoppage, slow-down or lockout
involving the Company or any of its Subsidiaries.
(m) Takeover Statutes. Assuming the accuracy of Parent's representations and
warranties contained in Section 5.2(n), the board of directors of the Company
has taken all necessary action so that no "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation
(including the control share acquisition provisions codified in Sections
1701.831 et seq. of the OGCL and the moratorium provisions codified in
Sections 1704.02 et seq. of the OGCL (each a "Takeover Statute")) or any
applicable anti-takeover provision in the Company's articles of incorporation
or regulations is applicable to the Company, the Shares or the Transactions,
except for the filing required by Section 1707.041 of the Ohio Revised Code.
(n) Vote Requirements. The affirmative vote of the holders of a majority of
the outstanding Shares at the Company Meeting to approve this Agreement and
the Merger is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve or adopt this Agreement and the
transactions contemplated hereby.
(o) Information Supplied. None of the information supplied or to be supplied
by the Company specifically for inclusion or incorporation by reference in (i)
the Offer Documents, at the time such documents are first published, sent or
given to the holders of Shares, and at any time they are amended or
supplemented, (ii) the Registration Statement (as defined in Section 6.6) to
be filed with the SEC by Parent in connection with the issuance of Parent
Common Stock in the Merger, at the time the Registration Statement is filed
with the SEC or at the time it becomes effective under the Securities Act, or
(iii) the Proxy Statement (as defined in Section 6.6), at the date it is first
mailed to the Company shareholders and Parent stockholders or at the time of
the Company Meeting or the Parent Meeting will contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representations and warranties are made by the Company with respect to
statements made or incorporated
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by reference therein based on information supplied by Parent or Merger Sub
specifically for inclusion or incorporation by reference in the Proxy
Statement or contained in the Parent Reports incorporated by reference in the
Offer Documents, the Registration Statement or the Proxy Statement.
(p) Available Funds. The Company has availability under the Revolving Credit
Agreement, dated as of May 31, 1995, among the Company, OHM Remediation
Services Corp., Citicorp USA, Inc., as administrative agent, Bank of America
Illinois, as issuing and paying agent, and the financial institutions listed
therein (the "Credit Agreement") to consummate the transactions contemplated
by the Share Repurchase Agreement, and has obtained all consents and approvals
to permit the transactions contemplated by the Share Repurchase Agreement, and
all consents and approvals of the lenders under the Credit Agreement required
to permit the transactions contemplated by this Agreement and the
Transactions.
(q) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement
except that the Company has employed Union Bancaire Privee International, Inc.
and BT Alex. Brown Incorporated as its financial advisors, the arrangements
with which have been disclosed to Parent prior to the date hereof.
5.2. Representations and Warranties of Parent and Merger Sub. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to the Company by Parent on or prior to entering into this Agreement
(the "Parent Disclosure Letter"), Parent and Merger Sub each hereby represents
and warrants to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of Merger Sub
consists of 1,000 shares of Common Stock, par value $0.10 per share, all of
which are validly issued and outstanding. All of the issued and outstanding
capital stock of Merger Sub is, and at the Effective Time will be, owned by
Parent, and there are (i) no other shares of capital stock or voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub
and (iii) no options or other rights to acquire from Merger Sub, and no
obligations of Merger Sub to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Merger Sub. Merger Sub has not conducted any business prior to
the date hereof and has no, and prior to the Effective Time will have no,
assets, liabilities or obligations of any nature other than those incident to
its formation and pursuant to this Agreement and the Merger and the other
transactions contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent and the
Subsidiaries of Parent listed in Section 5.2(b) of the Parent Disclosure
Letter is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and
is qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the ownership or operation of its properties or
conduct of its business requires such qualification, except where any failure
to be so qualified or in such good standing, individually or when taken
together with all other such failures, is not reasonably likely to have a
Parent Material Adverse Effect (as defined below). Parent has made available
to the Company a complete and correct copy of Parent's and its Subsidiaries'
articles or certificates of incorporation and by-laws or regulations, each as
amended to the date hereof. Parent's and its Subsidiaries' articles or
certificates of incorporation and by-laws or regulations so delivered are in
full force and effect.
As used in this Agreement, the term "Parent Material Adverse Effect" means a
material adverse effect on the financial condition, properties, business or
results of operations of the Parent and its Subsidiaries taken as a whole
provided, however, that to the extent that any such effect results directly
from the public announcement of the transactions contemplated by this
Agreement or actions taken by the Company or its Subsidiaries after the date
of this Agreement, such effect shall not be considered when determining if a
Parent Material Adverse Effect has occurred.
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(c) Capital Structure. The authorized capital stock of Parent consists of
50,000,000 shares of Parent Common Stock, of which 9,733,288 shares were
outstanding as of the close of business on January 13, 1998, 45,000 shares of
6% Cumulative Convertible Participating Preferred Stock, par value $100 per
share (the "6% Preferred Shares"), of which 45,000 shares were outstanding as
of the close of business on January 13, 1998, and 2,055,692 depositary shares,
each representing a 1/100th interest in a share of Parent's 7% Cumulative
Convertible Exchangeable Preferred Stock, par value $100 (the "7% Preferred
Shares" and, collectively with the 6% Preferred Shares, the "Parent Preferred
Shares"), of which 20,556 were outstanding as of the close of business on
January 13, 1998. All of the outstanding Parent Common Stock and Parent
Preferred Shares have been duly authorized and are validly issued, fully paid
and nonassessable. Parent has no Parent Common Stock or Parent Preferred
Shares reserved for issuance, except that, as of January 1, 1998, there were
870,253 shares of Parent Common Stock reserved for issuance pursuant to the
Parent Compensation and Benefit Plans, 5,625,000 shares of Parent Common Stock
subject to issuance upon conversion of the 6% Preferred Shares, 1,889,677
shares of Parent Common Stock subject to issuance upon conversion of the 7%
Preferred Shares and 1,889,677 shares of Parent Common Stock subject to
issuance pursuant to Parent's 7% Convertible Subordinated Debentures due 2008
(the "Parent Debentures"), 1,250,000 shares of Parent Common Stock purchasable
upon exercise of the Warrants issued November 20, 1996 to purchasers
affiliated with the Carlyle Group, 65,157 shares of Parent Common Stock
issuable pursuant to a litigation settlement and 117,915 shares of Parent
Common Stock issuable under an acquisition agreement. Each of the outstanding
shares of capital stock of each of Parent's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and, except for directors'
qualifying shares, owned by a direct or indirect wholly owned subsidiary of
Parent, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or to sell any shares of capital stock or other
securities of Parent or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of the Company or
any of its Subsidiaries, and no securities or obligation evidencing such
rights are authorized, issued or outstanding. Except for the Parent
Debentures, Parent does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
stockholders of Parent on any matter ("Parent Voting Debt").
(d) Corporate Authority.
(i) Each of the Parent and Merger Sub has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate,
subject only to any stockholder approval necessary to permit the issuance of
the shares of Parent Common Stock required to be issued pursuant to Article IV
(the "Parent Requisite Vote"), the Merger. This Agreement is a valid and
binding agreement of Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms, subject to the Bankruptcy and
Equity Exception.
(ii) The board of directors of Parent (A) has unanimously approved this
Agreement, the Offer, the Merger and the other transactions contemplated
hereby, and (B) has received the opinion of its financial advisor, Donaldson
Lufkin & Jenrette Securities Corporation, to the effect that the consideration
to be paid by Parent pursuant to this Agreement is fair to the Company from a
financial point of view.
(iii) Prior to the Effective Time and subject to obtaining the stockholder
approval contemplated by Section 6.4, Parent will have taken all necessary
corporate action to permit it to issue the number of shares of Parent Common
Stock required to be issued pursuant to Article IV. The Parent Common Stock,
when issued, will be validly issued, fully paid and nonassessable, and no
stockholder of Parent will have any preemptive right of subscription or
purchase in respect thereof. The Parent Common Stock, when issued, will be
registered under the Securities Act and Exchange Act and registered or exempt
from registration under any applicable state securities or "blue sky" laws.
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<PAGE>
(e) Governmental Filings; No Violations. (i) Other than the filings and/or
notices (A) under the HSR Act, the Securities Act and the Exchange Act, (B) to
comply with state securities or "blue sky" laws, including, without
limitation, the filing required by Section 1707.041 of the Ohio Revised Code,
and (C) required to be made with the NYSE, no notices, reports or other
filings are required to be made by Parent or Merger Sub with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by Parent or Merger Sub from, any Governmental Entity, in connection
with the execution and delivery of this Agreement by Parent and Merger Sub and
the Offer, the Merger and the other transactions contemplated hereby, except
those that the failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect or
prevent, materially delay or materially impair the ability of Parent or Merger
Sub to consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by Parent and
Merger Sub do not, and the making or consummation by Parent and Merger Sub of
the Offer, the Merger and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
certificate or by-laws of Parent and Merger Sub or the comparable governing
instruments of any of its Subsidiaries, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a lien,
pledge, security interest or other encumbrance on the assets of Parent or any
of its Subsidiaries (with or without notice, lapse of time or both) pursuant
to, any Contracts binding upon Parent or any of its Subsidiaries or any Law or
governmental or non-governmental permit or license to which Parent or any of
its Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any such Contract, except, in the case of clause (B) or (C)
above, for breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect or prevent, materially delay or materially impair the
ability of Parent or Merger Sub to consummate the transactions contemplated by
this Agreement. Section 6.2(e) of the Parent Disclosure Letter sets forth, to
the knowledge of the executive officers of Parent, a correct and complete list
of Contracts of Parent and its Subsidiaries pursuant to which consents or
waivers are or may be required prior to consummation of the transactions
contemplated by this Agreement (whether or not subject to the exception set
forth with respect to clauses (B) and (C) above).
(f) Parent Reports; Financial Statements. Parent has delivered to the
Company each registration statement, report, proxy statement or information
statement prepared by it since March 28, 1997, including (i) Parent's Annual
Report on Form 10-K for the year ended March 28, 1997, (ii) Parent's Amendment
on Form 10-K/A dated July 28, 1997, (iii) Parent's Quarterly Reports on Form
10-Q for the periods ended June 27, 1997 and September 26, 1997, (iv) Parent's
Current Reports on Form 8-K, dated January 17, 1997 and June 19, 1997, (iv)
Parent's registration statement on Form S-4 (File No. 333-32219); and (v)
Parent's Amendment No. 1 to registration statement on Form S-4 (File No. 333-
32219); each in the form (including exhibits, annexes and any amendments
thereto) filed with the SEC (collectively, including any such reports filed
subsequent to the date hereof, the "Parent Reports"). As of their respective
dates, the Parent Reports did not, and any Parent Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into the
Parent Reports (including the related notes and schedules) fairly presents, or
will fairly present, the consolidated financial position of Parent and its
Subsidiaries as of its date and each of the consolidated statements of income
and of cash flows included in or incorporated by reference into the Parent
Reports (including any related notes and schedules) fairly presents, or will
fairly present, the results of operations, retained earnings and changes in
financial position, as the case may be, of Parent and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with GAAP consistently applied
during the periods involved, except as may be noted therein.
(g) Absence of Certain Changes. Except as disclosed in the Parent Reports
filed prior to the date hereof, since September 26, 1997 Parent and its
Subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction other than according to, the ordinary and
usual course of such
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businesses and there has not been (i) any change in the financial condition,
properties, business or results of operations of Parent and its Subsidiaries
or any development or combination of developments of which the executive
officers of Parent have knowledge that, individually or in the aggregate, has
had or is reasonably likely to result in a Parent Material Adverse Effect;
(ii) any material damage, destruction or other casualty loss with respect to
any material asset or property owned, leased or otherwise used by Parent or
any of its Subsidiaries, whether or not covered by insurance; (iii) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the capital stock of Parent, except for dividends or other
distributions on its capital stock publicly announced prior to the date
hereof; or (iv) any change by Parent in accounting principles, practices or
methods.
(h) Litigation and Liabilities. Except as disclosed in the Parent Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of Parent, threatened
against Parent or any of its Subsidiaries or (ii) obligations or liabilities
of Parent or any of its Subsidiaries, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, including those
relating to matters involving any Environmental Law, or any other facts or
circumstances of which the executive officers of Parent have knowledge that
could result in any claims against, or obligations or liabilities of, Parent
or any of its Subsidiaries, except for those that are not, individually or in
the aggregate, reasonably likely to have a Parent Material Adverse Effect or
prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement.
(i) Employee Benefits.
(i) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, directors, former employees or former directors of
Parent and its Subsidiaries (the "Parent Compensation and Benefit Plans") and
any trust arrangement or insurance contract forming a part of such Parent
Compensation and Benefits Plans has been made available to the Company prior
to the date hereof. The Parent Compensation and Benefit Plans are listed in
Section 5.2(i) of the Parent Disclosure Letter and any "change of control" or
similar provision therein are specifically identified in Section 5.2(i) of the
Parent Disclosure Letter.
(ii) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect: (w)
all Parent Compensation and Benefit Plans are in compliance with all
applicable law, including the Code and ERISA; (x) each Parent Compensation and
Benefit Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Parent Pension Plan") and that is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and Parent is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter; (y) as of the date hereof, there is no pending or, to
the knowledge of the executive officers of Parent, threatened material
litigation relating to the Parent Compensation and Benefit Plans; and (z)
neither Parent nor any of its Subsidiaries has engaged in a transaction with
respect to any Parent Compensation and Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject Parent
or any of its Subsidiaries to a material tax or penalty imposed by either
Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by Parent or any Subsidiary
with respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered an ERISA Affiliate of Parent, except for such instances as are not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect. Parent and its Subsidiaries have not contributed, or been
obligated to contribute, to a multiemployer plan under Subtitle E of Title IV
of ERISA at any time since September 26, 1980, except for such instances as
are not, individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect. No notice of a
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"reportable event", within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been required to be
filed for any Parent Pension Plan or by any ERISA Affiliate within the 12-
month period ending on the date hereof or will be required to be filed in
connection with the transactions contemplated by this Agreement.
(iv) The consummation of the Merger and the other transactions contemplated
by this Agreement will not (x) entitle any employees of Parent or its
Subsidiaries to severance pay, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Parent Compensation and Benefit Plans or (z) result in any breach or violation
of, or default under, any of the Parent Compensation and Benefit Plans.
(v) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect: (x)
no compensation payable by Parent or its Subsidiaries to any of its employees
under any existing Parent Compensation and Benefit Plan (including by reason
of the transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code; and (y) any amount that could be received (whether
in cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer director
or independent contractor of Parent or any of its Subsidiaries who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment arrangement would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(vi) Except as specifically identified in Section 5.2(i) of the Parent
Disclosure Letter, no Parent Compensation and Benefit Plan provides or will
provide welfare benefits to former employees of Parent or any of its
Subsidiaries except as required under the Code.
(j) Compliance with Laws; Permits. Except as set forth in the Parent Reports
filed prior to the date hereof, the businesses of each of Parent and its
Subsidiaries have not been, and are not being, conducted in violation of any
Laws, except for violations or possible violations that, individually or in
the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect or prevent or materially burden or materially impair the ability of
Parent or Merger Sub to consummate the transactions contemplated by this
Agreement. No material change is required in Parent's or any of its
Subsidiaries' processes, properties or procedures in connection with any such
Laws, and Parent has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date
hereof. Parent and its Subsidiaries each has all permits, licenses,
trademarks, patents, trade names, copyrights, service marks, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its business as presently conducted except
those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
consummate the Merger and the other transactions contemplated by this
Agreement.
(k) Environmental Matters. Except as disclosed in the Parent Reports and
except for such instances as would not, individually or in the aggregate, be
reasonably likely to have a Parent Material Adverse Effect: (i) the properties
currently owned or operated by Parent and its Subsidiaries are in compliance
with all applicable Environmental Laws; (ii) the properties currently owned or
operated by Parent or any of its Subsidiaries are not the subject of any
pending or, to the knowledge of the executive officers of the Parent,
threatened investigation or notice from any Governmental Entity alleging the
violation of any applicable Environmental Law; (iii) Parent and its
Subsidiaries have not received any notice of violation concerning the
operation of the business that has not been resolved; (iv) neither Parent nor
any Subsidiary is currently subject to any court order, administrative order
or consent decree in connection with any Environmental Law; (v) to the
knowledge of the executive officers of Parent, the properties currently owned
or operated by Parent or any of its Subsidiaries have not been used for the
disposal of Hazardous Substances; (vi) to the knowledge of the executive
officers of Parent, the properties currently owned or operated by Parent and
its Subsidiaries have not had any emissions or discharges of any Hazardous
Substances except as permitted under applicable Environmental Laws; (vii) the
properties currently owned or operated by Parent or any of its Subsidiaries
possess all material permits, licenses,
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authorizations and approvals required under applicable Environmental Laws with
respect to the present conduct of the business; and (viii) there are no
circumstances that would reasonably be expected to subject Parent or any of
its Subsidiaries to liability under any Environmental Law for the assessment,
cleanup, response or removal of any Hazardous Substance at any location.
(l) Taxes. Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect: (i)
Parent and its Subsidiaries have filed completely and correctly in all
material respects all Tax Returns which are required by all applicable laws to
be filed by them, and have paid, or made adequate provision for the payment
of, all material Taxes which have or may become due and payable pursuant to
said Tax Returns and all other Taxes, governmental charges and assessments
received to date other than those Taxes being contested in good faith for
which adequate provision has been made on the most recent consolidated balance
sheet of Parent set forth in the Parent Reports. The Tax Returns of Parent and
its Subsidiaries have been prepared, in all material respects, in accordance
with all applicable laws and generally accepted principles applicable to
taxation consistently applied; (ii) all material Taxes which Parent and its
Subsidiaries are required by law to withhold and collect have been duly
withheld and collected, and have been paid over, in a timely manner, to the
proper taxing authorities to the extent due and payable; (iii) Parent and its
Subsidiaries have not executed any waiver to extend, or otherwise taken or
failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of Parent
or any of its Subsidiaries for the fiscal years prior to and including the
most recent fiscal year; (iv) neither Parent nor any of its Subsidiaries is a
"consenting corporation" within the meaning of Section 341(f) of the Code;
(v) Parent has at all times been taxable as a Subchapter C corporation under
the Code; (vi) Parent has never been a member of any consolidated group (other
than with Parent and its Subsidiaries) for Tax purposes; (vii) Parent is not a
party to any tax sharing agreement or arrangement, other than with its
Subsidiaries; (viii) no liens for Taxes exist with respect to any of the
assets or properties of Parent, except for statutory liens for Taxes not yet
due or payable or that are being contested in good faith; (ix) all of the U.S.
Federal Income Tax Returns filed by or on behalf of each of Parent and its
Subsidiaries have been examined by and settled with the Internal Revenue
Service, or the statute of limitations with respect to the relevant Tax
liability expired, for all taxable periods through and including the period
ending on the date on which the Effective Time occurs; (x) all Taxes due with
respect to any completed and settled audit, examination or deficiency
litigation with any taxing authority have been paid in full; (xi) there is no
audit, examination, deficiency, or refund litigation pending with respect to
any Taxes and during the past three years no taxing authority has given
written notice of the commencement of any audit, examination or deficiency
litigation, with respect to any Taxes; (xii) neither Parent nor any of its
Subsidiaries is bound by any currently effective private ruling, closing
agreement or similar agreement with any taxing authority relating to a
material amount of Taxes; (xiii) except with respect to like-kind exchanges
pursuant to Section 1031 of the Code, Parent shall not be required to include
in a taxable period ending after the Effective Time, any taxable income
attributable to income that economically accrued in a prior taxable period as
a result of Section 481 of the Code, the installment method of accounting or
any comparable provision of state or local Tax law; (xiv) (A) no material
amount of property of Parent is "tax exempt property" within the meaning of
Section 168(h) of the Code, (B) no material amount of assets of Parent is
subject to a lease under Section 7701(h) of the Code, and (C) Parent is not a
party to any material lease made pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect prior to the date of enactment
of the Tax Equity and Fiscal Responsibility Act of 1982; and (xv) immediately
following the Merger, Parent will not have any material amount of income or
gain that has been deferred under Treasury Regulation Section 1.1502-13, or
any material excess loss account in a Subsidiary under Treasury Regulation
Section 1.1502-19.
(m) Labor Matters. Neither Parent nor any of its Subsidiaries is, as of the
date hereof, a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Parent or any of its
Subsidiaries the subject of any material proceeding asserting that Parent or
any of its Subsidiaries has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization nor, except
as would not, individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect, is there
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pending or, to the knowledge of the executive officers of Parent, threatened,
any material labor strike, dispute, walk-out, work stoppage, slow-down or
lockout involving Parent or any of its Subsidiaries.
(n) Ownership of Shares. Neither Parent nor any of its Subsidiaries is the
beneficial owner (as such terms is used for purposes of Rule 13d-3 under the
Exchange Act) of any Shares.
(o) Takeover Statutes. Assuming that neither the Company nor any of its
Subsidiaries is the beneficial owner (as such term is used for purposes of
Rule 13d-3 under the Exchange Act) of any shares of Parent Common Stock or
Parent Preferred Shares, the board of directors of Parent has taken all
necessary action to be taken by Parent so that no Takeover Statute or any
applicable anti-takeover provision in the Parent's certificate of
incorporation or bylaws is applicable to Parent, the Parent Common Stock or
the Transactions, except for the filing required by Section 1707.041 of the
Ohio Revised Code.
(p) Vote Requirements. The affirmative vote of the holders of a majority of
the shares of Parent Common Stock and 6% Preferred Stock, represented in
person or by proxy and voting together as a single class at the Parent Meeting
to approve the issuance of shares of Parent Common Stock pursuant to this
Agreement, is the only vote of the holders of any class or series of Parent's
capital stock necessary in connection with the Transactions.
(q) Information Supplied. None of the information supplied or to be supplied
by Parent specifically for inclusion or incorporation by reference in (i) the
Schedule 14D-9, at the time such document is first published, sent or given to
the holders of Shares, and at any time it is amended or supplemented, (ii) the
Registration Statement (as defined in Section 6.6) to be filed with the SEC by
Parent in connection with the issuance of Parent Common Stock in the Merger,
at the time the Registration Statement is filed with the SEC or at the time it
becomes effective under the Securities Act, or (iii) the Proxy Statement (as
defined in Section 6.6), at the date it is first mailed to the Company
shareholders and Parent stockholders or at the time of the Company Meeting or
the Parent Meeting will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Registration Statement will comply as
to form in all material respects with the requirements of the Securities Act
and the rules and regulations thereunder, except that no representations and
warranties are made by Parent with respect to statements made or incorporated
by reference therein based on information supplied by the Company specifically
for inclusion or incorporation by reference in the Registration Statement or
the Proxy Statement or contained in the Company Reports incorporated by
reference in the Schedule 14D-9, the Registration Statement or the Proxy
Statement.
(r) Available Funds. Parent has available working capital and a commitment
from one or more financial institutions that, when funded in accordance with
its terms, will in the aggregate provide to Parent the funds necessary to
consummate the Offer and the Merger and to pay all fees, expenses and costs in
connection with its negotiation, execution and performance of this Agreement.
(s) Brokers and Finders. Neither Parent nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the Merger
or the other transactions contemplated by this Agreement, except that Parent
has employed Donaldson, Lufkin & Jenrette Securities Corporation as its
financial advisor, the arrangements with which have been disclosed in writing
to the Company prior to the date hereof.
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ARTICLE VI
COVENANTS
6.1. Company Interim Operations. The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the date
on which Purchaser Representatives are elected to the Board of Directors of
the Company in accordance with Section 1.3(a) hereof and represent at least a
majority of such directors (unless Parent or the Company, as the case may be,
shall otherwise approve in writing, which approval shall not be unreasonably
withheld or delayed, except as otherwise expressly contemplated by this
Agreement and except as set forth in Section 6.1 of the Company Disclosure
Letter):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course consistent with past practice and it and its
Subsidiaries shall use all reasonable best efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) it shall not (i) issue, sell, pledge, dispose of or encumber any capital
stock in any of its Subsidiaries; (ii) amend the articles or certificate of
incorporation or regulations or bylaws of the Company or any of its
Subsidiaries; (iii) split, combine or reclassify the outstanding shares of
capital stock of the Company or any of its Subsidiaries; (iv) declare, set
aside or pay any dividend payable in cash, stock or property in respect of any
capital stock other than dividends from its direct or indirect wholly-owned
Subsidiaries; or (v) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any of its Subsidiaries to purchase or otherwise acquire,
except in connection with the Stock Plans or pursuant to the Share Repurchase
Agreement, any shares of its capital stock or any securities convertible into
or exchangeable or exercisable for any shares of its capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any Voting Debt or any other property or assets (other than Shares issuable
pursuant to options outstanding on the date hereof under the Stock Plans or
upon conversion of the Debentures or exercise of the Warrants); (ii) other
than in the ordinary and usual course of business consistent with past
practice, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
of or encumber any other property or assets (including capital stock of any of
its Subsidiaries) or incur or modify any indebtedness or other liability in
excess of $1,000,000; (iii) make any loans or advances to any person, except
to employees in the ordinary course of business consistent with past practice;
or (iv) make or authorize or commit for any capital expenditures other than in
the ordinary and usual course of business consistent with past practice or in
amounts less than $200,000 individually and $1,000,000 in the aggregate or, by
any means, make any acquisition of, or investment in, assets or stock of any
other Person or entity;
(d) neither it nor any of its Subsidiaries shall terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plans or increase the salary, wage, bonus
or other compensation of any employees except increases occurring in the
ordinary and usual course of business consistent with past practice (which
shall include normal periodic performance reviews and related compensation and
benefit increases) or enter into any new employment or severance agreement
with any director, officer or other employee of the Company or of any of its
Subsidiaries except (i) with respect to the individuals listed in Section
6.1(d) of the Company Disclosure Letter or (ii) with respect to the renewal of
any existing agreement by operation of its terms in the ordinary and usual
course of business consistent with past practice;
(e) neither it nor any of its Subsidiaries shall settle or compromise any
material claims or litigation, except for settlements or compromises made in
the ordinary course of business consistent with past practice involving
payments by the Company or any of its Subsidiaries not in excess of $200,000
individually or $1,000,000 in the aggregate, or, except in the ordinary and
usual course of business consistent with past practice, modify, amend or
terminate any of its material Contracts or waive, release or assign any
material rights or claims;
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(f) neither it nor any of its Subsidiaries shall make any Tax election or
agree to an extension of a statute of limitations for any assessments of
federal income tax or material state corporate income or franchise tax or
permit any insurance policy naming it as a beneficiary or loss-payable payee
to be canceled or terminated except in the ordinary and usual course of
business;
(g) neither it nor its Subsidiaries shall take any action, other than as
required by GAAP, to change accounting policies or procedures or cash
maintenance policies or procedures;
(h) neither it nor its Subsidiaries shall take any action that would be
reasonably likely to impede or delay the Transactions or adversely affect the
parties' ability to consummate the Transactions;
(i) neither it nor its Subsidiaries shall take any action that would be
reasonably likely to diminish the value to the Company of the net operating
losses set forth in the September 30, 1997 financial statements included in
the Company Reports, except for the consummation of the Transactions; and
(j) neither it nor any of its Subsidiaries shall authorize or enter into an
agreement to do any of the foregoing.
6.2. Parent Interim Operations. Parent covenants and agrees as to itself and
its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless the Company shall otherwise approve in writing, which approval shall
not be unreasonably withheld or delayed, and except as otherwise expressly
contemplated by this Agreement or in Section 6.2 of the Parent Disclosure
Letter):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course consistent with past practice and it and its
Subsidiaries shall use all reasonable best efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) it shall not (i) amend the articles or certificate of incorporation or
regulations or bylaws of Parent or any of its Subsidiaries; (ii) split,
combine or reclassify the outstanding shares of capital stock of Parent or any
of its Subsidiaries; or (iii) declare, set aside or pay any dividend payable
in cash, stock or property in respect of any capital stock other than
dividends from its direct or indirect wholly owned Subsidiaries and other than
regular quarterly cash or "payment in kind" dividends on the Parent Preferred
Shares;
(c) neither it nor its Subsidiaries will take any action that would be
reasonably likely to impede or delay the Transactions or adversely affect the
parties' ability to consummate the Transactions; and
(d) neither it nor any of its Subsidiaries will authorize or enter into an
agreement to do any of the foregoing.
6.3. Acquisition Proposals. The Company agrees that neither it nor any of
its Subsidiaries nor any officer, director or employee of the Company or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly through another person, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal
or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
any of its Subsidiaries (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal"). The Company further agrees that neither it
nor any of its Subsidiaries nor any of their respective officers, directors or
employees shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly through another person, engage or participate in
any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement
an Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent either the Company or its Board of Directors at any
time prior to the purchase of Shares pursuant to the Offer from (A) complying
with Rule 14e-2 promulgated under the Exchange
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Act with regard to an Acquisition Proposal; (B) providing information in
response to a request therefor by a Person who has made an unsolicited bona
fide written Acquisition Proposal if the Board of Directors receives from the
Person so requesting such information an executed confidentiality agreement on
terms substantially similar to those contained in the Confidentiality
Agreement (as defined in Section 9.7); (C) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal; or (D) recommending such an Acquisition Proposal to the
shareholders of the Company, as the case may be, if and only to the extent
that, in each such case referred to in clause (B), (C) or (D) above, the Board
of Directors of the Company (x) determines in good faith, taking into
consideration the advice of outside legal counsel, that such action is likely
to be required in order for its members to comply with their fiduciary duties
under applicable law and (y) determines in good faith, after consultation with
its financial advisor, that such Acquisition Proposal is reasonably likely to
be consummated, taking into account all legal, financial and regulatory
aspects of the proposal and the person making the proposal and would, if
consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated
by this Agreement (any such Acquisition Proposal being referred to herein as a
"Superior Proposal"). The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
The Company agrees that it will take the necessary steps to promptly inform
the individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.2 and in the Confidentiality
Agreement. The Company will notify Parent as promptly as reasonably
practicable (and in any event not later than one business day after an inquiry
or proposal is made) if any such inquiries or proposals (including the
identity of the party making such inquiry or proposal and the terms thereof)
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, the
Company or such representatives.
6.4. Meeting of the Company's Shareholders. The Company will take,
consistent with applicable law and the Company's articles of incorporation and
regulations, all action necessary to convene a meeting of holders of Shares
(the "Company Meeting") as promptly as practicable to consider and vote upon
the adoption of this Agreement. The Board of Directors of the Company shall
recommend such approval and the Company shall take all lawful action to
solicit such approval; provided, however, that if the Board of Directors of
the Company determines in good faith, taking into consideration the advice of
outside legal counsel, that not recommending or soliciting such approval is
likely to be required in order for its members to comply with their fiduciary
duties under applicable law, then any failure by the Board of Directors of the
Company to recommend or solicit such approval shall not constitute a breach of
this Agreement. At any such meeting of the Company, Parent and Merger Sub
shall cause all of the Shares acquired in the Offer and any other Shares then
owned by the Parent Companies to be voted in favor of this Agreement.
6.5. Meeting of Parent's Stockholders. If approval of the issuance of shares
of Parent Common Stock is required under the rules of the NYSE, Parent will
take, consistent with applicable law and its certificate of incorporation and
bylaws, all action necessary to convene a meeting of its shareholders (the
"Parent Meeting") as promptly as practicable to consider and vote upon such
issuance. The Board of Directors of Parent shall recommend such approval and
Parent shall take all lawful action to solicit such approval; provided,
however, that if the Board of Directors of Parent determines in good faith,
taking into consideration the advice of outside legal counsel, that not
recommending or soliciting such approval is likely to be required in order for
its members to comply with their fiduciary duties under applicable law, then
any failure by the Board of Directors of Parent to recommend or solicit such
approval shall not constitute a breach of this Agreement.
6.6. Proxy Statement; Registration Statement. As promptly as practicable
following the date of this Agreement, the Company and Parent shall prepare and
file with the SEC under the Securities Act and the Exchange Act and shall use
all reasonable efforts to have cleared by the SEC, a proxy
statement/prospectus or information statement/prospectus, as appropriate (the
"Proxy Statement"), with respect to the Company Meeting and/or the Parent
Meeting, including a registration statement (together with any amendments
thereto, the "Registration Statement") for the purpose of registering the
shares of Parent Common Stock to be issued in connection with the Merger. As
promptly as practicable after the Proxy Statement has been cleared by the SEC
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and the Registration Statement has been declared effective, the Company and
Parent shall mail the Proxy Statement to their respective shareholders as of
the record date for the Company Meeting or the Parent Meeting, as the case may
be. Parent shall take such action as may be required to be taken under
applicable state securities or "blue sky" laws in connection with issuance of
the shares of Parent Common Stock to be issued in connection with the Merger;
provided that Parent shall not be required to become qualified as a foreign
corporation in any jurisdiction. The Proxy Statement shall contain the
recommendation of the Board of Directors of the Company in favor of and
adoption of this Agreement; provided, however, that if the Board of Directors
of the Company determines in good faith, taking into consideration the advice
of outside legal counsel, that for the Proxy Statement not to contain such
recommendation is likely to be required in order for its members to comply
with their fiduciary duties under applicable law, then any failure of the
Proxy Statement to contain such recommendation shall not constitute a breach
of this Agreement.
6.7. Filings; Other Action; Notification. (a) Subject to the terms and
conditions herein provided, the Company and Parent shall promptly make their
respective filings and thereafter make any other required submissions under
(i) the HSR Act, (ii) Section 1707.041 of the Ohio Revised Code, and (iii) the
other regulatory filings necessary or appropriate in connection with the
Offer, the Merger and the other transactions contemplated hereby. The Company
and Parent shall cooperate with each other and use (and shall cause their
respective Subsidiaries to use) their respective best efforts to take or cause
to be taken all actions, and do or cause to be done all things, necessary,
proper or advisable on its part under this Agreement and applicable Laws to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including preparing and
filing as promptly as practicable all documentation to effect all necessary
notices, reports and other filings and to obtain as promptly as practicable
all consents, registrations, approvals, permits and authorizations necessary
or advisable to be obtained from any third party and/or any Governmental
Entity in order to consummate the Offer, the Merger or any of the other
transactions contemplated by this Agreement; provided, however, that nothing
in this Section 6.7 shall require Parent to offer to, or agree to, sell or
hold separate and agree to sell, before or after the Effective Time, any
material assets, businesses or any interest in any material assets or
businesses of Parent, the Company or any of their respective affiliates (or to
consent to any sale or agreement to sell by the Company of any of its material
assets or businesses), or to agree to any material change in or restriction on
the operations of any such assets or businesses, or to require, or be
construed to require, an offer or agreement that would, in the reasonable
judgment of Parent, be likely to have a material adverse effect on the
anticipated financial condition, properties, business or results of operations
of the Parent and its Subsidiaries after the Merger, taken as a whole in order
to obtain any necessary or advisable consent, registration, approval, permit
or authorization from any Governmental Entity. Subject to applicable laws
relating to the exchange of information, Parent and the Company shall have the
right to review in advance, and to the extent practicable each will consult
the other on, all the information relating to Parent or the Company, as the
case may be, and any of their respective Subsidiaries, that appear in any
filing made with, or written materials submitted to, any third party and/or
any Governmental Entity in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the Company and
Parent shall act reasonably and as promptly as practicable.
(b) The Company and Parent each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Transactions or any statement,
filing, notice or application made by or on behalf of Parent, the Company or
any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Offer, the Merger or the other
transactions contemplated by this Agreement.
(c) The Company and Parent each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any
of its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Transactions.
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(d) Except as required by applicable law and except as expressly
contemplated by this Agreement, neither the Company, on the one hand, nor
Parent or Merger Sub, on the other hand, will, and they will not permit any of
their respective Subsidiaries to, take any action a purpose of which is to
cause (i) any of the representations or warranties of such party set forth in
this Agreement that are qualified as to materiality to become untrue, (ii) any
of such representations and warranties that are not so qualified to be untrue
in any material respect, or (iii) any of the conditions to the Merger set
forth in Article VII not to be satisfied.
6.8. Access. Upon reasonable notice, and except as may otherwise be required
by applicable law, the Company and Parent each shall (and shall cause its
Subsidiaries to) afford the other's officers, employees, counsel, accountants
and other authorized representatives (collectively, "Representatives") access,
during normal business hours throughout the period prior to the Effective
Time, to its properties, books, contracts and records and, during such period,
each shall (and shall cause its Subsidiaries to) furnish promptly to the other
all information concerning its business, properties and personnel as may
reasonably be requested, provided that no investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty
made by the Company, Parent or Merger Sub, and provided, further, that the
foregoing shall not require the Company or Parent to permit any inspection, or
to disclose any information, that in the reasonable judgment of the Company or
Parent, as the case may be, would result in the disclosure of any trade
secrets of third parties or violate any of its obligations with respect to
confidentiality if the Company or Parent, as the case may be, shall have used
reasonable efforts to obtain the consent of such third party to such
inspection or disclosure. All requests for information made pursuant to this
Section shall be directed to an executive officer of the Company or Parent, as
the case may be, or such Person as may be designated by either of its
officers, as the case may be. All such information shall be governed by the
terms of the Confidentiality Agreement.
6.9. Stock Exchange Listing and De-listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
to be approved for listing on the NYSE subject to official notice of issuance,
prior to the Closing Date. The Surviving Corporation shall use its best
efforts to cause the Shares to be de-listed from the NYSE and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
6.10. Publicity. The initial press release pertaining to the transactions
contemplated by this Agreement shall be a joint press release and thereafter
the Company and Parent each shall consult with each other prior to issuing any
press releases or otherwise making public announcements with respect to the
Merger and the other transactions contemplated by this Agreement and prior to
making any filings with any third party and/or any Governmental Entity
(including any national securities exchange) with respect thereto, except as
may be required by law or by obligations pursuant to any listing agreement
with or rules of any national securities exchange.
6.11. Benefits.
(a) Stock Options. Prior to the Effective Time, each holder of a Company
Option shall be required to elect between the treatment of their Company
Options under the provisions of either paragraph (i) or paragraph (ii) below.
(i) Prior to the Effective Time, the Company shall take all corporate action
necessary to cause each Company Option, whether vested or unvested,
exercisable or unexercisable, without any action on the part of the holder
(other than an election to be treated under this paragraph) to be converted
into the right to receive an amount in cash equal to the product of (x) (1)
the excess of $11.50 over (2) the exercise price per Share subject to such
Company Option and (y) the number of Shares subject to such Company Option,
payable to the holder of such Company Option at any time during the period
commencing on the date hereof and ending immediately prior to the Effective
Time; provided, that the Company shall be entitled to withhold from such cash
payment any amounts required to be withheld by applicable law. Each Company
Option to which this paragraph applies will be cancelled and shall cease to
exist by virtue of such payment.
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(ii) (A) At the Effective Time, each Company Option, whether vested or
unvested, exercisable or unexercisable, shall be deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Company Option, a number of shares of Parent Company Stock equivalent to
the number of Shares that could have been purchased immediately prior to the
Effective Time under such Company Option multiplied by the Exchange Ratio
(without regard to any adjustment thereof and rounded up to the nearest whole
number of shares of Parent Company Stock), at a price per share of Parent
Company Stock (rounded up to the nearest whole cent) equal to (y) the
aggregate exercise price for the Shares otherwise purchasable pursuant to such
Company Option divided by (z) the Exchange Ratio (without regard to any
adjustment thereof); provided, however, that in the case of any Company Option
to which Section 422 of the Code applies, the option price, the number of
shares purchasable pursuant to such option and the terms and conditions of
exercise of such option shall be determined in accordance with the foregoing,
subject to such adjustments as are necessary in order to satisfy the
requirements of Section 424(a) of the Code. At or prior to the Effective Time,
the Company shall make all necessary arrangements with respect to the Stock
Plans to permit the assumption of the unexercised Company Options to which
this paragraph (ii) of this Section 6.11 applies by Parent.
(B) Effective at the Effective Time, Parent shall assume each Company Option
to which this paragraph (ii) of this Section 6.11 applies in accordance with
the terms of the Stock Plans under which it was issued and the stock option
agreement by which it is evidenced. As soon as practicable after the Effective
Time, Parent shall deliver to each holder of a Company Option to which
paragraph (ii) of this Section 6.11 applies appropriate notices setting forth
such holders' rights pursuant to the Stock Plans, and the agreements
evidencing the grants of such Company Options shall continue in effect on the
same terms and conditions (subject to the conversion required by this Section
6.11 after giving effect to the Merger and the assumption by Parent as set
forth above). To the extent necessary to effectuate the provisions of this
Section 6.11, Parent may deliver new or amended agreements reflecting the
terms of each Company Option assumed by Parent.
(C) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery upon exercise of Company Options assumed by
it in accordance with this Section 6.11. Promptly, but in no event later than
three business days after the Effective Time, Parent shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or
other appropriate forms), or another appropriate form, or shall cause such
Company Option to be deemed an option issued pursuant to a Parent Stock Plan
for which shares of Parent Common Stock have been previously registered
pursuant to an appropriate registration form, with respect to the Parent
Common Stock subject to such Company Options, and shall use its best efforts
to maintain the effectiveness of such registration statements (and maintain
the current status of the prospectus or prospectuses contained therein) for so
long as such Company Options remain outstanding.
(b) Employee Compensation and Benefits. (i) Parent agrees that following the
Effective Time, the employees of the Company and its Subsidiaries who are
employed by the Surviving Corporation or its Subsidiaries ("Company
Employees") shall become eligible to participate in the employee benefit plans
and arrangements maintained by Parent or its Subsidiaries ("Parent Benefit
Plans") including, without limitation, severance plans, in the same manner as
similarly situated employees of Parent. Parent or its Subsidiaries shall grant
the Company Employees credit for all service credited by the Company for
purposes of eligibility, vesting and the determination of benefits under
vacation and severance pay plans. Parent shall, and shall cause the Surviving
Corporation to, honor in accordance with their terms all employee benefit
obligations to current and former employees under the Compensation and Benefit
Plans in existence on the date hereof (including, without limitation, the
plans and agreements listed in Section 5.1(h)(i) of the Company Disclosure
Letter) and all employment or severance agreements entered into by the Company
or adopted by the board of directors of the Company prior to the Effective
Date; it being understood that nothing contained herein shall limit or
restrict the ability of Parent to modify or terminate any Compensation and
Benefit Plan, or to merge any Compensation and Benefit Plan with any other
plan, following the Effective Time.
(ii) Any pre-existing condition exclusion under any Parent Benefit Plan
providing medical or dental benefits shall be waived for any Company Employee
who, immediately prior to commencing participation in such Parent
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Benefit Plan, was participating in a Company Benefit Plan providing medical or
dental benefits and had satisfied any pre-existing condition provision under
such Company Benefit Plan. Any expenses that were taken into account under a
Company Benefit Plan providing medical or dental benefits in which the Company
Employee participated immediately prior to commencing participation in a
Parent Benefit Plan providing medical or dental benefits shall be taken into
account to the same extent under such Parent Benefit Plan, in accordance with
the terms of such Parent Benefit Plan, for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions and life-time
benefit limits.
(iii) Parent and the Company agree that, as soon as practicable following
the date hereof, for purposes of Section 5(a)(ii) of each employment agreement
entered into between the Company and the executives listed in paragraph 12 of
Section 5.1(h)(i) of the Company Disclosure Letter (collectively, the
"Employment Agreements"), Price Waterhouse, LLP, who is independent of both
Parent and the Company, will be appointed as tax counsel ("Tax Counsel") to
make all relevant determinations required by Section 5(a) of the Agreements.
It is further agreed that Tax Counsel shall take into account and consider all
information provided by the parties, including the assumptions used and the
valuations previously prepared by Ernst & Young in connection with Section
5(a) of the Employment Agreements (inclusive of the valuation of the non-
competition agreements contained in each Employment Agreement), in making his
or her determinations. The determinations of Tax Counsel shall be binding upon
the executives and the Company. All fees and expenses of Tax Counsel shall be
borne solely by the Company and the Company shall enter into any agreement
requested by Tax Counsel in connection with the performance of services under
the Employment Agreements. Parent also agrees that, effective as of the
Effective Date, Section 5(a) of the Employment Agreements will be amended in
the manner set forth in the Company Disclosure Letter.
(c) Election to Parent's Board of Directors. At the Effective Time of the
Merger, Parent shall promptly increase the size of its Board of Directors or
exercise its reasonable best efforts to secure the resignation of present
directors in order to cause Herbert A. Getz and Richard W. Pogue (the
"Nominees") to be appointed to Parent's board of directors and, subject to
fiduciary obligations under applicable law, shall use its reasonable best
efforts to cause the Nominees to be elected (or remain in office) as directors
of Parent (divided as evenly as is possible among classes of directors) at the
first annual meeting of stockholders of Parent with a proxy mailing date after
the Effective Time.
6.12. Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse the
Surviving Corporation for such charges and expenses. Except as otherwise
provided in Section 8.5, whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the Merger and the
other transactions contemplated by this Agreement shall be paid by the party
incurring such expense, except that expenses incurred in connection with the
filing fee for the Proxy Statement and the Registration Statement and printing
and mailing such documents shall be borne by Parent.
6.13. Indemnification; Directors' and Officers' Insurance. (a) From and
after the Effective Time, Parent shall indemnify and hold harmless, to the
fullest extent permitted under applicable law (and Parent shall also advance
expenses as incurred to the fullest extent permitted under applicable law,
provided the Person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Person is not
entitled to indemnification), each present and former director and officer of
the Company and its Subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or prior to
the Effective Time, including the transactions contemplated by this Agreement,
which is based in whole or in part on, or arises in whole or in part out of
the fact that such person is or was a director or officer of the Company or
any of its Subsidiaries.
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(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.13, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Parent.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Parent shall have
the right to assume the defense thereof with counsel reasonably acceptable to
the Indemnified Party and Parent shall not be liable to any Indemnified Party
for any legal expenses of other counsel thereafter incurred in connection with
the defense thereof, (ii) the Indemnified Party will cooperate in all respects
as reasonably requested by Parent in the defense of any such matter, and in
connection therewith shall be entitled to reimbursement by Parent of expenses
incurred in connection therewith, and (iii) Parent shall not be liable for any
settlement effected without its prior written consent, which consent shall not
be unreasonably withheld or delayed; provided, however, that Parent shall not
have any obligation hereunder to any Indemnified Party if a court shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnified Party in the
matter contemplated hereby is prohibited by law. If such indemnity is not
available with respect to any Indemnified Party, then Parent and the
Indemnified Party shall contribute to the amount payable in such proportion as
is appropriate to reflect relative faults and benefits.
(c) Parent and the Surviving Corporation shall maintain the Company's and
its Subsidiaries' existing officers' and directors' liability insurance ("D&O
Insurance") for a period of six years after the Effective Time so long as the
annual premium therefor is not in excess of 200% of the last annual premium
paid prior to the date hereof (the "Current Premium"); provided, however, that
if the existing D&O Insurance expires, is terminated or canceled during such
six-year period, the Surviving Corporation will use its commercially
reasonable efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium not in excess (on an annualized basis)
of 200% of the Current Premium; provided further, that, in lieu of maintaining
such existing D&O Insurance as provided above, Parent may cause coverage to be
provided under any policy maintained for the benefit of Parent or any of its
Subsidiaries, so long as the terms are no less advantageous to the intended
beneficiaries thereof than the existing D&O Insurance. In lieu of the
maintenance or purchase of such insurance by Parent or the Surviving
Corporation, the Parent or the Surviving Corporation may purchase a six-year
extended reporting period endorsement ("reporting tail coverage") under the
Company's existing directors' and officers' liability insurance coverage,
provided that the total cost of the reporting tail coverage shall not exceed
$420,000, and provided that such reporting tail coverage shall extend the
director and officer liability coverage in force as of the date hereof for a
period of six years from the Effective Time for any claims based upon, arising
out of, directly or indirectly resulting from, in consequence of, or in any
way involving wrongful acts or omissions occurring on or prior to the
Effective Time, including without limitation all claims based upon, arising
out of, directly or indirectly resulting from, in consequence of, or in any
way involving the Offer, the Merger and any and all related transactions or
related events.
(d) The provisions of this Section 6.13 are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties and their
respective heirs and estates. Nothing in this Section 6.13 shall limit in any
way any other rights to indemnification that any current or former director or
officer of the Company or any of its Subsidiaries may have by contract or
otherwise.
(e) From and after the Effective Time, the Surviving Corporation shall
fulfill, assume and honor in all respects the obligations of the Company
pursuant to the Company's articles of incorporation, regulations and any
indemnification agreement between the Company and any of the Company's
directors and officers existing and in force as of the date of this Agreement.
The Company agrees that the indemnification obligations set forth in the
Company's articles of incorporation and regulations, in each case as of the
date of this Agreement, shall survive the Merger with respect to any matter
which is based in whole or in part on, or arises in whole or in part out of
the fact that an individual is or was a director or officer of the Company or
any of its Subsidiaries prior to the Effective Time.
(f) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such
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consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then,
and in each such case, proper provisions shall be made so that the respective
successors and assigns of the Parent and the Surviving Corporation shall
assume all of the obligations set forth in this Section.
6.14. Debentures. Prior to the Effective Time, the Company and Parent shall
enter into a supplemental indenture with the Trustee (as defined in the
Debentures) pursuant to the indenture under which the Debentures were issued
to provide, among other things, that on and after the Effective Time the
Debentures will be convertible only into the Merger Consideration.
6.15. Takeover Statutes. If any Takeover Statute is or may become applicable
to the Transactions, each of Parent and the Company and its board of directors
shall grant such approvals and take such actions as are reasonably necessary
so that such transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement or by the Merger and otherwise act to
eliminate or minimize the effects of such statute or regulation on such
transactions.
6.16. Agreement of Affiliates. The Company shall deliver to Parent, prior to
the date the Registration Statement becomes effective under the Securities
Act, a letter (the "Affiliate Letter") identifying all Persons who are, or may
be deemed to be, "affiliates" of the Company for purposes of Rule 145 under
the Securities Act. The Company shall use its reasonable best efforts to cause
each such Person who is identified as an "affiliate" in the Affiliate Letter
to deliver to Parent, prior to the Effective Time, a written agreement (the
"Affiliate Agreement") in substantially the form of Annex B hereto.
6.17. Legal Opinion. The Company shall use its reasonable efforts to cause
its Ohio counsel to render to the lenders designated by Parent a (i) written
"due incorporation", "due authorization" and "enforceability" opinion with
respect to the Company, of this Agreement, the Share Repurchase Agreement and
the Option Termination Agreement, (ii) written opinion that Chapter 1704 of
the Ohio Revised Code is not applicable to the Transactions and (iii) written
"due authorization" opinion by the Company with respect to those certain
voting agreements to which the Company and certain shareholders of Parent and
the Company are parties, which opinions shall contain assumptions,
qualifications and exceptions customarily contained in legal opinions of such
firm concerning such matters and shall be limited to the laws of the State of
Ohio.
ARTICLE VII
CONDITIONS
7.1. Conditions to Obligations of Parent and Merger Sub. (a) If Merger Sub
shall have purchased Shares pursuant to the Offer, the respective obligations
of Parent and Merger Sub to consummate the Merger shall be subject to the
fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by Parent or Merger Sub, as the case may be, to the
extent permitted by applicable law:
(i) Injunction. No United States or state court or other Governmental
Entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is in effect and prohibits consummation of the transactions
contemplated by this Agreement (collectively, an "Order").
(ii) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement shall have been
initiated or threatened by the SEC.
(iii) Stockholder Approval. (1) This Agreement and the Merger shall have
been approved and adopted by the holders of a majority of the Shares, and
(2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
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(iv) NYSE Listing. The Parent Common Stock to be issued in the Merger,
upon exercise of the Company Options assumed by Parent in connection with
the Merger and the Debentures have been approved for listing, subject to
official notice of issuance, on the NYSE.
(b) If Merger Sub shall not have purchased Shares pursuant to the Offer, the
respective obligations of Parent and Merger Sub to consummate the Merger shall
be subject to the fulfilment of each of the following conditions, any or all
of which may be waived in whole or in part by Parent or Merger Sub, as the
case may be, to the extent permitted by applicable law:
(i) Representations and Warranties. The representations and warranties of
the Company set forth in this Agreement shall have been true and complete
in all material respects when made and as of the Effective Time, and Parent
shall have received a certificate of the chief executive officer and chief
financial officer of the Company to such effect.
(ii) Performance of Obligations. The Company shall have performed in all
material respects all obligations to be performed by it under this
Agreement at or prior to the Effective Time, and Parent shall have received
a certificate of the chief executive officer and chief financial officer of
the Company to such effect.
(iii) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(iv) Order. There shall be in effect no Order.
(v) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement shall have been
initiated or threatened by the SEC.
(vi) Stockholder Approval. (1) This Agreement and the Merger shall have
been approved and adopted by the holders of a majority of the Shares, and
(2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(vii) NYSE Listing. The Parent Common Stock to be issued in the Merger,
upon exercise of the Company Options assumed by Parent in connection with
the Merger and the Debentures shall have been approved for listing, subject
to official notice of issuance, on the NYSE.
7.2. Conditions to Obligations of the Company. (a) If Merger Sub shall have
purchased Shares pursuant to the Offer, the obligations of the Company to
consummate the Merger shall be subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable law:
(i) Order. There shall be in effect no Order.
(ii) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement shall have been
initiated or threatened by the SEC.
(iii) Stockholder Approval. (1) This Agreement and the Merger shall have
been approved and adopted by the holders of a majority of the Shares, and
(2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(iv) NYSE Listing. The Parent Common Stock to be issued in the Merger,
upon exercise of the Company Options assumed by Parent in connection with
the Merger and the Debentures shall have been approved for listing, subject
to official notice of issuance, on the NYSE.
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(b) If Merger Sub shall not have purchased Shares pursuant to the Offer, the
obligations of the Company to consummate the Merger shall be subject to the
fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by the Company, as the case may be, to the extent
permitted by applicable law:
(i) Representations and Warranties. The representations and warranties of
Parent set forth in this Agreement shall have been true and complete in all
material respects when made and as of the Effective Time, and the Company
shall have received a certificate of the Chief Executive Officer and chief
financial officer of Parent to such effect.
(ii) Performance of Obligations. Parent and Merger Sub shall have
performed in all material respects all obligations to be performed by them
under this Agreement at or prior to the Effective Time, and the Company
shall have received a certificate of the chief executive officer and chief
financial officer of Parent to such effect.
(iii) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(iv) Order. There shall be in effect no Order.
(v) Effectiveness of Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall
have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement shall have been
initiated or threatened by the SEC.
(vi) Stockholder Approval. (1) This Agreement and the Merger shall have
been approved and adopted by the holders of a majority of the Shares, and
(2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(vii) NYSE Listing. The Parent Common Stock to be issued in the Merger,
upon exercise of the Company Options assumed by Parent in connection with
the Merger and the Debentures shall have been approved for listing, subject
to official notice of issuance, on the NYSE.
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the expiration or termination of
the Offer, before or after the approval by holders of Shares, by the mutual
consent of Parent and the Company, by action of their respective Boards of
Directors.
8.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either Parent or the Company after June 15, 1998 if, prior thereto, Merger
Sub shall not have purchased Shares pursuant to the Offer and the Effective
Time shall not have occurred; provided, the party seeking termination shall
not have breached its obligations under this Agreement.
8.3. Termination by Parent. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the acceptance for payment of Shares
pursuant to the Offer, by action of the Board of Directors of Parent, if (x)
the Company shall have failed to comply in any material respect with any of
the covenants or agreements contained in this Agreement to be complied with or
performed by the Company at or prior to the expiration or termination of the
Offer; or (y) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent or Merger Sub its approval or
recommendation of the Offer, this Agreement or the Merger or the Board of
Directors of the Company, upon request by Parent, shall fail to reaffirm such
approval or recommendation; or (z) the condition set forth in Section
7.1(b)(i) shall be incapable of being
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satisfied prior to June 15, 1998; provided that Parent shall not have breached
its obligations under this Agreement.
8.4. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the acceptance for payment of
Shares pursuant to the Offer, by action of the Board of Directors of the
Company, (x) prior to the expiration or termination of the Offer, if (i) (A)
Parent or Merger Sub shall have failed to comply in any material respect with
any of the covenants or agreements contained in this Agreement to be complied
with or performed by Parent or Merger Sub at or prior to the expiration or
termination of the Offer, or (B) any representation or warranty of Parent or
Merger Sub set forth in this Agreement shall be inaccurate or incomplete in
any material respect when made or thereafter and remains inaccurate or
incomplete in any material respect, or (C) there shall have occurred any event
or events that, individually or in the aggregate, have or are reasonably
likely to have a Parent Material Adverse Effect, or (ii) Parent or Merger Sub
shall have failed to commence the Offer within the time required in Section
1.1; or (y) if (i) the Board of Directors of the Company receives an
unsolicited written offer with respect to a merger, consolidation or sale of
all or substantially all of the Company's assets or an unsolicited tender or
exchange offer for the Shares is commenced, and the Board of Directors of the
Company (A) determines in good faith, taking into consideration the advice of
outside legal counsel, that approval, acceptance or recommendation of such
transaction is likely to be required in order for the members of the Company's
Board of Directors to comply with their fiduciary duties under applicable law,
and (B) determines in good faith, after consultation with its financial
advisor, that such transaction is a Superior Proposal, and (ii) the Company
pays the fee required by Section 8.5(b); or (z) the condition set forth in
Section 7.2(b)(i) shall be incapable of being satisfied prior to June 15,
1998; provided that the Company shall not have breached its obligations under
this Agreement. Upon the termination of this Agreement pursuant to this
Section, Parent and Merger Sub shall immediately terminate the Offer.
8.5. Effect of Termination and Abandonment. (a) In the event of termination
of this Agreement and abandonment of the Merger pursuant to this Article VIII,
no party hereto (or any of its directors or officers) shall have any liability
or further obligation to any other party to this Agreement, except as provided
in Section 8.5(b) below and Section 9.2 and except that nothing herein will
relieve any party from liability for any breach of this Agreement.
(b) If (x)(i) after the date hereof any corporation, partnership, person,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act)
other than Parent or Merger Sub or any of their respective subsidiaries or
affiliates (collectively, a "13(d)(3) Person") shall have become the
beneficial owner of a majority or more of the outstanding Shares or any
13(d)(3) Person shall have commenced, or shall have publicly announced an
intention to commence, a bona fide tender offer or exchange offer for one
third or more of the outstanding Shares, (ii) the Share Number Condition (as
defined in Annex A) shall not have been satisfied and the Offer is terminated
without the purchase of any Shares thereunder, and (iii) within one year
following such termination, the Company shall have entered into an agreement
with respect to an Acquisition Proposal with any person or other entity other
than Parent or any Person or other entity becomes the beneficial owner of a
majority or more of the outstanding Shares, in either case at a price per
Share of $11.50 or more, or (y) Parent shall have terminated this Agreement
pursuant to Section 8.3(y), or (z) the Company shall have terminated this
Agreement pursuant to Section 8.4(y), then (if such fee has not already been
paid) the Company shall promptly, but in no event later than two days after
the date of such agreement or the effective time of such termination, as the
case may be, pay Parent a fee of $15,000,000; provided that no fee shall be
paid pursuant to this Section 8.5(b) if Parent shall have materially breached
any of its obligations hereunder. The Company acknowledges that the agreements
contained in this Section 8.5(b) are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements, Parent and
Merger Sub would not enter into this Agreement; accordingly, if the Company
fails to promptly pay the amounts due pursuant to this Section 8.5(b), and, in
order to obtain such payment, Parent or Merger Sub commences a suit which
results in a judgment against the Company for the fee set forth in this
Section 8.5(b), the Company shall pay to Parent or Merger Sub its costs and
expenses (including attorneys' fees) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Citibank, N.A. on
the date such payment was required to be made.
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ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival. This Article IX and the agreements of the Company, Parent and
Merger Sub contained in Sections 6.9 (Stock Exchange Listing and De-listing),
6.11 (Benefits), 6.12 (Expenses) and 6.13 (Indemnification; Directors' and
Officers' Insurance) shall survive the consummation of the Merger. This
Article IX, the agreements of the Company, Parent and Merger Sub contained in
Section 6.12 (Expenses), Section 8.5 (Effect of Termination and Abandonment)
and the Confidentiality Agreement shall survive the termination of this
Agreement. All other representations, warranties, covenants and agreements in
this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of applicable law,
at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party
and may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT SHALL
BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED
AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF OHIO WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby
irrevocably submit to the jurisdiction of the courts of the State of Ohio and
the Federal courts of the United States of America located in the State of
Ohio solely in respect of the interpretation and enforcement of the provisions
of this Agreement and of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or
is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in
such an Ohio State or Federal court. The parties hereby consent to and grant
any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other
papers in connection with any such action or proceeding in the manner provided
in Section 9.5 or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES,
AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
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9.6. Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent or Merger Sub:
James G. Kirk
International Technology Corporation
2790 Mosside Boulevard
Monroeville, PA 15146-2792
Telecopier: (412) 858-3978
with a copy to:
Peter F. Ziegler
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Telecopier: (213) 229-7520
if to the Company:
Steven E. Harbour
OHM Corporation
5445 Triangle Parkway, Suite 400
Norcross, Georgia 30092
Telecopier: (770) 849-3110
with a copy to:
Joseph B. Frumkin
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopier: (212) 558-3588
and a copy to:
Thomas C. Daniels
Jones Day Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telecopier: (216) 579-0212
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
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9.7. Entire Agreement; No Other Representations. This Agreement (including
any exhibits hereto), the Company Disclosure Letter, the Parent Disclosure
Letter, the Share Repurchase Agreement, the Company Voting Agreement and
Parent Voting Agreement, and the Option Termination Agreement and the
Confidentiality Agreement, dated September 25, 1997, between Parent and the
Company (the "Confidentiality Agreement") constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the
subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND
MERGER SUB NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND
EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF
OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL
ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY
OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY
DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in Section 6.13
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary
of the Company to take any action, such requirement shall be deemed to include
an undertaking on the part of the Company to cause such Subsidiary to take
such action and, after the Effective Time, on the part of the Surviving
Corporation to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
9.12. Assignment. This Agreement shall not be assignable by operation of law
or otherwise; provided, however, that Parent may designate, by written notice
to the Company, another wholly-owned direct or indirect Subsidiary to be a
Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other Subsidiary,
except that all representations and warranties made herein with respect to
Merger Sub as of the date of this Agreement shall be deemed representations
and warranties made with respect to such other Subsidiary as of the date of
such designation.
A-36
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
OHM CORPORATION
By: /s/ James L. Kirk
----------------------------------
Name: James L. Kirk
Title: Chairman, President and
Chief Executive Officer
INTERNATIONAL TECHNOLOGY CORPORATION
By: /s/ Anthony J. DeLuca
----------------------------------
Name: Anthony J. DeLuca
Title:President
IT-OHIO, INC.
By: /s/ Anthony J. DeLuca
----------------------------------
Name: Anthony J. DeLuca
Title:President
A-37
<PAGE>
ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and provided that (i) the
Share Repurchase shall have been completed subject only to the condition that
Merger Sub shall have paid for Shares pursuant to the Offer and (ii) Merger
Sub shall not be obligated to accept for payment any Shares until expiration
or termination of all applicable waiting periods under the HSR Act, Merger Sub
shall not be required to accept for payment, or may delay the acceptance for
payment for any tendered Shares, or may, subject to the terms and conditions
of the Merger Agreement, terminate or amend the Offer as to any Shares not
then accepted for payment if 13,933,000 Shares shall not have been properly
and validly tendered pursuant to the Offer and not withdrawn prior to the
expiration of the Offer (the "Share Number Condition"), or, if on or after
January 15, 1998 and prior to the time of acceptance for payment for any of
such Shares, any of the following events shall occur:
(a) the Company shall have breached or failed to perform in any material
respect its obligations, covenants or agreements under the Merger Agreement
and, with respect to any such failure that can be remedied, the failure
shall not have been remedied within five business days after Parent has
furnished the Company written notice of such failure, or any representation
or warranty of the Company set forth in the Merger Agreement shall have
been inaccurate or incomplete in any material respect when made or
thereafter shall become and remain inaccurate or incomplete in any material
respect;
(b) there shall be instituted or pending any action, litigation,
proceeding, investigation or other application (hereinafter, an "Action")
before any court of competent jurisdiction or other governmental or
regulatory authority, agency or commission in the United States (each a
"Governmental Entity") by any Governmental Entity: (i) seeking to prohibit
the consummation of the transactions contemplated by the Offer or the
Merger; (ii) seeking to prohibit, or impose any material limitations on
Parent's or Merger Sub's ownership or operation of all or a material
portion of the Company's business or assets, or to compel Parent or Merger
Sub to dispose of or hold separate all or a material portion of the
Company's business or assets; or (iii) seeking to make the acceptance for
payment of, purchase of, or repayment for, some or all of the Shares
illegal;
(c) any statute, rule, regulation, order or injunction shall be enacted,
promulgated, entered, enforced or deemed to or become applicable to the
Offer or the Merger that results in any of the consequences referred to in
clauses (i) through (iii) of paragraph (b) above;
(d) it shall have been publicly disclosed or Parent shall have otherwise
learned that any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent and its Subsidiaries or any group of which
any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 under the Exchange Act) or more than 50%
of the outstanding shares, or any person, entity or group shall have
entered into a definitive written agreement with the Company with respect
to a tender offer or exchange offer for some portion or all of the Shares
or a merger, consolidation or other business combination with or involving
the Company;
(e) there shall have occurred any event or events that, individually or
in the aggregate, have or are reasonably likely to have a Company Material
Adverse Effect;
(f) the Merger Agreement shall have been terminated by the Company or
Parent or Merger Sub in accordance with its terms or Parent or Merger Sub
shall have reached an agreement or understanding in writing with the
Company providing for a termination or amendment of the Offer or a delay in
the acceptance for payment for the Shares; or
(g) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE (other than a
shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market index),
(ii) the declaration of any banking moratorium or any suspension of
payments in respect of banks, or any limitation (whether or not mandatory)
by any Governmental Entity on, or other event materially adversely
affecting, the extension of credit by
A-38
<PAGE>
lending institutions in the United States, or (iii) a commencement of a war
or armed hostilities directly or indirectly involving the United States;
which, in the reasonable judgment of Parent and Merger Sub, in any such case,
make it inadvisable to proceed with the Offer and/or with the acceptance for
payment for Shares.
The conditions set forth in this paragraph 1 are for the sole benefit of
Parent and Merger Sub and may be asserted by Parent or Merger Sub regardless
of the circumstances giving rise to such condition or may be waived by Parent
or Merger Sub, by express and specific action to that effect, in whole or in
part at any time and from time to time in their sole discretion, except as
otherwise provided in the Merger Agreement.
A-39
<PAGE>
ANNEX B
FORM OF AFFILIATE AGREEMENT
February , 1998
International Technology Corporation
2790 Mosside Boulevard
Monroeville, Pennsylvania 15146-2792
Ladies and Gentlemen:
Reference is made to the provisions of the Agreement and Plan of Merger,
dated as of January 15, 1998 (together with any amendments thereto, the
"Merger Agreement"), among OHM Corporation, an Ohio corporation (the
"Company"), International Technology Corporation, a Delaware corporation
("Parent"), and IT-Ohio, Inc., an Ohio corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), pursuant to which, among other things,
Merger Sub will be merged with and into the Company, with the Company
continuing as the surviving corporation (the "Merger"). This agreement
constitutes the undertakings of the undersigned contemplated by Section 6.16
of the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the Company, as
such term is defined for purposes of Rule 145 ("Rule 145") promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and that the
transferability of the shares of common stock, par value $0.01 per share, of
Parent (the "Parent Common Stock") which I will receive upon the consummation
of the Merger in exchange for my shares of common stock, par value $0.10 per
share, of the Company (the "Shares") may be restricted. Nothing herein shall
be construed as an admission that I am an affiliate.
I hereby represent, warrant and covenant to Parent that:
(a) I have the full power to execute and deliver this agreement and to
make the representations and warranties herein and to perform the
obligations hereunder;
(b) I will not sell, transfer or otherwise dispose of any of the shares
of Parent Common Stock except (i) pursuant to an effective registration
statement under the Securities Act or (ii) as permitted by, and in
accordance with, Rule 145, if applicable, or another applicable exemption
under the Securities Act; and
(c) I will not exercise appraisal rights in connection with the Merger.
Parent agrees to cause either or both of the conditions set forth in Rule
144(c) under the Securities Act to be satisfied at all times during the period
prior to the second anniversary of the Effective Time (as defined in the
Merger Agreement).
I hereby acknowledge that except as otherwise provided in the Merger
Agreement or in the previous paragraph, Parent is under no obligation to
register the sale, transfer or other disposition of the shares of Parent
Common Stock or to take any other action necessary for the purpose of making
an exemption from registration available.
I understand that Parent will issue stop transfer instructions to its
transfer agent with respect to the shares of Parent Common Stock that I
receive upon consummation of the Merger and that a restrictive legend will be
placed on the certificates delivered to me evidencing the shares of Parent
Common Stock in substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be sold or otherwise disposed of unless registered under the
Securities Act pursuant to a Registration Statement in effect at the time
or unless the proposed sale or disposition can be made in
A-40
<PAGE>
compliance with Rule 145 or without registration in reliance on another
exemption from registration. Reference is made to that certain agreement
dated February , 1998 between the Holder and the Issuer, a copy of which
is on file in the principal office of the Issuer."
Parent agrees to release such stop transfer instructions and to cause this
legend to be removed from the certificates delivered to me evidencing the
shares of Parent Common Stock free of charge to the holder thereof promptly
after the restrictions on transferability of the shares of Parent Common Stock
imposed by Rule 145 are no longer applicable or Parent breaches its
obligations set forth in the first sentence of the fourth paragraph of this
agreement, and after I surrender such certificates to the transfer agent with
a request for such removal.
This agreement shall be binding on successors to Parent and on my heirs,
executors and estate.
I hereby acknowledge that the receipt of this agreement by Parent is an
inducement and a condition to Parent's obligation to consummate the Merger
under the Merger Agreement and this agreement shall be governed by the laws of
the State of Delaware.
Very truly yours,
AGREED:
INTERNATIONAL TECHNOLOGY CORPORATION
By:
---------------------------
Name:
Title:
A-41
<PAGE>
ANNEX B
[LETTERHEAD OF DONALDSON, LUFKIN & JENRETTE APPEARS HERE]
January 14, 1998
Board of Directors
International Technology Corporation
2790 Mosside Boulevard
Monroeville, Pennsylvania 15146-2792
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to International Technology Corporation, a Delaware corporation (the
"Company"), of the consideration to be paid by OHM pursuant to the terms of
the Agreement and Plan of Merger, dated as of January 15, 1998 (the
"Agreement"), among OHM Corporation ("OHM"), OHM and IT-Ohio, Inc. a wholly
owned subsidiary of the Company, pursuant to which IT-Ohio, Inc. will be
merged (the "Merger") with and into OHM.
Pursuant to the Agreement, the Company will commence a tender offer (the
"Offer") for 13,933,000 outstanding shares (the "Shares") of the common stock,
par value $0.10 per share, of OHM ("OHM Common Stock") at a cash price of
$11.50 per share. Concurrently with the closing of the Offer, OHM will
purchase from Waste Management, Inc. 5,235,381 shares of OHM Common Stock at a
cash price of $11.50 per share pursuant to a Share Repurchase Agreement (the
"Repurchase") between OHM and Waste Management, Inc. ("WMX"). The Offer is to
be followed by the Merger in which each share of OHM Common Stock will be
converted into the right to receive (1) 1.394 shares (the "Exchange Ratio") of
common stock, $0.01 par value per share, of the Company ("Company Common
Stock"); provided that if fewer than 19,168,381 Shares are purchased in the
Offer and the Repurchase, then the Exchange Ratio is to be adjusted and will
equal the product obtained by multiplying the Exchange Ratio by a fraction,
(i) the numerator of which is equal to (x) the number of Shares issued and
outstanding immediately prior to the effective time of the Merger (the "Final
Outstanding Number") plus (y) the number of Shares purchased in the Offer and
the Repurchase (together the "Purchased Share Number") less (z) 19,168,381 and
(ii) the denominator of which is the Final Outstanding Number and (2) if the
Exchange Ratio has been so adjusted, an amount in cash equal to a fraction,
(i) the numerator of which is the product of $11.50 and the amount by which
19,168,381 exceeds the Purchased Share Number and (ii) the denominator of
which is the Final Outstanding Number.
In arriving at our opinion, we have reviewed the draft dated January 13,
1998 of the Agreement, the draft dated January 13, 1998 of the Share
Repurchase Agreement and a draft dated January 13, 1998 of the Schedule 14D-1
of the Company, proposed to be filed in connection with the Offer. We also
have reviewed financial and other information that was publicly available or
furnished to us by the Company and OHM, including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were certain
financial projections of OHM for the period beginning January 1, 1997 and
ending December 31, 2000 prepared by the management of the Company and certain
financial projections of OHM and OHM, each for the period beginning January 1,
1997 and ending December 31, 2002 prepared by the management of OHM (which, in
the case of OHM, were based on OHM management projections referred to above).
In addition, we have compared certain financial and securities data of the
Company and OHM with various other companies whose securities are traded in
public markets, reviewed the historical stock prices and trading volumes of
OHM Common Stock and Company Common Stock, reviewed prices and premiums paid
in certain other business combinations and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes of
this opinion.
B-1
<PAGE>
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and OHM or
their respective representatives, or that was otherwise reviewed by us. In
particular, we have relied upon the estimates of the management of the Company
of the operating synergies achievable as a result of the Merger and upon our
discussion of such synergies with the management of OHM. With respect to the
financial projections supplied to us, we have assumed that they have been
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of the Company and OHM. We have not
assumed any responsibility for making any independent evaluation of any assets
or liabilities or for making any independent verification of any of the
information reviewed by us.
Our opinion is necessarily based on economic market, financial and other
conditions as they exist, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have the obligation to update,
revise or reaffirm this opinion. We are expressing no opinion herein as to the
prices at which Company Common Stock will actually trade at any time. Our
opinion does not address the relative merits of the Offer or the Merger on the
one hand, and the other business strategies being considered by the Company's
Board of Directors, on the other hand nor does it address the Board's decision
to proceed with the Offer and the Merger. Our opinion does not constitute a
recommendation to any shareholder of the Company as to how such shareholder
should vote on the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past
and has been compensated for such services. These services have included a
strategic review of the Company which resulted in a $45.0 million investment
in the Company by The Carlyle Group for which DLJ received usual and customary
advisory compensation.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be paid by the Company pursuant to
the Agreement is fair to the Company from a financial point of view.
Very truly yours,
Donaldson, Lufkin & Jenrette
By: /s/ Mark A. Pytosh
---------------------------------
Mark A. Pytosh
Senior Vice President
B-2
<PAGE>
ANNEX C
[LOGO OF BT ALEX. BROWN]
LOGO
January 14, 1998
The Board of Directors of
OHM Corporation
16406 U.S. Route 224 East
Findlay, OH 45840
Dear Sirs:
OHM Corporation ("OHM" or the "Company"), International Technology
Corporation ("Buyer") and IT-Ohio, Inc., a wholly-owned subsidiary of Buyer
("Merger Sub"), proposed to enter into an Agreement and Plan of Merger dated
as of January 15, 1998 (the "Agreement"). Pursuant to the Agreement, within
five business days thereof, Merger Sub will commence a cash tender offer (the
"Offer") to acquire 13,933,000 shares of common stock, par value $0.10 per
share (the "Common Stock"), of OHM at a price of $11.50 per share, net to the
seller in cash. The Agreement also provides that following the Offer, Merger
Sub shall be merged with and into the Company (the "Merger"), and that each
outstanding share of Common Stock, other than Excluded Shares (as defined in
the Merger Agreement), shall be converted into, and become exchangeable for,
the right to receive 1.394 (the "Exchange Ratio") shares of common stock, par
value $0.01 per share, of Buyer ("Buyer Common Stock"); provided, however,
that if the aggregate number of shares of Common Stock accepted for payment
and paid for pursuant to the Offer and purchased from Waste Management, Inc.
pursuant to the Repurchase Agreement (as defined in the Agreement) is less
than 19,168,381 shares of Common Stock, then the Exchange Ratio shall be
adjusted downward, as provided in the Agreement, and if so adjusted, each
outstanding share of Common Stock shall be converted into, and become
exchangeable for, the right to receive a combination of Buyer Common Stock and
cash. Pursuant to the Agreement, concurrently with the acceptance by Merger
Sub of shares of the Common Stock for payment in the Offer, the Company shall
pay a pro rata taxable distribution to holders of record of the Common Stock
as of the close of business on the date prior to the date Merger Sub accepts
Common Stock for payment in the Offer, of all of the shares of common stock,
par value $0.01 per share, of NSC Corporation ("NSC") held by the Company (the
"NSC Distribution"). You have requested our opinion as to whether the
aggregate consideration to be received by the holders of the Common Stock in
the Offer, the Merger and the NSC Distribution is fair, from a financial point
of view, to such holders.
BT Alex. Brown Incorporated ("BT Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations of estate, corporate and
other purposes. We have acted as financial advisor to the Board of Directors
of the Company in connection with the transaction described above and will
receive a fee for our services, a portion of which is contingent upon the
consummation of the transactions described above. We have also served as a
managing underwriter in the follow-on public offering of the Common Stock of
the Company in December, 1993, and have acted as financial advisor to the
Company in connection with other matters. BT Alex. Brown regularly publishes
research reports regarding the environmental services industry and the
businesses and securities of the Company and other publicly owned companies in
the environmental services industry. In the ordinary course of business, BT
Alex. Brown may actively trade the securities of both the Company and the
Buyer for our own account and the account for our customers and, accordingly,
may at any time hold a long or short position in securities of the Company and
the Buyer.
C-1
<PAGE>
In connection with this opinion, we have reviewed certain publicly available
financial information and other information concerning the Company and Buyer
and certain internal analyses and other information furnished to us by the
Company and Buyer. We have also held discussions with the members of the
senior managements of the Company and Buyer regarding the businesses and
prospects of their respective companies and the joint prospects of a combined
company. In addition, we have (i) reviewed the reported prices and trading
activity for the common stock of the Company, Buyer and NSC, (ii) compared
certain financial and stock market information for the Company, Buyer and NSC
with similar information for certain companies whose securities are publicly
traded, (iii) reviewed the financial terms of certain recent business
combinations, (iv) performed a discounted cash flow analysis; (v) reviewed the
terms of the Agreement, and (vi) performed such other studies and analyses and
considered such other factors as we deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to the information relating to the prospects of the
Company and Buyer, we have assumed that such information reflects the best
currently available judgments and estimates of the managements of the Company
and Buyer as to the likely future financial performances of their respective
companies. In addition, we have not made nor been provided with an independent
evaluation or appraisal of the assets of the Company and Buyer, nor have we
been furnished with any such evaluations or appraisals. Further, we have not
made an independent evaluation or appraisal of the liabilities (including
environmental liabilities) of the Company or the Buyer. Our opinion is based
on market, economic and other conditions as they exist and can be evaluated as
of the date of this letter.
Our advisory services and the opinion expressed herein were prepared for the
use of the Board of Directors of the Company and do not constitute a
recommendation to the Company's stockholders as to whether to tender their
shares in the Offer or how they should vote at the stockholders' meeting in
connection with the Merger. We hereby consent, however, to the inclusion of
this opinion as an exhibit to the Company's Schedule l4D-9 in connection with
the Offer and to any proxy or registration statement distributed in connection
with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the aggregate consideration to be received by the holders
of the Common Stock in the Offer, the Merger and the NSC Distribution is fair,
from a financial point of view, to such holders.
Very truly yours,
BT ALEX. BROWN INCORPORATED
/s/ BT Alex. Brown Incorporated
-------------------------------------
C-2
<PAGE>
ANNEX D
EXCERPT FROM OHIO GENERAL CORPORATION LAW
RELATING TO APPRAISAL RIGHTS
1701.84 DISSENTING SHAREHOLDERS ENTITLED TO RELIEF.--The following are
entitled to relief as dissenting shareholders under section 1701.85 of the
Revised Code:
(A) Shareholders of a domestic corporation that is being merged or
consolidated into a surviving or new entity, domestic or foreign, pursuant
to section 1701.78, 1701.781, 1701.79, 1701.791, or 1701.801 of the Revised
Code;
(B) In the case of a merger into a domestic corporation, shareholders of
the surviving corporation who under section 1701.78 or 1701.781 of the
Revised Code are entitled to vote on the adoption of an agreement of
merger, but only as to the shares so entitling them to vote;
(C) Shareholders, other than the parent corporation, of a domestic
subsidiary corporation that is being merged into the domestic or foreign
parent corporation pursuant to section 1701.80 of the Revised Code;
(D) In the case of a combination or a majority share acquisition,
shareholders of the acquiring corporation who under section 1701.83 of the
Revised Code are entitled to vote on such transaction, but only as to the
shares so entitling them to vote;
(E) Shareholders of a domestic subsidiary corporation into which one or
more domestic or foreign corporations are being merged pursuant to section
1701.801 of the Revised Code.
1701.85 RELIEF FOR DISSENTING SHAREHOLDERS; QUALIFICATION; PROCEDURES.--
(A)(1) A shareholder of a domestic corporation is entitled to relief as a
dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with
this section.
(2) If the proposal must be submitted to the shareholders of the corporation
involved, the dissenting shareholder shall be a record holder of the shares of
the corporation as to which he seeks relief as of the date fixed for the
determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after
the date on which the vote on the proposal was taken at the meeting of the
shareholders, the dissenting shareholder shall deliver to the corporation a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief, which demand shall state his address, the number and
class of such shares, and the amount claimed by him as the fair cash value of
shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case
of a merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder
shall deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the
new entity; whether the demand is served before, on, or after the effective
date of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so
D-1
<PAGE>
that the corporation may forthwith endorse on them a legend to the effect that
demand for the fair cash value of such shares has been made. The corporation
promptly shall return such endorsed certificates to the dissenting
shareholder. A dissenting shareholder's failure to deliver such certificates
terminates his rights as a dissenting shareholder, at the option of the
corporation, exercised by written notice sent to the dissenting shareholder
within twenty days after the lapse of the fifteen-day period, unless a court
for good cause shown otherwise directs. If shares represented by a certificate
on which such a legend has been endorsed are transferred, each new certificate
issued for them shall bear a similar legend, together with the name of the
original dissenting holder of such shares. Upon receiving a demand for payment
from a dissenting shareholder who is the record holder of uncertificated
securities, the corporation shall make an appropriate notation of the demand
for payment in its shareholder records. If uncertificated shares for which
payment has been demanded are to be transferred, any new certificate issued
for the shares shall bear the legend required for certificated securities as
provided in this paragraph. A transferee of the shares so endorsed, or of
uncertificated securities where such notation has been made, acquires only
such rights in the corporation as the original dissenting holder of such
shares had immediately after the service of a demand for payment of the fair
cash value of the shares. A request under this paragraph by the corporation is
not an admission by the corporation that the shareholder is entitled to relief
under this section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving
or new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of
the county in which the principal office of the corporation that issued the
shares is located or was located when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such a complaint is required.
Upon the filing of such a complaint, the court, on motion of the petitioner,
shall enter an order fixing a date for a hearing on the complaint and
requiring that a copy of the complaint and a notice of the filing and of the
date for hearing be given to the respondent or defendant in the manner in
which summons is required to be served or substituted service is required to
be made in other cases. On the day fixed for the hearing on the complaint or
any adjournment of it, the court shall determine from the complaint and from
such evidence as is submitted by either party whether the dissenting
shareholder is entitled to be paid the fair cash value of any shares and, if
so, the number and class of such shares. If the court finds that the
dissenting shareholder is so entitled, the court may appoint one or more
persons as appraisers to receive evidence and to recommend a decision on the
amount of the fair cash value. The appraisers have such power and authority as
is specified in the order of their appointment. The court thereupon shall make
a finding as to the fair cash value of a share and shall render judgment
against the corporation for the payment of it, with interest at such rate and
from such date as the court considers equitable. The costs of the proceeding,
including reasonable compensation to the appraisers to be fixed by the court,
shall be assessed or apportioned as the court considers equitable. The
proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505 of the
Revised Code. If, during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin or otherwise
to prevent the carrying out of the action as to which the shareholder has
dissented, the proceeding instituted under this section shall be stayed until
the final determination of the other suit or proceeding. Unless any provision
in division (D) of this section is applicable, the fair cash value of the
shares that is agreed upon by the parties or fixed under this section shall be
paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or
the consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the case of
holders of shares represented by certificates, payment shall be made only upon
and simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
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(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as
of the day prior to the day on which the vote by the shareholders was taken,
and, in the case of a merger pursuant to section 1701.80 or 1701.801 of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would
be willing to pay, but in no event shall the fair cash value of a share exceed
the amount specified in the demand of the particular shareholder. In computing
such fair cash value, any appreciation or depreciation in market value
resulting from the proposal submitted to the directors or to the shareholders
shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally enjoined
or prevented from carrying it out, or the shareholders rescind their
adoption, of the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent of
the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation filed or joined in a complaint under division (B) of
this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or
the comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand until
either the termination of the rights and obligations arising from it or the
purchase of the shares by the corporation, all other rights accruing from such
shares, including voting and dividend or distribution rights, are suspended.
If during the suspension, any dividend or distribution is paid in money upon
shares of such class or any dividend, distribution, or interest is paid in
money upon any securities issued in extinguishment of or in substitution for
such shares, an amount equal to the dividend, distribution, or interest which,
except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair
cash value of the shares. If the right to receive fair cash value is
terminated other than by the purchase of the shares by the corporation, all
rights of the holder shall be restored and all distributions which, except for
the suspension, would have been made shall be made to the holder of record of
the shares at the time of termination.
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ANNEX E
FORM OF INTERNATIONAL TECHNOLOGY CORPORATION'S 1996 STOCK INCENTIVE PLAN, AS
AMENDED AND RESTATED
INTERNATIONAL TECHNOLOGY CORPORATION
1996 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED)
SECTION 1. PURPOSE OF PLAN
The purpose of this 1996 Stock Incentive Plan ("Plan") of International
Technology Corporation, a Delaware corporation (the "Company"), is to enable
the Company to attract, retain and motivate its employees and non-employee
directors by providing for or increasing the proprietary interests of such
employees and non-employee directors in the Company, and to enable the Company
to attract, retain and motivate its non-employee directors and further align
their interest with those of the shareholders of the Company by providing for
or increasing the proprietary interest of such directors in the Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN
Any person who is an employee or director of the Company or any of its
subsidiaries, consultants or affiliates (an "Eligible Person") shall be
eligible to be considered for the grant of Awards (as hereinafter defined)
hereunder.
SECTION 3. AWARDS
(a) The Committee (as hereinafter defined), on behalf of the Company, is
authorized under this Plan to enter into any type of arrangement with an
Eligible Person that is not inconsistent with the provisions of this Plan and
that, by its terms, involves or might involve the issuance of (i) shares of
Common Stock, one cent ($.01) par value, of the Company or of any other class
of security of the Company which is convertible into shares of the Company's
Common Stock ("Shares") or (ii) a right or interest with an exercise or
conversion privilege at a price related to the Shares or with a value derived
from the value of the Shares, which right or interest may, but need not,
constitute a "Derivative Security," as such term is defined in Rule 16a-1
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such Rule may be amended from time to time. The entering
into of any such arrangement is referred to herein as the "grant" of an
"Award."
(b) Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock,
stock options, stock purchase warrants, other rights to acquire stock,
securities convertible into or redeemable for stock, stock appreciation
rights, limited stock appreciation rights, phantom stock, dividend
equivalents, performance units or performance shares, and an Award may consist
of one such security or benefit, or two or more of them in tandem or in the
alternative. The terms upon which an Award is granted shall be evidenced by a
written agreement executed by the Company and the Eligible Person to whom such
Award is granted.
(c) Subject to paragraph (d)(ii) below, Awards may be issued, and Shares may
be issued pursuant to an Award, for any lawful consideration as determined by
the Committee, including, without limitation, services rendered by the
Eligible Person.
(d) Subject to the provisions of this Plan, the Committee, in its sole and
absolute discretion, shall determine all of the terms and conditions of each
Award granted under this Plan, which terms and conditions may (but need not)
include, among other things:
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(i) provisions permitting the Committee to allow or require the recipient
of such Award, including any Eligible Person who is a director or officer
of the Company, or permitting any such recipient the right, to pay the
purchase price of the Shares or other property issuable pursuant to such
Award, and/or such recipient's tax withholding obligation with respect to
such issuance, in whole or in part, by any one or more of the following
means:
(A) the delivery of cash;
(B) the delivery of other property deemed acceptable by the
Committee;
(C) the delivery of previously owned shares of capital stock of the
Company (including "pyramiding") or other property; or
(D) a reduction in the amount of Shares or other property otherwise
issuable pursuant to such Award;
(ii) provisions specifying the exercise or settlement price for any
option, stock appreciation right or similar Award, or specifying the method
by which such price is determined, provided that the exercise or settlement
price of any option, stock appreciation right or similar Award that is
intended to qualify as "performance based compensation" for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") provided that such price shall be not less than the fair market
value of a Share on the date such Award is granted;
(iii) provisions relating to the exercisability and/or vesting of Awards,
lapse and non-lapse restrictions upon the Shares obtained or obtainable
under Awards or under the Plan and the termination, expiration and/or
forfeiture of Awards;
(iv) provisions conditioning or accelerating the grant of an Award or the
receipt of benefits pursuant to such Award, either automatically or in the
discretion of the Committee, upon the occurrence of specified events,
including, without limitation, the achievement of performance goals, the
exercise or settlement of a previous Award, the satisfaction of an event or
condition within the control of the recipient of the Award or within the
control of others, a change of control of the Company, an acquisition of a
specified percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of substantially all of the property and
assets of the Company or an event of the type described in Section 7
hereof;
(v) provisions required in order for such Award to qualify (A) as an
incentive stock option under Section 422 of the Code (an "Incentive Stock
Option"), (B) as "performance based compensation" under Section 162(m) of
the Code, and/or (C) for an exemption from Section 16 of the Exchange Act;
and/or
(vi) provisions restricting the transferability of Awards or Shares
issued under Awards.
(e) Unless otherwise provided by the Committee, the terms of any stock
option granted under the Plan shall provide:
(i) that the term of such option shall be ten years from the date of
grant;
(ii) that if the Eligible Person to whom such option was granted (the
"Participant") ceases to be an Eligible Person for any reason other than
death, disability or retirement, the option shall not thereafter become
exercisable to an extent greater than it could have been exercised on the
date the Participant's status as an Eligible Person ceased, and that on the
death or disability of a Participant the option shall become fully
exercisable;
(iii) that (a) upon the retirement of the Participant the option shall
fully vest and shall expire on the expiration date set forth in the option
agreement; (b) upon the death or disability of the Participant the option
shall fully vest and shall expire one year from the termination of the
Participant's employment, (c) upon a termination for cause of the
Participant no unvested portion of the option shall thereafter vest and the
option shall expire one month from the termination of Participant's
employment, and (d) upon the Participant's cessation to be an Eligible
Person for any reason other than the foregoing, no unvested portion of the
option
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shall thereafter vest and the option shall expire ninety (90) days after
the termination of Participant's employment; and
(iv) that the option shall not be assignable or otherwise transferable
except by will or by the laws of descent and distribution or pursuant to a
domestic relations order, and during the lifetime of the Participant, the
option shall be exercisable only by the Participant or the transferee under
a domestic relations order.
(f) The exercise price of any stock option granted under the Plan shall not
be less than 100% of the market value of a share of Common Stock on the date
the option is granted;
(g) The Committee may establish the performance criteria and level of
achievement versus these criteria which shall determine the target and maximum
amount payable under an Award, which criteria may be based on financial
performance and/or personal performance evaluations. Notwithstanding anything
to the contrary herein, the performance criteria for any Award that is
intended by the Committee to satisfy the requirements for "performance-based
compensation" under Code Section 162(m) shall be a measure based on one or
more Qualifying Performance Criteria (as defined below) selected by the
Committee and specified at the time the Award is granted. The Committee shall
certify the extent to which any Qualifying Performance Criteria has been
satisfied prior to payment or settlement of any Award that is intended by the
Committee to satisfy the requirements for "performance-based compensation"
under Code Section 162(m). For purposes of this Plan, the term "Qualifying
Performance Criteria" shall mean any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or subsidiary, either
individually, alternatively or in any combination, and measured either on an
absolute basis or relative to a pre-established target, to previous years'
results or to a designated comparison group, in each case as specified by the
Committee in the Award: (i) cash flow, (ii) earnings per share (including
earnings before interest, taxes and amortization), (iii) stock price, (iv)
return on equity, (v) total stockholder return, (vi) return on capital, (vii)
return on assets or net assets, (viii) revenue, (ix) income or net income, (x)
operating income or net operating income, (xi) operating profit or net
operating profit, (xii) operating margin, (xiii) return on operating revenue,
and (xiv) market share.
SECTION 4. STOCK SUBJECT TO PLAN
(a) Subject to adjustment as provided in Section 7 hereof, at any time, the
aggregate number of Shares issued and issuable pursuant to all Awards
(including all Incentive Stock Options) granted under this Plan shall not
exceed 250,000, provided, however, that (i) on THE FIRST BUSINESS DAY of each
of the FISCAL years 1997, 1999, 2000 and 2001, such maximum number shall be
increased by a number equal to two percent (2%) of the number of Shares issued
and outstanding on each of such dates (with respect to any date, such maximum
number shall be referred to herein as the "Share Limitation") AND (ii) UPON
CONSUMMATION OF THE MERGER BETWEEN IT-OHIO, INC., AN OHIO CORPORATION AND A
WHOLLY OWNED SUBSIDIARY OF THE COMPANY ("MERGER SUB"), AND OHM CORPORATION, AN
OHIO CORPORATION ("OHM"), PURSUANT TO THAT CERTAIN AGREEMENT AND PLAN OF
MERGER, DATED AS OF JANUARY 15, 1998, AMONG OHM, THE COMPANY AND MERGER SUB,
AND THE ISSUANCE OF SHARES OF COMMON STOCK OF THE COMPANY TO OHM SHAREHOLDERS
PURSUANT THERETO, SUCH MAXIMUM NUMBER SHALL BE INCREASED BY A NUMBER EQUAL TO
TWO PERCENT (2%) OF THE SHARES ISSUED AND OUTSTANDING ON SUCH DATE. Such
maximum number does not include the number of Shares subject to the
unexercised portion of any Incentive Stock Option granted under this Plan that
expires or is terminated.
(b) Subject to adjustment as provided in Section 7 hereof, the aggregate
number of Shares subject to Awards granted during any calendar year to any one
Eligible Person (including the number of shares involved in Awards having a
value derived from the value of Shares) shall not exceed 125,000.
(c) The aggregate number of Shares issued under this Plan at any time shall
equal only the number of shares actually issued upon exercise or settlement of
an Award and not settled in cash or returned to the Company upon forfeiture of
an Award or in payment or satisfaction of the purchase price, exercise price
or tax withholding obligation of an Award.
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SECTION 5. NATURE AND DURATION OF PLAN
(a) This Plan is intended to constitute an unfunded arrangement for a select
group of management or other key employees.
(b) No Awards shall be made under this Plan after the fifth anniversary of
the Effective Date of the Plan (as provided in Section 9). Although Shares may
be issued after the fifth anniversary of the Effective Date pursuant to Awards
made prior to such date, no Shares shall be issued under this Plan after the
fifteenth anniversary of the Effective Date.
SECTION 6. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by one or more committees of the Board
(any such committee, the "Committee"). If no persons are designated by the
Board to serve on the Committee, the Plan shall be administered by the Board
and all references herein to the Committee shall refer to the Board. The Board
shall have the discretion to appoint, add, remove or replace members of the
Committee, and shall have the sole authority to fill vacancies on the
Committee. Unless otherwise provided by the Board: (i) with respect to any
Award for which such is necessary and desired for such Award to be exempted by
Rule 16b-3 of the Exchange Act, the Committee shall consist of the Board of
directors or of two or more directors each of whom is a "non-employee
director" (as such term is defined in Rule 16b-3 promulgated under the
Exchange Act, as such Rule may be amended from time to time), (ii) with
respect to any Award that is intended to qualify as "performance based
compensation" under Section 162(m) of the Code, the Committee shall consist of
two or more directors, each of whom is an "outside director" (as such term is
defined under Section 162(m) of the Code), and (iii) with respect to any other
Award, the Committee shall consist of one or more directors (any of whom also
may be an employee who has been granted or is eligible to be granted Awards
under the Plan).
(b) Subject to the provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of this Plan with respect to the Awards over which
such Committee has authority, including, without limitation, the following:
(i) adopt, amend and rescind rules and regulations relating to this Plan;
(ii) determine which persons are Eligible Persons and to which of such
Eligible Persons, if any, and when Awards shall be granted hereunder;
(iii) grant Awards to Eligible Persons and determine the terms and
conditions thereof, including the number of Shares subject thereto and the
circumstances under which Awards become exercisable or vested or are
forfeited or expire, which terms may but need not be conditioned upon the
passage of time, continued employment, the satisfaction of performance
criteria, the occurrence of certain events (including events which the
Board or the Committee determine constitute a change of control), or other
factors;
(iv) at any time cancel an Award, with or without the consent of the
holder thereof, and grant a new Award to such holder in lieu thereof, which
new Award may be the same or a different type of Award, may be for a
greater or lesser number of Shares, may have a higher or lower exercise or
settlement price and otherwise may have similar or dissimilar terms to the
canceled Award;
(v) determine whether, and the extent to which adjustments are required
pursuant to Section 7 hereof; and
(vi) interpret and construe any terms and conditions of, and define any
terms used in, this Plan, any rules and regulations under the Plan and/or
any Award granted under this Plan.
All decisions, determinations, and interpretations of the Committee shall be
final and conclusive upon any Eligible Person to whom an Award has been
granted and to any other person holding an Award.
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(c) The Committee may, in the terms of an Award or otherwise, temporarily
suspend the exercisability of an Award and/or the issuance of Shares under an
Award if the Committee determines that securities law or other considerations
so warrant.
SECTION 7. ADJUSTMENTS
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or
shares or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than a regular, quarterly cash dividend) or other distribution, stock
split, reverse stock split, spin-off or the like, or if substantially all of
the property and assets of the Company are sold, then, unless the terms of
such transaction shall provide otherwise, the Committee shall make appropriate
and proportionate adjustments in (i) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to Awards
theretofore granted under this Plan other than Incentive Stock Options and the
exercise or settlement price of such Awards, and (ii) the maximum number and
type of shares or other securities that may be issued pursuant to such Awards
thereafter granted under this Plan; provided, however, that notwithstanding
the foregoing, (A) such aggregate number of Shares shall be subject to
adjustment under this Section 7 only to the extent that such will not affect
the status of any Award intended to qualify as "performance based
compensation" under Section 162(m) of the Code; and (B) the maximum number and
type of shares or other securities that may be acquired pursuant to Incentive
Stock Options theretofore granted under this Plan and that may be subject to
Incentive Stock Options thereafter granted under this Plan (which need not
correspond to the maximum number and type of shares or other securities that
may be issued pursuant to such Awards thereafter granted under this Plan)
shall be determined under this Section 7 in a manner consistent with the
requirements for Incentive Stock Options.
SECTION 8. AMENDMENT AND TERMINATION OF PLAN
The Board may amend, alter or discontinue the Plan or any agreement
evidencing an Award made under the Plan, but no amendment or alteration shall
be made which would impair the rights of any Award holder, without such
holder's consent, under any Award theretofore granted, provided that no such
consent shall be required if the Committee determines in its sole discretion
and prior to the date of any change of control (as defined, if applicable, in
the agreement evidencing such Award) that such amendment or alteration is not
reasonably likely to significantly diminish the benefits provided under such
Award, or that any such diminishment has been adequately compensated. The
Committee may determine whether or not any amendment to a previously granted
Award is, for purposes of the Plan, deemed to be a cancellation and new grant
of the Award. Notwithstanding the foregoing, if an amendment to the Plan would
affect the ability of Awards granted under the Plan to comply with any law,
rule or regulation (including any rule of a self-regulatory organization), and
if the Committee determines that it is necessary or desirable for any Awards
theretofore or thereafter granted that are intended to comply with any such
provision to so comply, the amendment shall be approved by the Company's
stockholders to the extent required for such Awards to continue to comply with
such law, rule or regulation.
SECTION 9. EFFECTIVE DATE OF PLAN
The Effective Date of this Plan shall be the date upon which it was approved
by the affirmative votes of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at the Company's annual
meeting of stockholders.
SECTION 10. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
The Plan, the grant and exercise of Awards thereunder, and the obligation of
the Company to sell and deliver shares under such Awards, shall be subject to
all applicable federal and state laws, rules and regulations
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and to such approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to issue or deliver any
certificates for shares of Common Stock prior to the completion of any
registration or qualification of such shares under any federal or state law or
issuance of any ruling or regulation of any government body which the Company
shall, in its sole discretion, determine to be necessary or advisable.
SECTION 11. NO RIGHT TO COMPANY EMPLOYMENT
Nothing in this Plan or as a result of any Award granted pursuant to this
Plan shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate an
individual's employment at any time. The agreement evidencing an Award may
contain such provisions as the Committee may approve with respect to the
effect of approved leaves of absence.
SECTION 12. LIABILITY OF COMPANY
The Company and any affiliate which is in existence or hereafter comes into
existence shall not be liable to an Eligible Person or other persons as to:
(a) The Non-Issuance of Shares. The non-issuance or sale of shares as to
which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and
(b) Tax Consequences. Any tax consequence expected, but not realized, by any
Eligible Person or other person due to the issuance, exercise, settlement,
cancellation or other transaction involving any Award granted hereunder.
SECTION 13. GOVERNING LAW
This Plan and any Awards and agreements hereunder shall be interpreted and
construed in accordance with the laws of the State of Delaware and applicable
federal law.
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ANNEX F
FORM OF AMENDMENT TO INTERNATIONAL TECHNOLOGY CORPORATION'S CERTIFICATE OF
INCORPORATION
ARTICLE SEVENTH OF THE INTERNATIONAL TECHNOLOGY CORPORATION CERTIFICATE OF
INCORPORATION, AS SET FORTH BELOW, SHALL BE DELETED AND THE REMAINING ARTICLES
OF SUCH CERTIFICATE SHALL BE RENUMBERED ACCORDINGLY.
SEVENTH: The Board of Directors shall be and is divided into three classes,
Class I, Class II and Class III. Such classes shall be as nearly equal in
number of directors as possible. Each director shall serve for a term ending
on the third annual meeting following the annual meeting at which such
director was elected; provided, however, that the directors first elected to
Class I shall serve for a term ending on the annual meeting next following the
end of the calendar year 1983; that the directors first elected to Class II
shall serve for a term ending on the second annual meeting next following the
end of the calendar year 1983; and that the directors first elected to Class
III shall serve for a term ending on the third annual meeting next following
the end of the calendar year 1983. The foregoing notwithstanding, each
director shall serve until his successor shall have been duly elected and
qualified, unless he shall resign, become disqualified, disabled or shall
otherwise be removed. A director shall be subject to removal without cause by
the vote of the holders of not less than two-thirds of the total voting power
of all outstanding shares of voting stock of the Corporation.
At each annual election, the directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed, unless,
by reason of any intervening changes in the authorized number of directors,
the Board shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal in
number of directors as possible, in the event of any change in the authorized
number of directors, each director then continuing to serve as such shall
nevertheless continue as a director of the class of which he is a member until
the expiration of his current term, or his prior death, resignation or
removal. If any newly created directorship may, consistently with the rule
that the three classes shall be as nearly equal in number of directors as
possible, be allocated to one of two or more classes, the Board shall allocate
it to that of the available classes whose term of office is due to expire at
the earliest date following such allocation.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 145 of the Delaware General Corporation Law, as
amended, provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at its request in
such capacity in another corporation or business association against expenses
(including attorneys' fees), judgments, finds and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to provide in its certificate of incorporation that a
director of the corporation will not be personally liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit.
As permitted by Section 145 of the Delaware General Corporation Law, the
Bylaws of the Registrant provide: (i) the Registrant is required to indemnify
its directors, officers and employees and persons serving in such capacities
in other business enterprises (including, for example, subsidiaries of the
Registrant) at the Registrant's request, who are or were a party to, or is
threatened to be made a party to, any threatened, pending or completed action,
suit or proceeding, whether or not by or in the right of the Registrant, and
whether civil, criminal, administrative, investigative or otherwise, to the
fullest extent permitted by Delaware law; (ii) the Registrant will pay all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement and, in the manner provided by law, any such expenses may be paid
by the Registrant in advance of the final disposition of such action, suit or
proceeding); (iii) the rights conferred in the Bylaws are not exclusive and
the Registrant is authorized to enter into indemnification agreements with any
other person for any such expenses to the fullest extent permitted by law;
(iv) the Registrant may purchase and maintain insurance on behalf of any such
person against any liability which may be asserted against such person; and
(v) the Registrant may not retroactively amend the Bylaw provisions in a way
that is adverse to such directors, officers, employees and agents. The
Registrant has also entered into an agreement with its directors and certain
of its officers indemnifying them to the fullest extent permitted by the
foregoing. These indemnification provisions, and the Indemnification
Agreements entered into between the Registrant and its directors and certain
of its officers, may be sufficiently broad to permit indemnification of the
Registrants' officers and directors for liabilities arising under the
Securities Act.
ITEM 21. EXHIBITS.
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EXHIBIT NO. DESCRIPTION
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<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 15, 1998, among
OHM Corporation, the Registrant and IT-Ohio, Inc.(1)
2.2 Share Repurchase Agreement, dated as of January 15, 1998, among
OHM Corporation, Waste Management, Inc., Rust International, Inc.
and the Registrant.(1)
2.3 Amended and Restated Share Repurchase Agreement, dated as of
February 11, 1998, among OHM Corporation, Waste Management, Inc.,
Rust International, Inc., Rust Remedial Services Holding Company,
Inc. and the Registrant.(1)
2.4 Second Amended and Restated Share Repurchase Agreement, dated as
of February 17, 1998, among OHM Corporation, Waste Management,
Inc., Rust International, Inc., Rust Remedial Services Holding
Company, Inc. and the Registrant.(1)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
2.5 Parent Voting Agreement, dated as of January 15, 1998, among the
Registrant, certain stockholders of the Registrant and OHM
Corporation.(1)
3.1 Certificate of Incorporation of the Registrant as amended by Amendment
to Certificate of Incorporation filed September 17, 1987, with Delaware
Secretary of State.(2)
3.2 Amended and Restated Bylaws of the Registrant as amended through June
20, 1997.(3)
4.1 Certificate of Designations with respect to the Registrant's 7%
Cumulative Convertible Exchangeable Preferred Stock, $100 par value.(4)
4.2 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights and Qualifications, Limitations and
Restrictions Thereof of Cumulative Convertible Participating Preferred
Stock of the Registrant, issued November 20, 1996.(5)
4.3 Indenture for the Registrant's 7% Convertible Subordinate Debentures Due
2008.(4)
5.1 Opinion of Gibson, Dunn & Crutcher LLP.*
8.1 Opinion of Sullivan & Cromwell.*
10.1 Note Purchase Agreement dated as of October 24, 1995 for IT Corporation
8.67% Guaranteed Senior Secured Notes due October 30, 2003.(6)
10.2 Master Collateral and Intercreditor Agreement dated as of October 24,
1995 among Certain Participating Creditors of IT Corporation and
Chemical Bank, as Collateral Agent.(6)
10.3 Amendment No. 1 dated. as of January 5, 1996 to the Credit Agreement
dated as of October 24, 1995 among IT Corporation, the Lenders party
thereto, and Chemical Bank, as Administrative Agent.(7)
10.4 Amendment No. 1 dated as of January 5, 1996 to the several Note Purchase
Agreements, each dated as of October 24, 1995 between IT Corporation and
the respective Purchasers party thereto.(7)
10.5 Second Amendment to Credit Agreement, Master Collateral and
Intercreditor Agreement and Note Purchase Agreement, dated as of October
30, 1996, among the Lenders, Participating Creditors and
IT Corporation.(1)
10.6 Asset Transfer Agreement among MetPath Inc., the Registrant and IT
Corporation dated as of May 2, 1994.(8)
10.7 Amended and Restated Shareholders' Agreement between Corning
Incorporated, the Registrant, IT Corporation and Quanterra Incorporated,
dated January 1, 1996.(9)
10.8 Amended and Restated Equity Investors' Undertaking, dated January 19,
1996, from the Equity Investors in favor of Quanterra Incorporated,
Citibank, N.A., and Citicorp USA, Inc.(9)
10.9 Agreement, dated January 19, 1996, related to the ownership of IT
Corporation, Corning Clinical Laboratories Inc., and Corning
Incorporated in Quanterra Incorporated.(9)
10.10 Securities Purchase Agreement dated as of August 28, 1996 between the
Registrant and certain Purchasers identified therein affiliated with The
Carlyle Group (5), including agreement by and between The Carlyle Group
and the Registrant re financial advisory and investment banking fees.
10.11 Amendment No. 1, dated November 20, 1996, to Securities Purchase
Agreement dated August 28, 1996, by and among the Registrant and certain
Purchasers identified therein affiliated with The Carlyle Group.(10)
10.12 Form of Warrant Agreement by and among the Registrant and certain
Warrant Holders defined herein affiliated with The Carlyle Group, dated
as of November 20, 1996.(5)
10.13 Form of Registration Rights Agreement by and among the Registrant and
certain Investors affiliated with The Carlyle Group, dated November 20,
1996.(5)
10.14 Non-Employee Directors' Retirement Plan, as amended and restated June 2,
1994 (9)(10), as amended by the Amended and Restated Non-Employee
Directors Retirement Plan, Amendment No. 5, dated November 20, 1996.(11)
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.15 Description of the Special Turn-a-Round Plan (Fiscal Year 1995
Management Incentive Plan) of the Registrant.(8)(11)
10.16 1983 Stock Incentive Plan, as amended.(11)(13)
10.17 1991 Stock Incentive Plan (7)(11) as modified by waiver dated November
20, 1996, by certain former Non-Employee Directors, in favor of the
registrant.(11)
10.18 1996 Stock Incentive Plan.(11)(18)
10.19 Fiscal Year 1997 Management Incentive Plan.(11)
10.20 Fiscal Year 1998 Management Incentive Plan.(11)
10.21 Separation Agreement dated July 24, 1996 between Robert B. Sheh and the
Registrant.(11)(14)
10.22 Separation Agreement dated as of September 30, 1996 between Eric
Schwartz and the Registrant.(4)(10)
10.23 Retirement Plan of IT, 1993 Restatement.(11)(12)
10.24 Amendment Number One to IT Corporation Retirement Plan, dated as of July
1, 1995.(11)(15)
10.25 Amendment Number Two to IT Corporation Retirement Plan, dated as of
October 1, 1995.(11)(15)
10.26 Amendment Number Three to IT Corporation Retirement Plan, dated as of
July 15, 1996.(11)(16)
10.27 Amendment Number Four to IT Corporation Retirement Plan, dated as of
February 1, 1997.(11)
10.28 Amendment Number Five to IT Corporation Retirement Plan, dated as of May
13, 1997.(11)
10.29 Executive Stock Purchase Interest Reimbursement Plan, approved September
6, 1995.(7)(11)
10.30 Executive/Directors Deferred Compensation Plan, effective January 1,
1996.(7)(11)
10.31 Executive Restoration Plan, effective July 1, 1995 as amended through
May 13, 1997.(7)(11)
10.32 1997 International Technology Corporation Non-Employee Directors Stock
Plan--Director Fees, dated as of February 26, 1997.(11)(16)
10.33 Employment Agreement, dated as of November 20, 1996, by and between the
Registrant, IT Corporation, and Anthony J. DeLuca.(11)
10.34 Employment Agreement, dated as of November 20, 1996, by and between the
Registrant, IT Corporation, and Franklin E. Coffman.(11)
10.35 Employment Agreement, dated as of November 20, 1996, by and between the
Registrant, IT Corporation, and James R. Mahoney.(11)
10.36 Employment Agreement, dated as of November 20, 1996, by and between the
Registrant, IT Corporation, and Raymond J. Pompe.(11)
10.37 Credit Agreement, dated as of February 25, 1998, among the Registrant,
IT Corporation, IT-Ohio, Inc., the Lenders party thereto, the Issuing
Banks party thereto, Citicorp USA, Inc., as Administrative Agent,
BankBoston, N.A., as Documentation Agent, and Royal Bank of Canada, as
Co-Agent.(1)
10.38 Company Voting Agreement, dated as of January 17, 1998, among the
Registrant, OHM Corporation and certain shareholders of OHM
Corporation.(1)
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
23.2 Consent of Sullivan & Cromwell (included in Exhibit 8.1).
23.3 Consent of Ernst & Young LLP, independent auditors.
23.4 Consent of Donaldson, Lufkin & Jenrette Securities Corporation.
23.5 Form of Consent of BT Alex. Brown Incorporated.
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
24.1 Power of Attorney.**
99.1 Form of International Technology Corporation proxy card.
99.2 Form of OHM Corporation proxy card.
</TABLE>
- --------
* To be filed by amendment
** Previously filed
(1) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Schedule 14D-1 filed January 15, 1998, as
amended.
(2) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 28, 1997 (No. 1-9037)
(3) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1988
(4) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-3 (No. 33-
65988)
(5) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Form 8-K dated September 20, 1996
(6) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 29, 1995.
(7) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 29, 1996.
(8) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1994.
(9) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 29, 1995.
(10) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 27, 1996.
(11) Filed as a management compensation plan or arrangement per Item 14(a)(3)
of the Securities Exchange Act.
(12) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1995.
(13) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1993.
(14) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's report on Form 10-K/A, Amendment No. 1, dated
July 29, 1996, to the Annual Report of Form 10-K for the year ended March
29, 1996.
(15) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-8 (No. 333-
00651).
(16) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-8 (No. 333-
26143).
(17) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-8 (No. 333-
28721).
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement will be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
II-4
<PAGE>
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 1l, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and OHM
being acquired involved therein, that was not the subject of and included in
the Registration Statement when it became effective.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF MONROEVILLE, COMMONWEALTH OF PENNSYLVANIA, ON THIS 27TH DAY OF MARCH,
1998.
International Technology Corporation
By: /s/ Anthony J. DeLuca
----------------------------------
ANTHONY J. DELUCA,
Chief Executive Officer and
President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the
* Board of Directors March 27, 1998
- -------------------------------------
DANIEL A. D'ANIELLO
/s/ Anthony J. DeLuca Director, Chief
- ------------------------------------- Executive Officer March 27, 1998
ANTHONY J. DELUCA and President
(Principal
Executive Officer)
Director
* March 27, 1998
- -------------------------------------
PHILIP B. DOLAN
Director
* March 27, 1998
- -------------------------------------
E. MARTIN GIBSON
Director
* March 27, 1998
- -------------------------------------
JAMES C. MCGILL
Director
* March 27, 1998
- -------------------------------------
ROBERT F. PUGLIESE
Director
* March 27, 1998
- -------------------------------------
JAMES DAVID WATKINS
Vice President,
* Finance/ Controller March 27, 1998
- ------------------------------------- (Principal
HARRY J. SOOSE Financial Officer
and Principal
Accounting Officer)
</TABLE>
*By: /s/ Anthony J. DeLuca
___________________________
ANTHONY J. DELUCA,
Attorney-in-fact
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of January 15,
1998, among OHM Corporation, the Registrant and IT-
Ohio, Inc.(1)
2.2 Share Repurchase Agreement, dated as of January 15,
1998, among OHM Corporation, Waste Management, Inc.,
Rust International, Inc. and the Registrant.(1)
2.3 Amended and Restated Share Repurchase Agreement, dated
as of February 11, 1998, among OHM Corporation, Waste
Management, Inc., Rust International, Inc., Rust
Remedial Services Holding Company, Inc. and the
Registrant.(1)
2.4 Second Amended and Restated Share Repurchase Agreement,
dated as of February 17, 1998, among OHM Corporation,
Waste Management, Inc., Rust International, Inc., Rust
Remedial Services Holding Company, Inc. and the
Registrant.(1)
2.5 Parent Voting Agreement, dated as of January 15, 1998,
among the Registrant, certain stockholders of the
Registrant and OHM Corporation.(1)
3.1 Certificate of Incorporation of the Registrant as
amended by Amendment to Certificate of Incorporation
filed September 17, 1987, with Delaware Secretary of
State.(2)
3.2 Amended and Restated Bylaws of the Registrant as
amended through June 20, 1997.(3)
4.1 Certificate of Designations with respect to the
Registrant's 7% Cumulative Convertible Exchangeable
Preferred Stock, $100 par value.(4)
4.2 Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights and
Qualifications, Limitations and Restrictions Thereof of
Cumulative Convertible Participating Preferred Stock of
the Registrant, issued November 20, 1996.(5)
4.3 Indenture for the Registrant's 7% Convertible
Subordinate Debentures Due 2008.(4)
5.1 Opinion of Gibson, Dunn & Crutcher LLP.*
8.1 Opinion of Sullivan & Cromwell.*
10.1 Note Purchase Agreement dated as of October 24, 1995
for IT Corporation 8.67% Guaranteed Senior Secured
Notes due October 30, 2003.(6)
10.2 Master Collateral and Intercreditor Agreement dated as
of October 24, 1995 among Certain Participating
Creditors of IT Corporation and Chemical Bank, as
Collateral Agent.(6)
10.3 Amendment No. 1 dated. as of January 5, 1996 to the
Credit Agreement dated as of October 24, 1995 among IT
Corporation, the Lenders party thereto, and Chemical
Bank, as Administrative Agent.(7)
10.4 Amendment No. 1 dated as of January 5, 1996 to the
several Note Purchase Agreements, each dated as of
October 24, 1995 between IT Corporation and the
respective Purchasers party thereto.(7)
10.5 Second Amendment to Credit Agreement, Master Collateral
and Intercreditor Agreement and Note Purchase
Agreement, dated as of October 30, 1996, among the
Lenders, Participating Creditors and IT Corporation.(1)
10.6 Asset Transfer Agreement among MetPath Inc., the
Registrant and IT Corporation dated as of May 2,
1994.(8)
10.7 Amended and Restated Shareholders' Agreement between
Corning Incorporated, the Registrant, IT Corporation
and Quanterra Incorporated, dated January 1, 1996.(9)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.8 Amended and Restated Equity Investors' Undertaking,
dated January 19, 1996, from the Equity Investors in
favor of Quanterra Incorporated, Citibank, N.A., and
Citicorp USA, Inc.(9)
10.9 Agreement, dated January 19, 1996, related to the
ownership of IT Corporation, Corning Clinical
Laboratories Inc., and Corning Incorporated in
Quanterra Incorporated.(9)
10.10 Securities Purchase Agreement dated as of August 28,
1996 between the Registrant and certain Purchasers
identified therein affiliated with The Carlyle Group
(5), including agreement by and between The Carlyle
Group and the Registrant re financial advisory and
investment banking fees.
10.11 Amendment No. 1, dated November 20, 1996, to Securities
Purchase Agreement dated August 28, 1996, by and among
the Registrant and certain Purchasers identified
therein affiliated with The Carlyle Group.(10)
10.12 Form of Warrant Agreement by and among the Registrant
and certain Warrant Holders defined herein affiliated
with The Carlyle Group, dated as of November 20,
1996.(5)
10.13 Form of Registration Rights Agreement by and among the
Registrant and certain Investors affiliated with The
Carlyle Group, dated November 20, 1996.(5)
10.14 Non-Employee Directors' Retirement Plan, as amended and
restated June 2, 1994 (9)(10), as amended by the
Amended and Restated Non-Employee Directors Retirement
Plan, Amendment No. 5, dated November 20, 1996.(11)
10.15 Description of the Special Turn-a-Round Plan (Fiscal
Year 1995 Management Incentive Plan) of the
Registrant.(8)(11)
10.16 1983 Stock Incentive Plan, as amended.(11)(13)
10.17 1991 Stock Incentive Plan (7)(11) as modified by waiver
dated November 20, 1996, by certain former Non-Employee
Directors, in favor of the registrant.(11)
10.18 1996 Stock Incentive Plan.(11)(18)
10.19 Fiscal Year 1997 Management Incentive Plan.(11)
10.20 Fiscal Year 1998 Management Incentive Plan.(11)
10.21 Separation Agreement dated July 24, 1996 between Robert
B. Sheh and the Registrant.(11)(14)
10.22 Separation Agreement dated as of September 30, 1996
between Eric Schwartz and the Registrant.(4)(10)
10.23 Retirement Plan of IT, 1993 Restatement.(11)(12)
10.24 Amendment Number One to IT Corporation Retirement Plan,
dated as of July 1, 1995.(11)(15)
10.25 Amendment Number Two to IT Corporation Retirement Plan,
dated as of October 1, 1995.(11)(15)
10.26 Amendment Number Three to IT Corporation Retirement
Plan, dated as of July 15, 1996.(11)(16)
10.27 Amendment Number Four to IT Corporation Retirement
Plan, dated as of February 1, 1997.(11)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.28 Amendment Number Five to IT Corporation Retirement
Plan, dated as of May 13, 1997.(11)
10.29 Executive Stock Purchase Interest Reimbursement Plan,
approved September 6, 1995.(7)(11)
10.30 Executive/Directors Deferred Compensation Plan,
effective January 1, 1996.(7)(11)
10.31 Executive Restoration Plan, effective July 1, 1995 as
amended through May 13, 1997.(7)(11)
10.32 1997 International Technology Corporation Non-Employee
Directors Stock Plan--Director Fees, dated as of
February 26, 1997.(11)(16)
10.33 Employment Agreement, dated as of November 20, 1996, by
and between the Registrant, IT Corporation, and Anthony
J. DeLuca.(11)
10.34 Employment Agreement, dated as of November 20, 1996, by
and between the Registrant, IT Corporation, and
Franklin E. Coffman.(11)
10.35 Employment Agreement, dated as of November 20, 1996, by
and between the Registrant, IT Corporation, and James
R. Mahoney.(11)
10.36 Employment Agreement, dated as of November 20, 1996, by
and between the Registrant, IT Corporation, and Raymond
J. Pompe.(11)
10.37 Credit Agreement, dated as of February 25, 1998, among
the Registrant, IT Corporation, IT-Ohio, Inc., the
Lenders party thereto, the Issuing Banks party thereto,
Citicorp USA, Inc., as Administrative Agent,
BankBoston, N.A., as Documentation Agent, and Royal
Bank of Canada, as Co-Agent.(1)
10.38 Company Voting Agreement, dated as of January 17, 1998,
among the Registrant, OHM Corporation and certain
shareholders of OHM Corporation.(1)
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in
Exhibit 5.1).
23.2 Consent of Sullivan & Cromwell (included in Exhibit
8.1).
23.3 Consent of Ernst & Young LLP, independent auditors.
23.4 Consent of Donaldson, Lufkin & Jenrette Securities
Corporation.
23.5 Form of Consent of BT Alex. Brown Incorporated.
24.1 Power of Attorney.**
99.1 Form of International Technology Corporation proxy
card.
99.2 Form of OHM Corporation proxy card.
</TABLE>
- --------
* To be filed by amendment
** Previously filed
(1) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Schedule 14D-1 filed January 15, 1998, as
amended.
(2) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 28, 1997 (No. 1-9037)
(3) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1988
(4) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-3 (No. 33-
65988)
(5) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Form 8-K dated September 20, 1996
<PAGE>
(6) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 29, 1995.
(7) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 29, 1996.
(8) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1994.
(9) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 29, 1995.
(10) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 27, 1996.
(11) Filed as a management compensation plan or arrangement per Item 14(a)(3)
of the Securities Exchange Act.
(12) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1995.
(13) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Annual Report on Form 10-K for the year ended
March 31, 1993.
(14) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's report on Form 10-K/A, Amendment No. 1, dated
July 29, 1996, to the Annual Report of Form 10-K for the year ended March
29, 1996.
(15) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-8 (No. 333-
00651).
(16) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-8 (No. 333-
26143).
(17) Previously filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement on Form S-8 (No. 333-
28721).
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Joint Proxy Statement/Prospectus
of International Technology Corporation and OHM Corporation for the
registration of shares of International Technology Corporation's common stock
to be issued in connection with the merger of IT-Ohio, Inc. with OHM
Corporation and to the incorporation by reference therein of our reports dated
May 13, 1997 and February 12, 1998, with respect to the consolidated financial
statements and schedule of International Technology Corporation and OHM
Corporation, respectively, included in their Annual Reports (as amended) for
their years ended March 28, 1997 and December 31, 1997, respectively, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania and Columbus, Ohio
March 21, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
We hereby consent to (i) the inclusion of our opinion letter, dated January
14, 1998, to the Board of Directors of International Technology Corporation
(the "Company") as Annex B to the Joint Proxy Statement/Prospectus of the
Company relating to the proposed acquisition of OHM Corporation ("OHM") by the
Company and (ii) all references to Donaldson, Lufkin & Jenrette Securities
Corporation in the sections captioned "Summary," "Reasons for the Merger;
Recommendation of the Board of Directors of ITC," "Opinion of ITC's Financial
Advisor," and "Background of the Merger," of the Joint Proxy
Statement/Prospectus of the Company and OHM which forms a part of this
Registration Statement on Form S-4. In giving such consent, we do not admit
that we come within the category of persons whose consent is required under,
and we do not admit that we are "experts" for purposes of, the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
/s/ Mark A. Pytosh
___________________________________
Name: Mark A. Pytosh
Title: Managing Director
New York, New York
March 23, 1998
<PAGE>
EXHIBIT 23.5
March , 1998
CONSENT OF BT ALEX. BROWN & SONS INCORPORATED
We hereby consent to the references to us in the Proxy Statement-Prospectus
constituting part of this Registration Statement on Form S-4, and to the
inclusion in such Proxy Statement-Prospectus of our opinion (in whole but not
in part) to the Board of Directors of OHM Corporation dated January 14, 1998.
In giving this consent, we do not concede that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
BT Alex. Brown & Sons Incorporated
Baltimore, Maryland
March , 1998
<PAGE>
EXHIBIT 99.1
INTERNATIONAL TECHNOLOGY CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [WEDNESDAY, APRIL 29], 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
INTERNATIONAL TECHNOLOGY CORPORATION
The undersigned constitutes and appoints ANTHONY J. DELUCA and JAMES G.
KIRK, and each of them, attorneys-in-fact and proxies of the undersigned, to
represent the undersigned and to vote all shares of capital stock of
International Technology Corporation (the "Company") which the undersigned
would be entitled to vote if personally present at the Special Meeting of
Stockholders of the Company (the "Special Meeting") to be held at [11:00 a.m.
Eastern time, on Wednesday, April 29, 1998, at the DoubleTree Hotel, located
at 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222,] and at any and all
adjournments or postponements thereof.
THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE OF THIS PROXY CARD.
WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND
3. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the Special Meeting or any
adjournment or postponement thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INTERNATIONAL
TECHNOLOGY CORPORATION.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE
(See reverse side)
<PAGE>
- -------------------------------------------------------------------------------
Please mark
your votes
[X] as shown
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
1. ISSUANCE OF COMMON STOCK PURSUANT TO THE FOR AGAINST ABSTAIN
AGREEMENT AND PLAN OF MERGER, DATED AS OF [ ] [ ] [ ]
JANUARY 15, 1998, AMONG OHM CORPORATION,
INTERNATIONAL TECHNOLOGY CORPORATION AND
IT-OHIO, INC.
2. AMENDMENTS TO 1996 STOCK INCENTIVE PLAN TO FOR AGAINST ABSTAIN
INCREASE THE NUMBER OF AUTHORIZED SHARES [ ] [ ] [ ]
ISSUABLE THEREUNDER AND TO CHANGE THE DATE
OF CERTAIN ANNUAL AUTOMATIC ADJUSTMENTS TO THE
AUTHORIZED NUMBER OF SHARES THEREUNDER.
3. AMENDMENT TO CERTIFICATE OF INCORPORATION FOR AGAINST ABSTAIN
TO ELIMINATE THE CLASSIFIED BOARD OF DIRECTORS. [ ] [ ] [ ]
4. IN THE DISCRETION OF THE PROXYHOLDERS WITH
RESPECT TO ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE SPECIAL MEETING AND AT ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF. THE
BOARD OF DIRECTORS IS NOT AWARE OF ANY OTHER
MATTERS THAT WILL BE PRESENTED AT THE SPECIAL
MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE SPECIAL MEETING.
YOU ARE URGED TO MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED PREPAID ENVELOPE AS PROMPTLY AS POSSIBLE.
Signature(s): ____________________________________________________________
Date: ____________________________________________________________________
Signature(s): ____________________________________________________________
Date: ____________________________________________________________________
NOTE: Please sign exactly as your name(s) appears on your stock
certificate(s). If shares of stock are held of record in the names of two or
more persons or in the name of husband and wife, whether as joint tenants or
otherwise, both or all of such persons should sign the proxy. If shares of
stock are held of record by a corporation, the proxy should be executed by the
president or vice president and the secretary or assistant secretary. If
shares of stock are held of record by a partnership, the proxy should be
executed by a duly authorized officer of the partnership. Executors,
administrators or other fiduciaries who execute the above proxy for a deceased
shareholder should give their full title. Please date this proxy. Joint owners
should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
EXHIBIT 99.2
- --------------------------------------------------------------------------------
OHM CORPORATION
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [WEDNESDAY, APRIL 29], 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
OHM CORPORATION
The undersigned hereby appoints each of Pamela K.M. Beall and Steven E.
Harbour as proxies with full power of substitution, and hereby authorizes each
of them to present and vote, as designated on the reverse side of this card,
all the shares of Common Stock, $0.10 par value, of OHM Corporation (the
"Company"), held of record by the undersigned on March , 1998, at the
Special Meeting of Shareholders of OHM (the "Special Meeting") to be held at
[the Double Tree Hotel, located at 1000 Penn Avenue, Pittsburgh, Pennsylvania
15222, on Wednesday, April 29, 1998, at 12:00 p.m., Eastern time], and at any
and all adjournments or postponements thereof.
THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE OF THIS PROXY CARD.
WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSAL NO. 1. In
their discretion, the proxy holders are authorized to vote upon such other
business as may properly come before the Special Meeting or any adjournment or
postponement thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF OHM CORPORATION.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE
(See reverse side)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1. [X] Please mark
your votes
as shown
1. ADOPTION OF THE AGREEMENT AND PLAN FOR AGAINST ABSTAIN
OF MERGER, DATED AS OF JANUARY 15, 1998, [_] [_] [_]
AMONG OHM CORPORATION, INTERNATIONAL
TECHNOLOGY CORPORATION AND IT-OHIO, INC.
2. IN THE DISCRETION OF THE PROXYHOLDERS FOR AGAINST ABSTAIN
WITH RESPECT TO ANY OTHER MATTER THAT [_] [_] [_]
MAY PROPERLY COME BEFORE THE SPECIAL
MEETING AND AT ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. THE BOARD OF
DIRECTORS IS NOT AWARE OF ANY OTHER MATTERS
THAT WILL BE PRESENTED AT THE SPECIAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE SPECIAL MEETING.
YOU ARE URGED TO MARK, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED PREPAID ENVELOPE AS
PROMPTLY AS POSSIBLE.
Signature(s):
-----------------------
Date:
--------------------------------
Signature(s):
-----------------------
Date:
-------------------------------
NOTE: Please sign exactly as your
name(s) appears on your stock
certificate(s). If shares of stock
are held of record in the names of
two or more persons or in the name
of husband and wife, whether as
joint tenants or otherwise, both or
all of such persons should sign the
proxy. If shares of stock are held
of record by a corporation, the
proxy should be executed by the
president or vice president and the
secretary or assistant secretary. If
shares of stock are held of record
by a partnership, the proxy should
be executed by a duly authorized
officer of the partnership.
Executors, administrators or other
fiduciaries who execute the above
proxy for a deceased shareholder
should give their full title. Please
date this proxy. Joint owners should
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
