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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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OHM CORPORATION
(NAME OF SUBJECT COMPANY)
OHM CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, $0.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
670839 10 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
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STEVEN E. HARBOUR
VICE PRESIDENT, LEGAL AND SECRETARY
OHM CORPORATION
5445 TRIANGLE PARKWAY, SUITE 400
NORCROSS, GEORGIA 30092
TELEPHONE: 770-729-3900
TELECOPIER: 770-849-3101
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF
THE PERSON(S) FILING STATEMENT)
WITH COPIES TO:
JOSEPH B. FRUMKIN THOMAS C. DANIELS
SULLIVAN & CROMWELL JONES DAY REAVIS & POGUE
125 BROAD STREET NORTH POINT
NEW YORK, NEW YORK 10004 901 LAKESIDE AVENUE
TELEPHONE: (212) 558-4000 CLEVELAND, OHIO 90071
TELECOPIER: (212) 558-3588 TELEPHONE: (216) 586-3939
TELECOPIER: (216) 579-0212
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is OHM Corporation, an Ohio corporation (the
"Company"). The address of the principal executive offices of the Company is
16406 U.S. Route 224 East, Findlay, Ohio, 45840. The title of the class of
securities to which this statement relates is the Common Stock of the Company,
par value $0.10 per share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") by IT-Ohio, Inc.
("Purchaser"), a wholly owned subsidiary of International Technology
Corporation ("Parent"), to purchase 13,933,000 Shares at a price of $11.50 per
Share, net to tendering shareholder in cash, subject to the terms and
conditions set forth in the Offer to Purchase, dated January 16, 1998, and the
related Letter of Transmittal. The Offer is described in the Tender Offer
Statement on Schedule 14D-1 filed by Purchaser with the Securities and
Exchange Commission on January 16, 1998 (the "Schedule 14D-1") and is enclosed
herewith.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 15, 1998 (the "Merger Agreement"), among the Company, Parent and
Purchaser. The Merger Agreement provides that, regardless of whether Shares
are accepted for payment or paid for in the Offer, but subject to the
satisfaction or waiver of certain conditions precedent (including the approval
of the Merger Agreement by holders of a majority of the outstanding Shares),
Purchaser will merge with and into the Company (the "Merger"), which will be
the surviving corporation in the Merger, with the result that the Company will
become a wholly owned subsidiary of Parent.
At the effective time of the Merger, each Share (other than Shares purchased
in the Offer or otherwise owned by Parent or any subsidiary of Parent, Shares
owned by the Company or any subsidiary of the Company and Shares that are
owned by shareholders exercising appraisal rights pursuant to the Ohio General
Corporation Law (the "OGCL") (collectively, "Excluded Shares")) will be
converted into the right to receive (i) 1.394 shares (the "Exchange Ratio") of
Common Stock, $0.01 par value per share, of Parent ("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 Waste Management Inc.
("WMX") pursuant the Repurchase (as defined herein) is less than 19,168,381
Shares (the "Cash Share Number") (the number of Shares so paid for and
purchased being referred to as the "Purchased Share Number"), then the
Exchange Ratio will 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 of the Merger (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 in accordance with 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
the previous sentence is hereinafter referred to collectively as the "Merger
Consideration"). Both the Offer and the Merger will be fully taxable
transactions, with the result that gain will be realized in an amount equal to
the excess of the cash and fair market value of Parent Common Stock received
over the holder's adjusted tax basis in the Shares surrendered.
As the market price of the shares of the Parent Common Stock will fluctuate,
the value of the Exchange Ratio at the effective time of the Merger may be
greater or less than the $11.50 in cash per Share payable pursuant to the
Offer. ACCORDINGLY, THE VALUE OF THE MERGER CONSIDERATION MAY BE LESS OR
GREATER THAN THE $11.50 PER SHARE RECEIVED BY HOLDERS OF SHARES THAT ARE
PURCHASED PURSUANT TO THE OFFER. Based on the closing price of Parent Common
Stock on the New York Stock Exchange, Inc. on January 15, 1998, the value of
the Parent Common Stock to be received for each Share pursuant to the Exchange
Ratio would have been $11.15.
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The Merger Agreement is summarized in Item 3(b) below. A copy of the Merger
Agreement has been filed as Exhibit 3 to this Statement and is incorporated
herein by reference.
Pursuant to the Merger Agreement and the Share Repurchase Agreement, dated
as of January 15, 1998 (the "Repurchase Agreement"), among the Company,
Parent, WMX (which holds approximately 38% of the outstanding Shares) and Rust
International Inc., a wholly owned subsidiary of WMX ("Rust"), the Company
will repurchase from WMX 5,235,381 Shares for $11.50 per Share, concurrently
with the payment for Shares pursuant to the Offer (the "Repurchase"). The
effect of the Repurchase will be to increase the aggregate number of Shares
acquired for cash, make it possible for the consideration paid in the Merger
to consist solely of shares of Parent Common Stock, and result in WMX
receiving cash and Parent Common Stock in the same proportion as other
shareholders of the Company, assuming that all outstanding Shares (other than
7,525,380 Shares held by WMX) are tendered in the Offer. Pursuant to the
Repurchase Agreement, WMX has also agreed, among other things, to vote all
Shares held by it in favor of the adoption of the Merger Agreement and the
consummation of the Offer, the Merger and the other transactions contemplated
by the Merger Agreement (the "Transactions"); not to take certain actions, or
encourage or assist any other party in taking any action, which would compete
with, impede, interfere with or attempt to discourage the Transactions or
inhibit the timely consummation of the Transactions; and not to tender more
than 2,142,141 Shares into the Offer. Additional provisions of the Repurchase
Agreement are summarized in Item 3(b) below. A copy of the Repurchase
Agreement has been filed as Exhibit 4 to this Statement and is incorporated
herein by reference.
Pursuant to the Company Voting Agreement, dated as of January 15, 1998 (the
"Company Voting Agreement"), among the Company, Parent, James L. Kirk (the
Company's Chairman, President and Chief Executive Officer), Joseph R. Kirk (a
director and Executive Vice President of the Company), H. Wayne Huizenga and
The Huizenga Family Foundation (which shareholders are not affiliated with the
Company and are referred to collectively with Messrs. James and Joseph Kirk as
the "Company Shareholders"), the Company Shareholders (who collectively hold
approximately 23% of the outstanding Shares) have agreed, among other things,
to vote all Shares held by them in favor of the adoption of the Merger
Agreement and the consummation of the Transactions, and not to take certain
actions, or encourage or assist any other party in taking any action, which
would compete with, impede, interfere with or attempt to discourage the
Transactions or inhibit the timely consummation of the Transactions.
Additional provisions of the Company Voting Agreement are summarized in Item
3(b) below. A copy of the Company Voting Agreement has been filed as Exhibit 5
to this Statement and is incorporated herein by reference.
Pursuant to the Parent Voting Agreement, dated as of January 15, 1998 (the
"Parent Voting Agreement"), among Parent, the Company and certain stockholders
of Parent (the "Parent Stockholders") affiliated with The Carlyle Group
("Carlyle") which are entitled to cast approximately 38% of the votes entitled
to be cast at the meeting of stockholders of Parent contemplated by the Merger
Agreement, the Parent Stockholders have agreed, among other things, to vote
all shares of Cumulative Convertible Preferred Stock of Parent (the "Parent
Preferred Stock") held by them in favor of the consummation of the
Transactions and the issuance of shares of Parent Common Stock in connection
with the Merger, and not to take certain actions, or encourage or assist any
other party in taking any action, which would compete with, impede, interfere
with or attempt to discourage the Transactions or inhibit the timely
consummation of the Transactions. Additional provisions of the Parent Voting
Agreement are summarized in Item 3(b) below. A copy of the Parent Voting
Agreement has been filed as Exhibit 6 to this Statement and is incorporated
herein by reference.
Pursuant to the Merger Agreement, concurrently with the acceptance by
Purchaser of Shares for payment in the Offer, the Company will pay a pro rata
distribution (the "NSC Distribution") to holders of record of the Shares as of
the close of business on the date prior to the date Purchaser accepts Shares
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. It is
anticipated that the NSC distribution will be treated as a pro rata taxable
redemption which qualifies as a sale or exchange for tax purposes.
As set forth in the Schedule 14D-1, the address of the principal executive
offices of Parent and Purchaser is 2790 Mosside Boulevard, Monroeville,
Pennsylvania 15146-2792.
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ITEM 3. IDENTITY AND BACKGROUND.
(a) The name of the Company, which is the person filing this Statement, and
the address of its principal executive offices are set forth in Item 1 above.
Unless the context otherwise requires, references in this Statement to the
Company refer to the Company and its subsidiaries, taken as a whole.
(b) Except as set forth in this Item 3(b), to the knowledge of the Company,
as of the date hereof, there are no material contracts, agreements or
understandings and actual or potential conflicts of interest between the
Company or its affiliates and (i) its executive officers, directors or
affiliates, or (ii) Parent, Purchaser or their respective executive officers,
directors or affiliates.
AGREEMENTS WITH EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY
The Company has entered into certain agreements and contracts with its
executive officers, directors and affiliates, as described in the Information
Statement pursuant to Section 14(f) of the Securities Exchange Act of 1934 and
Rule 14f-1 thereunder (the "Information Statement"), which is attached to this
Statement as Annex B and is incorporated herein by reference. A copy of the
Information Statement has been filed as Exhibit 9 to this Statement.
The shareholders of the Company should be aware that certain members of the
Company's management and certain members of the Board of Directors of the
Company have certain interests in the Merger that are in addition to the
interests of shareholders of the Company generally.
EMPLOYMENT AGREEMENTS
The Merger will result in a change in control of the Company for purposes of
employment agreements entered into by the Company with eight executive
officers of the Company (the "Employment Agreements"). The Employment
Agreements are described more fully in the Information Statement. As a result
of the change in control, under the Employment Agreements such executives will
continue their employment with the Company 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 the Company 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 the Company, 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.
The Company 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 the Company, Mr. Kirk's employment will terminate and he will be entitled
to receive 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 date of the Merger, the Company will enter into an agreement
with an officer of the Company (which may be characterized as either a
severance agreement or a retention agreement) which will provide for a
severance payment of not more than one-year's base salary during the one-year
period following the change in control of the Company.
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RESTRICTED STOCK AWARDS
The Company has entered into restricted stock agreements ("Restricted Stock
Agreements") with five executive officers of the Company, including Mr. James
L. Kirk, Mr. Petrocelli, Mr. Szomjassy and Mr. Blackwell, pursuant to the
Company's Incentive Stock Plan. The Incentive Stock Plan is described more
fully in the Information Statement. In connection with the Merger, the Company
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 the Company, 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 Company stock options under
the Company's 1986 Stock Option Plan and the Nonqualified Stock Option Plan
for Directors, including the executive officers of the Company and
participating Directors, will be entitled to elect to receive a cash payment
in return for the cancellation of their options. The cash payment for each
Company option would equal the difference between $11.50 and the exercise
price of such option, multiplied by the number of Shares subject to such
option. Such payments will be made prior to the date of the Merger. If each
executive officer of the Company who is not also a Director elects to receive
the cash payment, the Company 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, the Company 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 that he elects to receive the cash
payment in lieu of his options.
DEFERRED COMPENSATION PLANS
The Company maintains the Retirement and Incentive Compensation Plan (the
"RICP"), the terms of which are more fully described in the Information
Statement. The Merger will result in a change in control of the Company 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 the executive officers of the Company,
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 the executive officers of the Company was $358,783.
COMPANY AIRCRAFT
In November 1997, the Company entered into an agreement to purchase a new
aircraft for use in the Company's business. In connection with such agreement,
the Company deposited the sum of $100,000 with the seller of such aircraft.
Following discussions with Parent, the Company has determined not to complete
the purchase of the aircraft. James L. Kirk has proposed that an entity in
which he has a personal interest assume the Company's obligations under the
foregoing purchase agreement and reimburse the Company in the amount of the
deposit made.
THE MERGER AGREEMENT
The following summary of certain provisions of the Merger Agreement is
presented only as a summary and is qualified in its entirety by reference to
the Merger Agreement, a copy of which is filed as Exhibit 3 to this Statement
and is incorporated herein by reference.
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THE OFFER
The Merger Agreement provides for the making of the Offer. Pursuant to the
Offer, each tendering shareholder will receive $11.50, net to the tendering
shareholder in cash for each share tendered in the Offer. If more than
13,933,000 Shares are validly tendered prior to the expiration date of the
Offer (the "Expiration Date") and not withdrawn, Purchaser will, upon the
terms and subject to the conditions of the Offer, accept 13,933,000 Shares for
payment on a pro rata basis, with adjustments to avoid purchases of fractional
Shares, based upon the number of Shares validly tendered prior to the
Expiration Date and not withdrawn by each tendering shareholder. The Schedule
14D-1 states that because of the difficulty of determining precisely the
number of Shares validly tendered and not withdrawn, if proration is required,
Purchaser would not expect to announce the final results of the proration
until at least seven New York Stock Exchange, Inc. ("NYSE") trading days after
the Expiration Date.
Purchaser's obligation to accept for payment or pay for Shares is subject to
the satisfaction of the conditions that are described in Section 15 of the
Offer to Purchase contained in the Schedule 14D-1. The Schedule 14D-1 states
that Purchaser reserves the right to increase the price per Share payable in
the Offer or to make any other changes in the terms and conditions of the
Offer. Pursuant to the Merger Agreement, however, unless previously approved
by the Company's Board in writing, Purchaser may not decrease the price per
Share or change the form of consideration payable in the Offer, decrease the
number of Shares sought pursuant to the Offer, change the conditions to the
Offer, impose additional conditions of the Offer or amend any other term of
the Offer in any manner adverse to 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 Section 15 of the Offer to Purchase.
The Merger Agreement provides that so long as the Merger 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, Purchaser 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.
THE MERGER
As soon as practicable after the satisfaction or waiver of the conditions to
the Merger, Purchaser will be merged with and into the Company, as a result of
which the separate corporate existence of Purchaser will cease and the Company
will continue as the surviving corporation. The Effective Time will occur at
the date and time that a certificate of merger is executed and filed with the
Secretary of State of the State of Ohio. The Company shall thereupon become a
wholly owned subsidiary of Parent.
Consideration to Be Paid in the Merger. At the effective time of the Merger,
each issued and outstanding Share (other than Excluded Shares) will be
converted into the right to receive (i) 1.394 (the "Exchange Ratio") fully
paid and nonassessable shares of 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 the Cash Share Number, then the Exchange Ratio shall be
adjusted to be equal to the product obtained by multiplying the Exchange Ratio
by a fraction, (A) the numerator of which is equal to (x) 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.
EMPLOYEE AND DIRECTOR STOCK OPTIONS
Pursuant to the Merger Agreement, each holder of an option to purchase a
Share under the Stock Plans (each, a "Company Option") granted under the
Company's 1986 Stock Option Plan, Director's Deferred Fee Plan, Incentive
Stock Plan and Nonqualified Stock Option Plan for Directors (collectively, the
"Stock Plans") is
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required to elect the treatment of their Company Options under the provisions
of the Merger Agreement. Company Option holders may elect that, at the
Effective Time, each Company Option, whether vested or unvested, exercisable or
unexercisable, shall be converted into the right to receive cash consideration
equal to the product of (x) (1) the excess of $11.50 over (2) the then current
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 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 will cease to exist by virtue of such payment.
Alternatively, Company Option holders may elect that, at the Effective Time,
each Company 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 Company Option, a number of shares of Parent
Common Stock equivalent to the number of Shares that could have been purchased
immediately prior to the effective time of the Merger 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 Common Stock), at a
price per share of Parent Common 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.
CONDUCT OF BUSINESS AND BOARD REPRESENTATION
The Company. The Company has agreed that, prior to the date on which
representatives of the Purchaser are elected to the Company's Board of
Directors and represent at least a majority of such directors (unless Parent
shall otherwise approve in writing, which approval shall not be unreasonably
withheld or delayed, and except as otherwise expressly contemplated by the
Merger Agreement), (i) the business of the Company and its subsidiaries will be
conducted in the ordinary and usual course consistent with past practice, (ii)
the Company and its subsidiaries shall use all reasonable best efforts to
preserve their business organization intact and maintain their existing
relations and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates, (iii) the Company will not, among
other things, (a) issue, sell, pledge, dispose of or encumber any capital stock
in any of its subsidiaries, (b) amend its or its subsidiaries' certificate of
incorporation or regulations, (c) split, combine or reclassify the outstanding
capital stock of the Company or its subsidiaries, (d) 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
(e) 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 the Repurchase Agreement, any shares of its capital stock or
any securities convertible into or exchangeable or exercisable for any share or
its capital stock and (iv) neither the Company nor any of its subsidiaries will
(a) 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 of any voting debt or any other property or assets (other
than Shares issuable pursuant to Company Options outstanding on the date hereof
under the Stock Plans or upon conversion of outstanding debentures or exercise
of the warrants, (b) 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, (c) make any loans or
advances to any person, except to employees in the ordinary course of business
consistent with past practice, (d) make or authorize or commit to 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, (e) 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), (f) enter into new employment agreements or severance
agreement with any director, officer or other employee of the Company or its
subsidiaries except for agreements with certain employees and for renewal of
any existing agreement by operation of its terms in the ordinary and usual
course of business
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consistent with past practice, (g) terminate, establish, adopt, enter into,
make any new grants or awards under or amend or otherwise modify any
compensation or benefit plan, (h) change any accounting principles or practices
or cash policies or procedures, other than as required by the GAAP,
(i) compromise or settle 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, (j) make a 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 cancelled or terminated except in the ordinary and usual course of business,
(k) 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, (l) take any action that would be reasonably
likely to impede or delay the Offer or the Merger or adversely affect the
parties' ability to consummate the Offer or the Merger or (m) enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing.
Parent. Parent has agreed that as to itself and its subsidiaries, 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 the Merger Agreement), (i) the business of
the Parent and its subsidiaries will be conducted in the ordinary and usual
course consistent with past practice, (ii) 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, (iii) it
will not (a) amend its charter documents, articles or those of its
subsidiaries, (b) split, combine or reclassify its outstanding shares of
capital stock or any of its subsidiaries, or (c) 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, (iv) neither the Parent nor any of its subsidiaries will take
any action that would be reasonably likely to impede or delay the Offer or the
Merger or adversely affect the parties' ability to consummate the Offer or the
Merger, and (v) neither Parent nor any of its subsidiaries will authorize or
enter into an agreement to do any of the foregoing.
INDEMNIFICATION
Pursuant to the Merger Agreement, Parent will, from and after the Effective
Time, indemnify and hold harmless, to the fullest extent permitted under
applicable law (and Parent 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 the Company 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 the Company
or any of its subsidiaries. In addition, for not less than six years after the
Effective Time, Parent and the Surviving Corporation shall maintain the
Company's and its subsidiaries' existing directors' and officers' liability
insurance ("D&O Insurance"), subject to certain maximum premium payments,
provided that Parent may substitute therefor policies maintained for the
benefit of Parent or any of its subsidiaries 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.
CONDITIONS TO THE MERGER
Pursuant to the Merger Agreement, if Purchaser shall have purchased Shares
pursuant to the Offer, the respective obligations of Parent, Purchaser and the
Company to consummate the Merger shall be subject to the
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fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by Parent, Purchaser or the Company, as the case
may be:
(a) No United States or state court or other government 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;
(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 shall have been issued by the
Commission and no proceedings for that purpose and no similar proceeding in
respect of the Proxy Statement shall have been initiated or threatened by
the Commission;
(c) The Merger Agreement and the Merger shall have been approved and
adopted by the holders of a majority of the Shares, and 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; and
(d) The Parent Common Stock to be issued in connection with the
transactions contemplated by the Merger Agreement, 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.
If Purchaser shall not have purchased Shares pursuant to the Offer, the
respective obligations of Parent and Purchaser to consummate the Merger shall
be subject to the fulfillment of each of the conditions described in
paragraphs (a) through (d) above and the following conditions, any or all of
which may be waived in whole or in part by Parent or Purchaser, as the case
may be:
(e) The representations and warranties of the Company set forth in the
Merger 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;
(f) The Company shall have performed in all material respects all
obligations to be performed by it under the Merger 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; and
(g) The waiting period applicable to the consummation of the Merger under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") shall have expired or terminated.
If Purchaser 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 conditions set forth in paragraphs (a) through (d)
above and the following conditions, any or all of which may be waived in whole
or in part by the Company:
(h) The representations and warranties of Parent set forth in the Merger
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;
(i) Parent and Purchaser shall have performed in all material respects
all obligations to be performed by them under the Merger 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; and
(j) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or terminated.
ACQUISITION PROPOSALS
Pursuant to the Merger Agreement, the Company has agreed that neither it nor
any of its subsidiaries nor any officer, director or employee of the Company
or its subsidiaries will, and that it will direct and use its best
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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 or
entity, 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
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 or entity, 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 the Company or the Company's Board at any time prior to the purchase of
Shares 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 Company's Board
receives from the person or entity 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 discussions
with any person or entity 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
Company's Board (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 the Merger
Agreement (any such Acquisition Proposal being referred to herein as a
"Superior Proposal"). The Company has agreed to 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.
TERMINATION OF THE MERGER AGREEMENT.
The Merger Agreement may be terminated at any time prior to the expiration
or termination of the Offer, whether before or after shareholder approval
thereof, (i) by the mutual consent of Parent and the Company by action of
their respective Board of Directors, (ii) by either Parent or the Company
after June 15, 1998 if prior thereto Purchaser shall not have purchased Shares
pursuant to the Offer or the Effective Time shall not have occurred; provided,
the party seeking termination is not in violation of the terms of the Merger
Agreement, (iii) by Parent, if (A) the Company shall have failed to comply in
any material respect with any of the covenants or agreements contained in the
Merger Agreement to be complied with or performed by the Company at or prior
to the expiration or termination of the Offer, (B) the Company's Board shall
have withdrawn or modified in a manner adverse to Parent or Purchaser its
approval or recommendation of the Offer, the Merger Agreement or the Merger or
the Company's Board, upon request by Parent, fails to reaffirm such approval
or recommendation, or (C) Parent or Purchaser shall have terminated the Offer
in accordance with the condition to the obligations of Parent and Purchaser
that the representations and warranties of the Company set forth in the Merger
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, or (iv) by the Company, if prior to the expiration or termination of
the Offer (x) Parent or Purchaser
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fails to comply in any material respect with any of the covenants or
agreements contained in the Merger Agreement to be complied with or performed
by Parent or Purchaser at or prior to the expiration or termination of the
Offer, (y) any representation or warranty of Parent or Purchaser set forth in
the Merger Agreement is inaccurate or incomplete in any material respect when
made or thereafter and remains inaccurate or incomplete in any material
respect, or (z) there occurs an event that has or is reasonably likely to have
a Parent Material Adverse Effect, or (B) the Company's Board receives an
Acquisition Proposal or an unsolicited tender or exchange offer for the Shares
is commenced, the Company's Board 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 to comply with their fiduciary duties under
applicable law, and the Company determines in good faith, after consultation
with its financial advisor, that such transaction is a Superior Proposal, and
pays the Parent the $15,000,000 fee described below; provided that no fee
shall be paid to Parent if Parent has materially breached any of its
obligations under the Merger Agreement.
Pursuant to the Merger Agreement, if (i) after the date of the Merger
Agreement, (x) any corporation, partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act) other than Parent or
Purchaser 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, (y)
the Share Number shall not have been satisfied and the Offer is terminated
without the purchase of any Shares thereunder, and (z) 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, (ii) Parent shall have terminated the Merger
Agreement due to the withdrawal or modification, in a manner adverse to Parent
or Purchaser, of the approval or recommendation of the Offer by the Company's
Board, or (iii) the Company shall have terminated the Merger Agreement as a
result of an Acquisition Proposal, then, 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 such fee shall be paid to Parent if Parent has materially
breached any of its obligations under the Merger Agreement.
BOARD REPRESENTATION
The Merger Agreement provides that if requested by Parent, the Company will,
promptly following the purchase by Purchaser 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 in accordance with this sentence) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Parent, Purchaser or any other direct or indirect Subsidiary of Parent bears
to the total number of Shares then issued and outstanding rounded up to the
next greatest nearest whole number. The Merger Agreement provides that the
Company will increase the size of its Board of Directors 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 of the
Merger, the Company's Board of Directors shall consist of at least two members
who are neither officers, shareholders, designees nor affiliates of Parent,
Purchaser or any other direct or indirect Subsidiary of Parent ("Parent
Representatives"). The Merger Agreement provides that 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 the Company's
Board of Directors, each board of directors of each subsidiary 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 Merger Agreement provides that, promptly after the Effective Time of the
Merger, Parent will increase the size of its Board of Directors or exercise
its reasonable best efforts to secure the resignation of present
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directors in order to cause Herbert A. Getz and Richard W. Pogue (the
"Nominees"), to be appointed to Parent's Board of Directors and that, subject
to fiduciary obligations under applicable law, Parent will 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.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
parties thereto. These include representations and warranties of the Company,
Purchaser and Parent with respect to corporate existence and power,
capitalization, subsidiaries, corporate authorization relative to the Merger
Agreement, governmental consents and approvals, Commission reports, financial
statements, absence of certain changes or events, litigation and liabilities,
employee benefits, compliance with laws, environmental laws, taxes, labor
matters, documents relating to the Offer and the Merger and other matters. No
representations or warranties made by the Company, Parent or Purchaser will
survive beyond the effective time of the Merger, and no covenants or agreements
made in the Merger Agreement will survive beyond the effective time of the
Merger, except for covenants relating to indemnification, employee benefits and
certain other matters. Certain of the representations and warranties set forth
in the Merger Agreement will not be breached unless the matter constituting the
breach would have, or be reasonably likely to have, a material adverse effect
on the financial condition, properties, business or results of operations of
the Company and its subsidiaries taken as a whole (a "Company Material Adverse
Effect") or Parent and its subsidiaries taken as a whole (a "Parent Material
Adverse Effect"); provided, however, that to the extent that any such effect
results directly from the public announcement of the transactions contemplated
by the Merger Agreement or actions taken by Parent or its subsidiaries after
the date of the Merger Agreement, such effect shall not be considered when
determining if a Company Material Adverse Effect has occurred and provided,
further, that to the extent that any such effect results directly from the
public announcement of the transactions contemplated by the Merger Agreement or
actions taken by the Company or its subsidiaries after the date of the Merger
Agreement, such effect shall not be considered when determining if a Parent
Material Adverse Effect has occurred.
MISCELLANEOUS
Amendment and Waiver. The Merger Agreement can only be amended by a written
agreement executed by duly authorized officers of the respective parties.
Expenses. Whether or not the Merger is consummated, all costs and expenses
incurred in connection with the negotiation, execution and delivery of the
Merger Agreement, the Merger and the other transactions contemplated by the
Merger Agreement, including the Offer, shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for certain documents and the printing and mailing of certain documents shall
be borne by the Parent.
THE REPURCHASE AGREEMENT
In connection with the Merger Agreement, the Company, Parent, WMX and Rust
entered into the Repurchase Agreement, pursuant to which the Company will
repurchase from WMX 5,235,381 Shares for $11.50 per Share concurrently with the
payment to the Depositary of the aggregate purchase price for all Shares
purchased in the Offer. In addition, pursuant to the Repurchase Agreement, WMX
has agreed not to tender more than 2,142,141 shares into the Offer. The effect
of the Repurchase will be to increase the aggregate number of Shares acquired
for cash, make it possible for the consideration paid in the Merger to consist
solely of shares of Parent Common Stock, and result in WMX receiving cash and
Parent Common Stock in the same proportion as other shareholders of the
Company, assuming that all outstanding Shares (other than 7,525,380 Shares held
by WMX) are tendered in the Offer. Consummation of the Repurchase is subject to
the satisfaction or waiver of certain conditions, including (i) the payment by
Purchaser for Shares pursuant to the Offer concurrently with the Repurchase,
and (ii) the absence of any statutes, rules, regulations, judgments, decrees,
injunctions or other
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orders prohibiting consummation of the Transactions or the transactions
contemplated by the Repurchase Agreement.
Pursuant to the Repurchase Agreement, WMX has agreed, among other things, (i)
to vote all Shares held by it (A) in favor of the adoption of the Merger
Agreement and in favor of the consummation of the Transactions, (B) against any
action or agreement that would compete with, impede, interfere with or inhibit
the timely consummation of the Transactions, (C) against any action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation of the Company under the Merger Agreement, and
(D) against any merger, consolidation, business combination, reorganization,
recapitalization, liquidation or sale or transfer of any material assets of the
Company or its subsidiaries, except the Transactions, (ii) to deliver to Parent
an irrevocable proxy to vote the Shares held by WMX in a manner consistent with
clause (i) of this paragraph, (iii) not to take certain actions, or encourage
or assist any other party in taking any action, which would compete with,
impede, interfere with or attempt to discourage the Transactions or inhibit
timely consummation of the Transactions, and (iv) not to transfer or otherwise
dispose of Shares or warrants to purchase Shares held by WMX during the term of
the Repurchase Agreement, except in accordance therewith. In addition, pursuant
to the Repurchase Agreement, the Company and WMX have agreed (w) to make
certain amendments to the Standstill and Non-Competition Agreement among the
Company, WMX and Rust which will, as of the consummation of the Repurchase,
terminate WMX's agreement not to compete with, or acquire any interest in any
entity that competes with the Company in certain businesses, (x) to terminate
the warrants to purchase Shares held by WMX, (y) to provide for the termination
of WMX's guaranty of the indebtedness incurred pursuant to the Company's
revolving credit agreement, and (z) terminate various agreements and
arrangements to which WMX and the Company are parties. The Repurchase Agreement
will terminate automatically upon the termination of the Merger Agreement, and
may be terminated (p) by the Company, if WMX shall have failed to comply with
any of its covenants or agreements contained in the Repurchase Agreement, or
(q) by WMX, if the Company shall have failed to comply with any of its
covenants or agreements contained in the Repurchase Agreement. A copy of the
Repurchase Agreement has been filed as Exhibit 4 to this Statement and is
incorporated herein by reference.
THE COMPANY VOTING AGREEMENT
In connection with the Merger Agreement, Parent, the Company and the Company
Shareholders (which hold approximately 23% of the outstanding Shares) entered
into the Company Voting Agreement, pursuant to which the Company Shareholders
have agreed, among other things, (i) to vote all Shares held by them (A) in
favor of the adoption of the Merger Agreement and in favor of consummation of
the Transactions, (B) in favor of each of the Parent Representatives, (C)
against any action or agreement that would compete with, impede, interfere
with, attempt to discourage the Transactions or inhibit the timely consummation
of the Transactions, (D) against any action or agreement that would result in a
breach of any covenant, representation or warranty or any other obligation of
the Company under the Merger Agreement, and (E) against any merger,
consolidation, business combination, reorganization, recapitalization,
liquidation or sale or transfer of any material assets of the Company or its
subsidiaries that could compete with, impede, interfere with or attempt to
discourage the Transactions or inhibit the timely consummation of the
Transactions, (ii) to deliver to Parent an irrevocable proxy to vote the Shares
held by the Company Shareholders in a manner consistent with clause (i) of this
paragraph, (iii) not to take certain actions, or encourage or assist any other
party in taking any action, which would compete with, impede, interfere with or
attempt to discourage the Transactions or inhibit timely consummation of the
Transactions, and (iv) not to transfer or otherwise dispose of Shares held by
the Company Shareholders during the term of the Company Voting Agreement,
except for tenders into the Offer and except in accordance therewith. The
Company Voting Agreement will terminate automatically upon the termination of
the Merger Agreement or upon the Effective Time, but is not otherwise
terminable. A copy of the Company Voting Agreement has been filed as Exhibit 5
to this Statement and is incorporated herein by reference.
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THE PARENT VOTING AGREEMENT
In connection with the Merger Agreement, Parent, the Company and the Parent
Stockholders (which are entitled to cast approximately 38% of the votes
entitled to be cast at the meeting of Parent Stockholders contemplated by the
Merger Agreement) entered into the Parent Voting Agreement, pursuant to which
the Parent Stockholders have agreed, among other things, (i) to vote all shares
of Parent Preferred Stock held by them (A) in favor of consummation of the
Transactions and the issuance of shares of Parent Common Stock in connection
with the Merger, (B) against any action or agreement that would compete with,
impede, interfere with or attempt to discourage the Transactions or inhibit the
timely consummation of the Transactions, (C) against any action or agreement
that would result in a breach of any covenant, representation or warranty or
any other obligation of Parent or Purchaser under the Merger Agreement, and
(D) against any merger, consolidation, business combination, reorganization,
recapitalization, liquidation or sale or transfer of any material assets of
Parent, Purchaser or their respective subsidiaries that could compete with,
impede, interfere with or attempt to discourage the Transactions or inhibit the
timely consummation of the Transactions, (ii) to deliver to the Company an
irrevocable proxy to vote the shares of Parent Preferred Stock held by the
Parent Stockholders in a manner consistent with clause (i) of this paragraph,
(iii) not to take certain actions, or encourage or assist any other party in
taking any action, which would compete with, impede, interfere with or attempt
to discourage the Transactions or inhibit timely consummation of the
Transactions, and (iv) not to transfer or otherwise dispose of shares of Parent
Preferred Stock held by the Parent Stockholders during the term of the Parent
Voting Agreement, except in accordance therewith. The Parent Voting Agreement
will terminate automatically upon the termination of the Merger Agreement or
upon the Effective Time, but is not otherwise terminable. A copy of the Parent
Voting Agreement has been filed as Exhibit 6 to this Statement and is
incorporated herein by reference.
THE OPTION TERMINATION AGREEMENT
Pursuant to a letter agreement, dated January 15, 1998 (the "Option
Termination Agreement"), between the Company and H. Wayne Huizenga, who holds
an option to purchase up to 620,000 Shares at an exercise price of $10.00 per
Share and an option to purchase up to 380,000 Shares at an exercise price of
$12.00 per Share, such options will be terminated on the earliest to occur of
(i) the acceptance by Purchaser of Shares for payment in the Offer, or (ii) the
Effective Time, in exchange for the payment by the Company to Mr. Huizenga of
$1,500,000. A copy of the Option Termination Agreement has been filed as
Exhibit 7 to this Statement and is incorporated by reference.
THE CONFIDENTIALITY AGREEMENT
Pursuant to a letter agreement, dated September 25, 1997 (the
"Confidentiality Agreement"), the Company and Parent agreed to disclose to each
other certain non-public or confidential information in order to evaluate a
possible combination of the two companies. A copy of the Confidentiality
Agreement has been filed as Exhibit 8 to this Statement and is incorporated
herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY 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, THE COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY,
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
The Offer is scheduled to expire at 9:00 a.m., New York City time, on
February 17, 1998, unless Parent extends the period of time for which the Offer
is open. A copy of a letter to the Company's shareholders
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communicating the Board's recommendation have been filed as Exhibit 2 to this
Statement, respectively, and are incorporated herein by reference.
(B) BACKGROUND OF THE OFFER; REASONS FOR THE RECOMMENDATION.
At a meeting in July 1997 with members of the management of Parent and WMX,
and representatives from Carlyle and Donaldson, Lufkin & Jenrette Securities
Corporation, Parent's financial advisor ("DLJ"), Parent expressed an interest
in WMX's various investments in the environmental consulting/engineering and
remediation industry. During the meeting, the participants discussed WMX
investment in approximately 38% of the outstanding Shares. Management of
Parent indicated they believed there would be significant cost savings created
in a combination of Parent and the Company and offered to explain more fully
the benefits of a combination to the Company's Board or to its management.
At a subsequent meeting in August 1997 with the same participants, the
management of Parent expressed an interest in pursuing a combination of Parent
and the Company in which Parent would issue stock in exchange for the
outstanding stock of the Company 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 Parent's interest in
pursuing a combination with the Company to the Company's management. In August
1997, a representative of WMX contacted DLJ and indicated that the Company's
Board of Directors might be interested in exploring further a potential
combination with several conditions: (i) the estimated synergies that Parent
had described would need to be evaluated, (ii) any transaction proposed would
need to offer a premium for the Company and have a significant cash component,
and (iii) all further discussions must be conducted through the Company's
management and its representatives.
During September 1997, the respective management teams of Parent and the
Company and representatives from Carlyle and DLJ had numerous discussions
regarding the likely synergies that could be created in a combination of
Parent and the Company. On September 25, 1997, the Company and Parent entered
into the Confidentiality Agreement.
At a meeting in October 1997, representatives of Parent and the Company 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., the Company's financial advisors ("UBP"), had several
discussions regarding potential transaction structures and the valuation of
the Company. DLJ indicated to UBP that Parent would consider offering $10.50 a
share for the Company, with 50% of the consideration consisting of Parent
Common Stock and 50% of the consideration consisting of cash. UBP indicated
that the Company's Board would review Parent's indication of interest at its
regularly scheduled Board of Directors meeting on October 30, 1997. Following
the Board meeting, UBP indicated to DLJ that the Company's Board of Directors
considered any transaction of the level of Parent's interest to be inadequate
and that a greater premium and cash component would be required for the
Company to be interested in negotiating a transaction. After numerous
telephonic discussions and several meetings in November 1997 between
representatives of the Company, UBP, Parent, Carlyle and DLJ, Parent proposed,
subject to due diligence of the Company by Parent 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 Parent Common Stock for each share
of Company Common Stock, and Parent would allow the Company to distribute to
its shareholders its ownership in NSC Corporation ("NSC").
The Company agreed to move forward on the foregoing basis. On December 8,
1997, the Company and Parent began conducting due diligence sessions.
Participants in these sessions included representatives of the Company's and
Parent's management and financial, legal and accounting advisors as well as
representatives from Parent's proposed lending group. In December 1997, the
Company, Parent and Carlyle and their respective legal and financial advisors
began negotiating a definitive merger agreement.
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On December 17, 1998, the Board of Directors of the Company met, at which
meeting the Company's management updated the Board concerning the discussions
with Parent and the Company's counsel and financial advisors advised the Board
concerning the proposed transaction.
On December 20, 1997, the Company's and Parent's counsel met to negotiate the
terms of the Merger Agreement. Discussions between the Company, Parent and
their respective counsel and financial advisors continued in late December 1997
and early January 1998.
At a Parent Board of Directors meeting on January 9, 1998, certain members of
Parent's management presented a comprehensive analysis of the proposed
transaction. The presentation included an overview of the Company, as well as a
description of various aspects of its operations, financial condition and
competitive position. Parent's Board of Directors also discussed the
anticipated synergies that might be realized from a combination with Parent,
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 Parent Board of Directors meeting, DLJ described the
valuation methodologies used in connection with its preliminary evaluation of
the fairness to Parent, from a financial point of view, of the consideration to
be paid by Parent for the Company. Parent's 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 of the proposed financing for the transaction. Parent's
Board of Directors also received a report on the due diligence review conducted
with respect to the Company. Management was directed to continue negotiations
with the Company and with Parent'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 Purchaser's
obligation to complete the Offer, the circumstances under which a termination
fee would be payable to Parent and the amount thereof. Parent 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 Parent for the Company is fair to Parent, from
a financial point of view. Parent's 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 Board of Directors of the Company met to consider
the results of the negotiation process and, after considering information
provided by the Company'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, the
Company 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.
Following the approval of the Boards of Directors of the Company and Parent,
on January 15, 1998, the Company, Parent and Purchaser 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.
In determining to make the recommendation set forth in Item 4(a), the Board
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 Company shareholders to receive
cash consideration approximately equal to the recent market price for the
Shares,
16
<PAGE>
while obtaining significant equity interest in Parent 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 were made, the Company, 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 Board of Directors with the financial
condition, results of operations, competitive position, business and
prospects of the Company (as reflected in the Company'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
Company Board considered Company management's views with respect to the
benefits associated with increased size in the environmental and hazardous
waste business, the fact that the Company and Parent 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 Parent and the Company 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 Company's 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 the Shares 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 A TO THIS STATEMENT 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 Board 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 the Shares in the Offer, the Merger and the NSC
Distribution. The opinion does not constitute a recommendation to any
shareholder as to whether to tender Shares in the Offer or how to vote with
respect to the Merger.
4. The historical market prices of, and recent trading activity in, the
Shares, particularly the fact that the Offer and the Merger will enable the
shareholders of the Company to realize a premium of approximately 29.2%
over the closing price of the Shares 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 the Shares
have been traded in the past year.
5. The possible alternatives to the Offer and the Merger, including the
prospects of the Company going forward as an independent entity, the range
of possible benefits to the Company's shareholders of such alternatives and
the timing and the likelihood of actually accomplishing any of such
alternatives.
6. The likelihood that the Transactions will be consummated, including
the fact that the obligations of Parent and Purchaser to consummate the
Merger are not subject to the prior consummation of the Offer and the fact
that the obligations of Parent and Purchaser to consummate the 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 Offer and the Merger, the Board 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.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated April 28, 1997 between the Company and
UBP, the Company, as compensation for financial advisory services rendered by
UBP, agreed to pay UBP $50,000 upon execution of such letter agreement and a
transaction fee to be mutually agreed in good faith in the event any major
transaction such as the Merger is completed during the period of UBP's
engagement under the letter agreement. The Company and UBP have agreed that
such transaction fee will be $1,750,000. The Company agreed to reimburse UBP
for its reasonable out-of-pocket expenses incurred in connection with
rendering financial advisory services, including fees and disbursements of its
legal counsel. The Company also agreed to indemnify UBP and its directors,
officers, agents, employees and controlling persons for certain costs,
expenses and liabilities, including liabilities under the federal securities
laws.
17
<PAGE>
On December 3, 1997, the Company engaged BT Alex. Brown Incorporated ("BT
Alex. Brown") to perform certain financial advisory and investment banking
services.
Pursuant to a letter agreement dated December 3, 1997 between the Company
and BT Alex. Brown, the Company, as compensation for financial advisory
services rendered by BT Alex. Brown, agreed to pay BT Alex. Brown (i) $50,000
payable upon execution of such letter agreement, (ii) a fee of $750,000 if the
Company requests and BT Alex. Brown delivers an opinion on the fairness of the
terms of a possible Transaction (defined as one or a series of transactions,
including, but not limited to, transactions of the type contemplated in the
Merger Agreement), (iii) an additional fee of $100,000 if the Company requests
and BT Alex. Brown delivers an additional opinion with respect to amended or
revised offers and (iv) $1,750,000, in the event a Transaction is consummated
with the Company pursuant to a definitive agreement executed within 90 days of
the date of the letter agreement, less the amount of any fees paid pursuant to
clauses (i) and (ii). The Company 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. The Company has also agreed to indemnify BT Alex. Brown and its
affiliates and their directors, officers, agents, employees and controlling
persons for certain costs, expenses and liabilities, including liabilities
under the federal securities laws.
On October 17, 1997, the Company entered into a Consulting Agreement with
Gene J. Ostrow, pursuant to which Mr. Ostrow agreed to provide certain
investment advisory services, including the identification, selection and
analysis of potential acquisition candidates, for an annual fee of $50,000
plus a transaction fee of $711,000, payable at the Effective Time. The
agreement terminates on December 31, 1998, unless the Company elects to renew
it for one year.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on
its behalf with respect to the Offer, except that such solicitations or
recommendations may be made by directors, officers or employees of the
Company, for which services no additional compensation will be paid.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) No transaction in the Shares have been effected during the past 60 days
by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of the Company's knowledge, except for Share the sale of
which may trigger liability for the holder(s) under Section 16(b) of the
Exchange Act of 1934, each executive officer, director and affiliate of the
Company currently intends to tender all Shares to Purchaser over which he or
she has sole dispositive power as of the expiration date of the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Statement, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i)
an extraordinary transaction, such as a merger or reorganization involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of
a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described in Item 3(b) and Item 4 (the provisions of which are
hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred
to in paragraph (a) of this Item 7.
18
<PAGE>
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1. Opinion of BT Alex. Brown, dated January 14, 1998.
2. Letter to Shareholders.
3. The Merger Agreement.
4. The Share Repurchase Agreement.
5. The Company Voting Agreement.
6. The Parent Voting Agreement.
7. The Option Termination Agreement.
8. The Confidentiality Agreement.
9. Information statement pursuant to Section 14(f) of
the Securities Exchange Act of 1934 and Rule 14f-1
thereunder.
</TABLE>
19
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
accurate.
OHM Corporation
/s/ Steven E. Harbour
By: _________________________________
Name: Steven E. Harbour
Title:Vice President, Legal and
Secretary
Dated: January 16, 1998
20
<PAGE>
ANNEX B
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about January 16, 1998, as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of OHM Corporation (the "Company") with respect to the
tender offer by IT-Ohio, Inc. ("Merger Subsidiary") for shares of the
Company's Common Stock, par value $0.10 per share ("Shares"). Capitalized
terms used and not otherwise defined herein shall have the meaning set forth
in the Schedule 14D-9. You are receiving this Information Statement (this
"Statement") in connection with the possible election of persons designated by
Parent to a majority of the seats on the Board of Directors of the Company
(the "Board"). The Agreement and Plan of Merger among the Company, Parent and
Merger Subsidiary, dated as of January 15, 1998 (the "Merger Agreement")
provides that if requested by Parent, the Company will, subject to compliance
with applicable law and promptly following the purchase by Merger Subsidiary
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. The Merger Agreement further provides
that in furtherance thereof, the Company will increase the size of the Board,
or use its reasonable 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 (as
defined in the Merger Agreement), 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 (as defined in the Merger
Agreement). The Merger Agreement further provides that at such time, the
Company, if so requested, will use its reasonable 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 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). This Information Statement is required by
Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule
14f-1 promulgated thereunder.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION.
The Offer commenced on January 16, 1998 and is scheduled to expire at 9:00
a.m., New York City time, on February 17, 1998, unless extended.
The information contained in this Information Statement concerning Parent
and Merger Subsidiary has been furnished to the Company by Parent, and the
Company assumes no responsibility for the accuracy, completeness or fairness
of any such information.
At the close of business on January 15, 1998, there were 27,554,547 Shares
issued and outstanding, which is the only class of securities outstanding
having the right to vote for the election of directors of the Company, each of
which entitles its record holder to one vote.
DESIGNEES TO THE COMPANY'S BOARD OF DIRECTORS
Parent has informed the Company that it currently intends to choose the
designees (the "Acquisition Designees") it has the right to designate to the
Company's Board of Directors pursuant to the Merger Agreement from the
executive officers and directors of Parent and Merger Subsidiary listed in
Schedule I of the Offer to Purchase, a copy of which is being mailed to
shareholders. The information with respect to such officers in Schedule I is
hereby incorporated herein by reference in its entirety. As of January 15,
1998, the ages of each
<PAGE>
such officers are as follows: Mr. Anthony J. DeLuca--50; Mr. E. Martin
Gibson--59; Mr. James C. McGill--54; Mr. Daniel A. D'Aniello--51; Mr. Philip
B. Dolan--39; Admiral James David Watkins--70; Mr. Robert F. Pugliese--65; Mr.
Franklin E. Coffman--55; Mr. James R. Mahoney--59; Mr. Raymond J. Pompe--63;
Mr. James G. Kirk--58; Mr. Harry J. Soose--45; Mr. James M. Redwine--41; and
Mr. Joseph K. Register--44.
It is expected that the Acquisition Designees may assume office at any time
following the purchase by the Purchaser of a specified minimum number of
Shares pursuant to the Offer, which purchase cannot be earlier than February
17, 1998. This step will be accomplished at a meeting or by written consent of
the Board providing that the size of the Board will be increased and/or
sufficient numbers of current directors resigning such that, immediately
following such action, the number of vacancies to be filled by the Acquisition
Designees will be available. It is currently not known which of the current
directors of the Company will resign. Parent has informed the Company that
each of the officers listed in Schedule I of the Offer to Purchase has
consented to act as a director of the Company, if so designated.
None of the executive officers and directors of Parent or Merger Subsidiary
currently is a director of, or holds any position with, the Company. The
Company has been advised that, to the best knowledge of Parent or Merger
Subsidiary, none of Parent's or Merger Subsidiary's directors or executive
officers beneficially owns any equity securities, or rights to acquire any
equity securities, of the Company and none has been involved in any
transactions with the Company or any of its directors, executive officers,
affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the Securities and Exchange Commission.
B-2
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
Herbert A. Getz.................. 42 Director and member of the Compensation and
Stock Option Committee. Mr. Getz has been
Senior Vice President of Waste Management,
Inc. ("WMX") since May 1995 and General
Counsel of WMX since August 1992. Mr. Getz
also served as Vice President from May 1990
to May 1995 and as Secretary of WMX since
January 1988. Mr. Getz served as Assistant
General Counsel from December 1985 until
August 1992. Mr. Getz has also held the
offices of Vice President, General Counsel
and Secretary of Waste Management of North
America, Inc., a provider of solid waste
management services, from April 1989 until
December 1993, and Vice President and
Secretary of Rust International Inc.
("Rust"), a provider of engineering,
construction, environmental,
infrastructure, consulting services and
other on-site industrial and related
services, from January 1993 to May 1999. He
has also served as Vice President and
Secretary of Wheelabrator Technologies Inc.
("WTI") a provider of environmental
products and services, from July 1995 until
January 1997, as well as being the General
Counsel of WTI from November 1990 until May
1993. Mr. Getz is a director of NSC
Corporation.
Ivan W. Gorr..................... 67 Director and Chairman of the Audit
Committee and member of the Compensation
and Stock Option and Executive Committees.
Mr. Gorr retired as Chairman of the Board
of Directors and Chief Executive Officer of
Cooper Tire & Rubber Company of Findlay,
Ohio, a manufacturer of tires and other
rubber products. Mr. Gorr is a director of
Amcast Industrial Corporation, Arvin
Industries, Inc., The Fifth Third Bancorp
and Borg-Warner Automotive.
Dr. Charles D. Hollister......... 60 Director and member of the Audit Committee.
Since 1979, Dr. Hollister has been Senior
Scientist and Vice President of Woods Hole
Oceanographic Institution, Woods Hole,
Massachusetts, a non-profit oceanographic
research institution.
William P. Hulligan.............. 53 Director and member of the Executive
Committee. Mr. Hulligan served as Vice
President of WMX from February 1997 until
his retirement in November 1997 and now
serves as a consultant to WMX. Prior to
this position, he was Executive Vice
President of WMX from January 1996 until
February 1997, President of the Midwest
Group of Waste Management, Inc., from March
1993 until January 1996, and President of
the East Group of Waste Management, Inc.
from 1992 until March 1993. Mr. Hulligan is
a director of National Seal Company and NSC
Corporation.
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
James L. Kirk (1)................ 47 Chairman of the Board of Directors,
President and Chief Executive Officer and
Chairman of the Executive Committee. Mr.
Kirk has been President and Chief Executive
Officer of the Company since July 1986 and,
in addition, was elected Chairman of the
Board in January 1987. He has served as
Chairman of the Board and President of OHM
Remediation Services Corp., a wholly-owned
subsidiary of the Company ("OHMR"), since
April 1985. Mr. Kirk is a founder of OHMR
and has served in various capacities as an
officer and director of OHMR.
Joseph R. Kirk (1)............... 45 Executive Vice President and Director,
positions he has held since July 1986. Mr.
Kirk served as Vice Chairman of OHMR from
April 1985 until July 1986 and continues to
serve as Executive Vice President of OHMR.
He is a founder of OHMR and has served in
various capacities as an officer and
director of OHMR.
James E. Koenig.................. 49 Director and member of the Audit Committee.
Mr. Koenig served as Executive Vice
President of WMX and President of Waste
Management Shared Services from February
1997 until October 1997 and remains an
employee of WMX. Prior to this position, he
was Senior Vice President of WMX from May
1992 until February 1997, Chief Financial
Officer of WMX since 1989 and Vice
President and Treasurer of WMX since
December 1986. Mr. Koenig served as Vice
President, Chief Financial Officer and
Treasurer of WTI from November 1990 to May
1993 and Vice President, Chief Financial
Officer and Treasurer of Rust from January
1993 to August 1993. Mr. Koenig is a
director of National Seal Company, WTI and
Waste Management International, plc.
Richard W. Pogue................. 68 Director and member of the Executive
Committee. Mr. Pogue is a consultant with
Dix & Eaton, a public relations firm.
Effective June 30, 1994, Mr. Pogue retired
as Senior Partner of the law firm of Jones,
Day, Reavis & Pogue, Cleveland, Ohio, of
which he had been a partner since 1961. Mr.
Pogue is also a director of Continental
Airlines, Inc., Derlan Industries Limited,
M. A. Hanna Company, KeyCorp, Redland PLC,
Rotek Incorporated and TRW Inc.
Charles W. Schmidt............... 68 Director and Chairman of the Compensation
and Stock Option Committee and member of
the Executive Committee, Mr. Schmidt
retired as Senior Vice President, External
Affairs of Raytheon Company, a broadly
diversified manufacturer of industrial and
consumer products, and was formerly
President and Chief Executive Officer of
SCA Services, Inc., a company that provided
waste management-related services. Mr.
Schmidt also serves as a director of The
Boston Company, Boston Safe Deposit and
Trust Company, the Massachusetts Financial
Services Family of Mutual Funds and Mohawk
Paper Company.
</TABLE>
- --------
(1) James L. Kirk and Joseph R. Kirk are brothers.
B-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
Pamela K. M. Beall............... 40 Vice President, Treasurer and Assistant
Secretary. Ms. Beall joined the Company in
June 1985 as Director of Finance of OHMR,
became Treasurer and Assistant Secretary of
OHMR in September 1985, and became
Treasurer and Assistant Secretary of the
Company in January 1986. Ms. Beall assumed
her current position in August 1994. Prior
to joining the Company, Ms. Beall was
General Manager, Treasury Services for USX
Corporation and previous to that with
Marathon Oil Company. Ms. Beall also serves
as a director of NSC.
Robert J. Blackwell.............. 40 Vice President, Marketing and Strategic
Planning. Mr. Blackwell joined the Company
in July 1993 as Vice President, Government
Business Development of OHMR, and has
served as Senior Vice President, Marketing
of OHMR since October 1995. Prior to
joining the Company, Mr. Blackwell was Vice
President for Federal Marketing and
Legislative Affairs, from January 1993 to
July 1993, and Director of Marketing and
Federal Relations, from January 1989 to
December 1992, of Ebasco Services
Incorporated. Mr. Blackwell also serves as
a director of NSC.
Fred H. Halvorsen................ 55 Vice President, Health and Safety. Dr.
Halvorsen joined the Company in 1984 as
Director of Health and Safety of OHMR and
assumed his current position in May 1987.
Kris E. Hansel................... 39 Vice President and Controller. Mr. Hansel
joined the Company in November 1988 as
General Accounting Manager of OHMR, became
Assistant Controller in October 1991 of the
Company and became Controller in October
1992. Mr. Hansel assumed his current
position in August 1994. Prior to joining
the Company, Mr. Hansel was General
Accounting Manager of WearEver-
ProctorSilex, Inc.
Steven E. Harbour................ 49 Vice President, Legal and Secretary. Mr.
Harbour joined the Company in December
1996. Prior to joining the Company, Mr.
Harbour served in various management and
legal capacities with The Coca-Cola Company
from 1983 to 1993, was Vice President, The
Coca-Cola Bottling Company of New York,
Inc., from 1993 to 1995, and most recently
was affiliated with the law firm of Sumner
& Anderson.
Philip V. Petrocelli............. 39 Vice President, Western Operations. Mr.
Petrocelli joined the Company in August
1993 as Vice President, Western Region of
OHMR, and since October 1995 has served as
Senior Vice President, Western Region of
OHMR. Mr. Petrocelli assumed his current
position with the Company in May 1995.
Prior to joining the Company, Mr.
Petrocelli was Regional Director and
previous to that was Acting Vice
President--Analytical Labs, with IT
Corporation.
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
Philip O. Strawbridge............ 43 Vice President, Chief Financial and
Administrative Officer. Mr. Strawbridge
joined the Company in February 1996. In
addition, Mr. Strawbridge has served as
Senior Vice President and Director of OHMR
since October 1996. Prior to joining the
Company, Mr. Strawbridge was Senior
Director of Contracts and Finance with
Fluor Daniel, Inc. and an acting Vice
President of Fluor Daniel Fernald.
Michael A. Szomjassy............. 46 Vice President, Eastern Operations. Mr.
Szomjassy joined the Company in November
1989 as Vice President, Southeast Region of
OHMR and since October 1995 has served as
Senior Vice President, Eastern Operations
of OHMR. Prior to joining OHM, Mr.
Szomjassy was Regional Manager, Remediation
Services of Ebasco Services, Inc.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission (the "Commission"). Specific due dates for
these reports have been established and the Company is required to disclose in
its Proxy Statement any failure to file by these dates. All of these filing
requirements were satisfied, except Pamela K. M. Beall, Vice President,
Treasurer and Assistant Secretary and Fred H. Halvorsen, Vice President,
Health and Safety, each filed one late Form 4 reporting an exercise of stock
option.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS HELD
During 1997, the Board of Directors of the Company held a total of seven
meetings.
The Executive Committee of the Board of Directors presently consists of
Messrs. Gorr, Hulligan, James L. Kirk, Pogue and Schmidt and did not meet
during 1997. The function of the Executive Committee is to exercise, when the
full Board is not in session, the powers of the Board in the management of the
business and affairs of the Company.
The Compensation and Stock Option Committee of the Board of Directors met
four times during 1997. Messrs. Getz, Gorr and Schmidt are presently members
of the Compensation and Stock Option Committee, the primary function of which
is to review and approve salaries and other benefits for executive officers of
the Company, to make recommendations to the Board of Directors with respect to
the adoption of employee benefit programs and to administer the Company's
stock option plans and approve awards of stock options made under the
Company's 1986 Stock Option Plan.
The Company has a standing Audit Committee, the primary function of which is
to oversee the accounting and auditing affairs of the Company. Messrs. Gorr,
Hollister and Koenig serve as members of the Audit Committee, which met three
times during 1997.
The Company has no standing nominating committee or committee performing
similar functions.
In 1997, except for Dr. Hollister and Joseph R. Kirk, each member of the
Board of Directors attended at least 75% of the meetings of the Board of
Directors and the committees of which they are members.
B-6
<PAGE>
DIRECTORS' FEES
Directors of the Company who are not employees receive $18,000 per annum.
Members of the Company's Executive Committee who are not employees receive
$1,500 per meeting, and each non-employee member of any other committee of the
Company's Board of Directors receives $500 per meeting. WMX has requested that
Messrs. Hulligan, Getz and Koenig, representatives of WMX, not be paid
directors' fees.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company's Common Stock is the Company's only outstanding class of voting
securities. The following table sets forth certain information as of January
10, 1998 with respect to the beneficial ownership of the Company's Common
Stock by (i) holders of 5% or more of the outstanding Common Stock, (ii) each
Director of the Company, (iii) the executive officers named in the Summary
Compensation Table under "Executive Compensation and Other Information" and
(iv) all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE
NAME BENEFICIAL OWNERSHIP (1) OF CLASS
---- ------------------------ ----------
<S> <C> <C>
WMX Technologies, Inc. (2)
3003 Butterfield Road
Oak Brook, Illinois 60521............... 10,368,000 37.63%
State of Wisconsin Investment Board (3)
P.O. Box 7842
Madison, Wisconsin 53707................ 1,517,000 5.51%
H. Wayne Huizenga (4)
200 South Andrews Avenue
Fort Lauderdale, Florida 33301.......... 1,500,000 5.25%
James L. Kirk (5) (6) (7)................ 2,280,960 8.14%
Joseph R. Kirk (5) (6) (7)............... 2,569,138 9.25%
Herbert A. Getz (5)(6)................... 25,000 *
Ivan W. Gorr (5) (6) (8)................. 50,606 *
Dr. Charles D. Hollister (5) (6)......... 40,000 *
William P. Hulligan (5) ................. 20,000 *
James E. Koenig (5) (6) (7).............. 25,150 *
Richard W. Pogue (5) (6) (7)............. 53,000 *
Charles W. Schmidt (5) (6) (7) (8)....... 78,190 *
Robert J. Blackwell (5) (6) (8).......... 173,076 *
Philip V. Petrocelli (5) (6) (8)......... 212,735 *
Philip O. Strawbridge (5) (6) (8)........ 148,274 *
Michael A. Szomjassy (5) (6) (8)......... 223,159 *
All Directors and executive officers as a
group (17 persons) (5) (6).............. 6,122,185 20.87%
</TABLE>
- --------
*less than 1%.
(1) Information with respect to beneficial ownership is based on information
furnished to the Company by each shareholder included in this table.
Except as indicated in the notes to the table, each shareholder included
in the table has sole voting and investment power with respect to the
shares shown to be beneficially owned. Beneficial ownership is calculated
in accordance with the rules and regulations of the Commission.
(2) According to a Schedule 13D dated June 8, 1995 jointly filed by WMX
Technologies Inc. ("WMX"), Chemical Waste Management, Inc., Rust Holding
Company Inc., and Rust International Inc. Assumes the exercise of warrants
currently exercisable to purchase 700,000 shares of Common Stock pursuant
to that certain Warrant Agreement between the Company and WMX described
below. See "Certain Relationships and Related Transactions--Transactions
with Shareholders--The Warrant Agreement" and "--The Standstill and Non-
Competition Agreement."
(3) According to an Amendment No. 8 to Schedule 13G filed by the State of
Wisconsin Investment Board.
(4) According to a Schedule 13D, dated April 1, 1995, filed by Mr. Huizenga.
Assumes the exercise of options currently exercisable or exercisable
within 60 days to purchase 1,000,000 shares of Common Stock, but does not
include 500,000 shares of Common Stock owned by the Huizenga Family
Foundation, Inc. as to which Mr. Huizenga disclaims beneficial ownership.
B-7
<PAGE>
(5) The address of the shareholder is c/o OHM Corporation, 16406 U.S. Route
224 East, Findlay, Ohio 45840.
(6) Assumes the exercise of options to purchase 463,279, 210,000, 25,000,
40,000, 40,000, 20,000, 25,000, 40,000, 30,000, 133,092, 175,489, 122,967,
200,275, and 1,737,494 by Messrs. James L. Kirk, Joseph R. Kirk, Getz,
Gorr, Hollister, Hulligan, Koenig, Pogue, Schmidt, Blackwell, Petrocelli,
Strawbridge, Szomjassy, respectively, and all directors and executive
officers as a group, respectively.
(7) Includes 20,562 shares of Common Stock held in three trusts by Mr. James
L. Kirk's wife as trustee for the benefit of the Kirks' children and 2,600
held in trust by Mr. James L. Kirk's daughter as trustee for the benefit
of Mr. Kirk's grandchild, as to which Mr. James L. Kirk disclaims
beneficial ownership. Includes 30,201 shares of Common Stock held in three
trusts by Mr. Joseph R. Kirk's wife as trustee for the benefit of the
Kirks' children, as to which Mr. Joseph R. Kirk disclaims beneficial
ownership. Includes 150 shares of Common Stock held in trust for the
benefit of Mr. Koenig's brother as to which he disclaims beneficial
ownership. Includes 1,000 shares of Common Stock held in trust for the
benefit of Mr. Pogue's wife as to which he disclaims beneficial ownership.
Includes 10,000 shares of Common Stock held in trust for the benefit of
Mr. Schmidt's wife as to which he disclaims beneficial ownership.
(8) Includes 8,606, 8,190, 5,479, 7,083, 11,537, and 3,130 phantom stock units
held by Messrs. Gorr, Schmidt, Blackwell, Petrocelli, Strawbridge, and
Szomjassy, respectively.
James L. Kirk and Joseph R. Kirk are brothers, each of whom disclaims
beneficial interest in the shares owned by the other.
B-8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 1997,
1996 and 1995, the cash compensation paid by the Company and its subsidiaries,
as well as certain other compensation paid or accrued for those years, to each
of the five most highly compensated executive officers of the Company in 1996,
including the Chief Executive Officer of the Company, in all capacities in
which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS STOCK OPTIONS
ANNUAL COMPENSATION GRANTED (#)
--------------------------------- ---------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
- ----------------------- ---- ------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James L. Kirk 1997 452,830 256,750 0 0 125,000 23,883
Chairman, President 1996 376,747 0 44,841 351,750 68,279 17,568
and Chief Executive
Officer 1995 330,013 0 0 0 70,000 5,347
Michael A. Szomjassy 1997 281,363 155,995 0 0 50,000 41,748
Vice President, 1996 288,093 25,000 0 150,750 65,275 14,682
Eastern Operations 1995 256,266 0 0 0 25,000 5,184
Philip V. Petrocelli 1997 274,122 125,500 0 0 50,000 110,677
Vice President, 1996 264,040 65,476 0 142,375 100,489 76,528
Western Operations 1995 232,513 50,000 50,839 0 25,000 19,435
Philip O. Strawbridge 1997 262,376 119,000 0 0 75,000 109,817
Vice President and 1996 187,321 0 0 108,875 22,967 47,305
Chief Financial Officer 1995 0 0 0 0 0 0
Robert J. Blackwell 1997 251,708 114,000 0 0 42,000 108,000
Vice President,
Marketing 1996 225,349 28,125 25,505 125,625 66,092 36,621
and Strategic Planning 1995 193,768 30,000 0 0 25,000 29,591
</TABLE>
- --------
(1) Amounts in 1996 include $37,392 and $0 for financial planning services;
$2,126 and $3,377 for country club dues; and $5,323 and $11,845
representing earnings on the contributions made to the retirement deferral
accounts in accordance with the Company's Retirement and Incentive
Compensation Plan for Messrs. James L. Kirk and Robert J. Blackwell,
respectively. Amount in 1996 for Mr. Blackwell includes $7,583 for
miscellaneous perquisites and $2,700 for imputed interest. Amount in 1995
for Mr. Petrocelli includes $43,938, $4,466, and $2,435 paid to him for
reimbursement of tax costs in connection with the relocation of his
principal residence, imputed interest, and miscellaneous perquisites,
respectively.
(2) Represents 42,000, 18,000, 17,000, 13,000, and 15,000 shares of restricted
stock which were granted to Messrs. James L. Kirk, Szomjassy, Petrocelli,
Strawbridge, and Blackwell, respectively, the value of which was $8.375
per share as of December 31, 1996.
(3) Amounts in 1996 include 69,453, 31,135, and 38,092 stock options which
were granted to Messrs. Petrocelli, Szomjassy, and Blackwell,
respectively, on May 9, 1996 in exchange for the surrender of previously
granted options.
(4) Amounts in 1995 for Messrs. Petrocelli and Blackwell include $14,286 and
$25,000, respectively, in loans forgiven by the Company. Amount in 1996
for Mr. Strawbridge includes $47,261 for relocation expenses. Amount in
1996 for Mr. Petrocelli includes $19,048 for a loan forgiven by the
Company. Amounts in 1996 include matching contributions to each
individual's Retirement and Incentive Compensation Plan account of
$17,568, $14,682, $57,480, and $36,561, on behalf of Messrs. James L.
Kirk, Szomjassy, Petrocelli, and Blackwell, respectively. Amounts in 1997
for Messrs. Petrocelli, Strawbridge, and Blackwell include $14,285,
$10,000 and $20,000, respectively, in loans forgiven by the Company. See
"Certain Relationships
B-9
<PAGE>
and Related Transactions -- Transactions with Management." Amounts in 1997
include matching contributions to each individual's Retirement and
Incentive Compensation Plan account of $22,347, $35,320, $89,165, $92,600,
and $79,931; and matching contributions to each individual 401(k) account
of $0, $5,712, $6,352, $6,352 and $6,352, on behalf of Messrs. Kirk,
Szomjassy, Petrocelli, Strawbridge, and Blackwell, respectively. On
December 30, 1997, pursuant to resolutions approved by the Board of
Directors, the vested portion of each individual's Retirement and Incentive
Compensation Plan account was distributed to Messrs. James L. Kirk,
Szomjassy, Petrocelli, Strawbridge, and Blackwell, in the amounts of
$109,896, $95,489, $312,464, $123,894, and $257,233, respectively.
STOCK OPTIONS
The following table sets forth information with respect to grants of options
pursuant to the Company's 1986 Stock Option Plan made to the executive
officers named in the Summary Compensation Table during the 1996 fiscal year.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
-------------------------------------------- -----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION 5% 10%
(#) YEAR ($/SH) DATE ($) ($)
---------- ---------- ----------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Kirk........... 125,000 15.49 8.500 02/12/07 $ 668,200.54 $ 1,693,351.36
Philip O. Strawbridge... 75,000 9.29 8.500 02/12/07 $ 400,920.32 $ 1,018,010.82
Michael A. Szomjassy.... 50,000 6.20 8.500 02/12/07 $ 267,280.22 $ 677,340.55
Robert J. Blackwell..... 42,000 5.20 8.500 02/12/07 $ 224,515.38 $ 568,966.06
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the executives
named in the Summary Compensation Table concerning the exercise of options
during the last fiscal year and the value of unexercised options held as of
the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON (MARKET PRICE OPTIONS AT FY-END (#) AT FY END ($)
EXERCISE AT EXERCISE LESS ------------------------- -------------------------
NAME (#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James L. Kirk........... -- -- 249,070 214,209 21,000 14,000
Michael A. Szomjassy.... -- -- 110,558 89,717 7,500 5,000
Philip V. Petrocelli.... -- -- 89,901 85,558 7,500 5,000
Philip O. Strawbridge... -- -- 11,992 110,975 1,563 4,688
Robert J. Blackwell..... -- -- 49,530 83,562 7,500 5,000
</TABLE>
REPORT ON REPRICING OF STOCK OPTIONS
Pursuant to resolutions of the Board of Directors adopted May 9, 1996, the
Company approved adjustments in certain existing stock options granted under
the 1986 Stock Option Plan. The Board of Directors, in approving the
adjustments in the options granted under the 1986 Stock Option Plan,
considered a variety of factors,
B-10
<PAGE>
including the Company's actual performance since the date of the original
grants, the market performance of the Company's stock, changes in the stock
market affecting the industry generally, the Company's need to compete for the
services of employees, the effectiveness of previously granted options as a
retention device, and the Board's belief that stock-based compensation as a
significant component of the employee's compensation package is a strong
motivational device. The Board determined that certain of the stock options
were no longer motivational or retention devices, and therefore authorized
adjustments for such options.
IVAN W. GORR HERBERT A. GETZ CHARLES W. SCHMIDT
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF EXERCISE ORIGINAL
SECURITIES PRICE AT OPTION TERM
UNDERLYING MARKET PRICE OF TIME OF NEW REMAINING AT
OPTIONS STOCK AT TIME REPRICING OR EXERCISE DATE OF
REPRICED OR OF REPRICING OR AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED AMENDMENT ($) ($) AMENDMENT
---- -------- ----------- --------------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
James L. Kirk........... N/A
Chairman, President
and Chief Executive
Officer
Michael A. Szomjassy.... 08/06/92 10,000 7.625 11.00 7.625 7 yr. 4 mo.
Vice President, 08/06/92 10,000 7.625 11.00 7.625 7 yr. 9 mo.
Eastern Operations 05/09/96 10,579 8.375 11.875 8.375 7 yr. 5 mo.
05/09/96 5,154 8.375 16.25 8.375 7 yr. 9 mo.
05/09/96 15,402 8.375 10.875 8.375 8 yr. 1 mo.
Philip V. Petrocelli.... 05/09/96 37,222 8.375 10.125 8.375 7 yr. 4 mo.
Vice President, 05/09/96 20,679 8.375 10.125 8.375 7 yr. 4 mo.
Western Operations 05/09/96 11,552 8.375 10.875 8.375 8 yr. 1 mo.
Philip O. Strawbridge... N/A
Vice President,
Chief Financial Officer
Robert J. Blackwell..... 05/09/96 9,805 8.375 10.25 8.375 7 yr. 3 mo.
Vice President, 05/09/96 12,885 8.375 16.25 8.375 7 yr. 9 mo.
Marketing and Strategic 05/09/96 15,402 8.375 10.875 8.375 8 yr. 1 mo.
Planning
</TABLE>
1996 MANAGEMENT INCENTIVE PLAN
The Board of Directors has adopted the 1996 Management Incentive Plan
("MIP"). The principal purpose of the MIP is to advance the interests of the
Company by providing annual bonuses for officers of the Company so as to
attract and retain such officers, make their compensation competitive with
other opportunities, and cause them to strive to achieve the Company's
financial and other business objectives. All officers of the Company are
eligible to be selected as MIP participants. Participants in the MIP are
selected by the Compensation and Stock Option Committee.
Pursuant to the terms of the MIP, officers are eligible to receive "target"
bonuses established as a percentage of each participant's annual base salary
if the Company meets certain performance goals selected by the Compensation
and Stock Option Committee related to the achievement of pre-tax income or
operating income (or a combination thereof). The MIP provides a formula or
matrix prescribing the extent to which a participant's target bonus may be
earned based upon the degree of achievement of such performance goal or goals.
The current target bonus range is 30% to 50% of participants' base salaries
for 1997. The MIP also allows the Company, subject to Compensation and Stock
Option Committee approval, to award discretionary cash bonuses for exemplary
performance or to reward special achievements which impact the Company's
results.
B-11
<PAGE>
RETIREMENT AND INCENTIVE COMPENSATION PLAN
Effective January 1, 1996, the Board of Directors of the Company adopted the
Executive Retirement Plan and subsequently amended it on June 21, 1996 and
renamed the plan as the Retirement and Incentive Compensation Plan ("RICP").
The RICP is administered by the Compensation and Stock Option Committee. The
principal purpose of the RICP is to allow executive officers to defer current
federal income taxation of their compensation and, along with the Company's
matching contribution, accumulate monies towards retirement in the absence of
any Company retirement plan, other than the Company's Retirement Saving Plan
which severely restricts officer participation due to certain Internal Revenue
Service limitations. Pursuant to the terms of the RICP, executive officers may
defer up to 50% of their compensation during any year, provided that such
executive officer may not defer more than 30% of his or her compensation during
any year to such individual's Retirement Deferral Account (as described below).
The Company matches 50% of the amounts deferred by the participant and
deposited into the Retirement Deferral Account and matches 100% of the amounts
deferred by the participant and deposited into the OHM Common Stock Deferral
Account. The participant's contribution, plus the Company match, remain
unfunded by the Company until paid to the participant at retirement or other
termination of employment. Any amounts deferred by the participant and
deposited into the Retirement Deferral Account, and Company matching
contributions, are credited monthly with interest at the prime rate and are
increased yearly by the annual increase in the S&P 500 index if such increase
exceeds the interest credited monthly to the participant during the calendar
year. Any amounts deferred by the participant and deposited into the OHM Common
Stock Deferral Account, and Company matching contributions, are credited
monthly in units on the basis of the average of the market value of the
Company's Common Stock during the preceding calendar month.
INCENTIVE STOCK PLAN
The principal purpose of the Incentive Stock Plan is to attract, compensate
and retain officers of the Company and to align the financial interests of the
Company's officers with the shareholders of the Company. Officers and key
employees of the Company are eligible to participate in the Incentive Stock
Plan.
Officers of the Company who are selected by the Compensation and Stock Option
Committee are eligible to receive grants or sales of shares of restricted stock
for up to an aggregate of 500,000 shares of the Company's Common Stock upon
such terms and conditions as the Compensation and Stock Option Committee may
determine in accordance with the Incentive Stock Plan. Each grant or sale is to
be evidenced by an agreement and shall result in an immediate transfer of
ownership of shares of Common Stock to the participant in the Plan, or the
Compensation and Stock Option Committee may defer the transfer of ownership of
the shares until such time as the Committee may specify, provided that in each
case such grant or sale shall be made, issued or awarded in consideration of
the performance of services and the execution of a non-competition agreement,
and shall entitle the participant in the Incentive Stock Plan to dividend,
voting and other ownership rights, subject to a "Substantial Risk of
Forfeiture" within the meaning of Section 83 of the Internal Revenue Code for a
period to be determined by the Compensation and Stock Option Committee on the
date specified by the Compensation and Stock Option Committee on which the
grant of restricted stock becomes effective (the "Date of Grant").
Each sale or grant may be made without any other consideration from the
participant or in consideration of payment by the participant that is less than
the market value per share of Common Stock on the Date of Grant. The market
value of a share of Common Stock underlying the restricted stock at the end of
the Company's fiscal year was $7.625, which was the closing price as reported
on the New York Stock Exchange on such date.
Each grant or sale provides that, during the period for which there is a
"Substantial Risk of Forfeiture," the transferability of the shares of
restricted stock is prohibited in the manner and to the extent prescribed by
the Compensation and Stock Option Committee on the Date of Grant. Any grant or
sale may provide that any or all dividends or other distributions paid on the
shares of restricted stock be automatically sequestered and reinvested on an
immediate or deferred basis in additional shares of Common Stock, which may be
subject to the same restrictions as the underlying award or such other
restrictions as the Compensation and Stock Option Committee may determine.
B-12
<PAGE>
The Compensation and Stock Option Committee may provide on or after the Date
of Grant of any restricted stock, for the payment of a cash bonus intended to
offset the amount of tax that the participant in the Plan may incur in
connection with the restricted stock, including tax on the receipt of the
bonus. To the extent the Company is required to withhold federal, state, local
or other taxes in connection with any payment made or benefit realized by a
participant or other person under the Plan, and the amounts available to the
withholding are insufficient, it is a condition to the receipt of any payment
or the realization of any benefit that the participant or such other person
make arrangements satisfactory to the Company for payment of the balance of
any taxes required to be withheld.
The Committee may amend the Plan from time to time. Upon the termination of
employment by reason of death, disability or retirement from the Company, upon
the attainment of age 65 or upon completion of ten years of employment with
the Company and the attainment of age 55, or in the event of a change in
control of the Company, a participant's restricted stock shall become fully
vested and cease to be subject to a "Substantial Risk of Forfeiture."
Federal Income Tax Consequences. Unless a special election is made under
Section 83 of the Internal Revenue Code, a participant generally will not be
subject to tax upon the grant of restricted shares. A participant generally
will recognize ordinary income at the time the restrictions lapse in an amount
equal to the then fair market value of the shares less any cash paid by the
participant. In addition, a participant will recognize ordinary income upon
receipt of any cash bonus. To the extent that a participant recognizes
ordinary income, the Company will be entitled to a corresponding deduction,
provided, among other things, that such income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code and is not disallowed by the $1 million limitation on certain
executive compensation.
OHM CORPORATION RETIREMENT SAVINGS PLAN
The Company's Retirement Savings Plan (the "Retirement Plan") was
established in 1988. Officers of the Company, together with substantially all
full-time salaried employees and certain other employees of the Company and
its subsidiaries, are eligible to participate in the Retirement Plan.
Participants may make basic contributions of up to a combination of 15% of
their compensation, as defined in the Retirement Plan, which qualify for
deferred tax treatment under Section 401(k) of the Internal Revenue Code (the
"Code"). The Company makes matching contributions of 100% of the first two
percent of the participant's compensation contributed to the Retirement Plan
and 50% of the next four percent of the participant's compensation contributed
to the Retirement Plan. Matching contributions are allocated to the accounts
of participants in the Retirement Plan who have completed two years of
service. The Company also may, in its discretion, make profit sharing
contributions to the Retirement Plan which will be allocated to all eligible
employees. All participant contributions are invested at the direction of the
participant, and all profit sharing contributions are invested at the
direction of the Retirement Plan committee. Matching contributions are made in
Company stock and, upon allocation to a participant's account, may be
reinvested at the direction of the participant. Amounts attributable to the
Company's matching contributions vest upon the earlier of (i) the completion
of two years of service, or (ii) the participant's death, disability or
attaining age 65 while an employee. As of November 30, 1997, an aggregate of
$43,918 was contributed as matching contributions under the Retirement Plan to
the accounts of all executive officers as a group during 1997. Matching
contributions for the five most highly compensated executed officers named are
shown above under the heading "Executive Compensation and Other Information,
Summary of Cash and Certain Other Compensation." The Company made no profit
sharing contributions to the Retirement Plan during 1997.
1986 STOCK OPTION PLAN
Officers and key employees of the Company and its subsidiaries, which
consist of approximately 180 individuals, are eligible to receive stock
options under the 1986 Plan. The purpose of the 1986 Plan is to attract and
retain outstanding individuals as officers and employees of the Company and
its subsidiaries, and to furnish incentives to such persons to increase the
Company's profits by providing them opportunities to acquire shares of Common
Stock of the Company on advantageous terms. The 1986 Plan is administered by
the Compensation
B-13
<PAGE>
and Stock Option Committee of the Board of Directors, currently consisting of
Messrs. Getz, Gorr and Schmidt, which determines the terms and conditions of
stock options issued under the 1986 Plan, amounts of benefits granted, and the
officers and key employees who shall receive them. Options granted under the
1986 Plan may be (i) options that are intended to qualify under particular
provisions of the Code; (ii) options that are not intended to so qualify, or
(iii) combinations of the foregoing.
The 1986 Plan, as amended, authorizes the granting of options to purchase up
to an aggregate of 3,850,000 shares of the Company's Common Stock. Option
agreements evidencing the grant of options are required to specify an option
price which is not less than the fair market value of shares of Common Stock
of the Company on the date of grant. The market value of a share of Common
Stock underlying the options at the end of the Company's fiscal year was
$7.625, which was the closing price as reported on the New York Stock Exchange
on such date. Option agreements must also specify the methods of payment of
the option price, which may be (i) in cash or by check, (ii) by delivery of
Common Stock of the Company already owned by the optionee having a fair value
at the time of exercise equal to the total option price; or (iii) a
combination of such methods of payment. No stock option granted under the 1986
Plan may be exercised more than ten years from the date of grant. Except with
respect to the proposed amount to limit the number of options granted to any
individual in a three-year period, if adopted by the shareholders, the 1986
Plan does not impose any other limit on the number of shares that may be
optioned to a particular employee or officer. However, the Code requires that
the aggregate fair market value (determined at the time the options are
granted) of stock with respect to which "incentive stock options" are
exercisable for the first time by any one employee during any calendar year
not exceed a total of $100,000. Outstanding options are subject to adjustment
in specified events, such as stock dividends, stock splits, recapitalizations
and mergers, and the number of shares authorized by the 1986 Plan is subject
to adjustment in those events.
Stock options issued under the 1986 Plan may be either Non-Qualified Stock
Options or Incentive Stock Options with the following Federal tax
consequences.
Non-Qualified Stock Options. A stock option that is not qualified under the
Code (a "Non-Qualified Stock Option") generally will not result in any taxable
income to the optionee at the time it is granted. In general, the holder of a
Non-Qualified Stock Option will realize ordinary income at the time of
exercise of the option in an amount measured by the excess of the fair market
value of the optioned shares (at the time of exercise) over the option price.
However, the Section 16 (b) Deferral (as defined below) will apply in the case
of optionees who are officers of the Company.
If the option price of a Non-Qualified Stock Option is paid for by the
delivery of shares of Common Stock previously owned by the optionee, no gain
or loss will be recognized to the extent that the shares received are equal in
fair market value to the shares surrendered.
Section 83 of the Code deals generally with property (including stock)
received by an employee as compensation, and provides for deferral of taxation
so long as the employee's rights in the property are subject to a substantial
risk of forfeiture and are not transferable. Section 83 will apply so long as
the sale of stock received could subject the employee to suit under Section
16(b) of the Securities Exchange Act of 1934, but not longer than six months
(the "Section 16(b) Deferral").
The Section 16(b) Deferral can be avoided if the officer makes an election
within thirty days after the transfer of stock to him to have it taxed to him
as ordinary income at its fair market value on the date of transfer less the
amount, if any, paid by him.
Incentive Stock Option. An incentive stock option, i.e. a stock option that
is qualified under the Code (an "Incentive Stock Option"), will not result in
any taxable income to the optionee when it is granted or timely exercised. To
be timely exercised, an Incentive Stock Option must be exercised within three
months after the optionee ceases to be an employee (within one year if the
optionee is disabled) unless the optionee has died. If the optioned stock is
held more than two years from the date of grant of the option and more than
one year after the transfer of the stock to the optionee, the optionee will be
taxed on any gain on the sale of such stock at long-term capital gains rates.
B-14
<PAGE>
If Common Stock acquired on the exercise of an Incentive Stock Option is
sold, exchanged or otherwise disposed of before the end of the required
holding periods, the optionee will in the usual case realize ordinary income
at the time of disposition equal to the excess of the fair market value of the
stock at the time of exercise over the option price.
Under Section 1036 of the Code, if shares of Common Stock previously owned
by the optionee are transferred in payment of the option price under an
Incentive Stock Option, generally no gain or loss will be recognized on the
surrender of such shares to the extent the fair market value of the shares
received equals the fair market value of the shares surrendered. The shares
received in such equal exchange will have the same tax basis and holding
period as the shares surrendered; any additional shares received will have a
zero basis and the holding period will commence on the transfer date. The
spread at the time of exercise will not be subject to tax if the holding
period and other requirements for an Incentive Stock Option are satisfied.
However, if any shares transferred in payment of the option price under an
Incentive Stock Option were previously acquired by the optionee on the
exercise of an Incentive Stock Option and were held for less than the
necessary holding period, Section 1036 would not be available. As a result,
the optionee would realize income on the surrender of such shares in payment
of the option price.
General Matters. To the extent that an employee recognizes ordinary income
in the circumstances described above, the Company would be entitled to a
corresponding deduction. provided, among other things, that such income meets
the test of reasonableness and is an ordinary and necessary business expense.
Withholding of Federal taxes at applicable rates will be required in
connection with ordinary income realized by an optionee upon exercise of Non-
Qualified Stock Options and disqualifying dispositions of stock acquired upon
exercise of an Incentive Stock Option.
Stock options granted under the 1986 Plan may not be transferred except by
will or the laws of descent and distribution and may not be exercised during
an optionee's lifetime except by the optionee or his guardian or legal
representative. The 1986 Plan may be amended from time to time by the Board of
Directors. However, any amendment that increases the aggregate number of
shares of Common Stock covered by the 1986 Plan or would cause Rule 16b-3
under the Exchange Act of 1934 (or any successor rule to the same effect) to
cease to be applicable to the 1986 Plan, is subject to approval by the
shareholders of the Company. The 1986 Plan provides that the Compensation and
Stock Option Committee may, with the concurrence of the affected optionee,
cancel any agreement evidencing a stock option granted under the 1986 Plan. In
the event of such cancellation, the Compensation and Stock Option Committee
may authorize the granting of a new stock option, which may or may not cover
the number of shares which had been the subject to the prior agreement, in
such manner, at such option price and subject of the same terms, conditions
and discretions as would have been applicable under the 1986 Plan had the
cancelled stock option not been granted.
DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN
The Company recognizes the importance of attracting and retaining
outstanding individuals as directors and of stimulating the active interest of
these persons in the development and financial success of the Company. In
addition, the Company endorses the position that stock ownership arrangements
are beneficial in aligning Directors' and shareholders' interests in the
enhancement of shareholder value. The Board of Directors believes that the
Directors' Non-Qualified Stock Option Plan (the "Director Option Plan") is a
significant factor in furtherance of these objectives and intends, through the
Director Option Plan, to increase the Company's profits by providing such
persons with opportunities to acquire shares of the Common Stock of the
Company on advantageous terms.
Only Directors who are not employees of the Company and its subsidiaries are
eligible to participate in the Director Option Plan. The Director Option Plan
provides that the total number of shares that may be sold upon the exercise of
stock options shall not exceed 1,000,000 shares of Common Stock. The Director
Option Plan is of indefinite duration and will continue in effect until all
shares reserved for options thereunder have been sold or until earlier
termination of the Director Option Plan.
B-15
<PAGE>
The Director Option Plan provides for automatic grants of options to
purchase shares of Common Stock of the Company to Directors of the Company who
are not employees of the Company or its subsidiaries. Under the Director
Option Plan, each person who was an incumbent non-employee Director of the
Company received an option to purchase 15,000 shares of Common Stock, as of
August 6, 1992, the effective date of the Director Option Plan, provided that
the total number of shares each optionee was eligible to receive was reduced
by the number of shares of Common Stock subject to prior option grants to such
Director. Each person who first becomes a non-employee Director of the Company
after the effective date is entitled to receive an option to purchase 15,000
shares of Common Stock as of the date such person first became a non-employee
Director. Each person who is a non-employee Director of the Company is
entitled to receive an option to purchase 5,000 shares of Common Stock
immediately after each of the Company's annual meetings of shareholders. An
option is exercisable in full upon six months of continuous service as a non-
employee Director. Options granted under the Director Option Plan are options
that do not qualify under particular provisions of the Code. The Director
Option Plan is administered by employee directors who are not eligible to
participate in the Director Option Plan.
DIRECTORS' DEFERRED FEE PLAN
The Board of Directors has adopted the Directors' Deferred Fee Plan (the
"Deferred Fee Plan") the purpose of which is to help solidify the common
interest of Directors and shareholders in enhancing the value of the Company's
Common Stock. It is also intended that the Deferred Fee Plan will assist in
attracting and retaining qualified individuals to serve as Directors. The
Deferred Fee Plan will give those Directors who are not also employees of the
Company an opportunity to defer current federal income taxation of all or a
portion of their annual retainer and meeting fees payable by the Company for
their services as a Director.
Under the terms of the Deferred Fee Plan, a Director may elect to have his
or her Director's fees credited to an account in either cash or units (an
accounting unit equal in value to one share of Common Stock). Deferred fees
that a Director elects to have credited in cash will be credited to the
Director's account as they become payable to the Director. A Director's
account to which fees have been credited in cash will earn interest annually
at the rate of interest payable on one-year U.S. Treasury Bills or such other
rate as the Committee designated by the Deferred Fee Plan may establish. In no
event, however, will the rate of interest be more than five percent higher
than the rate payable on such U.S. Treasury Bills. Deferred fees payable in
units will be credited, together with an amount equal to 10% of such deferred
fees, to a Director's account after the end of the fiscal year on the basis of
the average of the market values of the Common Stock on the last trading day
in each calendar month during the year. Each account to which fees have been
credited in units shall be credited annually after the end of each fiscal year
with additional units equal in value to the amount of cash dividends paid by
the Company during such year on Common Stock equivalent to the average daily
balance of units in such account during the year. The maximum number of units
that may be granted under the Deferred Fee Plan during its term is 100,000 in
the aggregate. The Deferred Fee Plan is administered by a Committee consisting
of the Chairman of the Board (provided he is an employee-director) and two
Company officers or directors who are employee-directors appointed by the
Chairman of the Board.
EMPLOYMENT AND INDEMNIFICATION AGREEMENTS
The Company has entered into agreements with the executive officers named in
the Summary Compensation Table and certain other executive officers providing
that in the event of any "change in control" of the Company, such officers
would continue their employment with the Company in their present position for
terms of approximately three years following such change in control. During
such term of employment, each such officer would be entitled to receive base
compensation and to continue to participate in incentive and employee benefit
plans at levels no less favorable to him than prior to commencement of the
term or to receive a lump sum payment, following the termination of his
employment. Benefits under these agreements are subject to an overall
limitation which assures that payments will not constitute "excess golden
parachute payments" under federal income tax law. While each of such
agreements is presently in effect, none become operative until a change in
control of the Company has occurred, prior to which time the Company and such
officer each reserves
B-16
<PAGE>
the right at any time with or without cause to terminate their employment
relationship. The transactions that are deemed to result in a change in
control for the purposes of these agreements include (a) merger or
consolidation of the Company with, or sale of all or substantially all its
assets to another corporation, as a result of which less than a majority of
the voting shares of the surviving entity are owned by former stockholders of
the Company; (b) any person becoming the beneficial owner of 25% or more of
the voting stock of the Company; (c) reporting by the Company under specified
provisions of the federal securities laws that a change in control has
occurred; and (d) when within any two-year period, a majority of directors at
the beginning of such period (not including persons approved by at least two-
thirds of the Directors still in office who were directors at the beginning of
such period) cease to be directors of the Company. Effective December 12,
1995, the Company terminated the employment agreements in effect as of such
date and, effective as of January 1, 1996, entered into revised employment
agreements with the executive officers of the Company. The revised employment
agreements include the provisions described above, except that the Board of
Directors may, by vote of three-quarters of the members, determine that a
change in control described in (b) above will not cause the employment
agreement to become operative.
The Company has also entered into indemnification agreements (the
"Indemnification Agreements") with each current member of the Board of
Directors as well as with each executive officer of the Company. The form and
execution of the Indemnification Agreements were approved by the Company's
shareholders. The Indemnification Agreements were amended as of January 1,
1996 to provide that Ohio law determines the rights and responsibilities of
the Company and the indemnitee. The amendment was necessary to reflect the
Company's reincorporation under Ohio law previously approved by the
shareholders. Such agreements essentially provide that, to the extent
permitted by Ohio law, the Company will indemnify the indemnitee against all
expenses, costs, liabilities and losses (including attorney's fees, judgments,
fines or settlements) incurred or suffered by the indemnitee in connection
with any suit in which the indemnitee is a party or otherwise involved as a
result of his service as a member of the Board or as an officer.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Gorr, Getz and Schmidt are members of the Compensation and Stock
Option Committee of the Board of Directors of the Company. Mr. Getz is
employed by WMX, which beneficially owns 37.63% of the Company's Common Stock.
WMX and its affiliates and the Company are parties to various agreements,
including the Guarantee Agreement, the Warrant Agreement and the Standstill
and Non-Competition Agreement discussed below. See "Certain Relationships and
Related Transactions."
BOARD COMPENSATION AND STOCK OPTION COMMITTEE REPORT(1)
The primary function of the Compensation and Stock Option Committee is to
review and approve salaries and other benefits for executive officers of the
Company, to make recommendations to the Board of Directors with respect to the
adoption of employee benefit programs and to administer the Company's stock
option plans and to approve awards of stock options made under the Company's
1986 Stock Option Plan. The Compensation and Stock Option Committee is
composed of three Directors, Messrs. Gorr, Getz and Schmidt, who are not
executive officers of the Company. Set forth below is a report of Messrs.
Gorr, Getz and Schmidt in their capacity as the Board's Compensation and Stock
Option Committee addressing the Company's compensation policies for 1997 as
they affected Mr. James L. Kirk and the other executive officers of the
Company.
The Compensation and Stock Option Committee's executive compensation
policies are designed to provide levels of compensation that integrate pay
(considered in connection with grants of stock options under the Company's
1986 Stock Option Plan) with the Company's annual and long-term performance
goals, reward individual achievement and attract and retain qualified
executives, all in the context of the highly competitive industry in which the
Company operates.
- --------
(1) Note: This information is not incorporated by reference in any prior or
future Securities and Exchange Commission filings, directly or by
reference to the incorporation of proxy statements of the Company,
unless such filing specifically incorporates this information.
B-17
<PAGE>
Salaries for executive officers are determined periodically by evaluating
the performance of the individuals reviewed and their contributions to the
performance of the Company and particular business units, as applicable, their
responsibilities, experience, potential and period of service at their current
salary. Financial results as well as appropriate non-financial measures are
considered. Factors consistent with the Company's overall compensation policy
and strategy may also be considered. With respect to executive officers, the
Company's Management Incentive Plan provides bonus awards based upon the
Company's achievement of certain financial goals, and allows the Committee to
grant discretionary bonus awards for exemplary performance or to reward
special achievements which impact Company results. In its deliberations, the
Committee takes into account the recommendations of appropriate Company
officials. See "1996 Management Incentive Plan."
The Compensation and Stock Option Committee also endorses the position that
stock ownership by management and stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders'
interest in the enhancement of shareholder value. The granting of stock
options pursuant to the Company's 1986 Stock Option Plan is also within the
authority of the Compensation and Stock Option Committee. In determining
grants of stock options to executive officers, the Compensation and Stock
Option Committee has followed policies substantially similar to those
described above with respect to compensation. James L. Kirk received grants of
stock options covering 125,000 shares of Common Stock in 1997, exercisable in
installments over a four-year period. The Compensation and Stock Option
Committee considers, in granting such options to Mr. Kirk, the view expressed
above that stock ownership by Mr. Kirk beneficially aligns his interests with
the interests of the Company's shareholders.
Mr. James L. Kirk's annual base salary of $450,000.00 was established in
February 1997.
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits a
publicly held corporation, such as the Company, from claiming a deduction on
its federal income tax return for compensation in excess of $1,000,000 paid
for a given federal year to certain executives. Because of the Company's
current compensation levels, the Compensation Committee has developed no
policies at this time concerning Section 162(m).
IVAN W. GORR HERBERT A. GETZ CHARLES W. SCHMIDT
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT
The Company provides Robert W. Kirk, a former officer and stockholder of the
Company and father of James L. Kirk and Joseph R. Kirk, with a pension
arrangement pursuant to which the Company is to make payments of $96,000 per
year, subject to further cost of living adjustments, for the remainder of his
life and that of his spouse if she survives him. During 1997, the Company made
payments totaling $117,955 to Robert W. Kirk under this pension arrangement.
The Company has entered into a five-year employment agreement with Mr.
Joseph Kirk during 1996, pursuant to which he will be entitled to a salary of
$250,000 payable in the initial year, and decreasing $25,000 during each of
the four succeeding years. Under the agreement, Mr. Kirk is eligible to
receive other benefits and perquisites payable to senior employees.
During 1997, OHMR paid $471,593 to Kirk Brothers Co., Inc. ("KBC"), the
principal shareholders of which are Richard C. Kirk and Robert W. Kirk, the
brother and father, respectively, of James L. Kirk and Joseph R. Kirk. This
amount represents payments made to KBC for subcontract services.
OHMR leases a building with approximately 5,400 square feet for a monthly
rental of $2,500 on a month-to-month basis from The KDC Company ("KDC"), the
principal shareholders of which are James L. Kirk and Joseph R. Kirk. OHMR
utilizes the building, located near its headquarters in Findlay, Ohio, for the
storage of equipment and inventory and made rental payments to KDC aggregating
$20,000 during 1997 under this arrangement.
B-18
<PAGE>
OHMR leases office and storage space from Findlay Machine and Tool, Inc.
("FMT"), of which Joseph R. Kirk is the principal shareholder pursuant to a
lease. The rate and other terms of the lease were approved by the Board of
Directors on November 7, 1995 and amended on March 6, 1996 and August 13,
1996. During 1997, OHMR made payments to FMT totaling $297,860 under the
lease.
In connection with the commencement of his employment, Mr. Philip V.
Petrocelli, Vice President, Western Operations, received a $100,000 interest
free loan to be forgiven in equal installments on the anniversary date of his
employment over seven consecutive years. The balance of the loan becomes due
and payable immediately in the event Mr. Petrocelli voluntarily leaves the
employment of the Company or is terminated for cause before August 30, 2000.
During 1997, $14,286 of the principal balance was forgiven. As of December 31,
1997, the aggregate principal amount outstanding was $38,095.
TRANSACTIONS WITH SHAREHOLDERS
In connection with the Reorganization Agreement (the "Reorganization
Agreement") entered into in connection with the Company's purchase of Rust
Environmental, Inc., the Company and Rust International, Inc. ("Rust"), the
parent of Rust Environmental, Inc., entered into certain business agreements.
First, Rust agreed that the Company would provide all environmental
remediation services under Rust's governmental Total Environmental Restoration
Contracts ("TERCs"), and a portion of all fees earned under such contracts.
Rust also agreed to maintain, at its cost, certain payment, performance and
surety bonds in connection with certain Rust projects acquired in connection
with the transaction, and to assist the Company in preparing documents and
favorable pricing from Rust and affiliated Company vendors.
THE GUARANTEE AGREEMENT
In connection with the Reorganization Agreement, WMX, the majority
stockholder of Rust, and the Company entered into a Guarantee Agreement, which
provides that in exchange for a Warrant (described below), WMX guaranteed
indebtedness of the Company in an amount not to exceed $62,000,000. The
Guarantee amount may be increased from time to time, up to an amount not to
exceed $75,000,000 in the event the Warrant is, in whole or in part, exercised
by WMX or transferred to a third party. On May 31, 1995, WMX guaranteed
certain indebtedness under the Company's Revolving Credit Agreement and the
Company, in consideration thereof, executed a Reimbursement Agreement in favor
of WMX obligating the Company to reimburse WMX for any payments by WMX under
the Guarantee. Pursuant to the Repurchase Agreement, the Guarantee Agreement
shall be terminated as of the date on which WMX's guarantee of the
indebtedness incurred under the Company's revolving credit agreement (the
"Indebtedness") terminates (the "Common Termination Date"). The Common
Termination Date is expected to occur upon the repayment of the Indebtedness
on or about the Effective Time.
THE WARRANT AGREEMENT
In consideration for the Guarantee, the Company issued a Warrant to WMX
which is exercisable, in whole or in part, until May 31, 2000, for an
aggregate of 700,000 shares of Common Stock (the "Warrant Shares") at an
exercise price of $15.00 per Warrant Share (the "Exercise Price"). The Warrant
provides further that the acquisition by WMX of any of the Warrant Shares upon
exercise of all or any portion of the Warrant is subject to the ownership
limitation on WMX and its affiliates (the "WMX Group") set forth in the
Standstill and Non-Competition Agreement (the "Standstill Agreement")
described below. The Warrant provides for certain adjustments to the Exercise
Price and/or the number of Warrant Shares purchasable upon exercise in the
event of a stock combination, stock split, a capital reorganization or
reclassification, a merger or consolidation, or a sale or conveyance of all or
substantially all of the Company's assets. Pursuant to the Repurchase
Agreement, the Warrants and the Warrant Agreement shall terminate at the
Common Termination Date.
B-19
<PAGE>
THE STANDSTILL AND NON-COMPETITION AGREEMENT
Pursuant to the Reorganization Agreement, the Company, WMX and Rust entered
into a Standstill Agreement providing that the WMX Group will not acquire any
of the Company's Common Stock or any of the Company's other securities
entitled to vote generally for the election of directors ("Voting Securities")
other than pursuant to exercise of the Warrant, or in acquisitions, including
exercise of the Warrant, that do not result in the aggregate ownership by the
WMX Group or more than 40% of the Company's Voting Securities, or such lesser
percentage as may exist from time to time as the result of voluntary
dispositions by the WMX Group (the "Ownership Limit").
Pursuant to the Standstill Agreement, no member of the WMX Group shall
acquire Voting Securities which would result in the WMX Group owning Voting
Securities beyond the Ownership Limit unless the acquisition is (i) made
pursuant to an offer for all of the Company's outstanding Voting Securities at
the same price, and (ii) is approved by either the Company's independent
directors or the Company's shareholders, other than the WMX Group and certain
other shareholders, pursuant to the Control Share Acquisition provisions of
the Company's Amended and Restated Articles of Incorporation. The Standstill
Agreement also provides that if the WMX Group's ownership level falls below
20% of the outstanding Voting Securities, the WMX Group shall have an option
to purchase from the Company sufficient Voting Securities at fair market value
to raise its ownership to not more than 21% of the outstanding Voting
Securities. The WMX Group, pursuant to the Standstill Agreement, agrees, among
other things, not to solicit proxies in opposition to any matter recommended
by a majority of the Company's directors not representing WMX (the "Non-WMX
Directors"), or to solicit a tender offer or business combination.
As long as the WMX Group owns at least 20% of the Voting Securities, the
Company will include as nominees to the Board of Directors a number of WMX
Group designees proportionate to the WMX Group's ownership interest (to the
lowest corresponding whole directorship). Furthermore, so long as the WMX
Group owns at least 20% of the outstanding Voting Securities, WMX shall take
all actions in its control to include at least three independent Directors on
the Company's Board of Directors. The Standstill Agreement provides that the
WMX Group shall vote its Common Stock for the Company's nominees to the Board
of Directors selected by a majority of the Non-WMX Directors. The WMX Group
shall vote on all other matters (i) in accordance with the recommendations of
the majority of the Non-WMX Directors, or (ii) if no recommendation is made,
in the same proportion as other shareholders of the Company shall vote.
Pursuant to the Standstill Agreement, WMX, Rust and their respective wholly-
owned subsidiaries (the "WMX Affiliates") have agreed not to engage in the
business of providing field services for the on-site remediation of hazardous
substances in North America for seven years after the closing except as
otherwise provided in the Standstill Agreement. The Standstill Agreement also
provides that for so long as the WMX Group owns at least 20% of the
outstanding Voting Securities, (i) the Company shall be a preferred provider
of certain environmental remediation services to the WMX Affiliates, and (ii)
the WMX Affiliates shall be preferred providers of engineering, consulting and
design environmental and waste management services to the Company. Also, Rust
will provide the Company access to its engineering, consulting, design and
project management services personnel on the same terms and conditions as Rust
provides them to WMX Affiliates. Additionally, the Standstill Agreement
provides that the WMX Affiliates will contract with the Company for $20
million of environmental remediation services prior to December 31, 1996,
which was extended to December 31, 1997.
Pursuant to the Repurchase Agreement, the foregoing provisions of the
Standstill Agreement will terminate as of the consummation of the Repurchase.
OTHER SERVICES
In 1997, OHMR received from WMX and its affiliates $23,663,946 for
remediation, construction and other services performed by OHMR. OHMR paid
$6,867,570 to WMX and its affiliates for engineering-related and disposal
services.
B-20
<PAGE>
EXHIBIT 1
BT ALEX. BROWN INCORPORATED
---------------------------
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"), propose 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 for 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 transaction 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 of our customers and, accordingly,
may at any time hold a long or short position in securities of the Company and
the Buyer.
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
<PAGE>
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 14D-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
<PAGE>
EXHIBIT 2
OHM CORPORATION
16406 U.S. ROUTE 224 EAST
FINDLAY, OHIO 45840
January 16, 1998
Dear Fellow Shareholder:
I am pleased to inform you that on January 15, 1998, OHM Corporation (the
"Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with International Technology Corporation, a Delaware corporation
("Parent"), and IT-Ohio, Inc., an Ohio corporation and a wholly owned
subsidiary of Parent ("Purchaser"). Pursuant to the Merger Agreement,
Purchaser is today commencing a tender offer (the "Offer") to purchase
13,933,000 shares of Common Stock, par value $0.10 per share, of the Company
(the "Shares") at a price of $11.50 per Share, net to the seller in cash.
The Merger Agreement provides holders of Shares with an opportunity to
receive a combination of cash and shares of Common Stock, $.01 per share, of
Parent ("Parent Common Stock"), in exchange for their Shares. Company
shareholders can receive cash by tendering their Shares into the Offer. If
Parent purchases Shares pursuant to the Offer, Company shareholders will
receive 1.394 shares of Parent Common Stock for each Share not purchased in
the Offer. If all outstanding Shares are tendered into the Offer, Company
shareholders will, in the aggregate, receive approximately $8.00 in cash and
.424 of a share of Parent Common Stock per Share. If Parent does not purchase
Shares in the Offer, the Merger Agreement provides that the cash that
otherwise would have been paid in the Offer will be paid to Company
shareholders at the time of the merger (the "Merger") of Purchaser with and
into the Company. In addition, concurrently with the consummation of the
Offer, the Company will pay a pro rata taxable distribution, to holders of
record of the Shares as of the close of business on the date immediately prior
to consummation of the tender offer, of all of the shares of common stock of
NSC Corporation held by the Company (the "NSC Distribution"). Both the Offer
and the Merger are subject to certain conditions described in Parent's tender
offer materials, which I encourage you to review carefully.
As the market price of the shares of the Parent Common Stock will fluctuate,
the value of such shares at the effective time of the Merger may be greater or
less than the $11.50 in cash per Share payable pursuant to the Offer.
ACCORDINGLY, THE VALUE OF THE CONSIDERATION EXCHANGED FOR SHARES IN THE MERGER
MAY BE LESS OR GREATER THAN THE $11.50 PER SHARE RECEIVED BY HOLDERS OF SHARES
THAT ARE PURCHASED PURSUANT TO THE OFFER. Based on the closing price of Parent
Common Stock on the New York Stock Exchange, Inc. on January 15, 1998, the
value of the Parent Common Stock to be received for each Share pursuant to the
Exchange Ratio on such date would have been $11.15. Both the Offer and the
Merger will be fully taxable transactions, with the result that gain will be
realized in an amount equal to the excess of the cash and fair market value of
Parent Common Stock received over the holder's adjusted tax basis in the
Shares surrendered. Furthermore, it is anticipated that the NSC distribution
will be treated as a pro rata taxable redemption which qualifies as a sale or
exchange for tax purposes.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY 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, THE COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9"), including, among other things, the written opinion of BT Alex. Brown
Incorporated ("BT Alex.
<PAGE>
Brown"), the Company's financial advisor, to the effect that, as of such date
and based upon certain matters in such opinion, the aggregate consideration to
be received by the holders of the Shares in the Offer, the Merger and the NSC
Distribution was fair from a financial point of view to such holders. THE FULL
TEXT OF THE WRITTEN OPINION OF BT ALEX. BROWN, DATED JANUARY 14, 1998, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH SUCH OPINION, IS ATTACHED AS ANNEX A TO
THE SCHEDULE 14D-9. SHAREHOLDERS ARE URGED TO READ SUCH OPINION CAREFULLY IN
ITS ENTIRETY.
The Company has also entered into a Share Repurchase Agreement with Waste
Management, Inc., a Delaware corporation ("WMX"), pursuant to which WMX has
agreed not to tender more than 5,235,381 Shares into the Offer. The Company
has agreed to purchase a number of Shares such that WMX will receive, between
Shares purchased in the Offer and pursuant to the Share Repurchase Agreement,
an amount in cash equal to $8.00 multiplied by the total number of Shares held
by WMX. This action was taken because limitations on Parent's ability to
finance the full cash portion of the purchase price with respect to all
outstanding Shares on terms that Parent found acceptable and the Company's
desire to assure that all cash paid in the transaction would be received as
soon as practicable caused the Company's Board of Directors to determine to
borrow funds to acquire some Shares directly. WMX entered into the Share
Repurchase Agreement at the request of the Company and the Company does not
believe the transactions provide WMX with any benefit compared to the other
shareholders of the Company.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9. Also enclosed is the Parent's Offer to Purchase and
related materials, including a Letter of Transmittal to be used for tendering
your Shares. These documents set forth the terms and conditions of the Offer
and provide instructions as to how to tender your Shares. I urge you to read
the enclosed materials and consider this information carefully.
Sincerely,
.
James L. Kirk
Chairman, President and
Chief Executive Officer
<PAGE>
EXHIBIT 3
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
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RECITALS
ARTICLE I
The Tender Offer and the Stock Purchase
<C> <S> <C>
1.1. Tender Offer................................................................................2
1.2. Company Action..............................................................................3
1.3. The Share Repurchase........................................................................4
1.4. Directors; Committees.......................................................................5
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger..................................................................................6
2.2. Closing.....................................................................................6
2.3. Effective Time..............................................................................6
ARTICLE III
Articles of Incorporation, Regulations and
Officers and Directors of the Surviving Corporation
3.1. The Articles of Incorporation...............................................................7
3.2. The Regulations.............................................................................7
3.3. Officers and Directors......................................................................7
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock.....................................................................7
4.2. Exchange of Certificates....................................................................9
4.3. Dissenters' Rights.........................................................................12
4.4. Adjustments to Prevent Dilution............................................................13
4.5. Treatment of Warrants and WH Options.......................................................13
4.6. Treatment of the Debentures................................................................13
4.7. NSC Spinoff................................................................................13
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE V
Representations and Warranties
<C> <S> <C>
5.1. Representations and Warranties of the Company..............................................14
5.2. Representations and Warranties of Parent
and Merger Sub........................................................................28
ARTICLE VI
Covenants
6.1. Company Interim Operations.................................................................41
6.2. Parent Interim Operations..................................................................44
6.3. Acquisition Proposals......................................................................45
6.4. Meeting of the Company's Shareholders......................................................46
6.5. Meeting of Parent's Stockholders...........................................................47
6.6. Proxy Statement; Registration Statement....................................................47
6.7. Filings; Other Action; Notification........................................................48
6.8. Access.....................................................................................50
6.9. Stock Exchange Listing and De-listing......................................................50
6.10. Publicity..................................................................................50
6.11. Benefits...................................................................................51
6.12. Expenses...................................................................................54
6.13. Indemnification; Directors' and
Officers' Insurance...................................................................55
6.14. Debentures.................................................................................57
6.15. Takeover Statutes..........................................................................58
6.16. Agreement of Affiliates....................................................................58
6.17. Legal Opinion..............................................................................58
ARTICLE VII
Conditions
7.1. Conditions to Obligations of Parent
and Merger Sub........................................................................59
7.2. Conditions to Obligations of the Company...................................................61
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent..............................................................63
8.2. Termination by Either Parent or the Company................................................63
8.3. Termination by Parent......................................................................63
8.4. Termination by the Company.................................................................63
8.5. Effect of Termination and Abandonment......................................................64
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
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ARTICLE IX
Miscellaneous and General
<C> <S> <C>
9.1. Survival...................................................................................65
9.2. Modification or Amendment..................................................................66
9.3. Waiver of Conditions.......................................................................66
9.4. Counterparts...............................................................................66
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL..............................................66
9.6. Notices....................................................................................67
9.7. Entire Agreement; No Other Representations.................................................68
9.8. No Third Party Beneficiaries...............................................................69
9.9. Obligations of Parent and of the Company...................................................69
9.10. Severability...............................................................................69
9.11. Interpretation.............................................................................69
9.12. Assignment.................................................................................70
</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
<PAGE>
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.
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
-2-
<PAGE>
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,
-3-
<PAGE>
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.
(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
-4-
<PAGE>
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.
-5-
<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
--------
-6-
<PAGE>
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.
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,
-7-
<PAGE>
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.
-8-
<PAGE>
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").
-------------
(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
-9-
<PAGE>
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
-10-
<PAGE>
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 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
-11-
<PAGE>
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.
-12-
<PAGE>
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 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
-13-
<PAGE>
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
-14-
<PAGE>
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 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
-15-
<PAGE>
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.
-16-
<PAGE>
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
"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
-17-
<PAGE>
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
-18-
<PAGE>
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 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
-19-
<PAGE>
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
-20-
<PAGE>
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 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
-21-
<PAGE>
(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
-22-
<PAGE>
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 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. ' 9601(14) or any other
substance listed, defined,
-23-
<PAGE>
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
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<PAGE>
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 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.
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<PAGE>
(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
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<PAGE>
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 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
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<PAGE>
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
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<PAGE>
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.
(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
-29-
<PAGE>
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
-30-
<PAGE>
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.
(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,
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<PAGE>
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
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<PAGE>
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 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.
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<PAGE>
(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
-34-
<PAGE>
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 "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
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<PAGE>
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
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<PAGE>
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, 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
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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,
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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 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
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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.
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
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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
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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;
(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
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<PAGE>
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
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<PAGE>
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 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
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<PAGE>
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
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<PAGE>
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 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
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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
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<PAGE>
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.
(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
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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
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<PAGE>
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.
(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
-------- -------
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<PAGE>
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.
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(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
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
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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
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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.
(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
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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.
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<PAGE>
(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
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
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<PAGE>
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
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<PAGE>
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.
(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
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<PAGE>
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
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<PAGE>
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.
(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.
-----
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(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
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(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 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
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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
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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.
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.
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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.
-65-
<PAGE>
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 90071
Telecopier: (216) 579-0212
-66-
<PAGE>
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
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.
-67-
<PAGE>
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.
-68-
<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: __________________________
Name: James L. Kirk
Title: Chairman, President and
Chief Executive Officer
INTERNATIONAL TECHNOLOGY CORPORATION
By: __________________________
Name: Anthony J. DeLuca
Title: President
IT-OHIO, INC.
By: __________________________
Name: Anthony J. DeLuca
Title: President
<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
A-1
<PAGE>
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
A-2
<PAGE>
banks, or any limitation (whether or not mandatory) by any Governmental
Entity on, or other event materially adversely affecting, the extension of
credit by 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-3
<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;
<PAGE>
(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 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
B-2
<PAGE>
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:
B-3
<PAGE>
EXHIBIT 4
SHARE REPURCHASE AGREEMENT
SHARE REPURCHASE AGREEMENT (this "Agreement"), dated as of January 15,
1998, among OHM Corporation, an Ohio corporation (the "Company"), Waste
Management, Inc., a Delaware corporation (the "Shareholder"), Rust International
Inc., a Delaware corporation ("Rust"), and International Technology Corporation,
a Delaware corporation ("Parent").
WHEREAS, certain of the parties to this Agreement are also parties to
the Standstill and Non-Competition Agreement, dated as of May 30, 1995, among
the Company, the Shareholder and Rust (the "Standstill Agreement"); and
WHEREAS, concurrently with the execution of this Agreement, the
Company, Parent and IT-Ohio, Inc., an Ohio corporation ("Merger Sub"), have
entered into an Agreement and Plan of Merger, dated as of the date hereof (as it
may be amended from time to time, the "Merger Agreement"), which provides that
Merger Sub will make a tender offer (the "Offer") for 13,933,000 shares of
Common Stock, par value $0.10 per share, of the Company ("Shares") and that,
subsequent to the consummation of the Offer, Merger Sub will merge with and into
the Company (the "Merger" and, collectively with the Offer and the other
transactions contemplated by the Merger Agreement, the "Merger Transactions");
and
WHEREAS, the Shareholder is the record holder of an aggregate of
9,668,000 Shares (the "Shareholder Shares"); and
WHEREAS, Parent, the Company and the Shareholder wish, as a part of
the Merger Transactions, to provide for the repurchase by the Company from the
Shareholder, 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 (the "Payment
Time"), of 5,235,381 Shareholder Shares (the "Repurchased Shares"), in a manner
that will increase the aggregate number of Shares acquired for cash in the
Merger Transactions and make it possible for the Merger Consideration (as
defined in the Merger Agreement) to consist solely of shares of Parent Common
Stock (as defined in the Merger Agreement); and
<PAGE>
WHEREAS, the parties intend for the Shareholder not to receive any
greater consideration per Share in the Merger Transactions than the other
holders of Shares, and that for Shareholder not to receive any greater amount of
cash consideration per Share in the Merger Transactions than the other holders
of Shares; and
WHEREAS, in order to facilitate consummation of the Merger
Transactions, the Shareholder wishes to agree (i) to vote the Shareholder Shares
and any other shares of capital stock of the Company held by it so as to
facilitate consummation of the Merger Transactions, (ii) except as provided in
this Agreement, not to transfer or otherwise dispose of any of the Shareholder
Shares, or any other shares of capital stock of the Company, acquired by it
hereafter and prior to the Effective Time (as defined in the Merger Agreement),
(iii) to deliver to Parent an irrevocable proxy to vote the Shareholder Shares
and any other shares of capital stock of the Company acquired by the Shareholder
hereafter and prior to the Effective Time, and (iv) to amend or terminate, as
the case may be, certain agreements to which certain of the parties hereto are
parties, and (v) to make certain other agreements, all as provided for herein.
NOW, THEREFORE, for good and valuable considera tion, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
Definitions; Representations and Warranties
-------------------------------------------
1.1 Definitions. Terms used herein but not defined herein shall have
-----------
the respective meanings ascribed to such terms in the Merger Agreement.
1.2 Representations of the Shareholder. The Shareholder represents
----------------------------------
and warrants to the Company that (a) it owns beneficially (as such term is
defined in the Securities Exchange Act of 1934, as amended (the "1934 Act"))
9,668,000 Shares free and clear of all liens, claims, charges, security
interests or other encumbrances (each, a "Lien") and, except for this Agreement
and the warrants to purchase Shares (the "Warrants") issued pursuant to the
Warrant Agreement, dated as of May 30, 1995, among the Company and the
Shareholder (the "Warrant Agreement"), there are no options, warrants or other
rights, agreements,
-2-
<PAGE>
arrangements or commitments of any character to which the Shareholder is a party
relating to the pledge or disposition of any shares of capital stock of the
Company and, except for the Standstill Agreement and this Agreement, there are
no voting trusts or voting agreements to which the Shareholder is a party with
respect to any shares of capital stock of the Company; (b) the Shareholder does
not beneficially own any shares of capital stock of the Company other than the
Shareholder Shares and the Warrants and, except for the Warrants, does not have
any options, warrants or other rights to acquire any additional shares of
capital stock of the Company or any security exercisable for or convertible into
shares of capital stock of the Company; (c) the Shareholder has full power and
authority to enter into, execute and deliver this Agreement and to perform fully
its obligations under this Agreement; and (d) this Agreement has been duly
executed and delivered by each of the Shareholder and Rust, constitutes the
legal, valid and binding obligation of the Shareholder and Rust and is
enforceable against each of them in accordance with its terms. The foregoing
representations shall survive consummation of the Merger Transactions and the
other transactions contemplated by this Agreement.
1.3 Representations of the Company. The Company represents and
------------------------------
warrants to the Shareholder that (a) the Company has full power and authority to
enter into, execute and deliver this Agreement and to perform fully its
obligations under this Agreement, (b) this Agreement has been duly executed and
delivered by the Company, constitutes the legal, valid and binding obligation of
the Company and is enforceable against it in accordance with its terms, and (c)
the Company has obtained all consents, approvals, permits and authorizations
required to be obtained by the Company pursuant to any law, regulation,
contract, agreement or instrument in connection with the execution and delivery
of this Agreement. The foregoing representations shall survive consummation of
the Merger Transactions and the other transactions contemplated by this
Agreement.
ARTICLE II
The Repurchase and the Offer
----------------------------
2.1 Repurchase of Shares. (a) Subject to the terms and conditions
--------------------
of this Agreement, including the conditions set forth in Section 2.3, the
Company agrees to
-3-
<PAGE>
purchase from the Shareholder, and the Shareholder agrees to sell to the Company
(such purchase and sale transaction, the "Repurchase"), the Repurchased Shares,
free and clear of any Liens at a purchase price of $11.50 per Repurchased Share,
or such greater price per Repurchased Share as may be paid in the Offer (the
"Repurchase Price").
(b) If for any reason the Company has not repurchased the Repurchased
Shares immediately prior to the Effective Time (as defined in the Merger
Agreement), the Company shall take such action as may be necessary at such time
to purchase the Repurchased Shares at the Repurchase Price for cash at such
time, so that the Repurchased Shares shall have been acquired by the Company,
Parent or Merger Sub prior to the Effective Time.
2.2 Repurchase Closing. (a) The delivery of the Repurchased Shares
------------------
(the "Repurchase Closing") shall take place at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, New York at the Payment Time.
(b) At the Repurchase Closing:
(i) The Shareholder shall deliver to the Company certificates
representing the Repurchased Shares, duly endorsed and in form for transfer
to the Company; and
(ii) The Company shall pay to the Shareholder, by wire transfer,
to an account designated by the Shareholder no fewer than two business days
prior to the Repurchase Closing, immediately available funds equivalent to
the Repurchase Price multiplied by the number of Repurchased Shares.
2.3 Conditions to the Repurchase. (a) The respective obligations of
----------------------------
the Company and the Shareholder to consummate the Repurchase are 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 or the Shareholder, as the case may
be, to the extent permitted by applicable law:
(i) Concurrently with the Repurchase Closing, Merger Sub shall have
paid for Shares pursuant to the Offer.
-4-
<PAGE>
(ii) No United States or state court or other Governmental Entity (as
defined in the Merger Agreement) 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 or this Agreement.
(b) The obligation of the Company to consummate the Repurchase is
subject to the condition that the representations and warranties of the
Shareholder contained in Section 1.2 are true and accurate in all material
respects as of the date hereof and as of the Repurchase Closing, provided,
however, that the foregoing condition may be waived in whole or in part by the
Company.
(c) The obligation of the Shareholder to consummate the Repurchase is
subject to the condition that the representations and warranties of the Company
contained in Section 1.3 are true and accurate in all material respects as of
the date hereof and as of the Repurchase Closing, provided, however, that the
foregoing condition may be waived in whole or in part by the Shareholder.
2.4 The Tender Offer. The Shareholder agrees that it will not tender
----------------
more than 2,142,141 Shareholder Shares into the Offer.
ARTICLE III
The Merger
----------
3.1 Agreement to Vote Shares. In addition to and notwithstanding the
------------------------
provisions of Section 1.2 of the Standstill Agreement, the Shareholder agrees
that during the term of this Agreement it consents to and approves the voting of
the Shareholder Shares and any New Shares (as defined in Section 4.2), (a) in
favor of adoption of the Merger Agreement and in favor of consummation of the
Merger Transactions at every meeting of the shareholders of the Company at which
such matters are considered and at every adjournment thereof or in connection
with any written consent of the shareholders of the Company, (b) in favor of the
election to the Company's Board of Directors of such
-5-
<PAGE>
number of Parent Representatives as Parent is permitted to cause to be elected
to the Company's Board of Directors pursuant to Section 1.4 of the Merger
Agreement, (c) against any action or agreement that would compete with, impede,
interfere with or attempt to discourage the Merger Transactions, or inhibit the
timely consummation of the Merger Transactions, (d) against any action or
agreement that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement and (e) against any merger, consolidation, business
combination, reorganization, recapitalization, liquidation or sale or transfer
of any material assets of the Company or its subsidiaries, except for the Merger
Transactions. The Shareholder agrees to deliver to Parent upon request a proxy
substantially in the form attached hereto as Exhibit A, which proxy shall be
irrevocable during the term of this Agreement to the fullest extent permitted
under Ohio law.
3.2 No Voting Trusts. The Shareholder agrees that it will not, nor
----------------
will it permit any entity under their control to, deposit any of the Shareholder
Shares or any New Shares held by it in a voting trust or subject any of the
Shareholder Shares or any New Shares held by it to any arrangement with respect
to the voting of the Shareholder Shares that could result in a shareholder's
vote or action by consent of the shareholders of the Company in opposition to or
in competition with the consummation of the Merger Transactions.
3.3 No Proxy Solicitations. The Shareholder agrees that it will not,
----------------------
nor will it permit any entity under its control to, (a) solicit proxies or
become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the 1934 Act) in opposition to or competition with the
consummation of the Merger Transactions or otherwise encourage or assist any
party in taking or planning any action which would compete with, impede,
interfere with or attempt to discourage the Merger Transactions or inhibit the
timely consummation of the Merger Transactions, (b) directly or indirectly
encourage, initiate or cooperate in a shareholders' vote or action by consent of
the Company's shareholders in opposition to or in competition with the
consummation of the Merger Transactions, or (c) become a member of a "group" (as
such term is used in Section 13(d) of the 1934 Act) with respect to any voting
securities of the Company for the purpose of
-6-
<PAGE>
opposing or competing with the consummation of the Merger Transactions.
3.4 Waiver of Dissenters' Rights. The Shareholder hereby
----------------------------
unconditionally and irrevocably waives its rights pursuant to Sections 1701.84
et seq. of the Ohio General Corporation Law to exercise appraisal rights or
- -- ---
dissenters' rights with respect to the Offer, the Merger, or the other
transactions contemplated by the Merger Agreement.
ARTICLE IV
Other Agreements
----------------
4.1 No Transfer or Encumbrance. In addition to and notwithstanding
--------------------------
the provisions of Section 1.8 of the Standstill Agreement, the Shareholder
agrees not to transfer, sell, offer, exchange, pledge or otherwise dispose of or
encumber any of the Warrants, Shareholder Shares or New Shares on or after the
date hereof and during the term of this Agreement, except for tenders in
accordance with Section 2.4, unless the transferee agrees in writing in form
satisfactory to the Company and Parent to be bound by the terms of this
Agreement.
4.2 No Additional Purchases or Acquisitions. In addition to and
---------------------------------------
notwithstanding the provisions of Sections 1.1 and 2.4 of the Standstill
Agreement, the Shareholder agrees that it will not purchase or otherwise acquire
beneficial ownership of any Shares or any other capital stock of the Company
after the execution of this Agreement ("New Shares"), nor will the Shareholder
voluntarily acquire the right to vote or share in the voting of any Shares or
any other capital stock of the Company other than the Shareholder Shares, unless
(in either case) the Shareholder agrees to deliver to the Board of Directors of
the Company immediately after such purchase or acquisition an irrevocable proxy
in the form attached hereto as Exhibit A with respect to such New Shares. The
Shareholder also agrees that any New Shares acquired or purchased by it shall be
subject to the terms of this Agreement to the same extent as if they constituted
Shareholder Shares.
4.3 First Amendment to Standstill Agreement. The Standstill
---------------------------------------
Agreement is hereby amended ab initio, as of the
-7-
<PAGE>
execution of this Agreement, to amend Section 1.4 thereof by adding the
following clause to the end of such Section:
", except the Share Repurchase Agreement, dated January 15, 1998, among OHM
Corporation, Waste Management, Inc., Rust International Inc. and
International Technology Corporation."
4.4 Second Amendment to Standstill Agreement. The Standstill
----------------------------------------
Agreement is hereby further amended ab initio, as of the occurrence of the
Repurchase Closing, to delete therefrom Sections 2.1 through 2.7 thereof in
their entirety.
4.5 Third Amendment to Standstill Agreement. The Standstill
---------------------------------------
Agreement is hereby further amended ab initio, as of the Repurchase Closing, to
delete therefrom Sections 3.1, 3.2 and 3.3 thereof in their entirety.
4.6 Release from Intercreditor Agreement. The Shareholder hereby
------------------------------------
consents to the payment by the Company of a pro rata taxable distribution (the
--- ----
"NSC Distribution") to holders of record of the Shares of all of the shares of
common stock, par value $0.01 per share, of NSC Corporation held by the Company
(the "NSC Shares") and waives its rights to reimbursement pursuant to the
Reimbursement Agreement, dated as of May 31, 1995, among the Company,
Remediation and the Shareholder, and the Intercreditor Agreement, dated as of
May 31, 1995, among the Shareholder, the Administrative Agent and the Issuing
and Paying Agent, and hereby releases the NSC Shares from any security interest
(pursuant to pledge agreements or otherwise) which the Shareholder may have with
respect to such NSC Shares. The Shareholder agrees to execute any documents
reasonably necessary to give effect to the provisions of this Section, promptly
upon request therefor made by the Company.
4.7 Termination of the Guaranty Agreement. The parties hereby agree
-------------------------------------
that the Guaranty Agreement, dated as of May 30, 1995, between the Company and
the Shareholder, shall be terminated effective as of the Common Termination
Date.
4.8 Cancellation of The Warrants.
----------------------------
(a) The parties hereby agree that the Warrant Agreement shall be
terminated and the Warrants shall be
-8-
<PAGE>
canceled effective as of the date on which the Guaranty, made as of May 31,
1995, by the Shareholder in favor of the Banks listed therein (the "Guaranty")
terminates in accordance with Section 10(a) thereof (such date, the "Common
Termination Date"), without the payment of any separate consideration therefor.
The parties hereby agree to use their reasonable best efforts to cause the
events specified in Section 10(a) of the Guaranty to occur prior to the second
business day subsequent to the Effective Time.
(b) The Shareholder agrees not to exercise its rights pursuant to
Sections 3.1 or 3.2 of the Warrant Agreement prior to the earlier to occur of
(i) the second business day subsequent to the Effective Time, and (ii) the
termination of the Merger Agreement in accordance with its terms.
(c) The Shareholder agrees not to exercise its rights pursuant to
Section 2.2 of the Warrant Agreement with respect to the Merger Transactions
prior to the second business day subsequent to the Effective Time.
(d) The Shareholder hereby waives its rights under Sections 2.1
through 2.7 of the Warrant Agreement with respect to the NSC Distribution.
ARTICLE V
Miscellaneous
-------------
5.1 Specific Performance. Each party hereto acknowledges that it
--------------------
will be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agreement,
that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy for
any such failure and will not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto agrees
that it will not seek, and agrees to waive any requirement for, the securing or
posting of a bond in connection with any other party's seeking or obtaining such
equitable relief.
-9-
<PAGE>
5.2 Entire Agreement. This Agreement and the Standstill Agreement
----------------
(as herein amended) supersedes all prior agreements, written or oral, among the
parties hereto with respect to the subject matter hereof and contains the entire
agreement among the parties with respect to the subject matter hereof. This
Agreement may not be amended, supplemented or modified, and no provisions hereof
may be modified or waived, except by an instrument in writing signed by all the
parties hereto. No waiver of any provisions hereof by any party shall be deemed
a waiver of any other provisions hereof by any such party, nor shall any such
waiver be deemed a continuing waiver of any provision hereof by such party.
5.3 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 the Shareholder or Rust:
-----------------------------
Herbert A. Getz
Waste Management, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60523
Telecopier: (630) 572-9130
with a copy to:
John H. Bitner
Bell, Boyd & Lloyd
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207
Telecopier: (312) 372-2098
if to the Company:
-----------------
Steven E. Harbour
OHM Corporation
5445 Triangle Parkway, Suite 400
Norcross, Georgia 30092
Telecopier: (770) 849-3110
-10-
<PAGE>
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
if to Parent:
------------
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
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
5.4 Miscellaneous.
-------------
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of Ohio
applicable to agreements executed in and solely to be performed within such
State.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of
-11-
<PAGE>
competent jurisdiction, such provision or application shall be unenforceable
only to the extent of such invalidity or unenforceability and the remainder of
the provision held invalid or unenforceable and the application of such
provision to persons or circumstances, other than the party as to which it is
held invalid, and the remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) This Agreement shall terminate automatically upon the termination
of the Merger Agreement. This Agreement may be terminated by the Company at any
time if the Shareholder shall have failed to comply with any of its covenants or
agreements contained in this Agreement. This Agreement may be terminated by the
Shareholder at any time if the Company shall have failed to comply with any of
its covenants or agreements contained in this Agreement.
(e) Each party hereto shall execute and deliver such additional
documents as may be necessary or desirable to effect the transactions
contemplated by this Agreement.
(f) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(g) The obligations of the parties set forth in this Agreement shall
not be effective or binding upon any party hereto until after such time as the
Merger Agreement is executed and delivered by the Company, Parent and Merger
Sub, and the parties agree that there is not and has not been any other
agreement, arrangement or understanding between the parties hereto with respect
to the matters set forth herein.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
OHM CORPORATION
By:__________________________
Name:
Title:
WASTE MANAGEMENT, INC.
By:__________________________
Name:
Title:
RUST INTERNATIONAL INC.
By:__________________________
Name:
Title:
INTERNATIONAL TECHNOLOGY
CORPORATION
By:__________________________
Name:
Title:
<PAGE>
(EXHIBIT A)
FORM OF PROXY
The undersigned, for consideration received, hereby appoints Anthony
J. DeLuca and James G. Kirk and each of them my proxies, with power of
substitution and resubstitution, to vote all shares of Common Stock of OHM
Corporation, an Ohio corporation (the "Company"), [and [insert any other Shares
(as defined in the Share Repurchase Agreement) or other shares of capital stock
of the Company owned by the Shareholder)]] owned by the undersigned at the
Special Meeting of Shareholders of the Company to be held [insert date, time and
place] and at any adjournment thereof IN FAVOR OF adoption of the Agreement and
Plan of Merger, dated as of January 15, 1998 (the "Merger Agreement"), among the
Company, International Technology Corporation ("Parent") and IT-Ohio, Inc., IN
FAVOR OF consummation of the Merger Transactions, IN FAVOR OF [List such number
of Parent Representatives (as defined in Section 1.4 of the Merger Agreement) as
Parent is permitted to cause to be elected to the Company's Board of Directors
pursuant to Section 1.4 of the Merger Agreement], and AGAINST [insert
description of any action or agreement that would compete with, impede,
interfere with or attempt to discourage the Merger Transactions or inhibit the
timely consummation of the Merger Transactions or any action or agreement that
would result in a breach in any material respect of any covenant, representation
or warranty or any other obligation of the Company under the Merger Agreement or
any merger, consolidation, business combination, reorganization,
recapitalization, liquidation or sale or transfer of any material assets of the
Company or its subsidiaries]. This proxy is coupled with an interest, revokes
all prior proxies granted by the undersigned and is irrevocable until such time
as the Share Repurchase Agreement, dated as of January 15, 1998 among the
undersigned and the Company terminates in accordance with its terms.
Dated _________, 1998
RUST INTERNATIONAL, INC.
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT 5
COMPANY VOTING AGREEMENT
COMPANY VOTING AGREEMENT (this "Agreement"), dated as of January 15,
1998, among International Technology Corporation, a Delaware corporation
("Parent"), OHM Corporation, an Ohio corporation (the "Company") and the
undersigned shareholders of the Company (the "Shareholders").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Parent and IT-Ohio, Inc., an Ohio Corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), have entered into an Agreement and Plan of
Merger (as it may be hereafter amended from time to time, the "Merger
Agreement"), which provides that Merger Sub shall make a tender offer (the
"Offer") for 13,933,000 shares of common stock of the Company and that Merger
Sub shall thereafter merge (the "Merger") with and into the Company pursuant to
the terms and conditions of the Merger Agreement, and sets forth certain
representations, warranties, covenants and agreements of the parties thereto in
connection with the Offer, the Merger and the other transactions contemplated
therein (the "Merger Transactions"); and
WHEREAS, the Shareholders are the record holders of shares of Common
Stock, par value $0.10 per share ("Company Common Stock"), of the Company; and
WHEREAS, in order to induce the Company, Parent and Merger Sub to
enter into the Merger Agreement, the Shareholders wish to agree (i) to vote the
shares of Company Common Stock and any other shares of capital stock of the
Company held by them so as to facilitate the consummation of the Merger
Transactions, (ii) except as provided in this Agreement, not to transfer or
otherwise dispose of any of the shares of Company Common Stock or any other
shares of capital stock held by them, or any other shares of capital stock of
the Company acquired by them hereafter and prior to the Effective Time (as
defined in the Merger Agreement), and (iii) to deliver to Parent an irrevocable
proxy to vote the shares of Company Common Stock and any other shares of capital
stock held by them, and any other shares of capital stock of the Company
acquired by them hereafter and prior to the Effective Time.
NOW, THEREFORE, for good and valuable considera tion, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
<PAGE>
1. Representations of Shareholders. Each of the Shareholders
-------------------------------
represents and warrants to the Company, Parent and Merger Sub that (a) such
Shareholder lawfully owns beneficially (as such term is defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")), and of record the
number of shares of Company Common Stock set forth opposite such Shareholder's
name on Exhibit A (such Shareholder's "Shares") free and clear of all liens,
claims, charges, security interests or other encumbrances and, except for this
Agreement and the Merger Agreement, there are no options (other than options
described in the Company Disclosure Letter or annexes thereto), warrants or
other rights, agreements, arrangements or commitments of any character to which
such Shareholder is a party relating to the pledge, disposition or voting of any
shares of capital stock of the Company (other than, with respect to Mr. James L.
Kirk, a pledge of his Shares made in connection with a loan financing the
acquisition of real property) and there are no voting trusts or voting
agreements with respect to such Shares, (b) such Shareholder does not
beneficially own any shares of Company Common Stock or any other shares of
capital stock of the Company other than such Shares and, except for such Shares,
does not have any options, warrants or other rights to acquire any additional
shares of capital stock of the Company or any security exercisable for or
convertible into shares of capital stock of the Company, (c) such Shareholder
has full power and authority to enter into, execute and deliver this Agreement
and to perform fully such Shareholder's obligations hereunder, and (d) this
Agreement has been duly executed and delivered by such Shareholder, constitutes
the legal, valid and binding obligation of such Shareholder, and is enforceable
against such Shareholder in accordance with its terms.
2. Agreement to Vote Shares. Each of the Shareholders agrees that
------------------------
during the term of this Agreement it will vote such Shareholder's Shares and any
New Shares (as defined in Section 6 hereof), and will cause any holder of record
of such Shares or New Shares to vote such Shareholder's Shares and New Shares:
(a) in favor of adoption of the Merger Agreement and in favor of consummation of
the Merger Transactions at every meeting of the shareholders of the Company at
which such matters are considered and at every adjournment thereof and in
connection with any written consent of the shareholders of the Company, (b) in
favor of the election to the Company's Board of Directors of such number of
Parent Representatives as Parent is permitted to cause to be elected to the
Company's Board of Directors pursuant to Section 1.4 of the Merger Agreement,
(c) against any action or agreement that would compete with, impede, interfere
with or attempt to discourage the Merger Transactions, or inhibit the timely
consummation of the Merger Transactions, (d) against any action or agreement
that would result in a breach in any material respect of any covenant,
representation or warranty or
-2-
<PAGE>
any other obligation of the Company under the Merger Agreement and (e) against
any merger, consolidation, business combination, reorganization,
recapitalization, liquidation or sale or transfer of any material assets of the
Company or its subsidiaries that could compete with, impede, interfere with or
attempt to discourage the Merger Transactions or inhibit the timely consummation
of the Merger Transactions. Each Shareholder agrees to deliver to Parent upon
request a proxy substantially in the form attached hereto as Exhibit B, which
proxy shall be irrevocable during the term of this Agreement to the fullest
extent permitted under Delaware law.
3. No Voting Trusts. Each of the Shareholders agrees that they will
----------------
not, nor will they permit any entity under their control to, deposit any of
their Shares or any New Shares held by them in a voting trust or subject any of
their Shares or any New Shares held by them to any arrangement with respect to
the voting of such Shares or New Shares that could result in a shareholder's
vote or action by consent of the shareholders of the Company in opposition to or
in competition with the consummation of the Merger Transactions.
4. No Proxy Solicitations. Each of the Shareholders agrees that
----------------------
such Shareholder will not, nor will such Shareholder permit any entity under
such Shareholder's control to, (a) solicit proxies or become a "participant" in
a "solicitation" (as such terms are defined in Regulation 14A under the 1934
Act) in opposition to or competition with the consummation of the Merger
Transactions or otherwise encourage or assist any party in taking or planning
any action which would compete with, impede, interfere with or attempt to
discourage the Merger Transactions or inhibit the timely consummation of the
Merger Transactions, (b) directly or indirectly encourage, initiate or cooperate
in a shareholders' vote or action by consent of Parent's shareholders in
opposition to or in competition with the consummation of the Merger
Transactions, or (c) become a member of a "group" (as such term is used in
Section 13(d) of the 1934 Act) with respect to any voting securities of Parent
for the purpose of opposing or competing with the consummation of the Merger
Transactions.
5. Transfer and Encumbrance. On or after the date hereof and during
------------------------
the term of this Agreement, each of the Shareholders agrees not to transfer,
sell, offer, exchange, pledge or otherwise dispose of or encumber any of such
Shareholder's Shares or New Shares, except for tenders of such Shares into the
Offer, unless the transferee agrees in written form satisfactory to Parent to be
bound by the terms of this Agreement.
6. Additional Purchases. Each of the Shareholders agrees that such
--------------------
Shareholder will not purchase or otherwise
-3-
<PAGE>
acquire beneficial ownership of any shares of Company Common Stock or any other
capital stock of the Company after the execution of this Agreement ("New
Shares"), nor will any Shareholder voluntarily acquire the right to vote or
share in the voting of any shares of Company Common Stock or any other capital
stock of the Company other than the Shares, unless such Shareholder agrees to
deliver to Parent immediately after such purchase or acquisition an irrevocable
proxy in the form attached hereto as Exhibit B with respect to such shares. Each
of the Shareholders also severally agrees that any New Shares acquired or
purchased by such Shareholder shall be subject to the terms of this Agreement to
the same extent as if they constituted Shares.
7. Specific Performance. Each party hereto acknowledges that it
--------------------
will be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agreement,
that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy for
any such failure and will not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto agrees
that it will not seek, and agrees to waive any requirement for, the securing or
posting of a bond in connection with any other party's seeking or obtaining such
equitable relief.
8. Entire Agreement. This Agreement supersedes all prior
----------------
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by all the parties hereto. No waiver
of any provisions hereof by any party shall be deemed a waiver of any other
provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
9. 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 any Shareholder:
---------------------
to the address listed on Exhibit A hereto.
-4-
<PAGE>
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
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
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10. Miscellaneous.
-------------
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware applicable to agreements executed in and solely to be performed within
such state.
-5-
<PAGE>
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability and the
remainder of the provision held invalid or unenforceable and the application of
such provision to persons or circumstances, other than the party as to which it
is held invalid, and the remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
(d) This Agreement shall terminate automatically upon the termination
of the Merger Agreement or upon the Effective Time of the Merger. This
Agreement shall not otherwise be terminable.
(e) Each party hereto shall execute and deliver such additional
documents as may be necessary or desirable to effect the transactions
contemplated by this Agreement.
(f) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(g) The obligations of the Shareholders set forth in this Agreement
shall not be effective or binding upon any Shareholder until after such time as
the Merger Agreement is executed and delivered by the Company, Parent and Merger
Sub, and the parties agree that there is not and has not been any other
agreement, arrangement or understanding between the parties hereto with respect
to the matters set forth herein.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
OHM CORPORATION
By:
-----------------------------
Name:
Title:
-----------------------------
(Shareholder)
-----------------------------
(Shareholder)
-----------------------------
(Shareholder)
-----------------------------
(Shareholder)
INTERNATIONAL TECHNOLOGY
CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE>
(EXHIBIT A)
Name and Address of
Shareholder Number of Shares
------------------- ----------------
H. Wayne Huizenga 1,000,000
Huizenga Holdings
450 E. Las Olas Boulevard
Ft. Lauderdale, FL 33301
Huizenga Family Foundation, Inc. 500,000
450 E. Las Olas Boulevard
Ft. Lauderdale, FL 33301
James L. Kirk 1,223,716
OHM Corporation
16406 U.S. Rt. 224 East
Findlay, OH 45840
Joseph R. Kirk 2,088,060
OHM Corporation
16406 U.S. Rt. 224 East
Findlay, OH 45840
<PAGE>
(EXHIBIT B)
FORM OF PROXY
The undersigned, for consideration received, hereby appoints Anthony
J. Deluca and James G. Kirk and each of them my proxies, with power of
substitution and resubstitution, to vote all shares of Common Stock, par value
$0.10 per share, of OHM Corporation, an Ohio corporation (the "Company"), [and
[insert any other Shares (as defined in the Voting Agreement) owned by
Shareholder]] owned by the undersigned at the Special Meeting of Shareholders of
the Company to be held [insert date, time and place] and at any adjournment
thereof IN FAVOR OF adoption of the Agreement and Plan of Merger, dated as of
January 15, 1998 (the "Merger Agreement"), among the Company, International
Technology Corporation ("Parent") and IT-Ohio, Inc., IN FAVOR OF consummation of
the Merger Transactions, IN FAVOR OF [List such number of Parent Representatives
(as defined in Section 1.4 of the Merger Agreement) as Parent is permitted to
cause to be elected to the Company's Board of Directors pursuant to Section 1.4
of the Merger Agreement], and AGAINST [insert description of any action or
agreement that would compete with, impede, interfere with or attempt to
discourage the Merger Transactions or inhibit the timely consummation of the
Merger Transactions or any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of the Company under the Merger Agreement or any merger,
consolidation, business combination, reorganization, recapitalization,
liquidation or sale or transfer of any material assets of the Company or its
subsidiaries]. This proxy is coupled with an interest, revokes all prior
proxies granted by the undersigned and is irrevocable until such time as the
Voting Agreement, dated as of January 15, 1998 among certain shareholders of the
Company, including the undersigned, Parent, and the Company terminates in
accordance with its terms.
Dated ______, 1998
___________________________
(Shareholder)
<PAGE>
EXHIBIT 6
PARENT VOTING AGREEMENT
PARENT VOTING AGREEMENT (this "Agreement"), dated as of January 15,
1998, among International Technology Corporation, a Delaware corporation
("Parent"), the undersigned stockholders (the "Stockholders") of Parent and OHM
Corporation, an Ohio corporation (the "Company").
WHEREAS, concurrently with the execution of this Agreement, the
Company, Parent and IT-Ohio, Inc., an Ohio Corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), have entered into an Agreement and Plan of
Merger (as it may be hereafter amended from time to time, the "Merger
Agreement"), which provides that Merger Sub shall make a tender offer (the
"Offer") for 13,933,000 shares of common stock of the Company and that Merger
Sub shall thereafter merge (the "Merger") with and into the Company pursuant to
the terms and conditions of the Merger Agreement, and sets forth certain
representations, warranties, covenants and agreements of the parties thereto in
connection with the Offer, the Merger and the other transactions contemplated
therein (the "Merger Transactions"); and
WHEREAS, upon consummation the Merger, the holders of outstanding
shares of common stock of the Company at the Effective Time (as defined in the
Merger Agreement) will receive the Merger Consideration (as defined in the
Merger Agreement), which will consist (at least in part) of shares of Common
Stock, par value $0.1 per share, of Parent ("Parent Common Stock") for each
share of common stock of the Company; and
WHEREAS, Section 6.4 of the Merger Agreement provides that if
stockholder approval of the issuance of shares of Parent Common Stock is
required under the rules of the New York Stock Exchange, Inc., Parent will take
all action necessary to convene a meeting of its stockholders as promptly as
practicable to consider and vote upon such issuance; and
WHEREAS, the Stockholders are the record holders of an aggregate of
45,000 shares of Cumulative Convertible Participating Preferred Stock, par value
$100 per share, of Parent (the "Preferred Shares") and warrants (the "Warrants")
to purchase 1,250,000 shares of Parent Common Stock; and
WHEREAS, in order to induce the Company, Parent and Merger Sub to
enter into the Merger Agreement, the Stockholders wish to agree (i) to vote the
Preferred Shares
<PAGE>
and any other shares of capital stock of Parent held by them so as to facilitate
the consummation of the Merger Transactions, (ii) except as provided in this
Agreement, not to transfer or otherwise dispose of any of the Preferred Shares
or, any other shares of capital stock held by them, or any other shares of
capital stock of Parent acquired by them hereafter and prior to the Effective
Time (as defined in the Merger Agreement), and (iii) to deliver to the Company
an irrevocable proxy to vote the Preferred Shares and any other shares of
capital stock held by them, and any other shares of capital stock of Parent
acquired by them hereafter and prior to the Effective Time, all in manner set
forth herein.
NOW, THEREFORE, for good and valuable considera tion, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. Representations of Stockholders. Each of the Stockholders
-------------------------------
represents and warrants to the Company, Parent and Merger Sub that (a) such
Stockholder lawfully owns beneficially (as such term is defined in the
Securities Exchange Act of 1934, as amended (the "1934 Act")), and of record the
number of Preferred Shares set forth opposite such Stockholder's name on Exhibit
A (such Stockholder's "Shares") free and clear of all liens, claims, charges,
security interests or other encumbrances and, except for this Agreement and the
Merger Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which such Stockholder is a
party relating to the pledge, disposition or voting of any shares of capital
stock of Parent and there are no voting trusts or voting agreements with respect
to such Shares, (b) such Stockholder does not beneficially own any shares of
Parent Common Stock or any other shares of capital stock of Parent other than
such Shares and, except for such Shares, does not have any options, warrants or
other rights to acquire any additional shares of capital stock of Parent or any
security exercisable for or convertible into shares of capital stock of Parent,
other than the Warrants, (c) such Stockholder has full power and authority to
enter into, execute and deliver this Agreement and to perform fully such
Stockholder's obligations hereunder, and (d) this Agreement has been duly
executed and delivered by such Stockholder, constitutes the legal, valid and
binding obligation of such Stockholder, and is enforceable against such
Stockholder in accordance with its terms.
2. Agreement to Vote Shares. Each of the Stockholders agrees that
------------------------
during the term of this Agreement it will vote such Stockholder's Shares and any
New Shares
-2-
<PAGE>
(as defined in Section 6 hereof), and will cause any holder of record
of such Shares or New Shares to vote such Stockholder's Shares and New Shares:
(a) in favor of the Merger Transactions and the issuance of shares of Parent
Common Stock in connection with the Merger at every meeting of the stockholders
of Parent at which such matters are considered and at every adjournment thereof,
and in connection with any written consent of the stockholders of Parent (b) in
favor of each of the Nominees (as defined in Section 6.11(c) of the Merger
Agreement) to Parent's Board of Directors, (c) against any action or agreement
that would compete with, impede, interfere with or attempt to discourage the
Merger Transactions, or inhibit the timely consummation of the Merger
Transactions, (d) against any action or agreement that would result in a breach
in any material respect of any covenant, representation or warranty or any other
obligation of Parent or Merger Sub under the Merger Agreement and (e) against
any merger, consolidation, business combination, reorganization,
recapitalization, liquidation or sale or transfer of any material assets of
Parent, Merger Sub or their respective subsidiaries that could compete with,
impede, interfere with or attempt to discourage the Merger Transactions or
inhibit the timely consummation of the Merger Transactions. Each Stockholder
agrees to deliver to the Company upon request a proxy substantially in the form
attached hereto as Exhibit B, which proxy shall be irrevocable during the term
of this Agreement to the fullest extent permitted under Delaware law.
3. No Voting Trusts. Each of the Stockholders agrees that they will
----------------
not, nor will they permit any entity under their control to, deposit any of
their Shares or any New Shares held by them in a voting trust or subject any of
their Shares or any New Shares held by them to any arrangement with respect to
the voting of such Shares or New Shares that would result in a stockholder's
vote or action by consent of the stockholders of Parent in opposition to or in
competition with the consummation of the Merger Transactions.
4. No Proxy Solicitations. Each of the Stockholders agrees that
----------------------
such Stockholder will not, nor will such Stockholder permit any entity under
such Stockholder's control to, (a) solicit proxies or become a "participant" in
a "solicitation" (as such terms are defined in Regulation 14A under the 1934
Act) in opposition to or competition with the consummation of the Merger
Transactions or otherwise encourage or assist any party in taking or planning
any action which would compete with, impede, interfere with or attempt to
discourage the Merger
-3-
<PAGE>
Transactions or inhibit the timely consummation of the Merger Transactions, (b)
directly or indirectly encourage, initiate or cooperate in a stockholders' vote
or action by consent of Parent's stockholders in opposition to or in competition
with the consummation of the Merger Transactions, or (c) become a member of a
"group" (as such term is used in Section 13(d) of the 1934 Act) with respect to
any voting securities of Parent for the purpose of opposing or competing with
the consummation of the Merger Transactions.
5. Transfer and Encumbrance. On or after the date hereof and during
------------------------
the term of this Agreement, each of the Stockholders agrees not to transfer,
sell, offer, exchange, pledge or otherwise dispose of or encumber any of such
Stockholder's Shares or New Shares, unless the transferee agrees in written form
satisfactory to the Company to be bound by the terms of this Agreement.
6. Additional Purchases. Each of the Stockholders agrees that such
--------------------
Stockholder will not purchase or otherwise acquire beneficial ownership of any
shares of Parent Common Stock, Preferred Shares, 7% Cumulative Convertible
Exchangeable Preferred Stock, par value $100 per share (the "7% Preferred
Stock") or any other capital stock of Parent after the execution of this
Agreement ("New Shares"), nor will any Stockholder voluntarily acquire the right
to vote or share in the voting of any shares of Parent Common Stock, Preferred
Shares, 7% Preferred Stock or any other capital stock of Parent other than the
Shares, unless such Stockholder agrees to deliver to the Company immediately
after such purchase or acquisition an irrevocable proxy in the form attached
hereto as Exhibit B with respect to such shares. Each of the Stockholders also
severally agrees that any New Shares acquired or purchased by such Stockholder
shall be subject to the terms of this Agreement to the same extent as if they
constituted Shares.
7. Specific Performance. Each party hereto acknowledges that it
--------------------
will be impossible to measure in money the damage to the other party if a party
hereto fails to comply with any of the obligations imposed by this Agreement,
that every such obligation is material and that, in the event of any such
failure, the other party will not have an adequate remedy at law or damages.
Accordingly, each party hereto agrees that injunctive relief or other equitable
remedy, in addition to remedies at law or damages, is the appropriate remedy for
any such failure and will not oppose the granting of such relief on the basis
that the other party has an adequate remedy at law. Each party hereto agrees
that it will not seek, and agrees to waive any
-4-
<PAGE>
requirement for, the securing or posting of a bond in connection with any other
party's seeking or obtaining such equitable relief.
8. Entire Agreement. This Agreement supersedes all prior
----------------
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and con tains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by all the parties hereto. No waiver
of any provisions hereof by any party shall be deemed a waiver of any other
provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
9. 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 any Stockholder:
---------------------
Daniel A. D'Aniello
Managing Director
The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004-2505
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
-5-
<PAGE>
if to the Company:
-----------------
Steven E. Harbour
OHM Corporation
5445 Triangle Parkway, Suite 400
Norcross, Georgia 30092
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.
10. Miscellaneous.
-------------
(a) This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
Delaware applicable to agreements executed in and solely to be performed within
such state.
(b) If any provision of this Agreement or the application of such
provision to any person or circumstances shall be held invalid or unenforceable
by a court of competent jurisdiction, such provision or application shall be
unenforceable only to the extent of such invalidity or unenforceability and the
remainder of the provision held invalid or unenforceable and the application of
such provision to persons or circumstances, other than the party as to which it
is held invalid, and the remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an
-6-
<PAGE>
original but all of which together shall constitute one and the same instrument.
(d) This Agreement shall terminate automatically upon the termination
of the Merger Agreement or upon the Effective Time of the Merger. This
Agreement shall not otherwise be terminable.
(e) Each party hereto shall execute and deliver such additional
documents as may be necessary or desirable to effect the transactions
contemplated by this Agreement.
(f) All Section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
(g) The obligations of the Stockholders set forth in this Agreement
shall not be effective or binding upon any Stockholder until after such time as
the Merger Agreement is executed and delivered by the Company, Parent and Merger
Sub, and the parties agree that there is not and has not been any other
agreement, arrangement or understanding between the parties hereto with respect
to the matters set forth herein.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
International Technology
Corporation
By:__________________________
Name:
Title:
OHM Corporation
By:__________________________
Name:
Title:
Carlyle Partners II, L.P.
By: its General Partner, TC Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
-8-
<PAGE>
Carlyle Partners III, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
Carlyle International Partners II, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
Carlyle International Partners III, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
C/S International Partners
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
Carlyle Investment Group, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
-9-
<PAGE>
Carlyle-IT International Partners, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
Carlyle-IT International
Partners II, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
Carlyle-IT Partners, L.P.
By: its General Partner, TC
Group, L.L.C.
By:__________________________
Name: Daniel A. D'Aniello
Title: Managing Director
-10-
<PAGE>
State Board of Administration of Florida separate
account maintained pursuant to an Investment
Management Agreement dated as of September 6, 1996
between the State Board of Administration of
Florida, Carlyle Investment Group, L.P. and
Carlyle Investment Management, L.L.C.
By: Carlyle Investment
Management, L.L.C., as
Investment Manager
By: _________________________
Its: _________________________
-11-
<PAGE>
(EXHIBIT A)
Number of Shares
of Cumulative Convertible
Name of Stockholder Participating Preferred Stock
------------------- -----------------------------
Carlyle Partners II, L.P. 1,781,965
Carlyle Partners III, L.P. 81,357
Carlyle International Partners 1,504,210
II, L.P.
Carlyle International III, L.P. 81,042
C/S International Partners 338,682
Carlyle Investment Group, L.P. 1,907
Carlyle-IT International 2,366,299
Partners, L.P.
Carlyle-IT International 79,765
Partners II, L.P.
The State Board of Administration 748,520
of the State of Florida
Carlyle-IT Partners, L.P. 195,107
<PAGE>
(EXHIBIT B)
FORM OF PROXY
The undersigned, for consideration received, hereby appoints [insert
names of Company designees] and each of them my proxies, with power of
substitution and resubstitution, to vote all shares of Cumulative Convertible
Participating Preferred Stock, par value $100 per share, of International
Technology Corporation, a Delaware corporation ("Parent"), [and [insert any
other Shares (as defined in the Voting Agreement) owned by Stockholder]] owned
by the undersigned at the Special Meeting of Stockholders of Parent to be held
[insert date, time and place] and at any adjournment thereof IN FAVOR OF
consummation of the Offer, the Merger and the other transactions (the "Merger
Transactions") contemplated by the Merger Agreement, dated as of January 15,
1998 (the "Merger Agreement"), among OHM Corporation (the "Company"), Parent and
IT-Ohio, Inc. ("Merger Sub"), IN FAVOR OF the issuance of shares of common stock
of Parent in connection with the merger of Merger Sub with and into the Company,
IN FAVOR OF each of the Nominees (as defined in Section 6.11(c) of the Merger
Agreement) to Parent's Board of Directors and AGAINST [insert description of any
action or agreement that would compete with, impede, interfere with or attempt
to discourage the Merger Transactions or inhibit the timely consummation of the
Merger Transactions or any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of Parent under the Merger Agreement or any merger, consolidation,
business combination, reorganization, recapitalization, liquidation or sale or
transfer of any material assets of Parent or its subsidiaries]. This proxy is
coupled with an interest, revokes all prior proxies granted by the undersigned
and is irrevocable until such time as the Voting Agreement, dated as of January
15, 1998 among certain stockholders of Parent, including the undersigned,
Parent, Merger Sub and the Company terminates in accordance with its terms.
Dated ______, 1998
[NAME OF STOCKHOLDER]
By:___________________________
<PAGE>
EXHIBIT 7
H. WAYNE HUIZENGA
January 15, 1998
To OHM CORPORATION:
With reference to the First Option Agreement, dated as of March 28,
1995 (the "First Option Agreement"), between OHM Corporation (the "Company") and
H. Wayne Huizenga (the "Holder") and the Second Option Agreement, dated as of
March 28, 1995 (the "Second Opinion Agreement"), between the Company and the
Holder, and the Agreement and Plan of Merger, dated the date hereof (the "Merger
Agreement"), among the Company, International Technologies Corporation and IT-
Ohio, Inc. ("Merger Sub"), this letter agreement will confirm our agreement as
follows:
1. Terms used herein but not defined herein shall have the respective meanings
set forth in the Merger Agreement.
2. In consideration of the agreement set forth in paragraphs 3, 4 and 5 of
this letter agreement, the Company agrees that, as promptly as practicable
after the earliest to occur of (i) the acceptance by Merger Sub of Shares
for payment in the Offer, or (ii) the Effective Time, the Company shall pay
to the Holder, in immediately available funds, $1,500,000 (the "Termination
Payment").
3. In consideration of the payment of the Termination Payment, the First
Option Agreement and the Second Option Agreement are hereby terminated,
effective as of the time of payment of the Termination Payment.
4. The Holder shall not exercise his rights pursuant to Sections 3.1 or 3.2 of
the First Option Agreement or Sections 3.1 or 3.2 of the Second Option
Agreement prior to the earliest to occur of (i) the second business day
subsequent to the Effective Time, and (ii) the termination of the Merger
Agreement in accordance with its terms.
<PAGE>
5. The Holder hereby waives his rights under Section 2.2 of the First Option
Agreement and Section 2.2 of the Second Merger Agreement with respect to
the NSC Distribution.
6. This letter agreement shall terminate upon the termination of the Merger
Agreement, but shall not otherwise be terminable.
7. This letter agreement and rights and obligations of the parties hereunder
shall be governed by, construed and interpreted in accordance with the laws
of the State of Ohio applicable to agreements executed by residents of that
state, and fully to be performed, in that state.
If the foregoing is in accordance with your understanding, please
execute one counterpart of this letter agreement, whereupon this letter
agreement shall constitute a binding agreement among the parties hereto.
Very truly yours,
______________________
(H. Wayne Huizenga)
Accepted and agreed
as of the date hereof:
OHM CORPORATION
By:_____________________
Name:
Title:
<PAGE>
EXHIBIT 8
September 25, 1997
Mr. James L. Kirk
Chairman, President and CEO
OHM Corporation
16406 U.S. Route 224 East
Findlay, OH 45840
Mr. Anthony J. DeLuca
President and CEO
International Technology Corporation
2790 Mosside Boulevard
Monroeville, PA 15146
Gentlemen:
In connection with a possible negotiated transaction (the "Transaction")
between OHM Corporation ("OHM") and International Technology Corporation ("ITX")
(each, a "Disclosing Party" or "Recipient," as the case may be), OHM and ITX are
each prepared to disclose to each other certain information which is non-public,
confidential or proprietary in nature ("Evaluation Material").
By execution of this letter agreement (the "Agreement"), each Recipient
agrees to treat all Evaluation Material provided by the Disclosing Party
confidentially (except as otherwise provided herein) and to observe the terms
and conditions set forth herein. For purposes of this Agreement, Evaluation
Material shall include all non-public confidential or proprietary in nature
information, regardless of the form in which it is communicated or maintained
(whether prepared by OHM, ITX or otherwise) that contains or otherwise reflects
information concerning the Disclosing Party that the Recipient or its
Representatives (as defined below) may be provided by or on behalf of the
Disclosing Party or its Representatives in the course of its evaluation of a
possible Transaction. The term "Evaluation Material" shall also include all
reports, analyses, notes or other information that are based on, contain or
reflect any Evaluation Material ("Notes"). The terms and conditions of this
Agreement shall not apply to those portions of the Evaluation Material that (i)
become generally available to the public other than as result of a disclosure by
the Recipient or any of its Representatives, (ii) were available to the
Recipient on a non-confidential basis prior to the disclosure of such Evaluation
Material to the Recipient pursuant to this Agreement, provided that the source
of such information was not known by the Recipient or any of its
Representatives, to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Disclosing
Party or any of its affiliates with respect to such material or (iii) become
available on a non-confidential basis from a source other than the Disclosing
Party or its agents, advisors or representatives provided that the source of
such information was not known by the Recipient or any of its Representatives,
after inquiry, to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Disclosing
Party or any of its affiliates with respect to such material.
<PAGE>
Page 2 September 25, 1997
The Recipient agrees that it will not use the Evaluation Material for
any purpose other than determining whether it wishes to enter into a
Transaction. The Recipient agrees not to disclose or allow disclosure to others
of any Evaluation Material; except that the Recipient may disclose Evaluation
Material to its directors, officers, employees, partners, affiliates, agents,
advisors or representatives (hereinafter, "Representatives") to the extent
necessary to permit such Representatives to assist in making the determination
referred to in the prior sentence, provided, however, that the Recipient shall
inform its Representatives of the confidential nature of the Evaluation
Material. The Recipient's obligation of confidentiality and non-use hereunder
shall expire 24 months after the last receipt of Evaluation Material.
In addition, the Recipient will not make any disclosure that it is
having or has had discussions concerning a Transaction, that it has received
Evaluation Material or that it is considering a possible Transaction; provided
that the Recipient may make such disclosure if it has received the opinion of
counsel that such disclosure must be made in order that the Recipient not commit
a violation of law and, prior to such disclosure, it promptly advises and
consults with the Disclosing Party and its legal counsel concerning the
information proposed to be disclosed.
Although the Disclosing Party has endeavored to include in the
Evaluation Material information known to it which it believes to be relevant for
the purpose set forth herein, neither of the Disclosing Parties nor any of their
respective affiliates, agents, advisors or representatives (i) have made or make
any representation or warranty, expressed or implied, as to the accuracy or
completeness of the Evaluation Material or (ii) shall have any liability
whatsoever to the Recipient or its Representatives relating to or resulting from
the use of the Evaluation Material or any errors therein or omissions therefrom.
Furthermore, the Disclosing Party shall not be obligated to provide any
information concerning pricing, cost or bidding, which in such party's or its
counsel's opinion may involve or lead to involvement in violations of antitrust
or procurement laws.
In the event that the Recipient or anyone to whom the Recipient
transmits any Evaluation Material in accordance with this Agreement is requested
or required (by deposition, interrogatories, requests for information or
documents in legal proceedings, subpoenas, civil investigative demand or similar
process), in connection with any proceeding, to disclose any Evaluation
Material, the Recipient will give the Disclosing Party prompt written notice of
such request or requirement so that the Disclosing Party may seek an appropriate
protective order or other remedy and/or waive compliance with the provisions of
this Agreement, and the Recipient will cooperate with the Disclosing Party to
obtain such protective order. In the event that such protective order or other
remedy is not obtained or the Disclosing Party waives compliance with the
relevant provisions of this Agreement, the Recipient (or such other persons to
whom such request is directed) will furnish only that portion of the Evaluation
Material which, in the opinion of counsel, is legally required to be disclosed
and, upon the Disclosing Party's request, use best efforts to obtain assurances
that confidential treatment will be accorded to such information.
If the Recipient decides that it does not wish to explore a possible
Transaction, it will promptly notify Disclosing Party of that decision. In that
case, or if the Disclosing Party shall elect at any time to terminate further
access to the Evaluation Material for any reason, if the Disclosing Party
requests in writing, the Recipient will promptly redeliver to the Disclosing
Party all copies of
<PAGE>
Page 3 September 25, 1997
the Evaluation Material and destroy all Notes. Notwithstanding the return or
destruction of Evaluation Material and Notes, the Recipient and its
Representatives will continue to be bound by its obligations of confidentiality
and other obligations hereunder.
The Recipient understands that the Disclosing Party shall have the right
to reject or accept any proposal by the Recipient, for any reason whatsoever, in
its sole discretion and neither the Disclosing Party nor any of its
Representatives shall have any claims whatsoever against the other Disclosing
Party or any of their respective directors, officers, stockholders, owners,
affiliates or agents arising out of or relating to the Transaction (other than
those against the parties to a definitive agreement in accordance with the terms
thereof). Each party hereto agrees that unless and until a definitive agreement
between OHM and ITX with respect to any Transaction has been executed and
delivered, neither party will be under any legal obligation of any kind
whatsoever with respect to such Transaction.
Each Recipient agrees that money damages would not be a sufficient
remedy for any breach of this Agreement by it or its Representatives, that in
addition to all other remedies, the Disclosing Party shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any such breach, and the Recipient further agrees to waive, and to use its best
efforts to cause its Representatives to waive, any requirement for the securing
or posting of any bond in connection with such remedy. In the event of
litigation relating to this letter agreement, if a court of competent
jurisdiction determines that the Recipient or any of its Representatives have
breached this letter agreement, the Recipient shall be liable and pay to the
Disclosing Party the reasonable legal fees incurred by the Disclosing Party and
its Representatives in connection with such litigation, including any appeal
therefrom.
All modifications of, waivers of and amendments to this Agreement or any
part hereof must be in writing signed on behalf of each Disclosing Party. You
acknowledge that each Disclosing Party is intended to be benefited by this
Agreement and that each Disclosing Party shall be entitled to enforce this
Agreement and to obtain for itself the benefit of any remedies that may be
available for the breach hereof.
It is further understood and agreed that no failure or delay by either
Disclosing Party in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any right, power or
privilege hereunder.
Each of OHM and ITX hereby irrevocably and unconditionally submit to the
exclusive jurisdiction of any State or Federal court sitting in New York City
over any suit, action or proceeding arising out of or relating to this letter.
Each hereby agrees that service of any process, summons, notice or document by
U.S. registered mail addressed to either party shall be effective service of
process for any action, suit or proceeding brought against you in any such
court. Each party hereby irrevocably and unconditionally waives any objection to
the laying of venue of any such suit, action or proceeding brought in any such
court and any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Each party agrees that a final
judgment in any such suit, action or proceeding brought in any such court shall
be
<PAGE>
Page 4 September 25, 1997
conclusive and binding upon either party and may be enforced in any court to
whose jurisdiction either party is or may be subject, by suit upon such
judgment.
In the event that any provision or portion of this letter is determined
to be invalid or unenforceable for any reason, in whole or in part, the
remaining provisions of this letter shall be unaffected thereby and shall remain
in full force and effect to the fullest extent permitted by applicable law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
If you are in agreement with the foregoing, please so indicate by
signing, dating and returning one copy of this Agreement, which will constitute
our agreement with respect to the matters set forth herein.
Agreed and Accepted:
OHM Corporation International Technology Corporation
By: /s/ By: /s/ Anthony J. De Lucca
------------------------------ ------------------------------
Title: VP Corp Director Title: CEO
--------------------------- ---------------------------
Date: 10/10/97 Date: Oct. 1, 1997
--------------------------- ---------------------------
<PAGE>
EXHIBIT 9
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
<PAGE>
ANNEX B
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about January 16, 1998, as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of OHM Corporation (the "Company") with respect to the
tender offer by IT-Ohio, Inc. ("Merger Subsidiary") for shares of the
Company's Common Stock, par value $0.10 per share ("Shares"). Capitalized
terms used and not otherwise defined herein shall have the meaning set forth
in the Schedule 14D-9. You are receiving this Information Statement (this
"Statement") in connection with the possible election of persons designated by
Parent to a majority of the seats on the Board of Directors of the Company
(the "Board"). The Agreement and Plan of Merger among the Company, Parent and
Merger Subsidiary, dated as of January 15, 1998 (the "Merger Agreement")
provides that if requested by Parent, the Company will, subject to compliance
with applicable law and promptly following the purchase by Merger Subsidiary
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. The Merger Agreement further provides
that in furtherance thereof, the Company will increase the size of the Board,
or use its reasonable 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 (as
defined in the Merger Agreement), 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 (as defined in the Merger
Agreement). The Merger Agreement further provides that at such time, the
Company, if so requested, will use its reasonable 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 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). This Information Statement is required by
Section 14(f) of the Securities Exchange Act of 1934, as amended, and Rule
14f-1 promulgated thereunder.
YOU ARE URGED TO READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT,
HOWEVER, REQUIRED TO TAKE ANY ACTION.
The Offer commenced on January 16, 1998 and is scheduled to expire at 9:00
a.m., New York City time, on February 17, 1998, unless extended.
The information contained in this Information Statement concerning Parent
and Merger Subsidiary has been furnished to the Company by Parent, and the
Company assumes no responsibility for the accuracy, completeness or fairness
of any such information.
At the close of business on January 15, 1998, there were 27,554,547 Shares
issued and outstanding, which is the only class of securities outstanding
having the right to vote for the election of directors of the Company, each of
which entitles its record holder to one vote.
DESIGNEES TO THE COMPANY'S BOARD OF DIRECTORS
Parent has informed the Company that it currently intends to choose the
designees (the "Acquisition Designees") it has the right to designate to the
Company's Board of Directors pursuant to the Merger Agreement from the
executive officers and directors of Parent and Merger Subsidiary listed in
Schedule I of the Offer to Purchase, a copy of which is being mailed to
shareholders. The information with respect to such officers in Schedule I is
hereby incorporated herein by reference in its entirety. As of January 15,
1998, the ages of each
<PAGE>
such officers are as follows: Mr. Anthony J. DeLuca--50; Mr. E. Martin
Gibson--59; Mr. James C. McGill--54; Mr. Daniel A. D'Aniello--51; Mr. Philip
B. Dolan--39; Admiral James David Watkins--70; Mr. Robert F. Pugliese--65; Mr.
Franklin E. Coffman--55; Mr. James R. Mahoney--59; Mr. Raymond J. Pompe--63;
Mr. James G. Kirk--58; Mr. Harry J. Soose--45; Mr. James M. Redwine--41; and
Mr. Joseph K. Register--44.
It is expected that the Acquisition Designees may assume office at any time
following the purchase by the Purchaser of a specified minimum number of
Shares pursuant to the Offer, which purchase cannot be earlier than February
17, 1998. This step will be accomplished at a meeting or by written consent of
the Board providing that the size of the Board will be increased and/or
sufficient numbers of current directors resigning such that, immediately
following such action, the number of vacancies to be filled by the Acquisition
Designees will be available. It is currently not known which of the current
directors of the Company will resign. Parent has informed the Company that
each of the officers listed in Schedule I of the Offer to Purchase has
consented to act as a director of the Company, if so designated.
None of the executive officers and directors of Parent or Merger Subsidiary
currently is a director of, or holds any position with, the Company. The
Company has been advised that, to the best knowledge of Parent or Merger
Subsidiary, none of Parent's or Merger Subsidiary's directors or executive
officers beneficially owns any equity securities, or rights to acquire any
equity securities, of the Company and none has been involved in any
transactions with the Company or any of its directors, executive officers,
affiliates or associates which are required to be disclosed pursuant to the
rules and regulations of the Securities and Exchange Commission.
B-2
<PAGE>
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
Herbert A. Getz.................. 42 Director and member of the Compensation and
Stock Option Committee. Mr. Getz has been
Senior Vice President of Waste Management,
Inc. ("WMX") since May 1995 and General
Counsel of WMX since August 1992. Mr. Getz
also served as Vice President from May 1990
to May 1995 and as Secretary of WMX since
January 1988. Mr. Getz served as Assistant
General Counsel from December 1985 until
August 1992. Mr. Getz has also held the
offices of Vice President, General Counsel
and Secretary of Waste Management of North
America, Inc., a provider of solid waste
management services, from April 1989 until
December 1993, and Vice President and
Secretary of Rust International Inc.
("Rust"), a provider of engineering,
construction, environmental,
infrastructure, consulting services and
other on-site industrial and related
services, from January 1993 to May 1999. He
has also served as Vice President and
Secretary of Wheelabrator Technologies Inc.
("WTI") a provider of environmental
products and services, from July 1995 until
January 1997, as well as being the General
Counsel of WTI from November 1990 until May
1993. Mr. Getz is a director of NSC
Corporation.
Ivan W. Gorr..................... 67 Director and Chairman of the Audit
Committee and member of the Compensation
and Stock Option and Executive Committees.
Mr. Gorr retired as Chairman of the Board
of Directors and Chief Executive Officer of
Cooper Tire & Rubber Company of Findlay,
Ohio, a manufacturer of tires and other
rubber products. Mr. Gorr is a director of
Amcast Industrial Corporation, Arvin
Industries, Inc., The Fifth Third Bancorp
and Borg-Warner Automotive.
Dr. Charles D. Hollister......... 60 Director and member of the Audit Committee.
Since 1979, Dr. Hollister has been Senior
Scientist and Vice President of Woods Hole
Oceanographic Institution, Woods Hole,
Massachusetts, a non-profit oceanographic
research institution.
William P. Hulligan.............. 53 Director and member of the Executive
Committee. Mr. Hulligan served as Vice
President of WMX from February 1997 until
his retirement in November 1997 and now
serves as a consultant to WMX. Prior to
this position, he was Executive Vice
President of WMX from January 1996 until
February 1997, President of the Midwest
Group of Waste Management, Inc., from March
1993 until January 1996, and President of
the East Group of Waste Management, Inc.
from 1992 until March 1993. Mr. Hulligan is
a director of National Seal Company and NSC
Corporation.
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
James L. Kirk (1)................ 47 Chairman of the Board of Directors,
President and Chief Executive Officer and
Chairman of the Executive Committee. Mr.
Kirk has been President and Chief Executive
Officer of the Company since July 1986 and,
in addition, was elected Chairman of the
Board in January 1987. He has served as
Chairman of the Board and President of OHM
Remediation Services Corp., a wholly-owned
subsidiary of the Company ("OHMR"), since
April 1985. Mr. Kirk is a founder of OHMR
and has served in various capacities as an
officer and director of OHMR.
Joseph R. Kirk (1)............... 45 Executive Vice President and Director,
positions he has held since July 1986. Mr.
Kirk served as Vice Chairman of OHMR from
April 1985 until July 1986 and continues to
serve as Executive Vice President of OHMR.
He is a founder of OHMR and has served in
various capacities as an officer and
director of OHMR.
James E. Koenig.................. 49 Director and member of the Audit Committee.
Mr. Koenig served as Executive Vice
President of WMX and President of Waste
Management Shared Services from February
1997 until October 1997 and remains an
employee of WMX. Prior to this position, he
was Senior Vice President of WMX from May
1992 until February 1997, Chief Financial
Officer of WMX since 1989 and Vice
President and Treasurer of WMX since
December 1986. Mr. Koenig served as Vice
President, Chief Financial Officer and
Treasurer of WTI from November 1990 to May
1993 and Vice President, Chief Financial
Officer and Treasurer of Rust from January
1993 to August 1993. Mr. Koenig is a
director of National Seal Company, WTI and
Waste Management International, plc.
Richard W. Pogue................. 68 Director and member of the Executive
Committee. Mr. Pogue is a consultant with
Dix & Eaton, a public relations firm.
Effective June 30, 1994, Mr. Pogue retired
as Senior Partner of the law firm of Jones,
Day, Reavis & Pogue, Cleveland, Ohio, of
which he had been a partner since 1961. Mr.
Pogue is also a director of Continental
Airlines, Inc., Derlan Industries Limited,
M. A. Hanna Company, KeyCorp, Redland PLC,
Rotek Incorporated and TRW Inc.
Charles W. Schmidt............... 68 Director and Chairman of the Compensation
and Stock Option Committee and member of
the Executive Committee, Mr. Schmidt
retired as Senior Vice President, External
Affairs of Raytheon Company, a broadly
diversified manufacturer of industrial and
consumer products, and was formerly
President and Chief Executive Officer of
SCA Services, Inc., a company that provided
waste management-related services. Mr.
Schmidt also serves as a director of The
Boston Company, Boston Safe Deposit and
Trust Company, the Massachusetts Financial
Services Family of Mutual Funds and Mohawk
Paper Company.
</TABLE>
- --------
(1) James L. Kirk and Joseph R. Kirk are brothers.
B-4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
Pamela K. M. Beall............... 40 Vice President, Treasurer and Assistant
Secretary. Ms. Beall joined the Company in
June 1985 as Director of Finance of OHMR,
became Treasurer and Assistant Secretary of
OHMR in September 1985, and became
Treasurer and Assistant Secretary of the
Company in January 1986. Ms. Beall assumed
her current position in August 1994. Prior
to joining the Company, Ms. Beall was
General Manager, Treasury Services for USX
Corporation and previous to that with
Marathon Oil Company. Ms. Beall also serves
as a director of NSC.
Robert J. Blackwell.............. 40 Vice President, Marketing and Strategic
Planning. Mr. Blackwell joined the Company
in July 1993 as Vice President, Government
Business Development of OHMR, and has
served as Senior Vice President, Marketing
of OHMR since October 1995. Prior to
joining the Company, Mr. Blackwell was Vice
President for Federal Marketing and
Legislative Affairs, from January 1993 to
July 1993, and Director of Marketing and
Federal Relations, from January 1989 to
December 1992, of Ebasco Services
Incorporated. Mr. Blackwell also serves as
a director of NSC.
Fred H. Halvorsen................ 55 Vice President, Health and Safety. Dr.
Halvorsen joined the Company in 1984 as
Director of Health and Safety of OHMR and
assumed his current position in May 1987.
Kris E. Hansel................... 39 Vice President and Controller. Mr. Hansel
joined the Company in November 1988 as
General Accounting Manager of OHMR, became
Assistant Controller in October 1991 of the
Company and became Controller in October
1992. Mr. Hansel assumed his current
position in August 1994. Prior to joining
the Company, Mr. Hansel was General
Accounting Manager of WearEver-
ProctorSilex, Inc.
Steven E. Harbour................ 49 Vice President, Legal and Secretary. Mr.
Harbour joined the Company in December
1996. Prior to joining the Company, Mr.
Harbour served in various management and
legal capacities with The Coca-Cola Company
from 1983 to 1993, was Vice President, The
Coca-Cola Bottling Company of New York,
Inc., from 1993 to 1995, and most recently
was affiliated with the law firm of Sumner
& Anderson.
Philip V. Petrocelli............. 39 Vice President, Western Operations. Mr.
Petrocelli joined the Company in August
1993 as Vice President, Western Region of
OHMR, and since October 1995 has served as
Senior Vice President, Western Region of
OHMR. Mr. Petrocelli assumed his current
position with the Company in May 1995.
Prior to joining the Company, Mr.
Petrocelli was Regional Director and
previous to that was Acting Vice
President--Analytical Labs, with IT
Corporation.
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OTHER RELATIONSHIPS
NAME AGE WITH THE COMPANY AND BUSINESS EXPERIENCE
---- --- ----------------------------------------
<C> <C> <S>
Philip O. Strawbridge............ 43 Vice President, Chief Financial and
Administrative Officer. Mr. Strawbridge
joined the Company in February 1996. In
addition, Mr. Strawbridge has served as
Senior Vice President and Director of OHMR
since October 1996. Prior to joining the
Company, Mr. Strawbridge was Senior
Director of Contracts and Finance with
Fluor Daniel, Inc. and an acting Vice
President of Fluor Daniel Fernald.
Michael A. Szomjassy............. 46 Vice President, Eastern Operations. Mr.
Szomjassy joined the Company in November
1989 as Vice President, Southeast Region of
OHMR and since October 1995 has served as
Senior Vice President, Eastern Operations
of OHMR. Prior to joining OHM, Mr.
Szomjassy was Regional Manager, Remediation
Services of Ebasco Services, Inc.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission (the "Commission"). Specific due dates for
these reports have been established and the Company is required to disclose in
its Proxy Statement any failure to file by these dates. All of these filing
requirements were satisfied, except Pamela K. M. Beall, Vice President,
Treasurer and Assistant Secretary and Fred H. Halvorsen, Vice President,
Health and Safety, each filed one late Form 4 reporting an exercise of stock
option.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS HELD
During 1997, the Board of Directors of the Company held a total of seven
meetings.
The Executive Committee of the Board of Directors presently consists of
Messrs. Gorr, Hulligan, James L. Kirk, Pogue and Schmidt and did not meet
during 1997. The function of the Executive Committee is to exercise, when the
full Board is not in session, the powers of the Board in the management of the
business and affairs of the Company.
The Compensation and Stock Option Committee of the Board of Directors met
four times during 1997. Messrs. Getz, Gorr and Schmidt are presently members
of the Compensation and Stock Option Committee, the primary function of which
is to review and approve salaries and other benefits for executive officers of
the Company, to make recommendations to the Board of Directors with respect to
the adoption of employee benefit programs and to administer the Company's
stock option plans and approve awards of stock options made under the
Company's 1986 Stock Option Plan.
The Company has a standing Audit Committee, the primary function of which is
to oversee the accounting and auditing affairs of the Company. Messrs. Gorr,
Hollister and Koenig serve as members of the Audit Committee, which met three
times during 1997.
The Company has no standing nominating committee or committee performing
similar functions.
In 1997, except for Dr. Hollister and Joseph R. Kirk, each member of the
Board of Directors attended at least 75% of the meetings of the Board of
Directors and the committees of which they are members.
B-6
<PAGE>
DIRECTORS' FEES
Directors of the Company who are not employees receive $18,000 per annum.
Members of the Company's Executive Committee who are not employees receive
$1,500 per meeting, and each non-employee member of any other committee of the
Company's Board of Directors receives $500 per meeting. WMX has requested that
Messrs. Hulligan, Getz and Koenig, representatives of WMX, not be paid
directors' fees.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company's Common Stock is the Company's only outstanding class of voting
securities. The following table sets forth certain information as of January
10, 1998 with respect to the beneficial ownership of the Company's Common
Stock by (i) holders of 5% or more of the outstanding Common Stock, (ii) each
Director of the Company, (iii) the executive officers named in the Summary
Compensation Table under "Executive Compensation and Other Information" and
(iv) all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE
NAME BENEFICIAL OWNERSHIP (1) OF CLASS
---- ------------------------ ----------
<S> <C> <C>
WMX Technologies, Inc. (2)
3003 Butterfield Road
Oak Brook, Illinois 60521............... 10,368,000 37.63%
State of Wisconsin Investment Board (3)
P.O. Box 7842
Madison, Wisconsin 53707................ 1,517,000 5.51%
H. Wayne Huizenga (4)
200 South Andrews Avenue
Fort Lauderdale, Florida 33301.......... 1,500,000 5.25%
James L. Kirk (5) (6) (7)................ 2,280,960 8.14%
Joseph R. Kirk (5) (6) (7)............... 2,569,138 9.25%
Herbert A. Getz (5)(6)................... 25,000 *
Ivan W. Gorr (5) (6) (8)................. 50,606 *
Dr. Charles D. Hollister (5) (6)......... 40,000 *
William P. Hulligan (5) ................. 20,000 *
James E. Koenig (5) (6) (7).............. 25,150 *
Richard W. Pogue (5) (6) (7)............. 53,000 *
Charles W. Schmidt (5) (6) (7) (8)....... 78,190 *
Robert J. Blackwell (5) (6) (8).......... 173,076 *
Philip V. Petrocelli (5) (6) (8)......... 212,735 *
Philip O. Strawbridge (5) (6) (8)........ 148,274 *
Michael A. Szomjassy (5) (6) (8)......... 223,159 *
All Directors and executive officers as a
group (17 persons) (5) (6).............. 6,122,185 20.87%
</TABLE>
- --------
*less than 1%.
(1) Information with respect to beneficial ownership is based on information
furnished to the Company by each shareholder included in this table.
Except as indicated in the notes to the table, each shareholder included
in the table has sole voting and investment power with respect to the
shares shown to be beneficially owned. Beneficial ownership is calculated
in accordance with the rules and regulations of the Commission.
(2) According to a Schedule 13D dated June 8, 1995 jointly filed by WMX
Technologies Inc. ("WMX"), Chemical Waste Management, Inc., Rust Holding
Company Inc., and Rust International Inc. Assumes the exercise of warrants
currently exercisable to purchase 700,000 shares of Common Stock pursuant
to that certain Warrant Agreement between the Company and WMX described
below. See "Certain Relationships and Related Transactions--Transactions
with Shareholders--The Warrant Agreement" and "--The Standstill and Non-
Competition Agreement."
(3) According to an Amendment No. 8 to Schedule 13G filed by the State of
Wisconsin Investment Board.
(4) According to a Schedule 13D, dated April 1, 1995, filed by Mr. Huizenga.
Assumes the exercise of options currently exercisable or exercisable
within 60 days to purchase 1,000,000 shares of Common Stock, but does not
include 500,000 shares of Common Stock owned by the Huizenga Family
Foundation, Inc. as to which Mr. Huizenga disclaims beneficial ownership.
B-7
<PAGE>
(5) The address of the shareholder is c/o OHM Corporation, 16406 U.S. Route
224 East, Findlay, Ohio 45840.
(6) Assumes the exercise of options to purchase 463,279, 210,000, 25,000,
40,000, 40,000, 20,000, 25,000, 40,000, 30,000, 133,092, 175,489, 122,967,
200,275, and 1,737,494 by Messrs. James L. Kirk, Joseph R. Kirk, Getz,
Gorr, Hollister, Hulligan, Koenig, Pogue, Schmidt, Blackwell, Petrocelli,
Strawbridge, Szomjassy, respectively, and all directors and executive
officers as a group, respectively.
(7) Includes 20,562 shares of Common Stock held in three trusts by Mr. James
L. Kirk's wife as trustee for the benefit of the Kirks' children and 2,600
held in trust by Mr. James L. Kirk's daughter as trustee for the benefit
of Mr. Kirk's grandchild, as to which Mr. James L. Kirk disclaims
beneficial ownership. Includes 30,201 shares of Common Stock held in three
trusts by Mr. Joseph R. Kirk's wife as trustee for the benefit of the
Kirks' children, as to which Mr. Joseph R. Kirk disclaims beneficial
ownership. Includes 150 shares of Common Stock held in trust for the
benefit of Mr. Koenig's brother as to which he disclaims beneficial
ownership. Includes 1,000 shares of Common Stock held in trust for the
benefit of Mr. Pogue's wife as to which he disclaims beneficial ownership.
Includes 10,000 shares of Common Stock held in trust for the benefit of
Mr. Schmidt's wife as to which he disclaims beneficial ownership.
(8) Includes 8,606, 8,190, 5,479, 7,083, 11,537, and 3,130 phantom stock units
held by Messrs. Gorr, Schmidt, Blackwell, Petrocelli, Strawbridge, and
Szomjassy, respectively.
James L. Kirk and Joseph R. Kirk are brothers, each of whom disclaims
beneficial interest in the shares owned by the other.
B-8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 1997,
1996 and 1995, the cash compensation paid by the Company and its subsidiaries,
as well as certain other compensation paid or accrued for those years, to each
of the five most highly compensated executive officers of the Company in 1996,
including the Chief Executive Officer of the Company, in all capacities in
which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS STOCK OPTIONS
ANNUAL COMPENSATION GRANTED (#)
--------------------------------- ---------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
- ----------------------- ---- ------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James L. Kirk 1997 452,830 256,750 0 0 125,000 23,883
Chairman, President 1996 376,747 0 44,841 351,750 68,279 17,568
and Chief Executive
Officer 1995 330,013 0 0 0 70,000 5,347
Michael A. Szomjassy 1997 281,363 155,995 0 0 50,000 41,748
Vice President, 1996 288,093 25,000 0 150,750 65,275 14,682
Eastern Operations 1995 256,266 0 0 0 25,000 5,184
Philip V. Petrocelli 1997 274,122 125,500 0 0 50,000 110,677
Vice President, 1996 264,040 65,476 0 142,375 100,489 76,528
Western Operations 1995 232,513 50,000 50,839 0 25,000 19,435
Philip O. Strawbridge 1997 262,376 119,000 0 0 75,000 109,817
Vice President and 1996 187,321 0 0 108,875 22,967 47,305
Chief Financial Officer 1995 0 0 0 0 0 0
Robert J. Blackwell 1997 251,708 114,000 0 0 42,000 108,000
Vice President,
Marketing 1996 225,349 28,125 25,505 125,625 66,092 36,621
and Strategic Planning 1995 193,768 30,000 0 0 25,000 29,591
</TABLE>
- --------
(1) Amounts in 1996 include $37,392 and $0 for financial planning services;
$2,126 and $3,377 for country club dues; and $5,323 and $11,845
representing earnings on the contributions made to the retirement deferral
accounts in accordance with the Company's Retirement and Incentive
Compensation Plan for Messrs. James L. Kirk and Robert J. Blackwell,
respectively. Amount in 1996 for Mr. Blackwell includes $7,583 for
miscellaneous perquisites and $2,700 for imputed interest. Amount in 1995
for Mr. Petrocelli includes $43,938, $4,466, and $2,435 paid to him for
reimbursement of tax costs in connection with the relocation of his
principal residence, imputed interest, and miscellaneous perquisites,
respectively.
(2) Represents 42,000, 18,000, 17,000, 13,000, and 15,000 shares of restricted
stock which were granted to Messrs. James L. Kirk, Szomjassy, Petrocelli,
Strawbridge, and Blackwell, respectively, the value of which was $8.375
per share as of December 31, 1996.
(3) Amounts in 1996 include 69,453, 31,135, and 38,092 stock options which
were granted to Messrs. Petrocelli, Szomjassy, and Blackwell,
respectively, on May 9, 1996 in exchange for the surrender of previously
granted options.
(4) Amounts in 1995 for Messrs. Petrocelli and Blackwell include $14,286 and
$25,000, respectively, in loans forgiven by the Company. Amount in 1996
for Mr. Strawbridge includes $47,261 for relocation expenses. Amount in
1996 for Mr. Petrocelli includes $19,048 for a loan forgiven by the
Company. Amounts in 1996 include matching contributions to each
individual's Retirement and Incentive Compensation Plan account of
$17,568, $14,682, $57,480, and $36,561, on behalf of Messrs. James L.
Kirk, Szomjassy, Petrocelli, and Blackwell, respectively. Amounts in 1997
for Messrs. Petrocelli, Strawbridge, and Blackwell include $14,285,
$10,000 and $20,000, respectively, in loans forgiven by the Company. See
"Certain Relationships
B-9
<PAGE>
and Related Transactions -- Transactions with Management." Amounts in 1997
include matching contributions to each individual's Retirement and
Incentive Compensation Plan account of $22,347, $35,320, $89,165, $92,600,
and $79,931; and matching contributions to each individual 401(k) account
of $0, $5,712, $6,352, $6,352 and $6,352, on behalf of Messrs. Kirk,
Szomjassy, Petrocelli, Strawbridge, and Blackwell, respectively. On
December 30, 1997, pursuant to resolutions approved by the Board of
Directors, the vested portion of each individual's Retirement and Incentive
Compensation Plan account was distributed to Messrs. James L. Kirk,
Szomjassy, Petrocelli, Strawbridge, and Blackwell, in the amounts of
$109,896, $95,489, $312,464, $123,894, and $257,233, respectively.
STOCK OPTIONS
The following table sets forth information with respect to grants of options
pursuant to the Company's 1986 Stock Option Plan made to the executive
officers named in the Summary Compensation Table during the 1996 fiscal year.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
-------------------------------------------- -----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION 5% 10%
(#) YEAR ($/SH) DATE ($) ($)
---------- ---------- ----------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
James L. Kirk........... 125,000 15.49 8.500 02/12/07 $ 668,200.54 $ 1,693,351.36
Philip O. Strawbridge... 75,000 9.29 8.500 02/12/07 $ 400,920.32 $ 1,018,010.82
Michael A. Szomjassy.... 50,000 6.20 8.500 02/12/07 $ 267,280.22 $ 677,340.55
Robert J. Blackwell..... 42,000 5.20 8.500 02/12/07 $ 224,515.38 $ 568,966.06
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the executives
named in the Summary Compensation Table concerning the exercise of options
during the last fiscal year and the value of unexercised options held as of
the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON (MARKET PRICE OPTIONS AT FY-END (#) AT FY END ($)
EXERCISE AT EXERCISE LESS ------------------------- -------------------------
NAME (#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James L. Kirk........... -- -- 249,070 214,209 21,000 14,000
Michael A. Szomjassy.... -- -- 110,558 89,717 7,500 5,000
Philip V. Petrocelli.... -- -- 89,901 85,558 7,500 5,000
Philip O. Strawbridge... -- -- 11,992 110,975 1,563 4,688
Robert J. Blackwell..... -- -- 49,530 83,562 7,500 5,000
</TABLE>
REPORT ON REPRICING OF STOCK OPTIONS
Pursuant to resolutions of the Board of Directors adopted May 9, 1996, the
Company approved adjustments in certain existing stock options granted under
the 1986 Stock Option Plan. The Board of Directors, in approving the
adjustments in the options granted under the 1986 Stock Option Plan,
considered a variety of factors,
B-10
<PAGE>
including the Company's actual performance since the date of the original
grants, the market performance of the Company's stock, changes in the stock
market affecting the industry generally, the Company's need to compete for the
services of employees, the effectiveness of previously granted options as a
retention device, and the Board's belief that stock-based compensation as a
significant component of the employee's compensation package is a strong
motivational device. The Board determined that certain of the stock options
were no longer motivational or retention devices, and therefore authorized
adjustments for such options.
IVAN W. GORR HERBERT A. GETZ CHARLES W. SCHMIDT
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF EXERCISE ORIGINAL
SECURITIES PRICE AT OPTION TERM
UNDERLYING MARKET PRICE OF TIME OF NEW REMAINING AT
OPTIONS STOCK AT TIME REPRICING OR EXERCISE DATE OF
REPRICED OR OF REPRICING OR AMENDMENT PRICE REPRICING OR
NAME DATE AMENDED AMENDMENT ($) ($) AMENDMENT
---- -------- ----------- --------------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
James L. Kirk........... N/A
Chairman, President
and Chief Executive
Officer
Michael A. Szomjassy.... 08/06/92 10,000 7.625 11.00 7.625 7 yr. 4 mo.
Vice President, 08/06/92 10,000 7.625 11.00 7.625 7 yr. 9 mo.
Eastern Operations 05/09/96 10,579 8.375 11.875 8.375 7 yr. 5 mo.
05/09/96 5,154 8.375 16.25 8.375 7 yr. 9 mo.
05/09/96 15,402 8.375 10.875 8.375 8 yr. 1 mo.
Philip V. Petrocelli.... 05/09/96 37,222 8.375 10.125 8.375 7 yr. 4 mo.
Vice President, 05/09/96 20,679 8.375 10.125 8.375 7 yr. 4 mo.
Western Operations 05/09/96 11,552 8.375 10.875 8.375 8 yr. 1 mo.
Philip O. Strawbridge... N/A
Vice President,
Chief Financial Officer
Robert J. Blackwell..... 05/09/96 9,805 8.375 10.25 8.375 7 yr. 3 mo.
Vice President, 05/09/96 12,885 8.375 16.25 8.375 7 yr. 9 mo.
Marketing and Strategic 05/09/96 15,402 8.375 10.875 8.375 8 yr. 1 mo.
Planning
</TABLE>
1996 MANAGEMENT INCENTIVE PLAN
The Board of Directors has adopted the 1996 Management Incentive Plan
("MIP"). The principal purpose of the MIP is to advance the interests of the
Company by providing annual bonuses for officers of the Company so as to
attract and retain such officers, make their compensation competitive with
other opportunities, and cause them to strive to achieve the Company's
financial and other business objectives. All officers of the Company are
eligible to be selected as MIP participants. Participants in the MIP are
selected by the Compensation and Stock Option Committee.
Pursuant to the terms of the MIP, officers are eligible to receive "target"
bonuses established as a percentage of each participant's annual base salary
if the Company meets certain performance goals selected by the Compensation
and Stock Option Committee related to the achievement of pre-tax income or
operating income (or a combination thereof). The MIP provides a formula or
matrix prescribing the extent to which a participant's target bonus may be
earned based upon the degree of achievement of such performance goal or goals.
The current target bonus range is 30% to 50% of participants' base salaries
for 1997. The MIP also allows the Company, subject to Compensation and Stock
Option Committee approval, to award discretionary cash bonuses for exemplary
performance or to reward special achievements which impact the Company's
results.
B-11
<PAGE>
RETIREMENT AND INCENTIVE COMPENSATION PLAN
Effective January 1, 1996, the Board of Directors of the Company adopted the
Executive Retirement Plan and subsequently amended it on June 21, 1996 and
renamed the plan as the Retirement and Incentive Compensation Plan ("RICP").
The RICP is administered by the Compensation and Stock Option Committee. The
principal purpose of the RICP is to allow executive officers to defer current
federal income taxation of their compensation and, along with the Company's
matching contribution, accumulate monies towards retirement in the absence of
any Company retirement plan, other than the Company's Retirement Saving Plan
which severely restricts officer participation due to certain Internal Revenue
Service limitations. Pursuant to the terms of the RICP, executive officers may
defer up to 50% of their compensation during any year, provided that such
executive officer may not defer more than 30% of his or her compensation during
any year to such individual's Retirement Deferral Account (as described below).
The Company matches 50% of the amounts deferred by the participant and
deposited into the Retirement Deferral Account and matches 100% of the amounts
deferred by the participant and deposited into the OHM Common Stock Deferral
Account. The participant's contribution, plus the Company match, remain
unfunded by the Company until paid to the participant at retirement or other
termination of employment. Any amounts deferred by the participant and
deposited into the Retirement Deferral Account, and Company matching
contributions, are credited monthly with interest at the prime rate and are
increased yearly by the annual increase in the S&P 500 index if such increase
exceeds the interest credited monthly to the participant during the calendar
year. Any amounts deferred by the participant and deposited into the OHM Common
Stock Deferral Account, and Company matching contributions, are credited
monthly in units on the basis of the average of the market value of the
Company's Common Stock during the preceding calendar month.
INCENTIVE STOCK PLAN
The principal purpose of the Incentive Stock Plan is to attract, compensate
and retain officers of the Company and to align the financial interests of the
Company's officers with the shareholders of the Company. Officers and key
employees of the Company are eligible to participate in the Incentive Stock
Plan.
Officers of the Company who are selected by the Compensation and Stock Option
Committee are eligible to receive grants or sales of shares of restricted stock
for up to an aggregate of 500,000 shares of the Company's Common Stock upon
such terms and conditions as the Compensation and Stock Option Committee may
determine in accordance with the Incentive Stock Plan. Each grant or sale is to
be evidenced by an agreement and shall result in an immediate transfer of
ownership of shares of Common Stock to the participant in the Plan, or the
Compensation and Stock Option Committee may defer the transfer of ownership of
the shares until such time as the Committee may specify, provided that in each
case such grant or sale shall be made, issued or awarded in consideration of
the performance of services and the execution of a non-competition agreement,
and shall entitle the participant in the Incentive Stock Plan to dividend,
voting and other ownership rights, subject to a "Substantial Risk of
Forfeiture" within the meaning of Section 83 of the Internal Revenue Code for a
period to be determined by the Compensation and Stock Option Committee on the
date specified by the Compensation and Stock Option Committee on which the
grant of restricted stock becomes effective (the "Date of Grant").
Each sale or grant may be made without any other consideration from the
participant or in consideration of payment by the participant that is less than
the market value per share of Common Stock on the Date of Grant. The market
value of a share of Common Stock underlying the restricted stock at the end of
the Company's fiscal year was $7.625, which was the closing price as reported
on the New York Stock Exchange on such date.
Each grant or sale provides that, during the period for which there is a
"Substantial Risk of Forfeiture," the transferability of the shares of
restricted stock is prohibited in the manner and to the extent prescribed by
the Compensation and Stock Option Committee on the Date of Grant. Any grant or
sale may provide that any or all dividends or other distributions paid on the
shares of restricted stock be automatically sequestered and reinvested on an
immediate or deferred basis in additional shares of Common Stock, which may be
subject to the same restrictions as the underlying award or such other
restrictions as the Compensation and Stock Option Committee may determine.
B-12
<PAGE>
The Compensation and Stock Option Committee may provide on or after the Date
of Grant of any restricted stock, for the payment of a cash bonus intended to
offset the amount of tax that the participant in the Plan may incur in
connection with the restricted stock, including tax on the receipt of the
bonus. To the extent the Company is required to withhold federal, state, local
or other taxes in connection with any payment made or benefit realized by a
participant or other person under the Plan, and the amounts available to the
withholding are insufficient, it is a condition to the receipt of any payment
or the realization of any benefit that the participant or such other person
make arrangements satisfactory to the Company for payment of the balance of
any taxes required to be withheld.
The Committee may amend the Plan from time to time. Upon the termination of
employment by reason of death, disability or retirement from the Company, upon
the attainment of age 65 or upon completion of ten years of employment with
the Company and the attainment of age 55, or in the event of a change in
control of the Company, a participant's restricted stock shall become fully
vested and cease to be subject to a "Substantial Risk of Forfeiture."
Federal Income Tax Consequences. Unless a special election is made under
Section 83 of the Internal Revenue Code, a participant generally will not be
subject to tax upon the grant of restricted shares. A participant generally
will recognize ordinary income at the time the restrictions lapse in an amount
equal to the then fair market value of the shares less any cash paid by the
participant. In addition, a participant will recognize ordinary income upon
receipt of any cash bonus. To the extent that a participant recognizes
ordinary income, the Company will be entitled to a corresponding deduction,
provided, among other things, that such income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code and is not disallowed by the $1 million limitation on certain
executive compensation.
OHM CORPORATION RETIREMENT SAVINGS PLAN
The Company's Retirement Savings Plan (the "Retirement Plan") was
established in 1988. Officers of the Company, together with substantially all
full-time salaried employees and certain other employees of the Company and
its subsidiaries, are eligible to participate in the Retirement Plan.
Participants may make basic contributions of up to a combination of 15% of
their compensation, as defined in the Retirement Plan, which qualify for
deferred tax treatment under Section 401(k) of the Internal Revenue Code (the
"Code"). The Company makes matching contributions of 100% of the first two
percent of the participant's compensation contributed to the Retirement Plan
and 50% of the next four percent of the participant's compensation contributed
to the Retirement Plan. Matching contributions are allocated to the accounts
of participants in the Retirement Plan who have completed two years of
service. The Company also may, in its discretion, make profit sharing
contributions to the Retirement Plan which will be allocated to all eligible
employees. All participant contributions are invested at the direction of the
participant, and all profit sharing contributions are invested at the
direction of the Retirement Plan committee. Matching contributions are made in
Company stock and, upon allocation to a participant's account, may be
reinvested at the direction of the participant. Amounts attributable to the
Company's matching contributions vest upon the earlier of (i) the completion
of two years of service, or (ii) the participant's death, disability or
attaining age 65 while an employee. As of November 30, 1997, an aggregate of
$43,918 was contributed as matching contributions under the Retirement Plan to
the accounts of all executive officers as a group during 1997. Matching
contributions for the five most highly compensated executed officers named are
shown above under the heading "Executive Compensation and Other Information,
Summary of Cash and Certain Other Compensation." The Company made no profit
sharing contributions to the Retirement Plan during 1997.
1986 STOCK OPTION PLAN
Officers and key employees of the Company and its subsidiaries, which
consist of approximately 180 individuals, are eligible to receive stock
options under the 1986 Plan. The purpose of the 1986 Plan is to attract and
retain outstanding individuals as officers and employees of the Company and
its subsidiaries, and to furnish incentives to such persons to increase the
Company's profits by providing them opportunities to acquire shares of Common
Stock of the Company on advantageous terms. The 1986 Plan is administered by
the Compensation
B-13
<PAGE>
and Stock Option Committee of the Board of Directors, currently consisting of
Messrs. Getz, Gorr and Schmidt, which determines the terms and conditions of
stock options issued under the 1986 Plan, amounts of benefits granted, and the
officers and key employees who shall receive them. Options granted under the
1986 Plan may be (i) options that are intended to qualify under particular
provisions of the Code; (ii) options that are not intended to so qualify, or
(iii) combinations of the foregoing.
The 1986 Plan, as amended, authorizes the granting of options to purchase up
to an aggregate of 3,850,000 shares of the Company's Common Stock. Option
agreements evidencing the grant of options are required to specify an option
price which is not less than the fair market value of shares of Common Stock
of the Company on the date of grant. The market value of a share of Common
Stock underlying the options at the end of the Company's fiscal year was
$7.625, which was the closing price as reported on the New York Stock Exchange
on such date. Option agreements must also specify the methods of payment of
the option price, which may be (i) in cash or by check, (ii) by delivery of
Common Stock of the Company already owned by the optionee having a fair value
at the time of exercise equal to the total option price; or (iii) a
combination of such methods of payment. No stock option granted under the 1986
Plan may be exercised more than ten years from the date of grant. Except with
respect to the proposed amount to limit the number of options granted to any
individual in a three-year period, if adopted by the shareholders, the 1986
Plan does not impose any other limit on the number of shares that may be
optioned to a particular employee or officer. However, the Code requires that
the aggregate fair market value (determined at the time the options are
granted) of stock with respect to which "incentive stock options" are
exercisable for the first time by any one employee during any calendar year
not exceed a total of $100,000. Outstanding options are subject to adjustment
in specified events, such as stock dividends, stock splits, recapitalizations
and mergers, and the number of shares authorized by the 1986 Plan is subject
to adjustment in those events.
Stock options issued under the 1986 Plan may be either Non-Qualified Stock
Options or Incentive Stock Options with the following Federal tax
consequences.
Non-Qualified Stock Options. A stock option that is not qualified under the
Code (a "Non-Qualified Stock Option") generally will not result in any taxable
income to the optionee at the time it is granted. In general, the holder of a
Non-Qualified Stock Option will realize ordinary income at the time of
exercise of the option in an amount measured by the excess of the fair market
value of the optioned shares (at the time of exercise) over the option price.
However, the Section 16 (b) Deferral (as defined below) will apply in the case
of optionees who are officers of the Company.
If the option price of a Non-Qualified Stock Option is paid for by the
delivery of shares of Common Stock previously owned by the optionee, no gain
or loss will be recognized to the extent that the shares received are equal in
fair market value to the shares surrendered.
Section 83 of the Code deals generally with property (including stock)
received by an employee as compensation, and provides for deferral of taxation
so long as the employee's rights in the property are subject to a substantial
risk of forfeiture and are not transferable. Section 83 will apply so long as
the sale of stock received could subject the employee to suit under Section
16(b) of the Securities Exchange Act of 1934, but not longer than six months
(the "Section 16(b) Deferral").
The Section 16(b) Deferral can be avoided if the officer makes an election
within thirty days after the transfer of stock to him to have it taxed to him
as ordinary income at its fair market value on the date of transfer less the
amount, if any, paid by him.
Incentive Stock Option. An incentive stock option, i.e. a stock option that
is qualified under the Code (an "Incentive Stock Option"), will not result in
any taxable income to the optionee when it is granted or timely exercised. To
be timely exercised, an Incentive Stock Option must be exercised within three
months after the optionee ceases to be an employee (within one year if the
optionee is disabled) unless the optionee has died. If the optioned stock is
held more than two years from the date of grant of the option and more than
one year after the transfer of the stock to the optionee, the optionee will be
taxed on any gain on the sale of such stock at long-term capital gains rates.
B-14
<PAGE>
If Common Stock acquired on the exercise of an Incentive Stock Option is
sold, exchanged or otherwise disposed of before the end of the required
holding periods, the optionee will in the usual case realize ordinary income
at the time of disposition equal to the excess of the fair market value of the
stock at the time of exercise over the option price.
Under Section 1036 of the Code, if shares of Common Stock previously owned
by the optionee are transferred in payment of the option price under an
Incentive Stock Option, generally no gain or loss will be recognized on the
surrender of such shares to the extent the fair market value of the shares
received equals the fair market value of the shares surrendered. The shares
received in such equal exchange will have the same tax basis and holding
period as the shares surrendered; any additional shares received will have a
zero basis and the holding period will commence on the transfer date. The
spread at the time of exercise will not be subject to tax if the holding
period and other requirements for an Incentive Stock Option are satisfied.
However, if any shares transferred in payment of the option price under an
Incentive Stock Option were previously acquired by the optionee on the
exercise of an Incentive Stock Option and were held for less than the
necessary holding period, Section 1036 would not be available. As a result,
the optionee would realize income on the surrender of such shares in payment
of the option price.
General Matters. To the extent that an employee recognizes ordinary income
in the circumstances described above, the Company would be entitled to a
corresponding deduction. provided, among other things, that such income meets
the test of reasonableness and is an ordinary and necessary business expense.
Withholding of Federal taxes at applicable rates will be required in
connection with ordinary income realized by an optionee upon exercise of Non-
Qualified Stock Options and disqualifying dispositions of stock acquired upon
exercise of an Incentive Stock Option.
Stock options granted under the 1986 Plan may not be transferred except by
will or the laws of descent and distribution and may not be exercised during
an optionee's lifetime except by the optionee or his guardian or legal
representative. The 1986 Plan may be amended from time to time by the Board of
Directors. However, any amendment that increases the aggregate number of
shares of Common Stock covered by the 1986 Plan or would cause Rule 16b-3
under the Exchange Act of 1934 (or any successor rule to the same effect) to
cease to be applicable to the 1986 Plan, is subject to approval by the
shareholders of the Company. The 1986 Plan provides that the Compensation and
Stock Option Committee may, with the concurrence of the affected optionee,
cancel any agreement evidencing a stock option granted under the 1986 Plan. In
the event of such cancellation, the Compensation and Stock Option Committee
may authorize the granting of a new stock option, which may or may not cover
the number of shares which had been the subject to the prior agreement, in
such manner, at such option price and subject of the same terms, conditions
and discretions as would have been applicable under the 1986 Plan had the
cancelled stock option not been granted.
DIRECTORS' NON-QUALIFIED STOCK OPTION PLAN
The Company recognizes the importance of attracting and retaining
outstanding individuals as directors and of stimulating the active interest of
these persons in the development and financial success of the Company. In
addition, the Company endorses the position that stock ownership arrangements
are beneficial in aligning Directors' and shareholders' interests in the
enhancement of shareholder value. The Board of Directors believes that the
Directors' Non-Qualified Stock Option Plan (the "Director Option Plan") is a
significant factor in furtherance of these objectives and intends, through the
Director Option Plan, to increase the Company's profits by providing such
persons with opportunities to acquire shares of the Common Stock of the
Company on advantageous terms.
Only Directors who are not employees of the Company and its subsidiaries are
eligible to participate in the Director Option Plan. The Director Option Plan
provides that the total number of shares that may be sold upon the exercise of
stock options shall not exceed 1,000,000 shares of Common Stock. The Director
Option Plan is of indefinite duration and will continue in effect until all
shares reserved for options thereunder have been sold or until earlier
termination of the Director Option Plan.
B-15
<PAGE>
The Director Option Plan provides for automatic grants of options to
purchase shares of Common Stock of the Company to Directors of the Company who
are not employees of the Company or its subsidiaries. Under the Director
Option Plan, each person who was an incumbent non-employee Director of the
Company received an option to purchase 15,000 shares of Common Stock, as of
August 6, 1992, the effective date of the Director Option Plan, provided that
the total number of shares each optionee was eligible to receive was reduced
by the number of shares of Common Stock subject to prior option grants to such
Director. Each person who first becomes a non-employee Director of the Company
after the effective date is entitled to receive an option to purchase 15,000
shares of Common Stock as of the date such person first became a non-employee
Director. Each person who is a non-employee Director of the Company is
entitled to receive an option to purchase 5,000 shares of Common Stock
immediately after each of the Company's annual meetings of shareholders. An
option is exercisable in full upon six months of continuous service as a non-
employee Director. Options granted under the Director Option Plan are options
that do not qualify under particular provisions of the Code. The Director
Option Plan is administered by employee directors who are not eligible to
participate in the Director Option Plan.
DIRECTORS' DEFERRED FEE PLAN
The Board of Directors has adopted the Directors' Deferred Fee Plan (the
"Deferred Fee Plan") the purpose of which is to help solidify the common
interest of Directors and shareholders in enhancing the value of the Company's
Common Stock. It is also intended that the Deferred Fee Plan will assist in
attracting and retaining qualified individuals to serve as Directors. The
Deferred Fee Plan will give those Directors who are not also employees of the
Company an opportunity to defer current federal income taxation of all or a
portion of their annual retainer and meeting fees payable by the Company for
their services as a Director.
Under the terms of the Deferred Fee Plan, a Director may elect to have his
or her Director's fees credited to an account in either cash or units (an
accounting unit equal in value to one share of Common Stock). Deferred fees
that a Director elects to have credited in cash will be credited to the
Director's account as they become payable to the Director. A Director's
account to which fees have been credited in cash will earn interest annually
at the rate of interest payable on one-year U.S. Treasury Bills or such other
rate as the Committee designated by the Deferred Fee Plan may establish. In no
event, however, will the rate of interest be more than five percent higher
than the rate payable on such U.S. Treasury Bills. Deferred fees payable in
units will be credited, together with an amount equal to 10% of such deferred
fees, to a Director's account after the end of the fiscal year on the basis of
the average of the market values of the Common Stock on the last trading day
in each calendar month during the year. Each account to which fees have been
credited in units shall be credited annually after the end of each fiscal year
with additional units equal in value to the amount of cash dividends paid by
the Company during such year on Common Stock equivalent to the average daily
balance of units in such account during the year. The maximum number of units
that may be granted under the Deferred Fee Plan during its term is 100,000 in
the aggregate. The Deferred Fee Plan is administered by a Committee consisting
of the Chairman of the Board (provided he is an employee-director) and two
Company officers or directors who are employee-directors appointed by the
Chairman of the Board.
EMPLOYMENT AND INDEMNIFICATION AGREEMENTS
The Company has entered into agreements with the executive officers named in
the Summary Compensation Table and certain other executive officers providing
that in the event of any "change in control" of the Company, such officers
would continue their employment with the Company in their present position for
terms of approximately three years following such change in control. During
such term of employment, each such officer would be entitled to receive base
compensation and to continue to participate in incentive and employee benefit
plans at levels no less favorable to him than prior to commencement of the
term or to receive a lump sum payment, following the termination of his
employment. Benefits under these agreements are subject to an overall
limitation which assures that payments will not constitute "excess golden
parachute payments" under federal income tax law. While each of such
agreements is presently in effect, none become operative until a change in
control of the Company has occurred, prior to which time the Company and such
officer each reserves
B-16
<PAGE>
the right at any time with or without cause to terminate their employment
relationship. The transactions that are deemed to result in a change in
control for the purposes of these agreements include (a) merger or
consolidation of the Company with, or sale of all or substantially all its
assets to another corporation, as a result of which less than a majority of
the voting shares of the surviving entity are owned by former stockholders of
the Company; (b) any person becoming the beneficial owner of 25% or more of
the voting stock of the Company; (c) reporting by the Company under specified
provisions of the federal securities laws that a change in control has
occurred; and (d) when within any two-year period, a majority of directors at
the beginning of such period (not including persons approved by at least two-
thirds of the Directors still in office who were directors at the beginning of
such period) cease to be directors of the Company. Effective December 12,
1995, the Company terminated the employment agreements in effect as of such
date and, effective as of January 1, 1996, entered into revised employment
agreements with the executive officers of the Company. The revised employment
agreements include the provisions described above, except that the Board of
Directors may, by vote of three-quarters of the members, determine that a
change in control described in (b) above will not cause the employment
agreement to become operative.
The Company has also entered into indemnification agreements (the
"Indemnification Agreements") with each current member of the Board of
Directors as well as with each executive officer of the Company. The form and
execution of the Indemnification Agreements were approved by the Company's
shareholders. The Indemnification Agreements were amended as of January 1,
1996 to provide that Ohio law determines the rights and responsibilities of
the Company and the indemnitee. The amendment was necessary to reflect the
Company's reincorporation under Ohio law previously approved by the
shareholders. Such agreements essentially provide that, to the extent
permitted by Ohio law, the Company will indemnify the indemnitee against all
expenses, costs, liabilities and losses (including attorney's fees, judgments,
fines or settlements) incurred or suffered by the indemnitee in connection
with any suit in which the indemnitee is a party or otherwise involved as a
result of his service as a member of the Board or as an officer.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Gorr, Getz and Schmidt are members of the Compensation and Stock
Option Committee of the Board of Directors of the Company. Mr. Getz is
employed by WMX, which beneficially owns 37.63% of the Company's Common Stock.
WMX and its affiliates and the Company are parties to various agreements,
including the Guarantee Agreement, the Warrant Agreement and the Standstill
and Non-Competition Agreement discussed below. See "Certain Relationships and
Related Transactions."
BOARD COMPENSATION AND STOCK OPTION COMMITTEE REPORT(1)
The primary function of the Compensation and Stock Option Committee is to
review and approve salaries and other benefits for executive officers of the
Company, to make recommendations to the Board of Directors with respect to the
adoption of employee benefit programs and to administer the Company's stock
option plans and to approve awards of stock options made under the Company's
1986 Stock Option Plan. The Compensation and Stock Option Committee is
composed of three Directors, Messrs. Gorr, Getz and Schmidt, who are not
executive officers of the Company. Set forth below is a report of Messrs.
Gorr, Getz and Schmidt in their capacity as the Board's Compensation and Stock
Option Committee addressing the Company's compensation policies for 1997 as
they affected Mr. James L. Kirk and the other executive officers of the
Company.
The Compensation and Stock Option Committee's executive compensation
policies are designed to provide levels of compensation that integrate pay
(considered in connection with grants of stock options under the Company's
1986 Stock Option Plan) with the Company's annual and long-term performance
goals, reward individual achievement and attract and retain qualified
executives, all in the context of the highly competitive industry in which the
Company operates.
- --------
(1) Note: This information is not incorporated by reference in any prior or
future Securities and Exchange Commission filings, directly or by
reference to the incorporation of proxy statements of the Company,
unless such filing specifically incorporates this information.
B-17
<PAGE>
Salaries for executive officers are determined periodically by evaluating
the performance of the individuals reviewed and their contributions to the
performance of the Company and particular business units, as applicable, their
responsibilities, experience, potential and period of service at their current
salary. Financial results as well as appropriate non-financial measures are
considered. Factors consistent with the Company's overall compensation policy
and strategy may also be considered. With respect to executive officers, the
Company's Management Incentive Plan provides bonus awards based upon the
Company's achievement of certain financial goals, and allows the Committee to
grant discretionary bonus awards for exemplary performance or to reward
special achievements which impact Company results. In its deliberations, the
Committee takes into account the recommendations of appropriate Company
officials. See "1996 Management Incentive Plan."
The Compensation and Stock Option Committee also endorses the position that
stock ownership by management and stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders'
interest in the enhancement of shareholder value. The granting of stock
options pursuant to the Company's 1986 Stock Option Plan is also within the
authority of the Compensation and Stock Option Committee. In determining
grants of stock options to executive officers, the Compensation and Stock
Option Committee has followed policies substantially similar to those
described above with respect to compensation. James L. Kirk received grants of
stock options covering 125,000 shares of Common Stock in 1997, exercisable in
installments over a four-year period. The Compensation and Stock Option
Committee considers, in granting such options to Mr. Kirk, the view expressed
above that stock ownership by Mr. Kirk beneficially aligns his interests with
the interests of the Company's shareholders.
Mr. James L. Kirk's annual base salary of $450,000.00 was established in
February 1997.
Section 162(m) of the Internal Revenue Code of 1986, as amended, prohibits a
publicly held corporation, such as the Company, from claiming a deduction on
its federal income tax return for compensation in excess of $1,000,000 paid
for a given federal year to certain executives. Because of the Company's
current compensation levels, the Compensation Committee has developed no
policies at this time concerning Section 162(m).
IVAN W. GORR HERBERT A. GETZ CHARLES W. SCHMIDT
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT
The Company provides Robert W. Kirk, a former officer and stockholder of the
Company and father of James L. Kirk and Joseph R. Kirk, with a pension
arrangement pursuant to which the Company is to make payments of $96,000 per
year, subject to further cost of living adjustments, for the remainder of his
life and that of his spouse if she survives him. During 1997, the Company made
payments totaling $117,955 to Robert W. Kirk under this pension arrangement.
The Company has entered into a five-year employment agreement with Mr.
Joseph Kirk during 1996, pursuant to which he will be entitled to a salary of
$250,000 payable in the initial year, and decreasing $25,000 during each of
the four succeeding years. Under the agreement, Mr. Kirk is eligible to
receive other benefits and perquisites payable to senior employees.
During 1997, OHMR paid $471,593 to Kirk Brothers Co., Inc. ("KBC"), the
principal shareholders of which are Richard C. Kirk and Robert W. Kirk, the
brother and father, respectively, of James L. Kirk and Joseph R. Kirk. This
amount represents payments made to KBC for subcontract services.
OHMR leases a building with approximately 5,400 square feet for a monthly
rental of $2,500 on a month-to-month basis from The KDC Company ("KDC"), the
principal shareholders of which are James L. Kirk and Joseph R. Kirk. OHMR
utilizes the building, located near its headquarters in Findlay, Ohio, for the
storage of equipment and inventory and made rental payments to KDC aggregating
$20,000 during 1997 under this arrangement.
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OHMR leases office and storage space from Findlay Machine and Tool, Inc.
("FMT"), of which Joseph R. Kirk is the principal shareholder pursuant to a
lease. The rate and other terms of the lease were approved by the Board of
Directors on November 7, 1995 and amended on March 6, 1996 and August 13,
1996. During 1997, OHMR made payments to FMT totaling $297,860 under the
lease.
In connection with the commencement of his employment, Mr. Philip V.
Petrocelli, Vice President, Western Operations, received a $100,000 interest
free loan to be forgiven in equal installments on the anniversary date of his
employment over seven consecutive years. The balance of the loan becomes due
and payable immediately in the event Mr. Petrocelli voluntarily leaves the
employment of the Company or is terminated for cause before August 30, 2000.
During 1997, $14,286 of the principal balance was forgiven. As of December 31,
1997, the aggregate principal amount outstanding was $38,095.
TRANSACTIONS WITH SHAREHOLDERS
In connection with the Reorganization Agreement (the "Reorganization
Agreement") entered into in connection with the Company's purchase of Rust
Environmental, Inc., the Company and Rust International, Inc. ("Rust"), the
parent of Rust Environmental, Inc., entered into certain business agreements.
First, Rust agreed that the Company would provide all environmental
remediation services under Rust's governmental Total Environmental Restoration
Contracts ("TERCs"), and a portion of all fees earned under such contracts.
Rust also agreed to maintain, at its cost, certain payment, performance and
surety bonds in connection with certain Rust projects acquired in connection
with the transaction, and to assist the Company in preparing documents and
favorable pricing from Rust and affiliated Company vendors.
THE GUARANTEE AGREEMENT
In connection with the Reorganization Agreement, WMX, the majority
stockholder of Rust, and the Company entered into a Guarantee Agreement, which
provides that in exchange for a Warrant (described below), WMX guaranteed
indebtedness of the Company in an amount not to exceed $62,000,000. The
Guarantee amount may be increased from time to time, up to an amount not to
exceed $75,000,000 in the event the Warrant is, in whole or in part, exercised
by WMX or transferred to a third party. On May 31, 1995, WMX guaranteed
certain indebtedness under the Company's Revolving Credit Agreement and the
Company, in consideration thereof, executed a Reimbursement Agreement in favor
of WMX obligating the Company to reimburse WMX for any payments by WMX under
the Guarantee. Pursuant to the Repurchase Agreement, the Guarantee Agreement
shall be terminated as of the date on which WMX's guarantee of the
indebtedness incurred under the Company's revolving credit agreement (the
"Indebtedness") terminates (the "Common Termination Date"). The Common
Termination Date is expected to occur upon the repayment of the Indebtedness
on or about the Effective Time.
THE WARRANT AGREEMENT
In consideration for the Guarantee, the Company issued a Warrant to WMX
which is exercisable, in whole or in part, until May 31, 2000, for an
aggregate of 700,000 shares of Common Stock (the "Warrant Shares") at an
exercise price of $15.00 per Warrant Share (the "Exercise Price"). The Warrant
provides further that the acquisition by WMX of any of the Warrant Shares upon
exercise of all or any portion of the Warrant is subject to the ownership
limitation on WMX and its affiliates (the "WMX Group") set forth in the
Standstill and Non-Competition Agreement (the "Standstill Agreement")
described below. The Warrant provides for certain adjustments to the Exercise
Price and/or the number of Warrant Shares purchasable upon exercise in the
event of a stock combination, stock split, a capital reorganization or
reclassification, a merger or consolidation, or a sale or conveyance of all or
substantially all of the Company's assets. Pursuant to the Repurchase
Agreement, the Warrants and the Warrant Agreement shall terminate at the
Common Termination Date.
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THE STANDSTILL AND NON-COMPETITION AGREEMENT
Pursuant to the Reorganization Agreement, the Company, WMX and Rust entered
into a Standstill Agreement providing that the WMX Group will not acquire any
of the Company's Common Stock or any of the Company's other securities
entitled to vote generally for the election of directors ("Voting Securities")
other than pursuant to exercise of the Warrant, or in acquisitions, including
exercise of the Warrant, that do not result in the aggregate ownership by the
WMX Group or more than 40% of the Company's Voting Securities, or such lesser
percentage as may exist from time to time as the result of voluntary
dispositions by the WMX Group (the "Ownership Limit").
Pursuant to the Standstill Agreement, no member of the WMX Group shall
acquire Voting Securities which would result in the WMX Group owning Voting
Securities beyond the Ownership Limit unless the acquisition is (i) made
pursuant to an offer for all of the Company's outstanding Voting Securities at
the same price, and (ii) is approved by either the Company's independent
directors or the Company's shareholders, other than the WMX Group and certain
other shareholders, pursuant to the Control Share Acquisition provisions of
the Company's Amended and Restated Articles of Incorporation. The Standstill
Agreement also provides that if the WMX Group's ownership level falls below
20% of the outstanding Voting Securities, the WMX Group shall have an option
to purchase from the Company sufficient Voting Securities at fair market value
to raise its ownership to not more than 21% of the outstanding Voting
Securities. The WMX Group, pursuant to the Standstill Agreement, agrees, among
other things, not to solicit proxies in opposition to any matter recommended
by a majority of the Company's directors not representing WMX (the "Non-WMX
Directors"), or to solicit a tender offer or business combination.
As long as the WMX Group owns at least 20% of the Voting Securities, the
Company will include as nominees to the Board of Directors a number of WMX
Group designees proportionate to the WMX Group's ownership interest (to the
lowest corresponding whole directorship). Furthermore, so long as the WMX
Group owns at least 20% of the outstanding Voting Securities, WMX shall take
all actions in its control to include at least three independent Directors on
the Company's Board of Directors. The Standstill Agreement provides that the
WMX Group shall vote its Common Stock for the Company's nominees to the Board
of Directors selected by a majority of the Non-WMX Directors. The WMX Group
shall vote on all other matters (i) in accordance with the recommendations of
the majority of the Non-WMX Directors, or (ii) if no recommendation is made,
in the same proportion as other shareholders of the Company shall vote.
Pursuant to the Standstill Agreement, WMX, Rust and their respective wholly-
owned subsidiaries (the "WMX Affiliates") have agreed not to engage in the
business of providing field services for the on-site remediation of hazardous
substances in North America for seven years after the closing except as
otherwise provided in the Standstill Agreement. The Standstill Agreement also
provides that for so long as the WMX Group owns at least 20% of the
outstanding Voting Securities, (i) the Company shall be a preferred provider
of certain environmental remediation services to the WMX Affiliates, and (ii)
the WMX Affiliates shall be preferred providers of engineering, consulting and
design environmental and waste management services to the Company. Also, Rust
will provide the Company access to its engineering, consulting, design and
project management services personnel on the same terms and conditions as Rust
provides them to WMX Affiliates. Additionally, the Standstill Agreement
provides that the WMX Affiliates will contract with the Company for $20
million of environmental remediation services prior to December 31, 1996,
which was extended to December 31, 1997.
Pursuant to the Repurchase Agreement, the foregoing provisions of the
Standstill Agreement will terminate as of the consummation of the Repurchase.
OTHER SERVICES
In 1997, OHMR received from WMX and its affiliates $23,663,946 for
remediation, construction and other services performed by OHMR. OHMR paid
$6,867,570 to WMX and its affiliates for engineering-related and disposal
services.
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