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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _______)*
Fluor Daniel GTI, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.001
- --------------------------------------------------------------------------------
(Title of Class of Securities)
34386C-10-6
-------------------------------------------------------
(CUSIP Number)
Raymond M. Bukaty, Esq., Fluor Corporation
3333 Michelson Drive, Irvine, CA 92730
(714) 975-6692
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
May 10, 1996
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copes are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746 (12-91)
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 34386C-10-6 SCHEDULE 13D PAGE 2 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FLOUR CORPORATION
95-0740960
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
5 [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
DELAWARE
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
4,400,000
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,400,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,400,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
54.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2 of 7
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 34386C-10-6 SCHEDULE 13D PAGE 3 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FD ENGINEERS & CONSTRUCTORS, INC.
95-3361207
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC, AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
5 [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
CALIFORNIA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
4,400,000
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,400,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,400,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
54.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2 of 7
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 34386C-10-6 SCHEDULE 13D PAGE 2 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
FLUOR DANIEL, INC.
95-2758280
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [X]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC, AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
5 [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
CALIFORNIA
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
4,400,000
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,400,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
4,400,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
54.5%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2 of 7
<PAGE>
Item 1. Security and Issuer.
-------------------
This Schedule 13D relates to the common stock, par value $.001 per share (the
"New Common Stock"), issued by Fluor Daniel GTI, Inc., a Delaware corporation
(the "Company"), having its principal executive offices at 100 River Ridge
Drive, Norwood, MA 02062.
Item 2. Identity and Background.
-----------------------
This Schedule 13D is filed by Fluor Daniel, Inc., a California corporation
("Fluor Daniel"), FD Engineers and Constructors, Inc., a California corporation
("FD Engineers") and Fluor Corporation, a Delaware corporation ("Fluor"), which
together may be deemed a "group" within the meaning of Rule 13D-5(b)(i) of the
Securities Exchange Act of 1934 (the "Act"). Fluor Daniel is a wholly owned
subsidiary of FD Engineers. FD Engineers is a wholly owned subsidiary of Fluor.
Fluor is a publicly traded company. Except as disclosed in the Schedule
13G-Amendment 1 dated April 9, 1996 jointly filed by FMR Corp., Edward C.
Johnson 3d, Abigial P. Johnson, Fidelity Management & Research Company and
Fidelity Magellan Fund, which discloses that the foregoing group owns
approximately 10.66% of Fluor's common stock, no shareholder of Fluor owns more
than 5% of the outstanding and issued shares of Fluor.
The principal office and business address of Fluor Daniel, FD Engineers and
Fluor is 3333 Michelson Drive, Irvine, CA 92730.
Through Fluor Daniel and FD Engineers and other domestic and foreign
subsidiaries, the principal business of Fluor is providing engineering,
procurement, construction, maintenance and other diversified services on a
worldwide basis to an extensive range of industrial, commercial, utility,
natural resources, energy and governmental clients. In addition, Fluor maintains
investments in a coal related business through its ownership of AT Massey Coal
Company, Inc.
The principal business of Fluor Daniel and FD Engineers is providing
engineering, procurement, construction and other diversified services on a
worldwide basis to an extensive range of industrial, commercial, utility,
natural resources, energy and governmental clients.
Page 5 of ___
<PAGE>
The names of the executive officers and directors of Fluor Daniel and their
positions in Fluor Daniel are as follows:
<TABLE>
<CAPTION>
Fluor Daniel Business
Name Position Address
- ---- ------------ --------
<S> <C> <C>
Dennis G. Bernhart Group President - The Americas Group *
Charles J. Bradley, Jr. Director; Vice President *
Alan L. Boeckmann Group President - Chemical Process **
& Industrial
Richard D. Carano Group President - Asia/Pacific *
Hugh K. Coble Director; Vice Chairman of the Board *
E. David Cole, Jr. Group President - Process Group **
J. Michal Conaway Chief Financial Officer *
Charles R. Cox Group President - Industrial Group **
Lawrence N. Fisher Director; Vice President-Law & *
Secretary
Thomas P. Merrick Vice President - Strategic Planning *
Leslie G. McCraw Director; Chairman of the Board, **
Chief Executive Officer and President
Charles R. Oliver Group President - Sales, Marketing *
& Strategic Planning
James O. Rollans Director; Chief Administrative Officer *
Carel J. C. Smeets Group President - Europe, Africa Fluor Daniel B.V.
& Middle East Surinameweg 17
2035VA Haarlem
The Netherlands
James C. Stein Group President - Diversified Services *
Richard M. Teater Group President - Power & Government *
</TABLE>
- --------------------
* Fluor Daniel, Inc., 3333 Michelson Drive, Irvine, California 92730
** Fluor Daniel, Inc., 100 Fluor Daniel Drive, Greenville, South Carolina
29607-2762
Page 6 of ____
<PAGE>
The present principal occupation of each of them is fulfilling his or her duties
as officers of Fluor Daniel, FD Engineers and Fluor, as applicable.
The names of the executive officers and directors of FD Engineers and their
positions in FD Engineers are as follows:
FD Engineers
Name Position
- ---- ------------
J. Michal Conaway Chief Financial Officer
Lawrence N. Fisher Director, Secretary
James O. Rollans President
The principal business address of each of these individuals is 3333 Michelson
Drive, Irvine, CA 92730. The present principal occupation of each of them is
fulfilling his or her duties as officers of Fluor Daniel, FD Engineers and
Fluor.
The names of the executive officers and directors of Fluor, their business
addresses, their positions at Fluor and principal occupation are as follows:
<TABLE>
<CAPTION>
Fluor Business Principal
Name Position Address Occupation
- ---- -------- --------- ----------
<S> <C> <C> <C>
Dennis W. Benner Vice President & CIO * Vice President & CIO
Dennis G. Bernhart Group President - The * Group President - The
Americas Group of Americas Group of
Fluor Daniel Fluor Daniel
Don L. Blankenship Chairman of the Board A. T. Massey Coal Co. Chairman of the Board
and CEO of A. T. Massey 4 North 4th Street and CEO of A. T. Massey
Coal Company Richmond, VA 23219 Coal Company
Alan L. Boeckman Group President - Fluor Daniel, Inc. Group President -
Chemical Processes and 100 Fluor Daniel Drive Chemical Processes and
Industrial of Greenville, SC 29607-2762 Industrial of
Fluor Daniel Fluor Daniel
Charles J. Bradley Vice President, Human * Vice President, Human
Resources & Administration Resources & Admin.
</TABLE>
Page 7 of ___
<PAGE>
<TABLE>
<CAPTION>
Fluor Business Principal
Name Position Address Occupation
- ---- -------- --------- ----------
<S> <C> <C> <C>
Carroll A. Campbell Director American Council of Life Ins Business Executive
1001 Pennsylvania Ave NW
Washington, DC 20004-2599
Richard D. Carano Group President - Asia/ * Group President - Asia/
Pacific of Fluor Daniel Pacific of Fluor Daniel
Hugh K. Coble Director & Vice Chairman * Vice Chairman
E. David Cole Group President - Process Fluor Daniel, Inc. Group President - Process
of Fluor Daniel One Fluor Daniel Drive of Fluor Daniel
Sugar Land, TX 77017
J. Michal Conaway Vice President & CFO * Vice President & CFO
Charles R. Cox Group President - Fluor Daniel, Inc. Group President -
Industrial of 100 Fluor Daniel Drive Industrial of
Fluor Daniel Greenville, SC 29607-2762 Fluor Daniel
Lawrence N. Fisher Sr. Vice President - Law * Sr. Vice President - Law
& Secretary & Secretary
Richard A. Flinton Chairman of the Board of * Chairman of the Board of
Fluor Constructors Fluor Constructors
International, Inc. International, Inc.
Peter J. Fluor Director Texas Crude Energy, Inc. Business Executive
2803 Buffalo Speedway
Houston, TX 77098
David P. Gardner Director The Wm R. & Flora Hewlett Fndn Business Executive
525 Middlefield Road, Suite 200
Menlo Park, CA 94025
William R. Grant Director Galen Associates Business Executive
666 Third Avenue, Suite 1400
New York, NY 10017-4011
Bobby R. Inman Director 701 Brazos, Suite 500 Business Executive
Austin, TX 78701
Robert V. Lindsay Director Morgan Guaranty Trust Co of NY Business Executive
15 Broad St., 30th Floor
New York, NY 10015
Vilma S. Martinez Director Munger, Tolles & Olson Attorney
355 South Grand Ave, 35th Floor
Los Angeles, CA 90071-1560
</TABLE>
Page 8 of ___
<PAGE>
<TABLE>
<CAPTION>
Fluor Business Principal
Name Position Address Occupation
- ---- -------- --------- ----------
<S> <C> <C> <C>
Leslie G. McCraw Director, Chairman & CEO Fluor Daniel, Inc. Chairman and CEO
100 Fluor Daniel Drive
Greenville, SC 29607-2762
Thomas P. Merrick Vice President, Strategic * Vice President, Strategic
Planning of Fluor Daniel Planning of Fluor Daniel
Buck Mickel Director Fluor Daniel, Inc. Business Executive
100 Fluor Daniel Drive
P.O. Box 19019, DB051
Greenville, SC 29607
Charles R. Oliver Group President - Sales, * Group President - Sales,
Marketing and Strategic Marketing and Strategic
Planning of Fluor Daniel Planning of Fluor Daniel
James O. Rollans Chief Admin Officer * Chief Admin Officer
Martha R. Seger Director 4810 East Scarlett Street Business Executive;
Tucson, AZ 85711 Professor of Finance
Carel J. C. Smeets Group President - Europe/ Fluor Daniel B. V. Group President - Europe/
Africa and Middle East of Surinameweg 17 Africa and Middle East of
Fluor Daniel 2035VA Haarlem Fluor Daniel
The Netherlands
James C. Stein Group President - * Group President -
Diversified Services of Diversified Services of
Fluor Daniel Fluor Daniel
Richard M. Teater Group President - Power * Group President - Power
and Government and Government
- --------------------------
* Fluor Corporation, 3333 Michelson Drive, Irvine, California 92730
</TABLE>
None of the individuals or entities referred to above has, during the last five
years, been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
None of the individuals or entities referred to above has, during the last five
years, been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Page 9 of ___
<PAGE>
Except for Smeets, all of Fluor Daniel's, FD Engineer's and Fluor's officers and
directors are citizens of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The net investment cost of the 4,400,000 shares (the "Shares") of New Common
Stock owned by Fluor Daniel is estimated to be in the range of $54 million to
$60 million, based on a summary valuation prepared by the Company's financial
advisor. This investment consists of $33,350,000 in cash and in addition,
effective May 10, 1996, Fluor Daniel Environmental Services, Inc., a California
corporation ("FDESI"), a wholly owned subsidiary of Fluor Daniel, was
transferred to the Company pursuant to a merger of FDESI into GTI Acquisition
Corporation, a California corporation ("Newco"), a wholly owned subsidiary of
the Company.
Fluor Daniel used funds from its ultimate parent, Fluor, to purchase the Shares.
Pursuant to the certain Stock Option Agreement dated as of December 11, 1995
between the Company and Fluor Daniel (the "Option Agreement"), which is attached
hereto as Exhibit 3, the Company sold to Fluor Daniel for a cash payment of
---------
$1,650,000 an option to purchase up to an additional 1,366,000 shares of the
Company's common stock (the "Common Stock") or, if exercised after the closing
of the Transaction, the New Common Stock (the "Base Shares"), at a purchase
price in cash of $17.00 per share (the "Per Share Price"), or $1,650,000 for all
of the Base Shares, with both the Base Shares and Per Share Price subject to
adjustment as described in Item 4 below. Fluor Daniel has not attempted to
arrange financing for the purchase of the Base Shares.
Item 4. Purchase of Transaction.
-----------------------
The purpose of the purchase of the Shares was for Fluor Daniel to obtain control
of the Company. The Board of Directors for Fluor Daniel, and the Board of
Directors of its ultimate parent corporation, Fluor, considered a number of
factors in connection with its acquisition of the Shares, including, without
limitation, the following: (i) a review of the Company, including a presentation
by Fluor Daniel's management regarding its due diligence review of the Company;
(ii) a review of advice of management, financial and legal advisors regarding
the terms of that certain Investment Agreement dated December 11, 1995 by and
among Fluor Daniel, FDESI, the
Page 10 of
---
<PAGE>
Company and Newco (the "Investment Agreement") which is attached hereto as
Exhibit 2, and the transactions contemplated thereby (the "Transaction");
- ---------
(iii) Fluor Daniel's existing position in the environmental service industry and
its desire to strengthen and expand its presence in the industry; (iv) quality,
diversity and experience of the personnel of the Company, and (v) the Company's
experience in the environmental services industry which would be complimentary
to the needs of Fluor Daniel, including the Company's extensive experience in
remediation services utilizing a wide spectrum of technologies. In addition, the
analysis included advice from Fluor Daniel's financial advisors concerning the
(i) the historical results of the Company; (ii) the potential for growth and
earnings of the Company following the proposed Transaction; (iii) historical
market prices and trading volumes of the Company's common stock; (iv) comparable
merger or acquisition transactions; and (v) ranges of estimates of value of the
Company based on various analysis. The Fluor Daniel Board also considered the
transactions prospective impact on Fluor's earnings per share, as well as
opportunities for cost savings. The Fluor Daniel Board also focused on the
revenue enhancements expected to result from the Transactions and the respective
contributions the parties would bring to the combined corporation. The Fluor
Daniel Board did not assign any specific or relative weight to the factors under
its consideration. The Fluor Daniel Board determined that the transactions were
in the best interest of Fluor Daniel and Fluor.
On December 11, 1995 Fluor Daniel and the Company entered into the Option
Agreement. Pursuant to the Option Agreement, the Company sold to Fluor Daniel
for a cash payment of $1,650,000 the Option to purchase up to 1,366,000 shares
of Common Stock or, if exercised after the closing of the Transaction, the New
Common Stock at a per share exercise price of $17.00 per share, with both the
Base Shares and the Per Share Price subject to adjustment as described below
(the Base Shares, as adjusted are herein referred to as the "Optioned Shares").
Exercise of the Option. The Option will become exercisable after the first
to occur of (i) December 11, 1996 and (ii) Fluor Daniel being entitled to
terminate the Investment Agreement pursuant to the terms thereof. Once
exercisable, the Option may be exercised in whole or in part prior to its
expiration by delivery by Fluor Daniel to the Company of a written notice (the
"Notice") specifying the number of Optioned Shares to be purchased and a place
and date (the "Option Closing Date") not later than 10 business days from the
date of the Notice for the closing of such purchase (the "Option Closing"),
provided that if any approvals are required under the HSR Act with respect to
such exercise, the Option Closing will be the later of (i) the Option Closing
Date specified in the Notice and (ii) the next business day following the date
on which the applicable waiting periods under the HSR Act shall have expired.
The Option expires on December 11, 1998.
Page 11 of
---
<PAGE>
Adjustment to Base Shares and Per Share Price. In connection with the
recapitalization of the Company (so long as the Option is not exercised in full
prior to the closing of the Transaction), the aggregate number of shares
purchasable upon exercise of the Option will be adjusted by multiplying the Base
Shares by the Adjustment Fraction (as defined below). The Per Share Price will
be adjusted by dividing the Per Share Price by the Adjustment Fraction. The term
"Adjustment Fraction" means a fraction, the numerator of which equals the
Current Market Price of the Common Stock and the denominator of which equals the
Current Market Price of the New Common Stock. For purposes of the Option, the
"Current Market Price" means the average per share closing price for the five
trading days (i) immediately preceding the closing of the Transaction, with
respect to the Common Stock, and (ii) immediately following the closing of the
Transaction, with respect to the New Common Stock. These adjustments have been
made and the number of shares subject to the Option is 1,768,970 at an exercise
price of $13.1274 per share. The number of Optioned Shares and the Per Share
Price are also subject to adjustment upon any change in the outstanding shares
of Common Stock or New Common Stock by reason of any stock dividend, stock
split, recapitalization, combination, exchange of shares, merger, consolidation,
reorganization or any other change in the corporate or capital structure of the
Company (other than the recapitalization of the Company) to maintain without
dilution the rights of Fluor Daniel under the Option.
Registration Rights. Under the Option Agreement, Fluor Daniel is entitled
to certain registration rights with respect to the Optioned Shares. At any time
within three years of any Option Closing, the Company is obligated (i) to effect
up to two registrations under the Securities Act (each a "Demand Registration")
of any or all of the Optioned Shares, one of which such registrations may, at
Fluor Daniel's request, so long as the Company satisfies the eligibility
requirements of Form S-3 under the Securities Act, be required to be made on a
continuous basis pursuant to Rule 415 under the Securities Act and (ii) at the
written request of Fluor Daniel delivered within ten (10) days after the Company
delivers a notice to Fluor Daniel of the Company's intent to file a registration
statement for its common stock, to include any or all of the Optioned Shares in
such registration (each an "Incidental Registration"). Fluor Daniel may not
request a Demand Registration within 120 days following the effective date of a
registration statement filed by the Company in which the Optioned Shares were
entitled to join. In an Incidental Registration, upon the written opinion of the
managing underwriter that the requested distribution of Optioned Shares would
adversely effect the distribution of securities of the Company, the Company may,
at its option, either (x) require Fluor Daniel to agree to delay the offering
and sale of the Optioned Shares for a reasonable period as requested by the
managing underwriter or (y) include in the registration statement only such
portion, if any, of the Optioned Shares as the managing underwriter advises may
be so included. In addition, The Company is
Page 12 of ____
<PAGE>
entitled to suspend any obligation to register Optioned Shares for 90 days in
any 12-month period if there exists material non-public information about the
Company which, in the reasonable opinion of the Company, should not be
disclosed. Under the Option Agreement, each of Fluor Daniel and the Company
agree to indemnify the other for all losses, claims, damages, liabilities and
expenses arising out of statements or omissions of the other contained in any
registration statement (and related prospectus).
Pursuant to the Investment Agreement the Company filed an Amended and Restated
Certificate of Incorporation on May 10, 1996, which amended Article FOURTH of
the Company's Restated Certificate of Incorporation to authorize 25,000,000
shares of New Common Stock and establish the terms thereof and to effect the
conversion of each outstanding share of Common Stock into the right to receive
$8.62 in cash and .5274 of a share of New Common Stock pursuant to the
Transaction. Under Article FOURTH the rights, preferences, privileges and
restrictions of the New Common Stock are identical in all respects to those of
the Common Stock, except the par value of the New Common Stock is $.001 per
share. In addition, the Company's Restated Certificate of Incorporation amended
(a) Article FIRST to change the Company's name to "Fluor Daniel GTI, Inc.", (b)
Article THIRD to maximize the legally permissible purposes of the Company under
Delaware Law and (c) to delete Article SIXTH, which contained provisions
regarding a classified board of directors.
Pursuant to the Investment Agreement, the Company's stockholders approved on May
10, 1996, certain amendments to the Company's Bylaws to, among other things,
amend Article 2 (Meeting of Shareholders), Article 3 (Directors), Article 4
(Meeting of the Board of Directors), Article 7 (Officers), Article 8
(Resignations, Removals and Vacancies) and Article 15 (Amendments). Amended
Article 2 of the Bylaws provides that special meetings of the stockholders may
be called only upon the written request of the majority of directors then in
office. Amended Article 3 of the Bylaws set the size of the Board of Directors
at no more than seven members and eliminates the provision allowing enlargement
of the Board by a majority vote of the Board or by affirmative vote of
two-thirds of the outstanding shares entitled to vote in the election of the
directors. Article 3 has also been amended to eliminate the classified board of
directors, such that the term of office of each director shall expire at the
next annual meeting of shareholders. Amended Article 4 of the Bylaws specifies
that a quorum of the Board for the transaction of business shall be a majority
of the Board, except as otherwise provided in the Amended and Restated
Certificate of Incorporation or the Bylaws. Amended Article 7 of the Bylaws
specifies that the Board shall have a Chairman of the Board who shall preside at
all meetings of the stockholders and of the Board of Directors. Amended Article
8 of the Bylaws provides that any or all directors may be
Page 13 of ____
<PAGE>
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, unless otherwise specified by law
or the Amended and Restated Certificate of Incorporation. Amended Article 8 also
eliminates provisions relating to the classified board structure to conform to
amended Article 3. Amended Article 15 of the Bylaws provides that the Bylaws may
be altered, amended or repealed, or new Bylaws adopted, by the stockholders or
by a majority of the full Board of Directors (whether or not present at a
meeting). The Bylaws were also amended throughout to reflect the change in the
Company's name to "Fluor Daniel GTI, Inc." and to reference the Amended and
Restated Certificate of Incorporation rather than the Restated Certificate of
Incorporation.
Pursuant to the Investment Agreement, the Amended Bylaws provide for a Board of
Directors with no more than seven members, with each director to service until
the next annual meeting of stockholders and until his or her successor is
elected and qualified or his or her early resignation or removal. As of May 10,
1996 the directors of the Company are as follows: Walter C. Barber, former
Chairman, President and Chief Executive Officer of the Company; Alan S. Bufferd
and Robert P. Schechter, formerly independent directors of the Company; David L.
Myers, J. Michal Conaway and James C. Stein, who are members of Fluor
Management; and Ernie Green, an independent director designated by Fluor. In
addition, three new vice presidents of the Company were elected, Rhonnie Smith,
John Wood and Don Stokely, all former members of FDESI management.
Except as described herein and more fully set forth in the Option Agreement and
the Investment Agreement, neither Fluor Daniel, FD Engineers nor Fluor presently
have any plans or proposals which relate to or would result in: (a) the
acquisition of additional securities, or disposition of securities, of the
Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(c) the sale or transfer of a material amount of assets of the Company or any of
its subsidiaries; (d) any change in the present Board of Directors or management
of the Company, including any plans or proposals to change the number or term of
directors or fill any existing vacancies on the board; (e) any material change
in the present capitalization or dividend policy of the insured; (f) any other
material change in the Company's business or corporate structure; (g) changes in
the Company's charter, bylaws or instruments corresponding thereto or any
actions which may impede the acquisition of control of the Company by any
person; (h) causing any class of securities of the Company be delisted from a
national securities exchange or cease being authorized to be quoted in a deal of
quotation of a registered national securities association; (i) a class of
equities
Page 14 of _____
<PAGE>
securities of the Company becoming eligible for termination of registration
pursuant to Section 12(g)(iv) of the Act; or (j) any similar action in any of
those numerated above.
Each of Fluor Daniel, FD Engineers and Fluor intends to continually review the
Company's business affairs and financial position, as well as conditions in the
securities markets and general economic and industry conditions. Based on such
evaluation and review and subject to the investment and disposition limitations
contained in the Investment Agreement described in Item 6 below, each of Fluor
Daniel, FD Engineers and Fluor will continue to consider various alternative
courses of action and will in the future take such action with respect to the
Company as it deems appropriate in light of circumstances existing from time to
time. Such actions may include, but are not limited to, purchasing additional
shares of New Common Stock of the Company, either in the open market or in
privately negotiated transactions, or selling its shares of New Common Stock,
either in the open market or in privately negotiated transactions. The foregoing
actions may be taken by each of Fluor Daniel, FD Engineers and Fluor alone, or
with other persons. Notwithstanding the foregoing, Fluor Daniel, FD Engineers
and Fluor's purchase of additional shares of New Common Stock of the Company and
transfer of the New Common Stock are subject to certain restrictions contained
in the Investment Agreement, as more particularly described in Item 6 below.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) As of May 10, 1996, Fluor Daniel was the record owner of 4,400,000 shares
of New Common Stock, which represents 54.5% of the Company's outstanding New
Common Stock, based upon 8,077,288 outstanding shares (before taking into
account the payment of cash in respect of fractional shares in the Company
recapitalization) as reported by the Company to Fluor Daniel on May 10, 1996.
(b) FD Engineers shares the power, in its capacity as the only parent of Fluor
Daniel, to direct the vote and direct the disposition of the New Common Stock
directly owned by Fluor Daniel. Fluor shares the power, in its capacity as the
only parent of FD Engineers, to direct the vote and direct the disposition of
the New Common Stock directly owned by Fluor Daniel.
(c) Fluor Daniel received its shares of New Common Stock on May 10, 1996, as a
result of the acquisition of the New Common Stock from the Company in accordance
with the Investment Agreement.
Page 15 of _____
<PAGE>
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
----------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
As discussed in Items 3 and 4 above, Fluor Daniel and the Company are parties to
the Option Agreement, which is incorporated herein by reference.
The Marketing Agreement dated as of May 10, 1996 between Fluor Daniel and the
Company (the "Marketing Agreement"), a copy of which is attached as Exhibit 4,
---------
sets forth the understanding of the Company and Fluor Daniel with respect to
their arrangement (a) to work together to approach the environmental services
market, (b) for Fluor Daniel to use the Company's services in connection with
Fluor Daniel's engineering and construction business, and (c) to provide, on an
intercompany basis, support services to each other. Fluor Daniel will continue
to provide its customers with engineering and construction services, as well as
certain environmental services, such as Department of Energy Management and
Operations, Operating and Management, Management and Integration services and
so-called "Total Business Solutions" services. Total Business Solutions services
are differentiated from the environmental services that will continue to be
provided by the Company in that they involve an integration of such services
with substantial non-environmental services or involve a substantial increase in
the scale and scope of services previously provided by the Company. The Company
will continue to provide environmental assessment, remediation and monitoring
services.
The Marketing Agreement provides that the Company will have primary
responsibility for the marketing and execution of environmental services and
Fluor Daniel will have primary responsibility for marketing and execution of
Total Business Solutions services. Fluor Daniel will promote the use of the
Company, and will retain the Company on a sole-source basis, for environmental
services that are related or incidental to Fluor Daniel's engineering and
construction business and Total Business Solutions business, provided that use
of the Company is acceptable to the customer, the Company has adequate available
personnel and other resources to timely and satisfactorily perform the work and
the Company's proposed commercial terms are competitive with the market. In
addition, the Company and Fluor Daniel will provide overhead support and
contract support services to each other on an intercompany basis. The Company
will use the
Page 16 of _____
<PAGE>
name "Fluor Daniel GTI, Inc." during the term of the Marketing Agreement, and
subsidiaries of the Company may also use a similar name if the parties decide it
is useful in marketing the operations of the Company's subsidiaries.
The term of the Marketing Arrangement is ten years from the closing of the
Transaction unless further extended by the parties. In the event Fluor Daniel
ceases to own at least 20% of the issued and outstanding equity of the Company,
then (a) Fluor Daniel, provided it is not in breach of its obligations pursuant
to Section 6.2(d) of the Investment Agreement (with respect to dispositions of
New Common Stock held by it), or the Company may terminate the Marketing
Agreement prior to expiration of the term; and (b) Fluor Daniel, pursuant to
Section 7.9 of the Investment Agreement, may revoke the license of the Company
and its subsidiaries to use the name "Fluor Daniel" in the Company's corporate
name.
The Investment Agreement sets forth restrictions on Fluor Daniel in connection
with certain transactions between Fluor Daniel and the Company, and in
connection with the acquisition, disposition and voting of its shares of New
Common Stock. These restrictions are summarized below:
Material Contracts. From May 10, 1996 until April 30, 1999, neither Fluor
Daniel nor its affiliates will be permitted to enter into any contract, with the
Company or any of its affiliates that is material to the Company's business as a
whole without the prior approval of a majority of the Independent Directors (as
defined below), other than any contract, agreement or transaction (a)
contemplated by the Marketing Agreement or the Option Agreement, (b) entered
into between the parties in the ordinary course of business or (c) governed by
the other restrictive provisions described below.
Acquisition of Securities. Until April 30, 1999, neither Fluor Daniel nor
its affiliates will be permitted to purchase or otherwise acquire any New Common
Stock, securities of the Company convertible into or exchangeable for New Common
Stock or options, rights, warrants and similar securities issued by the Company
to acquire New Common Stock, without the prior approval of a majority of the
Independent Directors, unless immediately after such purchase or acquisition,
the percentage of then outstanding New Common Stock that would be owned of
record or beneficially by Fluor Daniel and its affiliates ("Fluor's Percentage")
would not exceed 65%. The foregoing restrictions on purchases will not apply to
the exercise by Fluor Daniel of the Option, but if the Option is exercised by
Fluor Daniel, the Options Shares held by Fluor Daniel
Page 17 of _____
<PAGE>
will be counted in any determination of Fluor's Percentage with respect to any
purchases by Fluor Daniel or its affiliates after the date of such exercise.
Transfer of Securities. Until April 30, 1999, Fluor Daniel will not be
----------------------
permitted to sell, transfer, mortgage or otherwise dispose of any shares of New
Common Stock held by it without the prior approval of a majority of the
Independent Directors. The prior approval of the Independent Directors will not
be required, however, if there occurs a substantial and extreme adverse change
in the business, projects, or condition (financial or otherwise) of the Company
that arises from corresponding substantial adverse changes of expected long term
duration in the market for environmental services.
Board of Directors; Voting. Until April 30, 1999, Fluor Daniel will be
--------------------------
required to vote all shares of New Common Stock owned by it in favor of fixing
the size of the Board of Directors of the Company at not more than seven and in
favor of not less than three Independent Directors. Until the annual
stockholders' meeting of the Company (or written consent in lieu thereof) held
in 1998, Fluor Daniel is required to vote all shares of New Common Stock owned
by it in favor of Allan S. Bufferd an Robert P. Schechter (whom Fluor Daniel
will also cause to be nominated) in any election of members of the Company's
Board of Directors.
In addition, after May 10, 1996, and until April 30, 1999, the Company is
prohibited from taking the actions described below.
Repurchase of New Common Stock. Without the prior approval of a majority
------------------------------
of the Independent Directors, the Company will not be permitted to purchase any
shares of New Common Stock unless immediately after such repurchase, Fluor
Daniel's Percentage would not exceed 65%.
Amendment of Agreements. Without the prior approval of a majority of the
-----------------------
Independent Directors, the Company will not be permitted to enter into any
amendment or terminate or waive any provision of the Investment Agreement, the
Option Agreement or the Marketing Agreement.
Definition of "Independent Director." For purposes of the Investment
-------------------------------------
Agreement, an "Independent Director" is defined as a director of the Company who
is not (apart from such directorship) (i) an officer, affiliate, employee,
principal stockholder, consultant or partner of Fluor Daniel or any affiliate of
Fluor Daniel or of any entity that was dependent upon Fluor Daniel or any
affiliate of Fluor Daniel for more than 3% of its revenues or earnings in its
most recent
Page 18 of _____
<PAGE>
fiscal year, (ii) an officer, employee, principal stockholder, consultant or
partner of any entity that was dependent upon the Company or any affiliate of
the Company for more than 3% of its revenues or earnings in its most recent
fiscal year (unless agreed to in writing by Fluor Daniel) or (iii) an officer,
director, employee, principal stockholder, consultant or partner of a person
that is a competitor of Fluor Daniel or any of its affiliates (unless agreed
to in writing by Fluor Daniel) or of the Company or any of its affiliates.
Item 7. Material to be Filed as Exhibits.
---------------------------------
Fluor Daniel, FD Engineers and Fluor file as Exhibits the following:
Exhibit 1. Joint Reporting Agreement between Fluor Daniel, FD Engineers and
Fluor.
Exhibit 2. Investment Agreement dated as of December 11, 1995 by and among
Fluor Daniel, FDESI, the Company and Newco.
Exhibit 3. Stock Option Agreement dated as of December 11, 1995 between Fluor
Daniel and the Company.
Exhibit 4. Marketing Agreement dated as of May 10, 1996 between Fluor Daniel
and the Company.
Page 19 of _____
<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
correct.
Dated: May 20, 1996
Fluor Corporation Fluor Daniel, Inc.
By: /s/ Lawrence N. Fisher By: /s/ Lawrence N. Fisher
------------------------------- -----------------------------------
Lawrence N. Fisher, Senior Vice Lawrence N. Fisher, Vice President-
President-Law & Secretary Law & Secretary
FD Engineers & Constructors, Inc.
By: /s/ Lawrence N. Fisher
-----------------------------------
Lawrence N. Fisher, Secretary
Page 20 of ____
<PAGE>
JOINT REPORTING AGREEMENT
In consideration of the mutual covenants herein contained, each of the
parties hereto represents to and agrees with the other party as follows:
1. Such party is eligible to file a statement on Schedule 13D pertaining
to the common stock, par value $.001 per share, of Fluor Daniel GTI, Inc. to
which this agreement is an exhibit, for the filing of the information contained
therein.
2. Such party is responsible for timely filing of such statement and any
amendments thereto, and for the completeness and accuracy of the information
concerning such party contained therein; provided that no such party is
responsible for the completeness or accuracy of the information concerning the
other party making the filing, unless such party knows or has reason to believe
that such information is inaccurate.
3. Such party agrees that such statement is filed by and on behalf of each
such party and that any amendment thereto will be filed on behalf of each such
party.
This agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original instrument, but all of such counterparts
together shall constitute but one agreement.
Dated: May 20, 1996
FD Engineers & Constructors, Inc. Fluor Corporation
By: /s/ Lawrence N. Fisher By: /s/ Lawrence N. Fisher
----------------------------- -------------------------------
Lawrence N. Fisher, Secretary Lawrence N. Fisher, Senior Vice
President-Law & Secretary
Fluor Daniel, Inc.
By: /s/ Lawrence N. Fisher
---------------------------------
Lawrence N. Fisher, Vice President-
Law & Secretary
EXHIBIT 1
<PAGE>
INVESTMENT AGREEMENT
DATED AS OF DECEMBER 11, 1995
BY AND AMONG
FLUOR DANIEL, INC.,
FLUOR DANIEL ENVIRONMENTAL SERVICES, INC.,
GROUNDWATER TECHNOLOGY, INC.
AND
GTI ACQUISITION CORPORATION
EXHIBIT 2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Article I - The Plan of Recapitalization............................... 2
Section 1.1 The Recapitalization............................... 2
Section 1.2 Filing............................................. 2
Section 1.3 Conversion......................................... 3
Section 1.4 No Post-Closing Transfers.......................... 3
Section 1.5 Surrender of Certificates.......................... 3
Section 1.6 Exchange Agent..................................... 4
Article II - The Merger................................................ 5
Section 2.1 The Merger......................................... 5
Section 2.2 Effective Time..................................... 6
Section 2.3 Effects of the Merger.............................. 6
Section 2.4 Obligation to Transfer Funds to the Company........ 7
Section 2.5 Further Assurances................................. 7
Section 2.6 Articles of Incorporation and By-laws.............. 7
Section 2.7 Directors.......................................... 8
Section 2.8 Officers........................................... 8
Section 2.9 Closing; Closing Date.............................. 8
Article III - Representations and Warranties of the Company............ 8
Section 3.1 Corporate Existence and Power...................... 9
Section 3.2 Corporate Authorization............................ 9
Section 3.3 Governmental Authorization......................... 11
Section 3.4 Non-Contravention.................................. 11
Section 3.5 Capitalization..................................... 12
Section 3.6 Joint Ventures; Subsidiaries....................... 13
Section 3.7 SEC Filings........................................ 14
Section 3.8 Financial Statements............................... 14
Section 3.9 Disclosure Documents............................... 15
Section 3.10 Operations of the Company.......................... 16
Section 3.11 Litigation......................................... 17
Section 3.12 Taxes.............................................. 18
Section 3.13 Employee Benefit Plans............................. 18
Section 3.14 Compliance with Laws............................... 20
Section 3.15 Opinion of Financial Advisor....................... 21
Section 3.16 Intellectual Property.............................. 21
Section 3.17 Contracts and Other Agreements..................... 21
Section 3.18 Properties......................................... 22
Section 3.19 Environmental Matters.............................. 23
Section 3.20 Confidentiality Agreements......................... 24
Section 3.21 Disclosure......................................... 24
Article IV - Representations and Warranties of Holdings................ 24
Section 4.1 Corporate Existence and Power...................... 25
Section 4.2 Corporate Authorization............................ 25
Section 4.3 Governmental Authorization......................... 26
Section 4.4 Non-Contravention.................................. 26
Section 4.5 Capitalization of FDESI............................ 26
Section 4.6 FDESI Joint Ventures............................... 27
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 4.7 FDESI Financial Statements....................... 27
Section 4.8 Disclosure Documents............................. 28
Section 4.9 Operations of FDESI.............................. 28
Section 4.10 Litigation of FDESI.............................. 30
Section 4.11 Taxes of FDESI................................... 30
Section 4.12 Properties of FDESI.............................. 30
Section 4.13 FDESI Contract List.............................. 31
Section 4.14 Purchase for Investment; Legend.................. 32
Section 4.15 Employees and Employee Benefit Plans............. 33
Section 4.16 Compliance with Laws............................. 35
Section 4.17 Intellectual Property............................ 35
Section 4.18 Contracts and Other Agreements................... 35
Section 4.19 Properties....................................... 36
Section 4.20 Confidentiality Agreements....................... 37
Section 4.21 FDESI Disclosure................................. 37
Article V - Covenants of the Company.................................... 37
Section 5.1 Conduct of the Business.......................... 37
Section 5.2 Stockholder Meeting; Proxy Material.............. 40
Section 5.3 Access to Information............................ 40
Section 5.4 No Solicitation of Other Offers.................. 41
Section 5.5 Board of Directors and Officers.................. 43
Section 5.6 Amendments to Certificate of
Incorporation and By-laws...................... 43
Section 5.7 Stock Options.................................... 43
Section 5.8 Update to Opinion of Financial Advisor........... 44
Article VI - Covenants of Holdings and FDESI............................ 44
Section 6.1 Conduct of FDESI Business........................ 44
Section 6.2 Access to Information............................ 47
Section 6.3 Certain Additional Agreements of Holdings........ 47
Section 6.4 Holdings Debt.................................... 49
Section 6.5 Tax Indemnification.............................. 49
Section 6.6 Termination of Tax-Sharing Agreements............ 49
Section 6.7 Contract Indemnification......................... 50
Article VII - Covenants of Holdings and the Company..................... 50
Section 7.1 Reasonable Efforts............................... 50
Section 7.2 Certain Filings.................................. 50
Section 7.3 Public Announcements............................. 50
Section 7.4 Marketing Agreement.............................. 51
Section 7.5 Brokers or Finders............................... 51
Section 7.6 Notices of Certain Events........................ 51
Section 7.7 Post-Closing Tax Matters......................... 51
Section 7.8 FDESI Employee Benefits.......................... 52
Section 7.9 Use of Fluor Daniel Name......................... 52
Section 7.10 Non-Permitted Actions............................ 53
Article VIII - Conditions to the Closing............................... 53
Section 8.1 Conditions to the Obligations
of Each Party.................................. 53
Section 8.2 Conditions to the Obligations of Holdings........ 54
Section 8.3 Conditions to the Obligations of the Company..... 55
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Article IX - Termination................................................ 57
Section 9.1 Termination........................................ 57
Section 9.2 Effect of Termination.............................. 58
Article X - Miscellaneous............................................... 58
Section 10.1 Notices............................................ 58
Section 10.2 Non-Survival of Representations,
Warranties and Covenants; Indemnification.......... 60
Section 10.3 Amendments; No Waivers............................. 60
Section 10.4 Fees and Expenses.................................. 60
Section 10.5 Successor and Assigns.............................. 61
Section 10.6 Entire Agreement................................... 62
Section 10.7 Governing Law...................................... 62
Section 10.8 Counterparts; Effectiveness........................ 62
Section 10.9 Severability....................................... 62
Section 10.10 "To Knowledge"..................................... 62
</TABLE>
Exhibit A - Amended and Restated Certificate of Incorporation
Exhibit B - Amendments to the By-laws
Exhibit C - Marketing Agreement
iii
<PAGE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION PAGE
- ---------------------------------- -------------- ----
<S> <C> <C>
Acquired Shares................... Recitals... 1
Acquisition Proposal.............. 5.4(b)..... 38
Acquisition Transaction........... 5.4(b)..... 38
Adjusted Option................... 5.7........ 43
Adjustment Fraction............... 5.7........ 43
Affiliate......................... 3.17(c).... 21
Agreement......................... Recitals... 1
Agreement of Merger............... 2.2........ 6
Balance Sheet..................... 3.8........ 15
Balance Sheet Date................ 3.8........ 15
Board of Directors................ 3.1........ 9
By-law Amendments................. Recitals... 2
California Code................... 2.1........ 5
Charter Amendments................ Recitals... 2
Closing........................... 2.8........ 8
Closing Date...................... 2.8........ 8
Code.............................. 3.12....... 15
Commonly Controlled Entity........ 3.13(a).... 16
Company........................... Recitals... 1
Company 8-K's..................... 3.7(a)..... 14
Company 10-K's.................... 3.7(a)..... 14
Company 10-Q...................... 3.7(a)..... 14
Company Contract Backlog.......... 3.22....... 23
Company Deposit................... 1.6........ 4
Company Disclosure Documents...... 3.9(a)..... 15
Company Disclosure Letter......... Article III 8
Company Material Adverse Change... 3.10(a).... 16
Company Material Adverse Effect... 3.1........ 9
Company Proxy Statement........... 3.9(a)..... 15
Company Securities................ 3.5........ 12
Company Stockholder Meeting....... 5.2(a)..... 6
Constituent Corporations.......... 2.3(d)..... 4
Control........................... 3.17(c).... 21
Current Market Price.............. 5.7........ 43
Delaware Law...................... 1.1........ 2
Director Stock Options............ 3.5........ 12
Director Stock Option Plan........ 3.5........ 12
Effective Time of the Merger...... 2.2........ 6
Employee Stock Options............ 3.5........ 12
Employee Stock Option Plans....... 3.5........ 12
Environmental Laws................ 3.19(a).... 22
ERISA............................. 3.13(a).... 16
Exchange Act...................... 3.2........ 9
Exchange Agent.................... 1.5(a)..... 3
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION PAGE
- ---------------------------------- ----------- ----
<S> <C> <C>
FDESI............................. Recitals... 1
FDESI Balance Sheet............... 4.7........ 27
FDESI Balance Sheet Date.......... 4.7........ 27
FDESI Common Stock................ 2.3........ 6
FDESI Contract Backlog............ 4.13....... 31
FDESI Customer Contract........... 4.13....... 32
FDESI Deposit..................... 1.6........ 4
FDESI Disclosure Letter........... Article IV. 24
FDESI Employees................... 4.15(i).... 33
FDESI Financials.................. 4.7........ 27
FDESI Joint Venture............... 4.6........ 26
FDESI Joint Venture Agreements.... 4.6........ 26
FDESI Material Adverse Change..... 4.9(a)..... 28
FDESI Material Adverse Effect..... 4.1........ 25
FDESI Securities.................. 4.5........ 26
Financials........................ 3.8........ 15
GAAP.............................. 3.8........ 15
Governmental Entity............... 3.8........ 15
Governmental Entity............... 3.3........ 11
Hazardous Substance............... 3.19(a).... 24
Holdings.......................... Recitals... 1
Holdings Percentage............... 6.3........ 47
HSR Act........................... 3.3........ 11
Indebtedness...................... 3.17(b).... 20
Independent Director.............. 6.3........
Intellectual Property Rights...... 3.16(a).... 18
Interim Balance Sheet............. 3.8........ 15
Interim Balance Sheet Date........ 3.8........ 15
Interim Financials................ 3.8........ 15
Joint Venture..................... 3.6........ 13
Joint Venture Agreements.......... 3.6........ 13
License Rights.................... 3.16(a).... 18
Lien.............................. 3.4........ 11
Marketing Agreement............... 3.2........ 9
Merger............................ Recitals... 1
Merger Consideration.............. 2.3(c)..... 6
Multiple Employer Plan............ 3.13(d).... 19
Name Change....................... Recitals... 1
Newco............................. Recitals... 1
New Common Stock.................. Recitals... 1
NLRA.............................. 3.13(h).... 17
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION PAGE
- --------------------------------- ----------- ----
<S> <C> <C>
Old Common Stock................. Recitals... 1
Option........................... Recitals... 2
Option Agreement................. Recitals... 1
Option Shares.................... Recitals... 2
Outstanding Old Common Stock..... 1.6........ 4
Parachute Payment................ 3.13(f).... 17
Patents.......................... 3.16(a).... 18
Payment Agreement................ 1.6........ 4
Payment Fund..................... 1.6........ 4
Pension Plan..................... 3.13(d).... 16
Permit........................... 3.4........ 11
Plan............................. 3.13(a).... 16
Prohibited Transaction........... 3.13(b).... 16
Recapitalization................. Recitals... 1
Recapitalization Consideration... 1.3(a)..... 3
Recapitalization Payment......... 1.3(a)..... 3
Recapitalization Shares.......... 1.3(a)..... 3
SEC.............................. 3.7(a)..... 14
SEC Reports...................... 3.7(a)..... 14
Securities Act................... 3.7(a)..... 14
Standstill Period................ 6.3........ 47
Subsidiary....................... 3.1........ 9
Surviving Corporation............ 2.1........ 5
Tasks............................ 4.13....... 32
Tax.............................. 3.12....... 15
Termination Fee.................. 10.4(b).... 51
Trademarks....................... 3.16(a).... 18
Transactions..................... Recitals... 2
WARN............................. 3.13(g).... 17
Welfare Plan..................... 3.13(e).... 17
</TABLE>
vi
<PAGE>
INVESTMENT AGREEMENT
--------------------
THIS INVESTMENT AGREEMENT, dated as of December 11, 1995 (this "Agreement"),
is made and entered into by and among Groundwater Technology, Inc., a Delaware
corporation (the "Company"), GTI Acquisition Corporation, a California
corporation and a wholly owned subsidiary of the Company ("Newco"), Fluor
Daniel, Inc., a California corporation ("Holdings"), and Fluor Daniel
Environmental Services, Inc., a California corporation and a wholly owned
subsidiary of Holdings ("FDESI").
WHEREAS, Holdings desires to make an equity investment in the Company and the
parties desire to enter into other arrangements to further cooperation between
the Company and Holdings in certain business matters;
WHEREAS, in furtherance of the foregoing, Holdings desires to acquire from the
Company, and the Company desires to issue to Holdings, 4,400,000 newly issued
shares (the "Acquired Shares") of a newly authorized class of the Company's
common stock, par value $.001 per share (the "New Common Stock");
WHEREAS, the acquisition of the Acquired Shares by Holdings will be
accomplished by the merger of FDESI with Newco, with FDESI to survive such
merger as a wholly owned subsidiary of the Company (the "Merger"), and Holdings
to receive the Acquired Shares as a result of the Merger; on the terms and
subject to the conditions contained herein;
WHEREAS, the Board of Directors of the Company deems it advisable and in the
best interests of its stockholders to implement, in conjunction with the Merger,
a plan of recapitalization (the "Recapitalization") pursuant to which each share
of common stock, par value $.01 per share, of the Company (the "Old Common
Stock") outstanding on the Closing Date (as defined in Section 2.9) will be
reclassified, cancelled and converted into the right to receive .5274 shares of
New Common Stock and $8.62 in cash, all as more specifically set forth herein;
WHEREAS, to emphasize the close relationship of Holdings and the Company after
the Merger, at the completion of the transactions contemplated hereby, upon the
consummation of such transactions, the Company will change its name to "Fluor
Daniel/GTI, Inc." (the "Name Change");
1
<PAGE>
WHEREAS, concurrently with the execution and delivery of this Agreement,
Holdings and the Company are entering into a stock option agreement (the "Option
Agreement"), pursuant to which Holdings will purchase from the Company for a
cash payment of $1,650,000, and the Company will sell to Holdings on the date
hereof, an option (the "Option") to purchase up to an additional 1,366,000
shares of New Common Stock, as adjusted pursuant to the Option Agreement, or, if
exercised before the Closing in certain circumstances, Old Common Stock (the
"Option Shares"), on the terms and conditions set forth in the Option Agreement;
WHEREAS, the Board of Directors of the Company has approved this Investment
Agreement and the transactions contemplated hereby and resolved to recommend
that the stockholders of the Company approve the Merger, the Recapitalization
and the other transactions contemplated hereby, including the adoption of the
Amended and Restated Certificate of Incorporation (the "Charter Amendments"),
and amendments to the By-laws (the "By-law Amendments") of the Company set forth
in Exhibit "A" and Exhibit "B" hereof, (collectively, the "Transactions").
----------- -----------
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE PLAN OF RECAPITALIZATION
Section 1.1 The Recapitalization. Upon the terms and conditions hereinafter
set forth and in accordance with the General Corporation Law of the State of
Delaware (the "Delaware Law"), as of the Closing Date (as defined in Section
2.9), (i) the outstanding capital stock of the Company shall be reclassified in
accordance with the Charter Amendments and the stockholders of record of the
Company on the Closing Date shall be entitled to receive the Recapitalization
Consideration (as defined in Section 1.3); and (ii) the name of the Company will
be changed to "Fluor Daniel/GTI, Inc."
Section 1.2 Filing. On the Closing Date, subject to the satisfaction or
waiver of the conditions set forth in Article VIII, other than the condition set
forth in Section 8.1, paragraph (a) which may not be waived, and conditions set
forth in Section 8.2, paragraph (f) and Section 8.3, paragraph (b), the Company
shall cause the Charter Amendments to be executed and filed with the Secretary
of State of Delaware in accordance with Sections 242 and 103 of the Delaware
Law.
2
<PAGE>
Section 1.3 Conversion. At the Closing Date, by virtue of the
Recapitalization and without any action on the part of the holders thereof:
(a) Each issued and outstanding share of the Old Common Stock, other than
shares of Old Common Stock held in the treasury of the Company, shall be
reclassified and automatically converted into the right to receive consideration
per share consisting of .5274 of a share of the New Common Stock (the
"Recapitalization Shares") and $8.62 in cash without interest (the
"Recapitalization Payment," and collectively with the Recapitalization Shares,
the "Recapitalization Consideration").
(b) All shares of Old Common Stock which are held by the Company as
treasury shares shall be canceled and retired and cease to exist, without any
conversion thereof or payment with respect thereto.
(c) No fraction of a share of New Common Stock will be issued in the
Recapitalization, but, in lieu thereof, each holder of Old Common Stock who
would otherwise be entitled to a fraction of a share of New Common Stock (after
aggregating all fractional shares of New Common Stock to be received by the
holder) will be entitled to receive from the Company an amount of cash (rounded
to the nearest whole cent) equal to the product of (i) the fraction multiplied
by (ii) the average of the closing price of the Old Common Stock on the NASDAQ
National Market for the five days immediately prior to the Closing Date.
Section 1.4 No Post-Closing Transfers. No transfer of shares of Old Common
Stock of the Company shall be made from and after the Closing. If, after the
Closing Date, certificates previously representing shares of Old Common Stock
are presented to the Company or the Exchange Agent (as defined in Section 1.5),
they shall be canceled and exchanged for the Recapitalization Consideration as
provided in Section 1.3.
Section 1.5 Surrender of Certificates. From and after the Closing Date,
Boston EquiServ or such other bank and trust company as the Company, at least
five days prior to the mailing of the Company Proxy Statement (as defined in
Section 3.9), shall designate and Holdings shall approve (which approval shall
not be unreasonably withheld), shall act as exchange agent (the "Exchange
Agent") in effecting the reclassification by the exchange for cash and New
Common Stock of certificates that, prior to the Closing Date, represented shares
of Old Common Stock entitled to payment in cash and New Common Stock pursuant to
Section 1.3(a). As soon as practicable after the Closing Date, the Exchange
Agent shall send a notice and transmittal form to each holder of record of Old
Common
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Stock immediately prior to the Closing Date advising such holder of the
effectiveness of the Recapitalization and the procedure for surrendering to the
Exchange Agent (who may appoint forwarding agents with the approval of the
Company) the certificate or certificates to be exchanged pursuant to the
Recapitalization. Upon the surrender for exchange of such a certificate,
together with such letter of transmittal duly completed and properly executed in
accordance with instructions thereto and such other documents as may be required
pursuant to such instructions, the holder shall be paid promptly, without
interest thereon and subject to any required withholding of taxes, the amount of
cash and New Common Stock to which such holder is entitled hereunder, and such
certificate shall forthwith be canceled. Until so surrendered and exchanged,
each certificate which immediately prior to the Closing Date represented
outstanding shares of the Old Common Stock shall represent solely the right to
receive the cash and New Common Stock into which the Old Common Stock it
theretofore represented shall have been converted pursuant to Section 1.3(a),
subject to any required withholding of taxes. If any payment for Old Common
Stock is to be made to a person other than the person in whose name the
certificates for such shares surrendered is registered, it shall be a condition
of the exchange that the person requesting such exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the delivery of
such check to a person other than the registered owner of the certificate
surrendered or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable.
Section 1.6 Exchange Agent. Prior to the Closing Date, the Company and FDESI
shall enter into an agreement (the "Payment Agreement") with the Exchange Agent.
Immediately prior to the filing of the Charter Amendments, Holdings shall
deposit or cause FDESI to be deposited with the Exchange Agent (the "FDESI
Deposit") in trust for the benefit of stockholders of the Company, cash in the
amount of $33,350,000, and the Company shall deposit or cause to be deposited
with the Exchange Agent (the "Company Deposit") in trust for the benefit of the
stockholders of the Company cash in an aggregate amount equal to the amount
determined by subtracting the FDESI Deposit from the product obtained by
multiplying (i) the number of shares of Old Common Stock outstanding immediately
prior to the Closing Date (the "Outstanding Old Common Stock") by (ii) the
Recapitalization Payment. The deposits made by FDESI and the Company pursuant
to the preceding sentence is hereinafter referred to as the "Payment Fund." The
Payment Agreement shall provide, among other things, that (a) the Exchange Agent
shall maintain the Payment Fund as a separate fund to be held for the benefit of
the holders of the Old Common Stock of the Company, which shall be promptly
applied by the Exchange Agent to making the payments provided for in Section
1.5, (b) any portion of the Payment Fund that has not been paid to holders of
the Old Common Stock pursuant to Section 1.5 prior to that date which is six
months from the Closing Date shall be paid to the
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Company, and any holders of Old Common Stock who shall not have theretofore
complied with Section 1.5 shall thereafter look only to the Company for payment
of the amount of cash and securities to which they are entitled under this
Agreement, (c) the Payment Fund shall not be used for any purpose that is not
provided for herein, (d) the Exchange Agent may invest, if so directed by the
Company, the cash portion of the Payment Fund in obligations of the United
States government or any agency or instrumentality thereof, or in obligations
that are guaranteed or insured by the United States government or any agency or
instrumentality thereof, (e) any net profit resulting from, or interest or
income produced by, such investments shall be payable to the Company on demand,
(f) the Exchange Agent shall make payment of the Recapitalization Consideration,
to any holder who validly delivers at least 100,000 shares of Old Common Stock
in the Recapitalization on or after the Closing Date, by wire transfer of the
Recapitalization Payment to such holder within one business day of the later of
the Closing Date or the date of such delivery, and by transmittal of the
Recapitalization Shares by overnight courier, insured, on the next business day
after the later of the Closing Date or the date of such delivery and (g) all
expenses of the Exchange Agent shall be paid directly by the Company. Promptly
following the date which is six months from the Closing Date, the Exchange Agent
shall return to the Company all cash, securities and any other instruments in
its possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate formerly representing Old Common Stock may surrender such
certificate to the Company and (subject to applicable abandoned property,
escheat and similar laws) receive in exchange therefor the consideration payable
in respect thereto pursuant to Section 1.3(a) hereof, without interest, but
shall have no greater rights against the Company than may be accorded to general
creditors of the Company under the Delaware Law.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the California Corporations Code
(the "California Code"), Newco shall be merged with and into FDESI at the
Effective Time of the Merger (as defined in Section 2.2). Following the Merger,
the separate corporate existence of Newco shall cease and FDESI shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Newco in accordance with the
California Code.
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Section 2.2 Effective Time. As soon as practicable following the filing of
Charter Amendments and the satisfaction or waiver of the conditions set forth in
Article VIII, except the condition set forth in Section 8.3, paragraph (b), the
parties shall file an agreement of merger or other appropriate documents (in any
such case, the "Agreement of Merger") executed in accordance with the relevant
provisions of the California Code and shall make all other filings or recordings
required under the California Code. The Merger shall become effective at such
time as the Agreement of Merger is duly filed with the California Secretary of
State, notwithstanding that evidence of the acceptance of such filing might not
have been received on the filing date, or at such other time as Newco and FDESI
shall agree should be specified in the Agreement of Merger (the time the Merger
becomes effective being the "Effective Time of the Merger").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
forth in Section 1107 of the California Code. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of the shares of common stock, no par value, of FDESI ("FDESI Common Stock") or
any shares of capital stock of Newco:
(a) Capital Stock of Newco. Each issued and outstanding share of the
capital stock of Newco shall be converted into and become one fully paid and
nonassessable shares of common stock, no par value, of the Surviving
Corporation.
(b) Treasury Stock. No shares of FDESI Common Stock are owned by FDESI.
(c) Conversion of FDESI Common Stock. Each of the 1,000 issued and
outstanding shares of FDESI Common Stock shall be converted into the right to
receive from the Company 4,400 shares of New Common Stock of the Company (the
"Merger Consideration"), which shall be payable promptly upon the surrender of
the certificate representing such share at the Closing (as hereinafter defined)
against delivery of a certificate representing the aggregate Merger
Consideration. As of the Effective Time of the Merger, all such shares of FDESI
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and the holder of the certificate
representing such shares of FDESI Common Stock shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration,
without interest.
(d) Rights and Duties Survive. The Surviving Corporation shall possess
all the rights, privileges, powers and franchises of a public as well as of a
private nature, and be subject to all the restriction, disabilities and duties
of each of FDESI and Newco (collectively, the "Constituent
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Corporations"); and all and singular rights, privileges, powers and franchises
of each of the Constituent Corporations on whatever account, as well for stock
subscriptions as all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporation, and the tittle to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations shall not revert or be in any way impaired; but all rights of the
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thence forth attach to the
Surviving Corporation and may be enforced against it to the same extent as if
such debts, liabilities and dues had been incurred or contracted by it.
Section 2.4 Obligation to Transfer Funds to the Company. Each of FDESI and
Newco acknowledges and agrees that at the Effective Time of the Merger, the
Surviving Corporation shall be obligated to irrevocably authorize the Exchange
Agent to allow the FDESI Deposit to be held on behalf of the Company for the
benefit of the stockholders of the Company, in accordance with the Company's
instructions under the Payment Agreement (the "Transfer Authorization").
Section 2.5 Further Assurances. If at any time after the Effective Time of
the Merger the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, the title to any property or right of the Constituent
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or (ii) otherwise to carry out the purposes of this Agreement, the
Constituent Corporations agree that the Surviving Corporation and its proper
officers and directors shall and will execute and deliver all such deeds,
assignments and assurances in law and do all acts necessary, desirable or proper
to vest, perfect or confirm title to such property or right in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, and that
the proper officers and directors of the Constituent Corporations and the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of the Constituent Corporations or otherwise to take any and all such
action.
Section 2.6 Articles of Incorporation and By-laws. (a) The Articles of
Incorporation of FDESI, as in effect immediately prior to the Effective Time of
the Merger, shall be the Articles of Incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
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(b) The By-laws of FDESI as in effect at the Effective Time of the Merger
shall be the By-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
Section 2.7 Directors. The directors of FDESI at the Effective Time of the
Merger shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 2.8 Officers. The officers of FDESI at the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 2.9 Closing; Closing Date. The closing of the sale and purchase of
the Shares and the Merger contemplated hereby (the "Closing") shall take place
at the offices of Fluor Corporation, 3333 Michelson Drive, Irvine, California
92730, at 8:00 a.m. Los Angeles time, on a date to be mutually agreed upon by
the parties, which date shall, subject to the satisfaction, or, to the extent
permitted hereby, waiver, at or prior to the Closing, of all the conditions set
forth in Article VIII hereof, be no later than the third business day after the
satisfaction, or, to the extent permitted hereby, waiver, of the conditions set
forth in Sections 8.1(a), (b), (c) and (e). The time and date on which the
Closing occurs is herein called the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Holdings that the statements contained
in this Article III are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article III), except as set forth in the disclosure letter
delivered by the Company to the Holdings on the date hereof and initialed by the
parties (the "Company Disclosure Letter"). Nothing in the Company Disclosure
Letter shall be deemed adequate to disclose an exception to a representation or
warranty made herein, however, unless the Company Disclosure Letter identities
the exception with particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate to
disclose an exception to a
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representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other items itself). The
Company Disclosure Letter will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Article III.
Section 3.1 Corporate Existence and Power. Each of the Company and each of
its Subsidiaries (as defined herein), including, without limiting the generality
of the foregoing, Newco, is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, and has all requisite corporate power and authority to carry on
its business as now or currently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a material
adverse effect on the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company and its Subsidiaries taken as
a whole (a "Company Material Adverse Effect"). The Company has heretofore
delivered to Holdings true and complete copies of the Company's Certificate of
Incorporation and By-laws and the certificates of incorporation and by-laws of
the Subsidiaries, in each case as in effect on the date hereof. The minute
books of the Company contain true and complete records of all meetings and
consents in lieu of meeting of its Board of Directors (the "Board of Directors")
(and any committees thereof), and of its stockholders. The term "Subsidiary" as
used in this Agreement shall mean any corporation or other legal entity of which
the Company or FDESI, as the case may be, (either alone or together with other
Subsidiaries of the Company or FDESI, as the case may be) owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders of
which are ordinarily and generally, in the absence of contingencies or
understandings, entitled to vote for the election of a majority of the board of
directors or governing body.
Section 3.2 Corporate Authorization. The Company has all requisite corporate
power and authority to execute and deliver this Agreement, the Agreement of
Merger, the Option Agreement and the Marketing Agreement (as defined herein) and
to perform its obligations under such agreements and to consummate the
transactions contemplated hereby and thereby. Newco has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Company of this Agreement, the
Agreement of Merger, the Option Agreement and the Marketing Agreement, and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized and approved by the Board
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of Directors and no further corporate action on the part of the Company (except
for the approval by the Company's stockholders of the Transactions and the
filing of a Certificate of Amendment with the Secretary of State of Delaware
with respect to the Charter Amendments as required by Delaware Law) is necessary
to authorize the execution, delivery and performance by the Company of such
agreements or the consummation by the Company of the transactions contemplated
hereby or thereby. The execution, delivery and performance by Newco of this
Agreement and the Agreement of Merger, and the consummation by Newco of the
transactions contemplated hereby and thereby have been duly authorized and
approved by the Board of Directors of Newco, and by the sole shareholder of
Newco, and no further corporate action on the part of Newco or shareholder
action on the part of Newco's sole shareholder (except for the approval by the
Company's stockholders of the Transactions) is necessary to authorize the
execution delivery and performance by Newco of such agreements or the
consummation by Newco of the transactions contemplated hereby or thereby.
Assuming Holdings is not and has not been the beneficial owner (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") of 15% or more of the outstanding New Common Stock prior to its execution
and delivery of this Agreement, the foregoing authorization and approval by the
Board of Directors constitutes prior approval by the Board of Directors of the
transaction which resulted in Holdings becoming an "interested stockholder"
within the meaning of paragraph (a)(1) of Section 203 of the Delaware Law. This
Agreement, the Agreement of Merger, and the Option Agreement have been, and upon
execution and delivery by the Company and, in the case of this Agreement and the
Agreement of Merger, Newco, at the Closing, the Marketing Agreement will be,
duly executed and delivered by the Company and constitute (or, in the case of
the Marketing Agreement, will constitute at the Closing) valid and binding
obligations of the Company and, in the case of this Agreement and the Agreement
of Merger, Newco, enforceable against the Company and, in the case of this
Agreement and the Agreement of Merger, Newco, in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
equity or redemption, moratorium or similar laws now or hereafter in effect
affecting the enforcement of creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The Acquired Shares received by Holdings in
the Merger, and the shares to be issued upon exercise of the Option, will, when
issued and delivered in accordance with the terms hereof, or the Option
Agreement, as the case may be, be validly issued, fully paid and nonassessable
and free and clear of any claim, lien, encumbrance, preemptive right or
agreement. The term "Marketing Agreement" means that certain Marketing
Agreement, dated the date hereof, between the Company and Holdings, a copy of
which is attached hereto as Exhibit "C".
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Section 3.3 Governmental Authorization. The execution, delivery and
performance by each of the Company and Newco of this Agreement, and by the
Company of the Option Agreement and the Marketing Agreement, and the
consummation by the Company and Newco of the transactions contemplated hereby
and thereby require no action by or in respect of, or filing by the Company or
Newco with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") other than: (i) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"); (ii) compliance with any applicable
requirements of the Exchange Act, and the rules and regulations promulgated
thereunder; and (iii) compliance with any applicable federal or state securities
laws.
Section 3.4 Non-Contravention. The execution, delivery and performance by
each of the Company and Newco of this Agreement, and by the Company of the
Option Agreement and the Marketing Agreement and the consummation by the Company
and Newco of the transactions contemplated hereby and thereby do not and will
not: (i) contravene or conflict with the Certificate of Incorporation or By-laws
of the Company or the Articles of Incorporation or By-laws of Newco; (ii)
violate, conflict with or result in the breach of any of the terms of, otherwise
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default (by way of substitution,
novation or otherwise) under, any contract or other agreement to which the
Company or any of the Subsidiaries is a party or by which any of its assets or
properties may be bound or affected; (iii) violate any order, judgment,
injunction, award or decree of any United States federal or state court,
domestic arbitrator or United States federal or state governmental or regulatory
body against, or binding upon, the Company or its Subsidiaries or upon the
properties or business of the Company or its Subsidiaries; (iv) violate any
statute, law or regulation of the United States or any of the several states
thereof as such statute, law or regulation relates to the Company or its
Subsidiaries or to the properties or business of the Company or its
Subsidiaries; (v) result in the creation or imposition of any Lien (as defined
herein) on any asset of the Company or its Subsidiaries; or (vi) violate any
Permit (as defined herein), except, with respect to clauses (ii), (iv), (v) or
(vi) of this Section 3.4, for violations or Liens, which, individually or in the
aggregate, would not have a Company Material Adverse Effect. For purposes of
this Agreement, "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset. For purposes of this Agreement, "Permit" means any license, permit,
order or approval of any federal, state, or local regulatory body.
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Section 3.5 Capitalization. (a) As of the date hereof, the authorized
capital stock of the Company consists of 25,000,000 shares of Old Common Stock,
and 1,000,000 shares of preferred stock, par value $.01 per share, none of which
preferred stock is issued and outstanding. As of the date hereof, there are
outstanding (a) 6,962,196 shares of Old Common Stock, (b) Employee Stock Options
(as defined herein) to purchase an aggregate of 1,234,706 shares of Old Common
Stock, and (c) Director Stock Options (as defined herein) to purchase an
aggregate of 22,500 shares of Old Common Stock (Employee Stock Options and
Director Stock Options to purchase an aggregate of 304,916 shares of Old Common
Stock were vested and exercisable as of the date hereof). As of the date
hereof, 1,459,600 shares of Old Common Stock were reserved for issuance pursuant
to the Employee Stock Option Plans (as defined herein) and 100,000 shares of
Common Stock were reserved for issuance pursuant to the Director Stock Option
Plan (as defined herein). The 1988 Non-Employee Director Stock Option Plan has
been terminated and no options are outstanding under such plan. All outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights. Except
as contemplated by this Agreement and the Option Agreement and as set forth in
this Section 3.5, as of the date hereof there are, and, except for changes
occurring after the date hereof resulting from (x) the exercise of Employee
Stock Options or Director Stock Options outstanding on such date or (y) the
grant of Employee Stock Options in the ordinary course of business and the
exercise of such Employee Stock Options, on the Closing Date there will be, no
outstanding (i) shares of capital stock or other securities of the Company, (ii)
securities of the Company convertible into or exchangeable for shares of capital
stock or other securities of the Company or (iii) options, rights,
subscriptions, warrants, calls, unsatisfied preemptive rights, or other
agreements to acquire or otherwise receive from the Company any capital stock or
other securities of, or securities convertible into or exchangeable for capital
stock or other securities of, the Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Company Securities"). As of the
date hereof there are, and except for Employee Stock Options granted in the
ordinary course of business after the date hereof, as of the Closing Date there
will be, no options, grants, stock appreciation rights or other awards
outstanding under any Employee Stock Option Plan or any Director Stock Option
Plan other than the options to purchase the shares of Old Common Stock as
described in this Section 3.5. For purposes of this Agreement, the Company's
1986 Employee Stock Purchase Plan and 1987 Stock Plan shall be referred to
individually as an "Employee Stock Option Plan", and collectively as the
"Employee Stock Option Plans"; and the 1995 Director Stock Option Plan shall be
referred to as the "Director Stock Option Plan." The outstanding options to
purchase Old Common Stock granted under the Employee Stock Option Plans shall be
referred to as "Employee Stock Options" and under the Director Stock Option Plan
shall be referred to as "Director Stock Options".
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(b) As of the date hereof, the authorized capital stock of Newco consists in
its entirety of 1,000 shares of common stock, no par value, of which 1,000
shares are outstanding and owned of record and beneficially by the Company. All
outstanding shares of capital stock of Newco have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
Except as set forth in this Section 3.5, as of the date hereof there are, and on
the Closing Date there will be, no outstanding (i) shares of capital stock or
other securities of Newco, (ii) securities of Newco convertible into or
exchangeable for shares of capital stock or other securities of Newco or (iii)
options, rights, subscriptions, warrants, calls, unsatisfied preemptive rights,
or other agreements to acquire or otherwise receive from Newco any capital stock
or other securities of, or securities convertible into or exchangeable for
capital stock or other securities of, Newco.
Section 3.6 Joint Ventures; Subsidiaries. (a) The Company Disclosure Letter
sets forth a list of each entity in which the Company holds or has the right to
acquire one percent (1%) or more of the equity, partnership or other interests
of such entity (each such entity, except Subsidiaries, being referred to as a
"Joint Venture") and a list of all material agreements relating thereto to which
the Company is a party ("Joint Venture Agreements"). To the Company's knowledge
and belief, the Company and each other party thereto is in compliance in all
material respects with all of the terms, conditions and obligations binding upon
it in respect of each of the Joint Venture Agreements, and as of the date hereof
none of the Joint Venture Agreements has been terminated. The Company has
delivered true and correct copies of each Joint Venture Agreement, as amended,
modified or supplemented, to Holdings and all waivers executed thereunder.
(b) The Company's interest in each of the Joint Ventures is directly owned by
the Company and, except for any restrictions on transfer contained in the Joint
Venture Agreements, free and clear of any material Lien or any other limitation
or restriction (including any restriction on the right to vote, sell or
otherwise dispose of such interest). Except as expressly set forth in the Joint
Venture Agreements, there are no outstanding obligations of the Company to fund
or make a further investment in any Joint Venture.
(c) The Company Disclosure Letter also sets forth a list of each Subsidiary
of the Company. The Company or its Subsidiaries are, directly or indirectly,
the record and beneficial owner of the percentage of outstanding shares of
capital stock or other voting securities of each of its Subsidiaries listed
thereon; there are no proxies with respect to such securities, and no securities
of any of the Subsidiaries are or may become required to be issued, transferred
or sold for any reason including, without limitation, by reason of any
subscriptions, options, warrants, rights, calls, convertible securities
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or other agreements or commitments of any character obligating the Company or
any such Subsidiary to issue, transfer or sell any of such securities. All of
such securities so owned by the Company or its Subsidiaries are validly issued,
fully paid and nonassessable and are owned free and clear of any claim, lien,
encumbrance, preemptive right or agreement with respect thereto.
Section 3.7 SEC Filings. (a) The Company has delivered or made available to
Holdings true and complete copies of: (i) its Annual Report on Form 10-K for the
fiscal years ended April 29, 1995, April 30, 1994, and May 1, 1993 (the "Company
10-K's"), as filed with the Securities and Exchange Commission (the "SEC"), (ii)
its Quarterly Report on Form 10-Q for its fiscal quarter ended July 31, 1995, as
filed with the SEC (the "Company 10-Q"), (iii) its Current Reports on Form 8-K
filed with the SEC since May 1, 1993 (the "Company 8-K's," and, together with
the Company 10-K's and the Company 10-Q, the "SEC Reports"), (iv) its proxy or
information statements relating to meetings of, or actions without a meeting by,
the stockholders of the Company held since May 1, 1993 and (v) all of its other
reports, statements, schedules and final registration statements (except
registration statements filed on Form S-8) filed with the SEC since May 1, 1993.
The Company has filed all required documents, schedules, form, statements and
other documents with the SEC since May 1, 1992.
(b) As of its filing date, no such report, schedule or statement (including
all exhibits and schedules thereto and documents incorporated by reference
therein) referred to in clauses (a)(i)-(iv), as amended or supplemented if
applicable, filed pursuant to the Exchange Act contained any untrue statement of
a material fact or omitted to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
(c) No such final registration statement (including all exhibits and
schedules thereto and documents incorporated by reference therein) referred to
in clause (a)(v), as amended or supplemented, if applicable, filed pursuant to
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act") as of the date such statement or
amendment became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein not misleading (in the case of any prospectus, in
light of the circumstances under which they were made).
Section 3.8 Financial Statements. The audited balance sheets of the Company
as at April 29, 1995, April 30, 1994, and May 1, 1993, and the related audited
statements of operations, changes in
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stockholders' equity and cash flows for the fiscal years then ended, together
with the notes thereto certified by Ernst & Young, independent certified public
accountants, included in the Company 10-K's which have been delivered to
Holdings, comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis through the periods covered
thereby, and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and its results of
operations and cash flows for the periods then ended. The foregoing financial
statements of the Company as at April 29, 1995, and for the year then ended, are
sometimes herein called the "Financials," the balance sheet included in the
Financials is sometimes herein called the "Balance Sheet" and April 29, 1995 is
sometimes herein called the "Balance Sheet Date." The financial statements of
the Company for the three months ended July 31, 1995 and as included in the
Company 10-Q which has been delivered to Holdings, fairly present the financial
condition and results of operations of the Company as of and for the three
months ended (subject to year-end adjustments consisting only of normal
recurring accruals) in accordance with GAAP applied in a manner consistent with
the principles applied during the fiscal year ended 1995. The foregoing
unaudited financial statements of the Company as at July 31, 1995, and for the
three months then ended are sometimes herein called the "Interim Financials,"
the balance sheet included in the Interim Financials is sometimes herein called
the "Interim Balance Sheet" and July 31, 1995 is sometimes herein called the
"Interim Balance Sheet Date." Except as set forth in the SEC Reports, neither
the Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by GAAP
to be set forth on a consolidated balance sheet of the Company and its
consolidated Subsidiaries or in the notes thereto. Since the date of its
incorporation, Newco has had no assets other than a cash capital contribution of
$100 and no liabilities.
Section 3.9 Disclosure Documents. (a) The proxy statement of the Company on
Schedule 14A (the "Company Proxy Statement") to be filed with the SEC in
connection with the Transactions, and any amendments or supplements thereto (the
Company Proxy Statement, as amended or supplemented, being referred to as the
"Company Disclosure Documents") will, when filed, comply as to form in all
material respects with the applicable requirements of the Exchange Act, and the
rules and resolutions promulgated thereunder. At the time the Company Proxy
Statement or any amendments or supplements thereto are first mailed to
stockholders of the Company, and at the time such stockholders vote on approval
of the Transactions, the Company Proxy Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to
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make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(b) The representations and warranties contained in Section 3.9(a) shall not
apply to statements or omissions included in the Company Disclosure Documents
based upon information furnished in writing to the Company by Holdings
specifically for use therein.
Section 3.10 Operations of the Company. Except as contemplated by this
Agreement or as disclosed in the Interim Balance Sheet, since the Interim
Balance Sheet Date, the Company has conducted its business only in the ordinary
course and has not:
(a) suffered or incurred any material adverse change in the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries, taken as a whole (a "Company
Material Adverse Change"), and the Company knows of no such change that is
threatened;
(b) amended its certificate of incorporation or by-laws or merged with or into
or consolidated with any other person, subdivided or in any way reclassified any
shares of its capital stock or changed or agreed to change in any manner the
rights of its outstanding capital stock or other securities;
(c) incurred any indebtedness for borrowed money other than in the ordinary
course of business under the letters of credit referred to in the Company
Disclosure Letter;
(d) declared or paid any dividends or declared or made any other distributions
or any kind to its shareholders, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of its capital stock or
other securities;
(e) reduced its cash or short-term investments or their equivalent, other than
to meet cash needs arising in the ordinary course or business, consistent with
past practices;
(f) except as required by GAAP, made any change in its accounting methods or
practices or made any change in depreciation or amortization policies or rates
adopted by it;
(g) made any payment or commitment to pay any severance or termination pay to
any of its officers, directors, employees, consultants, agents or other
representatives, other than payments or
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commitments to pay persons other than its officers, directors or shareholders
made in the ordinary course of business;
(h) made any acquisition of all or substantially all of the assets,
properties, capital stock or business of any other person;
(i) agreed to the sale, lease, transfer or other disposition (other than
sales of assets in the ordinary course of business), in one or more
transactions, of the business or assets of the Company (including by way of a
merger, consolidation, tender or exchange offer, sale of stock, liquidation or
dissolution or similar transaction);
(j) entered into any employment agreement with any executive officers of the
Company or any of its Subsidiaries, or granted any such executive officers any
material increase in compensation, except in the ordinary course of business
consistent with prior practice;
(k) adopted any stock option or other stock-based employee benefits plans or
agreed to accelerate the vesting or exercisability of any employee or director
stock option;
(l) incurred any damage, destruction or loss, whether or not covered by
insurance, that has had or could have a Company Material Adverse Effect; or
(m) issued, sold or otherwise disposed of any Company Securities or any debt
or equity securities of any of its Subsidiaries.
Section 3.11 Litigation. Except as set forth in the SEC Reports, as of the
date hereof, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration tribunal
against or involving the Company or any of its Subsidiaries which could
reasonably be expected to result in a Company Material Adverse Change. Except
as set forth in the SEC Reports, as of the date hereof, there are no actions,
suits or claims or legal, administrative or arbitral proceedings of which the
Company or any of its Subsidiaries has received notice, or, to the knowledge of
the Company or any of the Subsidiaries, investigations (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or involving the Company or any of its Subsidiaries or any of
their respective properties or assets in which the amount in controversy or
damages sought exceeds $20,000.
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Section 3.12 Taxes. Each of the Company and each of its Subsidiaries has
paid all federal, state, county, local, foreign and other taxes, including,
without limitation, income taxes, estimated taxes, excise taxes, sales taxes,
gross receipts taxes, franchise taxes, employment and payroll-related taxes,
property taxes and import duties, whether or not measured in whole or in part by
net income (hereinafter, "Taxes" or, individually, a "Tax") required to be paid
by it through the date hereof and all deficiencies or other additions to tax,
interest and penalties owed by it, in connection with any such Taxes (other than
Taxes and deficiencies not material in the aggregate), and shall timely pay any
Taxes, including additions, interest and penalties, required to be paid by it
after the date hereof and on or before the Closing Date (other than Taxes being
contested in good faith and the liability for which is reserved for by the
Company in accordance with GAAP). All reserves or other provisions for taxes
reflected in the Financials and the Interim Financials are, or will be,
adequate, and there are no liens for delinquent taxes upon any property or asset
of the Company or any of its Subsidiaries. The Company Disclosure Letter sets
forth the status of the audit of any income tax returns of the Company or any of
its Subsidiaries for each fiscal year for which the statute of limitations has
not expired, including the amounts of any deficiencies and additions to tax,
interest and penalties indicated on any notices of proposed deficiency of
statutory notices of deficiency that may have been issued in connection
therewith. The Company Disclosure Letter sets forth all federal tax elections
under the Internal Revenue Code of 1986, as amended (the "Code") that are in
effect with respect to the Company for the fiscal years ended May 1, 1993, April
30, 1994, and April 29, 1995. No extension of time with respect to any date on
which any Tax return was or is to be filed by the Company or any of its
Subsidiaries is in force, and no waiver or agreement by the Company or any of
its Subsidiaries is in force for the extension of time for the assessment or
payment of any Tax. The Company has not made any election under Section 341(f)
of the Code. Each of the Company and each of its Subsidiaries has timely filed
all tax returns required through the date hereof, and shall prepare and timely
file, in a manner consistent with prior years and applicable laws and
regulations, all tax returns to be filed on or before the Closing Date.
Section 3.13 Employee Benefit Plans. Except as set forth in the SEC Reports:
(a) There are no plans, practices, arrangements, policies or commitments,
including, without limitation, any employment, consulting or deferred
compensation arrangements or agreements, executive compensation, bonus or
severance pay plans or practices, health or life insurance arrangements,
vacation pay plans or any other fringe benefit plans, including, without
limitation, any pension, profit sharing, savings or other plans described in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (whether or not covered by ERISA) (each
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individually, a "Plan") maintained or contributed to by or on behalf of the
Company, or with respect to which the Company has or could have any material
liability or obligation, whether actual or contingent, direct or indirect,
through any Commonly Controlled Entity (as defined below or otherwise), other
than the Employee Stock Option Plans and the Director Stock Option Plan. A
"Commonly Controlled Entity" of a person shall mean any other person who is
treated as a single employer (within the meaning of Code Section 414) with such
person.
(b) Each Plan is (and the Company is with respect to each Plan) in compliance
in all material respects with all applicable laws, regulations, reporting and
disclosure requirements and has been administered and operated in all material
respects in accordance with its terms. With respect to each Plan: (i) no
"prohibited transaction" (within the meaning of Code Section 4975 or ERISA
Section 406) or breach of fiduciary duty has occurred; and (ii) there are no
material actions, liens, claims or disputes pending or, to the knowledge of the
Company, threatened.
(c) With respect to each Plan (where applicable); on or before the date
hereof, the Company has delivered or made available to Holdings complete copies
of (i) each Plan document and individual agreement related thereto; and (ii) the
most recent summary plan description, annual report, actuarial valuation and
Internal Revenue Service determination letter.
(d) No Plan is a "pension plan" (within the meaning of ERISA Section 3(2)) or
a "multiple employer plan" (as described in Code Section 413(c)). The Company
has not incurred any actual or contingent liability arising under Title IV of
ERISA which is reasonably likely to have a Company Material Adverse Effect.
Without limiting the foregoing, the Company has no secondary liability under any
agreement described in ERISA Section 4204, or has been a party to a transaction
described in ERISA Section 4069, in each case, which is reasonably likely to
have a Company Material Adverse Effect.
(e) With respect to each Plan which is a "welfare plan" (within the meaning
of ERISA Section 3(1)): (i) except as required under Code Section 4980B or Part
6 of Title I of ERISA, no such plan provides medical or death benefits with
respect to any individual beyond his or her termination of employment or
service; and (ii) there are no reserves, assets, surplus or prepaid premiums
under any such Plan.
(f) The consummation of the Transactions and the exercise of the Option will
not: (i) entitle any individual to severance pay, unemployment compensation or
any similar payment; (ii) accelerate
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the time of payment or vesting or increase the amount of compensation due to any
individual; or (iii) entitle any individual to a "parachute payment" (within the
meaning of Code Section 280G).
(g) Neither the Company nor any Commonly Controlled Entity has incurred
within the last two years or reasonably expects, as of the date hereof, to incur
any liability or obligation under the Workers Adjustment Retraining Notification
Act or any similar state law ("WARN").
(h) Each of the Company and each of its Subsidiaries is not, and has not
been, a party to any collective bargaining agreement or any agreement with a
labor union or association. There is no pending work stoppage, organizing
effort, strike, slowdown, picketing or similar event affecting the Company or
any of the Subsidiaries or, to the knowledge of the Company and each of its
Subsidiaries, threatened, and no application for certification of a collective
bargaining agent is pending or, to the knowledge of the Company and each of its
Subsidiaries, threatened. Each of the Company and each of its Subsidiaries has
not been cited for any unfair labor practice or other practice or conduct
prohibited by the National Labor Relations Act (the "NLRA"). There is no
pending or, to the knowledge of the Company and each of its Subsidiaries,
threatened, complaint, charge or proceeding before the National Labor Relations
Board or any other governmental authority alleging any violation of the NLRA by
the Company or any of its Subsidiaries.
Section 3.14 Compliance with Laws. Except as previously disclosed in writing
in a letter to Holdings or in the SEC Reports, and except for violations which
are not reasonably likely to have a Company Material Adverse Effect, each of the
Company and each of its Subsidiaries is not, to its knowledge, in violation of,
and to its knowledge has not violated, (i) any federal, state or local law,
statute, ordinance or regulation or any other requirement of any federal, state
or local governmental or regulatory body of competent jurisdiction applicable to
the Company or any of its Subsidiaries or the business of the Company or any of
its Subsidiaries or (ii) any term of any applicable judgment, decree,
injunction, law and/or order issued by a governmental or regulatory body of
competent jurisdiction. Except as set forth in the SEC Reports, each of the
Company and each of its Subsidiaries, to its knowledge, has all Permits required
as of the date hereof for the conduct of the business of the Company and each of
its Subsidiaries as now conducted; to the Company's knowledge, such Permits are
in full force and effect; the Company has not received notice of any violation
in respect of any Permits and no proceeding is pending of which the Company has
received notice or, to the knowledge of the Company, threatened to revoke or
limit any Permit which revocations or limitations would have, in the aggregate,
a Company Material Adverse Effect.
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Section 3.15 Opinion of Financial Advisor. The Company has received the
opinion of Donaldson, Lufkin & Jenrette, dated December 11, 1995, to the effect
that the consideration to be received by the Company and its stockholders,
pursuant to the Transactions, taken as a whole, is fair from a financial point
of view to the Company and its stockholders, a true and complete copy of which
opinion has been delivered to Holdings prior to the date hereof.
Section 3.16 Intellectual Property. The Company is not aware of any patents
held by any person or entity under which a license is reasonably likely to be
required in connection with the conduct of the business of the Company as now
conducted or as currently proposed to be conducted. The Company has not
received any written notice of any adverse claim of any person or entity with
respect to any intellectual property right or asserted against or threatened to
be asserted against, the Company with respect to any intellectual property
right.
Section 3.17 Contracts and Other Agreements. (a) Except as set forth the
SEC Reports (or filed as an exhibit thereto), there are no contracts or
agreements to which the Company or any of its Subsidiaries is a party that are
material to the business, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company and its
Subsidiaries taken as a whole. Each agreement, contract, lease, license,
commitment or instrument of the Company set forth in the Company Disclosure
Letter or the SEC Reports is in full force and effect and is a legal, valid and
binding agreement of the Company and, to the best knowledge of the Company, of
each other party thereto, enforceable in accordance with its terms except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles. Neither the Company nor
any of its Subsidiaries is in violation of or in default under (nor, to the
knowledge of the Company, does there exist any condition which upon the passage
of time or the giving of notice would cause such a violation of or default
under) any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect.
(b) Set forth in the Company Disclosure Letter is (x) a list of all loan or
credit agreements, notes, bonds, indentures, and other agreements and
instruments pursuant to which any Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount in excess of $1,000,000 is
outstanding or may be incurred and (Y) the respective principal amounts
currently outstanding
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thereunder. For purposes of this Agreement, "Indebtedness" shall mean, with
respect to any person, without duplication, (A) all obligations of such person
for borrowed money, or with respect to deposits or advances of any kind to such
person, (B) all obligations of such person evidenced by bonds, debentures, notes
or similar instruments, (C) all obligations of such person upon which interest
charges are customarily paid, (D) all obligations of such person under
conditional sale or other title retention agreements relating to property
purchased by such person, (E) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such person's business), (F) all capitalized
lease obligations of such person, (G) all obligations of others secured by any
lien on property or assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of such
person under interest rate or currency hedging transactions (valued at the
termination value thereof), (I) all letters of credit issued for the account of
such person and (J) all guarantees and arrangements having the economic effect
of a guarantee of such person of any Indebtedness of any other person.
(c) The Company is not a party to or bound by any material written or oral
(w) employment agreement or employment contract that is not terminable at will
by the Company, (x) covenant not to compete, or (y) agreement, contract or other
arrangement with (A) any stockholder of the Company, (B) any Affiliate (as
defined herein) of the Company or, to the knowledge of the Company, any
Affiliate of any stockholder of the Company or (C) any officer, director or
employee of the Company (other than employment agreements covered by clause (w)
above), or of any stockholder of the Company or of any Affiliate of the Company.
The term "Affiliate" means, with respect to any person, any other person
controlling, controlled by or under direct or indirect common control with such
person (for the purposes of this definition "control," when used with respect to
any specified person, shall mean the power to direct the management and policies
of such person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing).
(d) The Company is not a party to or bound by any material written or oral
mortgage, pledge, security agreement, deed of trust or other document granting a
Lien or security interest (including, but not limited to, Liens upon properties
acquired under conditional sales, capital leases or other title retention or
security devices).
Section 3.18 Properties. (a) Except as set forth in the Company Disclosure
Letter, each of the Company and each of its Subsidiaries has good and marketable
title to, or valid leasehold interests
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in, all its properties and assets except for such as are no longer used or
useful in the conduct of its businesses or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in the
aggregate, do not and will not materially interfere with its ability to conduct
its business as currently conducted.
(b) Each of the Company and each of its Subsidiaries has complied in all
material respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full force and
effect. Each of the Company and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
Section 3.19 Environmental Matters. (a) Neither the Company nor any of its
Subsidiaries has (x) placed, released, transported, arranged for transportation
of or disposed of any Hazardous Substances (as defined herein) on, under, from
or at any of the Company's or any of its Subsidiaries' properties or any other
properties (which for purposes of this Section 3.19 includes any facility
formerly owned or operated by the Company), in violation of any applicable
Environmental Laws (as defined herein) except where such violation would not
have a Company Material Adverse Effect, (y) any knowledge of the presence of any
Hazardous Substances on, under or at any of the Company's or any of its
Subsidiaries' properties or any other property but arising from the Company's or
any of its Subsidiaries' properties, in violation of any applicable
Environmental Laws except where such violation would not have a Company Material
Adverse Effect, or (z) during the preceding three years, received any written
notice (A) from a Governmental Entity that the Company or any of its
Subsidiaries is in violation of any statute, law, ordinance, regulation, rule,
judgment, decree or order of any Governmental Entity relating to any matter of
pollution, protection of the environment, environmental regulation or control or
regarding Hazardous Substances (collectively, "Environmental Laws") on or under
any of the Company's or any of its Subsidiaries' properties or any other
properties, (B) of the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party in
connection with any such violation, (C) from a Governmental Entity requiring the
response to or remediation of a release or threatened release of Hazardous
Substances at or arising from any of the Company's or any of its Subsidiaries'
properties or any other properties, or (D) demanding payment by the Company or
any of its Subsidiaries for response to or remediation of a release or
threatened release of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties. For
purposes of this Agreement, the term "Hazardous Substance" shall mean any toxic
or hazardous materials, wastes or substances, including asbestos, buried
contaminants, chemicals, flammable explosives, radioactive materials,
polychlorinated biphenyls, petroleum and petroleum products and
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any substances defined as, or included in the definition of, "hazardous wastes",
"hazardous materials" or "toxic substances" under any Environmental Law.
(b) To the knowledge of the Company, no Environmental Law imposes any
obligation upon the Company or its Subsidiaries arising out of or as a condition
to any transaction contemplated by this Agreement or the Option Agreement,
including, without limitation, any requirement to modify or to transfer any
Permit or license, any requirement to file any notice or other submission with
any Governmental Entity, the placement of any notice, acknowledgement or
covenant in any land records, or the modification of or provision of notice
under any agreement, consent order or consent decree. No Lien has been placed
upon any of the Company's or its Subsidiaries' owned properties, or, to the
knowledge of the Company, leased properties under any Environmental Law.
Section 3.20 Confidentiality Agreements. To the Company's knowledge, all
officers and employees of the Company who have access to confidential
information have entered into confidentiality agreements and all employees
providing services of a scientific nature have entered into invention agreements
in the form then utilized by the Company. To the Company's knowledge, no
officer or employee has disavowed his or her obligations under any such
agreement and the Company is not aware of any facts or circumstances which would
constitute a material breach of any such agreement.
Section 3.21 Disclosure. No representations or warranties by the Company in
this Agreement and no statement contained in any document (including, without
limitation, the Financials, Interim Financials, Company Disclosure Letter,
certificates, or other writings) furnished or to be furnished by the Company to
Holdings or any of its representatives pursuant to the provisions hereof
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary, in light of the circumstances
under which it was made, in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Holdings represents and warrants to the Company that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as
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of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV), except
as set forth in the disclosure letter delivered by FDESI to the Company on the
date hereof and initialed by the parties (the "FDESI Disclosure Letter").
Nothing in the FDESI Disclosure Letter shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the FDESI
Disclosure Letter identities the exception with particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other items itself). The FDESI Disclosure Letter
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article IV.
Section 4.1 Corporate Existence and Power. Each of Holdings and FDESI is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted or currently proposed to be
conducted. FDESI is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, condition (financial or otherwise), results of
operations or prospects of FDESI (a "FDESI Material Adverse Effect"). FDESI has
heretofore delivered to the Company true and complete copies of the Company's
Articles of Incorporation and By-laws in each case as in effect on the date
hereof. The minute books of FDESI contain true and complete records of all
meeting and consents in lieu of meeting of its Board of Directors (and any
committees thereof), and of its stockholder.
Section 4.2 Corporate Authorization. Each of Holdings and FDESI has all
requisite corporate power and authority to execute and deliver this Agreement,
the Option Agreement and the Marketing Agreement and perform its obligations
under such agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Holdings and FDESI of this
Agreement, the Option Agreement and the Marketing Agreement and the consummation
by Holdings and FDESI of the transactions contemplated hereby and thereby have
duly authorized by the board of directors of Holdings, FDESI and Fluor
Corporation, and no other corporate action on the part of Holdings or FDESI is
necessary to authorize the execution, delivery and performance of such
agreements and consummation of the transactions contemplated hereby and
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thereby. This Agreement and the Option Agreement have been, and the Marketing
Agreement at the Closing will be, duly executed and delivered by Holdings and
FDESI and constitute valid and binding obligations of Holdings and FDESI
enforceable against Holdings and FDESI in accordance with their respective terms
subject to applicable bankruptcy, insolvency, moratorium and similar laws
relating to or affecting creditors' rights and to general equitable principles.
Section 4.3 Governmental Authorization. The execution, delivery and
performance by Holdings and FDESI of this Agreement, the Option Agreement and
the Marketing Agreement and the consummation by Holdings and FDESI of the
transactions contemplated hereby and thereby require no action by or in respect
of, or filing by Holdings or FDESI with any Governmental Entity other than (i)
compliance with any applicable requirements of the HSR Act; (ii) compliance with
any applicable requirements of the Exchange Act, and the rules and regulations
promulgated thereunder; and (iii) compliance with any applicable requirements of
foreign or state securities laws.
Section 4.4 Non-Contravention. The execution, delivery and performance by
Holdings and FDESI of this Agreement, the Option Agreement and the Marketing
Agreement and the consummation by Holdings and FDESI of the transactions
contemplated hereby and thereby do not and will not (i) contravene or conflict
with their respective certificate of incorporation or by-laws; (ii) violate,
conflict with or result in the breach of any of the terms of, result in a
material modification of the effect of, otherwise give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default (by way of substitution, novation or otherwise)
under, any contract or other agreement to which Holdings or FDESI is a party or
by or to which Holdings or FDESI or any of their respective assets or properties
may be bound; (iii) violate any order, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon Holdings or FDESI or upon the securities, properties or business of
Holdings or FDESI; (iv) violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to Holdings or FDESI or
to the securities, properties or business of Holdings or FDESI; (v) result in
the creation or imposition of any Lien on any asset of Holdings or FDESI, or
(vi) violate any Permit, except, with respect to clauses (ii), (iv), (v) and
(vi) of this Section 4.4, for violations, or Liens, which, individually or in
the aggregate, are not reasonably likely to have (x) a material adverse effect
on the ability of Holdings to consummate the transactions contemplated hereby or
(y) a FDESI Material Adverse Effect.
Section 4.5 Capitalization of FDESI. As of the date hereof, the authorized
capital stock of FDESI consists in its entirety of 1,000 shares of common stock,
no par value, of which 1,000 shares
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are outstanding and owned of record and beneficially by Holdings. All
outstanding shares of capital stock of FDESI have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
Except as set forth in this Section 4.5, as of the date hereof there are, and on
the Closing Date there will be, no outstanding (i) shares of capital stock or
other securities of FDESI, (ii) securities of FDESI convertible into or
exchangeable for shares of capital stock or other securities of FDESI or (iii)
options, rights, subscriptions, warrants, calls, unsatisfied preemptive rights,
or other agreements to acquire or otherwise receive from FDESI any capital stock
or other securities of, or securities convertible into or exchangeable for
capital stock or other securities of, FDESI (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "FDESI Securities").
Section 4.6 FDESI Joint Ventures. (a) The FDESI Disclosure Letter sets forth
a list of each entity in which FDESI holds or has the right to acquire one
percent (1%) or more of the equity, partnership or other interests of such
entity (each such entity, except Subsidiaries, being referred to as an "FDESI
Joint Venture") and a list of all material agreements relating thereto to which
FDESI is a party ("FDESI Joint Ventures Agreements"). To FDESI's knowledge and
belief, FDESI and each other party thereto is in compliance in all material
respects with all of the terms, conditions and obligations binding upon it in
respect of each of the FDESI Joint Ventures Agreements, and as of the date
hereof none of the FDESI Joint Ventures Agreements has been terminated. FDESI
has delivered true and correct copies of each FDESI Joint Ventures Agreement, as
amended, modified or supplemented, to the Company and all waivers executed
thereunder.
(b) FDESI's interest in each of the FDESI Joint Ventures is directly owned by
FDESI and, except for any restrictions on transfer contained in the FDESI Joint
Ventures Agreements, free and clear of any material Lien or any other limitation
or restriction (including any restriction on the right to vote, sell or
otherwise dispose of such interest). Except as expressly set forth in the FDESI
Joint Ventures Agreements, there are no outstanding obligations of FDESI to fund
or make a further investment in any FDESI Joint Ventures.
(c) FDESI has no Subsidiaries.
Section 4.7 FDESI Financial Statements. The unaudited balance sheets of
FDESI as at April 30, 1995 and October 31, 1995, and the related unaudited
statements of operations for the fiscal year and six month period, respectively,
then ended, (except for the absence of footnotes and for normal year end
adjustments and for the other matters set forth in that certain letter from Vic
L. Prechtl to Robert E. Sliney, Jr. dated November 30, 1995) have been prepared
in accordance with GAAP
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applied on a consistent basis through the periods covered thereby, and fairly
present the consolidated financial position of FDESI as of the date thereof and
its results of operations for the period then ended. The foregoing unaudited
financial statements of FDESI as at October 31, 1995, and for the period then
ended, are sometimes herein called the "FDESI Financials," the balance sheet
included in the FDESI Financials is sometimes herein called the "FDESI Balance
Sheet" and October 31, 1995 is sometimes herein called the "FDESI Balance Sheet
Date." Except as set forth in the FDESI Disclosure Letter, FDESI does not have
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) to Holdings or any Affiliate of Holdings ("Holdings
Debt") or otherwise required by GAAP to be set forth on a balance sheet of FDESI
or in the notes thereto.
Section 4.8 Disclosure Documents. The information with respect to Holdings
and its Affiliates furnished to the Company by Holdings in writing specifically
for use in any Company Disclosure Document will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading, in the case of the Company Proxy Statement, at the
time the Company Proxy Statement and or any amendment or supplement thereto is
first mailed to stockholders of the Company, and, in the case of the Company
Proxy Statement, at the time the stockholders vote on approval of the
Transactions.
Section 4.9 Operations of FDESI. Except as contemplated by this Agreement or
as disclosed in the FDESI Balance Sheet, since the FDESI Balance Sheet Date,
FDESI has conducted its business only in the ordinary course and has not:
(a) suffered or incurred any material adverse change in the business,
properties, condition (financial or otherwise), results of operations or
prospects of FDESI (a "FDESI Material Adverse Change"), and FDESI knows of no
such change that is threatened;
(b) amended its certificate of incorporation or by-laws or merged with or into
or consolidated with any other person, subdivided or in any way reclassified any
shares of its capital stock or changed or agreed to change in any manner the
rights of its outstanding capital stock or other securities;
(c) incurred any indebtedness for borrowed money other than in the ordinary
course of business;
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(d) declared or paid any dividends or declared or made any other distributions
or any kind to its shareholder, or made any direct or indirect redemption,
retirement, purchase or other acquisition of any shares of its capital stock or
other securities;
(e) reduced its cash or short-term investments or their equivalent, other than
to meet cash needs arising in the ordinary course or business, consistent with
past practices;
(f) except as required by GAAP, made any change in its accounting methods or
practices or made any change in depreciation or amortization policies or rates
adopted by it;
(g) made any payment or commitment to pay any severance or termination pay to
any of its officers, directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay persons other than
its officers, directors or shareholders made in the ordinary course of business;
(h) made any acquisition of all or substantially all of the assets,
properties, capital stock or business of any other person;
(i) agreed to the sale, lease, transfer or other disposition (other than sales
of assets in the ordinary course of business), in one or more transactions, of
the business or assets of FDESI (including by way of a merger, consolidation,
tender or exchange offer, sale of stock, liquidation or dissolution or similar
transaction);
(j) entered into any employment agreement with any executive officers of FDESI
or granted any such executive officers any material increase in compensation,
except in the ordinary course of business consistent with prior practice;
(k) adopted any stock option or other stock-based employee benefits plans or
agreed to accelerate the vesting or exercisability of any employee or director
stock option;
(l) incurred any damage, destruction or loss, whether or not covered by
insurance, that has had or could have a FDESI Material Adverse Effect; or
(m) issued, sold or otherwise disposed of any FDESI Securities.
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Section 4.10 Litigation of FDESI. As of the date hereof, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving
FDESI which could reasonably be expected to result in a FDESI Material Adverse
Change. As of the date hereof, there are no actions, suits or claims or legal,
administrative or arbitral proceedings of which Holdings or FDESI has received
notice, or, to the knowledge of Holdings or FDESI, investigations (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) pending or, to the knowledge of Holdings or FDESI, threatened against
or involving FDESI or any of its properties or assets.
Section 4.11 Taxes of FDESI. FDESI has paid all Taxes required to be paid by
it through the date hereof and all deficiencies or other additions to tax,
interest and penalties owed by it, in connection with any such Taxes (other than
Taxes and deficiencies not material in the aggregate), and shall timely pay any
Taxes, including additions, interest and penalties, required to be paid by it
after the date hereof and on or before the Closing Date (other than Taxes being
contested in good faith and the liability for which is reserved for by FDESI in
accordance with GAAP). All reserves or other provisions for taxes reflected in
the FDESI Financials are, or will be, adequate, and there are no liens for
delinquent taxes upon any property or asset of FDESI. The FDESI Disclosure
Letter sets forth the status of the audit of any income tax returns of FDESI
(and of any consolidated, unitary or combined returns which included FDESI, but
only insofar as such returns pertain specifically to FDESI) for each fiscal year
for which the statute of limitations has not expired, including the amounts of
any deficiencies and additions to tax, interest and penalties indicated on any
notices of proposed deficiency of statutory notices of deficiency that may have
been issued in connection therewith. The FDESI Disclosure Letter sets forth all
federal tax elections under the Code that are in effect with respect to FDESI
for the fiscal years ended May 1, 1993, April 30, 1994, and April 29, 1995. No
extension of time with respect to any date on which any Tax return was or is to
be filed by FDESI is in force, and no waiver or agreement by FDESI is in force
for the extension of time for the assessment or payment of any Tax. FDESI has
not made any election under Section 341(f) of the Code. FDESI has timely filed
all tax returns required through the date hereof, and shall prepare and timely
file, in a manner consistent with prior years and applicable laws and
regulations, all tax returns to be filed on or before the Closing Date.
Section 4.12 Environmental Matters of FDESI (a) FDESI has not (x) placed,
released, transported, arranged for transportation of or disposed of any
Hazardous Substances on, under, from or at any of FDESI's properties or any
other properties (which for purposes of this Section 4.12 includes any facility
formerly owned or operated by FDESI), in violation of any applicable
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Environmental Laws, except where such violation would not have a FDESI Material
Adverse Effect, (y) any knowledge of the presence of any Hazardous Substances
on, under or at any of FDESI's properties or any other property but arising from
FDESI's properties, in violation of any applicable Environmental Laws, except
where such violation would not have a FDESI Material Adverse Effect, or (z)
except in each case for notices set forth in the FDESI Disclosure Letter, during
the preceding three years, received any written notice (A) from a Governmental
Entity that FDESI is in violation of any Environmental Laws on or under any of
FDESI's properties or any other properties, (B) of the institution or pendency
of any suit, action, claim, proceeding or investigation by any Governmental
Entity or any third party in connection with any such violation, (C) from a
Governmental Entity requiring the response to or remediation of a release or
threatened release of Hazardous Substances at or arising from any of FDESI's
properties or any other properties, or (D) demanding payment by FDESI for
response to or remediation of a release or threatened release of Hazardous
Substances at or arising from any of FDESI's properties or any other properties.
(b) Except as set forth in the FDESI Disclosure Letter, to the knowledge of
FDESI, no Environmental Law imposes any obligation upon FDESI or its
Subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement or the Option Agreement, including, without limitation, any
requirement to modify or to transfer any Permit or license, any requirement to
file any notice or other submission with any Governmental Entity, the placement
of any notice, acknowledgement or covenant in any land records, or the
modification of or provision of notice under any agreement, consent order or
consent decree. No Lien has been placed upon any of FDESI's or its
Subsidiaries' owned properties, or, to the knowledge of FDESI, leased properties
under any Environmental Law.
Section 4.13 FDESI Contract List. (a) Except as set forth in paragraph 4.13
of the FDESI Disclosure Letter, FDESI is not a party to or subject to any
contract to provide services, materials or goods to third parties (an "FDESI
Customer Contract").
(b) The FDESI Disclosure Letter sets forth with respect to the FDESI Customer
Contracts, a summary of work performed as of the date of this Agreement and work
to be performed after the date of this Agreement not yet completed.
(c) Neither FDESI or Holdings has received notice or any other communication,
written or oral, from any customer terminating or not renewing any FDESI
Customer Contract or indicating the
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customer's formal non-acceptance of work performed by FDESI or Holdings under
any FDESI Customer Contract.
(d) FDESI or Holdings has completed in all material respects all work in
progress under all FDESI Customer Contracts pursuant to the terms of each such
contract, including all warranty terms, and substantially in accordance with
customer specifications. Neither FDESI nor Holdings has been provided with
written notice of any claims for material defects in performance under any of
the contracts, and neither FDESI nor Holdings has knowledge of any state of
facts or anticipated event which FDESI or Holdings in good faith, reasonably
believes may give rise to any such claim.
Section 4.14 Purchase for Investment; Legend. Holdings hereby:
(a) acknowledges that Holdings has been advised that the Acquired Shares have
not been registered under the Securities Act or under any state securities laws;
(b) represents and warrants that the Acquired Shares are being acquired by
Holdings for Holdings' own sole benefit and account for investment and not with
a view to, or for resale in connection with, a public offering or distribution
thereof;
(c) agrees that the Shares will not be sold or otherwise disposed of except in
compliance with the registration requirements or exemption provisions under the
Securities Act and the rules and regulations promulgated thereunder, or any
other applicable securities laws;
(d) consents that stop transfer instructions in respect of the Acquired
Shares, relating only to the restrictions in Section 4.14 (c), may be issued to
any transfer agent, transfer clerk or other agent at any time acting for the
Company; and
(e) consents that the certificate or certificates representing the Acquired
Shares not registered under the Securities Act may be impressed with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
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SHARES UNDER SUCH ACT OR AN EXEMPTION THEREFROM. THE SHARES REPRESENTED BY
THIS AGREEMENT ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON SALE OR TRANSFER
PURSUANT TO THE PROVISIONS OF THAT CERTAIN INVESTMENT AGREEMENT DATED AS
OF DECEMBER 11, 1995 AS TO WHICH THE COMPANY AND REGISTERED OWNER ARE
PARTIES."
Section 4.15 Employees and Employee Benefit Plans. Except as set forth in
the FDESI Disclosure Letter:
(a) There are no Plans maintained or contributed to by or on behalf of FDESI
or Holdings, or with respect to which FDESI has or could have any material
liability or obligation, whether actual or contingent, direct or indirect,
through any Commonly Controlled Entity.
(b) Each Plan is (and FDESI and Holdings is with respect to each Plan) in
compliance in all material respects with all applicable laws, regulations,
reporting and disclosure requirements and has been administered and operated in
all material respects in accordance with its terms. With respect to each Plan:
(i) no "prohibited transaction" (within the meaning of Code Section 4975 of
ERISA Section 406) or breach of fiduciary duty has occurred; and (ii) there are
no material actions, liens, claims or disputes pending or, to the knowledge of
FDESI or Holdings, threatened.
(c) With respect to each Plan (where applicable), (i) on or before the date
hereof, FDESI has delivered or made available to the Company complete copies of
(i) each Plan document and individual agreement related thereto; and (ii) the
most recent summary plan description, annual report, actuarial valuation and
Internal Revenue Service determination letter.
(d) No Plan is a "pension plan" (within the meaning of ERISA Section 3(2)) or
a "multiple employer plan" (as described in Code Section 413(c)). FDESI has not
incurred any actual or contingent liability arising under Title IV of ERISA
which is reasonably likely to have a Company Material Adverse Effect. Without
limiting the foregoing, FDESI has no secondary liability under any agreement
described in ERISA Section 4204, or has been a party to a transaction described
in ERISA Section 4069, in each case, which is reasonably likely to have a FDESI
Material Adverse Effect.
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(e) With respect to each Plan which is a "welfare plan" (within the meaning of
ERISA Section 3(1)): (i) except as required under Code Section 4980B or Part 6
of Title I of ERISA, no such plan provides medical or death benefits with
respect to any individual beyond his or her termination of employment or
service; and (ii) there are no reserves, assets, surplus or prepaid premiums
under any such Plan.
(f) The consummation of the Transactions will not: (i) entitle any individual
to severance pay, unemployment compensation or any similar payment; (ii)
accelerate the time of payment or vesting or increase the amount of compensation
due to any individual; or (iii) entitle any individual to a "parachute payment"
(within the meaning of Code Section 280G).
(g) Neither Holdings, FDESI nor any Commonly Controlled Entity has incurred
within the last two years or reasonably expects, as of the date hereof, to incur
any liability or obligation under WARN.
(h) Each of Holdings (with respect to the business of FDESI) and FDESI is not,
and has not been, a party to any collective bargaining agreement or any
agreement with a labor union or association. There is no pending work stoppage,
organizing effort, strike, slowdown, picketing or similar event affecting FDESI
or Holdings (with respect to the business of FDESI) or, to the knowledge of
Holdings and FDESI, threatened, and no application for certification of a
collective bargaining agent is pending or, to the knowledge of the Holdings and
FDESI, threatened. Neither Holdings (with respect to the business of FDESI) nor
FDESI has been cited for any unfair labor practice or other practice or conduct
prohibited by the NLRA. There is no pending or, to the knowledge of Holdings
and FDESI, threatened, complaint, charge or proceeding before the National Labor
Relations Board or any other governmental authority alleging any violation of
the NLRA by FDESI or Holdings (with respect to the business of FDESI).
(i) Set forth in paragraph 4.15(i) of the FDESI Disclosure Letter is a true,
correct and complete list of all employees of FDESI (or employees of Holdings
whose duties relate primarily to the business of FDESI and who Holdings intends
to transfer to FDESI on or before the Closing)(the "FDESI Employees") and their
rates of pay. No FDESI employee has sued or threatened to sue FDESI or
Holdings, or bought or threatened to bring any administrative complaint against
FDESI or Holdings, within the two years prior to the date hereof. FDESI has
possession of or access to all personnel files with respect to each FDESI
Employee.
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Section 4.16 Compliance with Laws. Except for violations which are not
reasonably likely to have a FDESI Material Adverse Effect, each of Holdings
(with respect to the business of FDESI) and FDESI is not, to its knowledge, in
violation of, and to its knowledge has not violated, (i) any federal, state or
local law, statute, ordinance or regulation or any other requirement of any
federal, state or local governmental or regulatory body of competent
jurisdiction applicable to FDESI or Holdings (with respect to the business of
FDESI) or the business of FDESI or Holdings (with respect to the business of
FDESI) or (ii) any term of any applicable judgment, decree, injunction, law
and/or order issued by a governmental or regulatory body of competent
jurisdiction. Except as set forth in the FDESI Disclosure Letter, each of the
FDESI and Holdings (with respect to the business of FDESI), to its knowledge has
all Permits required as of the date hereof for the conduct of the business of
the FDESI or Holdings (with respect to the business of FDESI) as now conducted;
to the knowledge of Holdings and FDESI, such Permits are in full force and
effect; neither FDESI nor Holdings has received notice of any violation in
respect of any Permits and no proceeding is pending of which Holdings or FDESI
has received notice or, to the knowledge of Holdings or FDESI, threatened to
revoke or limit any Permit which revocations or limitations would have, in the
aggregate, a FDESI Material Adverse Effect.
Section 4.17 Intellectual Property. Except as set forth in the FDESI
Disclosure Letter, neither FDESI nor Holdings is aware of any patents held by
any person or entity under which a license is reasonably likely to be required
in connection with the conduct of the business of FDESI as now conducted or as
currently proposed to be conducted. Except as set forth in the FDESI Disclosure
Letter, neither Holdings nor FDESI has received any written notice of any
adverse claim of any person or entity with respect to any intellectual property
right relating to the business of FDESI or asserted against or threatened to be
asserted against FDESI or Holdings (with respect to the business of FDESI) with
respect to any intellectual property right.
Section 4.18 Contracts and Other Agreements. (a) Except as set forth in the
FDESI Disclosure Letter, there are no contracts or agreements to which Holdings
or FDESI is a party that are material to the business, properties, assets,
condition (financial or otherwise), results of operations or prospects of FDESI.
Each agreement, contract, lease, license, commitment or instrument of FDESI set
forth in the FDESI Disclosure Letter is in full force and effect and is a legal,
valid and binding agreement of the FDESI and, to the best knowledge of Holdings
and FDESI, of each other party thereto, enforceable in accordance with its terms
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally or by general equitable principles. Neither
Holdings nor
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FDESI is in violation of or in default under (nor, to the knowledge of Holdings
or FDESI, does there exist any condition which upon the passage of time or the
giving of notice would cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding, to which it is a party or by which it or any of its properties or
assets is bound, except for violations or defaults that could not, individually
or in the aggregate, reasonably be expected to result in a FDESI Material
Adverse Effect.
(b) Set forth in the FDESI Disclosure Letter is (x) a list of all loan or
credit agreements, notes, bonds, indentures, and other agreements and
instruments pursuant to which any Indebtedness of FDESI in an aggregate
principal amount in excess of $25,000 is outstanding or may be incurred and (y)
the respective principal amounts currently outstanding thereunder.
(c) Except as set forth in the FDESI Disclosure Letter, neither FDESI nor
Holdings is a party to or bound by any material written or oral (w) employment
agreement or employment contract that is not terminable at will by the Company
or FDESI, (x) covenant not to compete which would limit or restrict the Company
or FDESI from conducting business anywhere in the world, or (y) agreement,
contract or other arrangement with (A) any stockholder of FDESI, (B) any
Affiliate (as defined herein) of FDESI or, to the knowledge of FDESI or
Holdings, any Affiliate of any stockholder of FDESI or (C) any officer, director
or employee of FDESI (other than employment agreements covered by clause (w)
above), or of any stockholder of FDESI or of any Affiliate of FDESI.
(d) Except as set forth in the FDESI Disclosure Letter, FDESI is not a party
to or bound by any material written or oral mortgage, pledge, security
agreement, deed of trust or other document granting a Lien or security interest
(including, but not limited to, Liens upon properties acquired under conditional
sales, capital leases or other title retention or security devices).
Section 4.19 Properties. (a) Except as set forth in the FDESI Disclosure
Letter, FDESI has good and marketable title to, or valid leasehold interests in,
all its properties and assets except for such as are no longer used or useful in
the conduct of its businesses or as have been disposed of in the ordinary course
of business and except for defects in title, easements, restrictive covenants
and similar encumbrances or impediments that, in the aggregate, do not and will
not materially interfere with its ability to conduct its business as currently
conducted.
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Section 4.20 Confidentiality Agreements. To the knowledge of Holdings and
FDESI, all FDESI Employees who have access to confidential information have
entered into confidentiality agreements and all employees providing services of
a scientific nature have entered into invention agreements in the form then
utilized by Holdings. The rights to all such agreements will be assigned by
Holdings to FDESI prior to Closing. To the knowledge of Holdings and FDESI, no
officer or employee has disavowed his or her obligations under any such
agreement and neither Holdings nor FDESI is aware of any facts or circumstances
which would constitute a material breach of any such agreement.
Section 4.21 FDESI Disclosure. No representations or warranties by FDESI in
this Agreement and no statement contained in any document (including, without
limitation, the Financials, Interim Financials, FDESI Disclosure Letter,
certificates, or other writings) furnished or to be furnished by FDESI to the
Company or any of its representatives pursuant to the provisions hereof contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
Section 5.1 Conduct of Business. (a) Ordinary Course. During the period
from the date of this Agreement to the Closing Date, the Company shall and shall
cause its Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall, in all material respects, be unimpaired at the Closing
Date. Except for the matters listed in Section 5.1 of the Company Disclosure
Letter, without limiting the generality of the foregoing, during the period from
the date of this Agreement to the Closing Date, the Company shall not, and shall
not permit any of its Subsidiaries, without the prior written consent of
Holdings, to:
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(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by any direct or indirect wholly owned Subsidiary of the Company
to its parent, (y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (z) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than (x) the issuance of Common
Stock upon the exercise of Employee Stock Options and Director Stock Options
outstanding on the date of this Agreement in accordance with their present
terms, and (y) the issuance of Common Stock pursuant to the Option Agreement);
(iii) amend its certificate of incorporation, by-laws or other comparable
charter or organizational documents or reincorporate in any jurisdiction;
(iv) acquire or agree to acquire (x) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof, except for such actions
undertaken in the ordinary course of business and consistent with past practice
and involving no more than $250,000 in the aggregate or (y) any assets that are
material, individually or in the aggregate, to the Company and its Subsidiaries
taken as a whole, except purchases of inventory in the ordinary course of
business consistent with past practice;
(v) sell, lease, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of, any of its properties or assets, except sales of
properties or assets no longer used by the Company or its Subsidiaries in the
conduct of its business and sales of inventory in the ordinary course of
business consistent with past practice;
(vi) (y) incur any Indebtedness for borrowed money or guarantee any such
Indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement condition of
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another person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowing not in excess of $1,000,000 in
the aggregate incurred in the ordinary course of business consistent with past
practice, the endorsement of checks in the normal course of business and the
extension of credit in the normal course of business or (z) make any loans,
advances or capital contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned Subsidiary of the
Company;
(vii) make or agree to make any new capital expenditures or commitments,
purchases of property or acquisitions of other businesses, capital assets or
properties which, individually, is in excess of $250,000 or, in the aggregate,
are in excess of $1,000,000 or enter into any new real property lease with an
annual rental of more than $60,000;
(viii) make any Tax election (other than in the ordinary course of
preparing and filing its Tax returns) or settle or compromise any material Tax
liability;
(ix) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, or liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of the Company included
in the SEC Reports or incurred after the date of such financial statements in
the ordinary course of business consistent with past practice, or waive the
benefits of, or agree to modify in any manner, any confidentiality or similar
agreement to which the Company or any of its Subsidiaries is a party;
(x) adopt any shareholder rights or similar plan or take any other action
with the intention of, or which may have the effect of, discriminating against
Holdings as a shareholder of the Company (or any successor);
(xi) adopt or amend in any material respect any Plan;
(xii) enter into any contract, agreement, plan or arrangement covering any
director, officer or employee providing for the making of any payments, the
acceleration of vesting of any benefit or right or any other entitlement
contingent upon (A) the consummation of the transactions contemplated hereby or
by the Option Agreement or any acquisition by Holdings of securities of the
Company (whether by merger, tender offer, private or market purchases or
otherwise) or (B) the
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termination of employment after the occurrence of any such contingency if such
payment, acceleration of entitlement would not have been provided but for such
contingency; or amend any existing contract, agreement, plan or arrangement to
so provide; or
(xiii) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Other Actions. The Company shall not, and shall not permit any of its
Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement or the Option Agreement becoming untrue, or,
(ii) any of the conditions to the Merger set forth in Article VIII, not being
satisfied.
(c) Advice of Changes. The Company shall promptly advise Holdings orally and
in writing of any change or event having, or which, insofar as can reasonably be
foreseen, would have, a material adverse effect on the Merger or the
Recapitalization, or a Company Material Adverse Effect.
Section 5.2 Stockholder Meeting; Proxy Material. The Company shall cause a
meeting of its stockholders (the "Company Stockholder Meeting") to be duly
called and held as soon as practicable for the purpose of voting on approval of
the Transactions. Subject to Section 5.4(a), the Board of Directors shall
unanimously recommend approval and adoption of the matters submitted to the
Company's stockholders, including the issuance of the Acquired Shares to
Holdings pursuant to the Merger, as required pursuant to the rules of the NASDAQ
National Market, and the execution and filing of the Charter Amendments,
pursuant to the Recapitalization. In connection with the Company Stockholder
Meeting, the Company: (i) shall promptly prepare and file with the SEC in
accordance with the Exchange Act the Company Proxy Statement, shall use all
reasonable efforts to have the Company Proxy Statement and/or any amendment or
supplement thereto cleared by the SEC and shall thereafter mail to its
stockholders as promptly as practicable the Company Proxy Statement; (ii) shall
use all reasonable efforts to obtain the necessary approvals by its stockholders
of the Transactions; and (iii) shall otherwise comply with all legal
requirements applicable to such meeting. The Company shall make available to
Holdings prior to the filing thereof with the SEC copies of the preliminary
Company Proxy Statement and any amendments or supplements thereto and shall make
any changes therein reasonably requested by Holdings insofar as such changes
relate to any matters relating to Holdings, FDESI or the description of the
Transactions.
Section 5.3 Access to Information. From the date hereof until the Closing,
the Company shall give Holdings, its counsel, financial advisors, auditors and
other authorized representatives reasonable
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access during normal business hours to the offices, properties, books and
records of the Company and its Subsidiaries and, to the extent the Company may
do so, its Joint Ventures, shall furnish to Holdings, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request to
the extent available to the Company and shall instruct the Company's employees,
counsel and financial advisors to cooperate with Holdings in its investigation
of the business of the Company, its Subsidiaries and its Joint Ventures;
provided, that no investigation pursuant to this Section 5.3 shall affect any
representation or warranty given by the Company to Holdings hereunder. All
requests for information made pursuant to this Section 5.3 shall be directed to
the Chief Financial Officer of the Company or such other persons as may be
designated by him.
Section 5.4 No Solicitation of Other Offers. (a) From the date hereof until
the earlier of the Closing or the termination of this Agreement, the Company
shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly, take (nor shall the Company authorize or permit its officers,
directors, employees, representatives, investment bankers, attorneys,
accountants or other agents or affiliates, to take) any action to: (i)
encourage, solicit or initiate the submission of any Acquisition Proposal (as
defined below), (ii) enter into any agreement with respect to or propose any
Acquisition Proposal or (iii) participate in any way in any discussions or
negotiations with, or furnish any information to, any person or entity (other
than Holdings or its officers, directors, employees, representatives, investment
bankers, attorneys, accountants or other agents or affiliates of Holdings) in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal; provided, however, that (x) the Company may
participate in discussions or negotiations (including as a part thereof making
any counterproposal) with or furnish information to any third party pursuant to
a customary confidentiality agreement (so long as it has complied with the
prohibitions of paragraph (a), subparagraph (i) above) if (i) a majority of the
Board of Directors determines in good faith, after receipt of written advice of
outside counsel, that the failure to provide such information or participate in
such discussions or negotiations would be more likely than not to cause the
members of the Board of Directors to be in breach of their fiduciary duties
under Delaware Law and (ii) a majority of the Board of Directors, after
consultation with the Company's independent financial advisors, determines in
good faith that there is a reasonable possibility that such third party will
submit to the Company an Acquisition Proposal which is a Superior Proposal (as
defined below), (y) if a majority of the Board of Directors determines in good
faith, after receipt of written advice of outside counsel, that the failure to
recommend to the Company's stockholders an Acquisition Proposal which is a
Superior Proposal would cause the members of the Board of Directors to be in
breach of their fiduciary duties
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under Delaware Law, the Company may withdraw its recommendation to the
stockholders in favor of the Transactions and recommend to its stockholders such
an Acquisition Proposal which is a Superior Proposal and (z) after termination
of this Agreement, the Company may enter into an agreement with any third party
with respect to any Acquisition Proposal which is a Superior Proposal; provided,
further however, that the Company shall not take any action described in clause
(x), (y) or (z) of the immediately preceding provision except after prompt
notice to Holdings of its receipt of any Acquisition Proposal or of any inquiry
or request for information contemplating an Acquisition Proposal. The Company
shall promptly notify Holdings of its receipt of any Acquisition Proposal or of
any inquiry or request for information contemplating an Acquisition Proposal.
The Company shall keep Holdings informed, on a current basis, of the status of
any such proposals, negotiations or discussions except to the extent that a
majority of the Board of Directors determines in good faith, after receipt of
written advice of outside counsel, that the provision of such information to
Holdings would be more likely than not to cause the members of the Board to be
in breach of their fiduciary duties under Delaware Law. Any actions permitted
under, and taken in compliance with, this Section 5.4 shall not be deemed a
breach of any other covenant or agreement of the Company contained in this
Agreement.
(b) (i) For purposes of this Agreement, "Acquisition Proposal" shall mean
any bona fide proposal made by a third party to acquire (A) beneficial ownership
(as defined under Rule 13(d) of the Exchange Act) of a majority equity interest
in the Company pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, tender offer or exchange offer or
similar transactions involving the Company including, without limitation, any
single or multi-step transaction or series of related transactions which is
structured in good faith to permit such third party to acquire beneficial
ownership of a majority or greater equity interest in the Company or (B) all or
substantially all of the business or assets of the Company (other than the
transactions contemplated by this Agreement and the Option Agreement). Any
transaction described in the preceding sentence is herein referred to as an
"Acquisition Transaction."
(ii) The term "Superior Proposal" shall mean any bona fide Acquisition
Proposal which a majority of the members of the Board of Directors determines in
its good faith judgment (based on the written advice of independent financial
advisors) to be more favorable to the Company and the holders of Common Stock
than the transactions contemplated hereby (including, without limitation, the
Marketing Agreement), taken as a whole, and for which financing is then
committed or which, in the good faith judgment of a majority of such members
(based on the written advice of independent financial advisors) is capable of
being financed by such third party.
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Section 5.5 Board of Directors and Officers. The Company shall cause the
Board of Directors of the Company, effective upon the Closing, to consist of
seven members, and shall cause the filing of the Charter Amendments to terminate
the classification of the Board of Directors. Until such time as their
successors are duly elected or appointed, effective upon the Closing, the
directors who shall serve shall be Walter C. Barber, Allan S. Bufferd, Robert P.
Schechter, David L. Myers, J. Michal Conaway, James C. Stein and an additional
Independent Director to be named by Holdings prior to the mailing of the Company
Proxy Statement. The Company shall also cause the Board of Directors of the
Surviving Corporation, immediately following the Closing, to consist of three
members, Walter C. Barber, David L. Myers and J. Michal Conaway, who shall serve
until their successors are duly elected or appointed. The Surviving Corporation
shall cause the following individuals to be appointed to the offices indicated,
effective upon the Closing, to serve at the pleasure of the Board of Directors:
Walter Barber President
Robert Sliney Vice President and CFO
Steve Paquette Vice President
Keith Angell Vice President
Ronnie Smith Vice President
John Wood Vice President
Don Stokley Vice President
Section 5.6 Amendments to Certificate of Incorporation and By-laws. The
Board of Directors shall adopt, subject to stockholder approval, the Charter
Amendments and By-law Amendments and submit such amendments for approval by the
stockholders of the Company at the Company Stockholder Meeting. The Charter
Amendments shall include a provision changing the name of the Company as set
forth therein. The Board of Directors shall recommend approval and adoption of
such amendments by the Company's stockholders, subject to Section 5.4(a).
Section 5.7 Stock Options. The Company shall not take any steps to
accelerate the vesting or exercisability of any Employee Stock Options or
Director Stock Options outstanding on the date of this Agreement, or otherwise
modify the terms of such options on or before the Closing, without the prior
written consent of Holdings. Promptly after the Closing Date (but effective as
of the Closing Date of the Merger), each of the outstanding Employee Stock
Options and each of the outstanding Director Stock Options shall be canceled,
and the holder thereof shall receive, in exchange therefore, a substitute option
(an "Adjusted Option") to purchase a number of shares of New Common Stock equal
to the number of shares of Old Common Stock subject to such canceled option
multiplied by
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the Adjustment Fraction (as defined below), at a per share exercise price equal
to the per share exercise price of such canceled option multiplied by a fraction
equal to one divided by the Adjustment Fraction. Any Adjusted Option issued as
described above shall be subject to the same terms and conditions (other than
number of shares and exercise price) as the option for which it is exchanged,
including the terms relating to vesting (treating such Adjusted Options as if
they were granted at the same time as the options for which they were exchanged)
and the conditions relating to exercise.
For purposes of the adjustments described in this section, the "Adjustment
Fraction" means a fraction, the numerator of which equals the Current Market
Price (as defined below) of a share of Old Common Stock, and the denominator of
which equals the Current Market Price of a share of New Common Stock. The
"Current Market Price" of a share of Old Common Stock or a share of New Common
Stock means the average per share closing price for the five trading days
immediately preceding the Closing Date, in the case of the Old Common Stock, and
the five trading days immediately following the Closing Date, in the case of the
New Common Stock, as reported on the NASDAQ National Market.
Section 5.8 Update to Opinion of Financial Advisor. The Company shall
request and thereafter use its best efforts to obtain, prior to the mailing of
the Company Proxy Statement, an additional opinion of Donaldson, Lufkin &
Jenrette, to the effect that as of such date the consideration to be received by
the Company and its stockholders, pursuant to the Transactions, taken as a
whole, is fair from a financial point of view to the Company and its
stockholders.
ARTICLE VI
COVENANTS OF HOLDINGS AND FDESI
Section 6.1 Conduct of FDESI Business. (a) Ordinary Course. During the
period from the date of this Agreement to the Closing Date, Holdings and FDESI
covenant that FDESI and Holdings (with respect to the business of FDESI) shall
carry on their respective businesses in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall,
in all material respects, be
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unimpaired at the Closing Date. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Closing
Date, FDESI shall not:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (z) purchase, redeem or otherwise acquire any shares of capital
stock of FDESI or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities;
(iii) amend its certificate of incorporation, by-laws or other comparable
charter or organizational documents or reincorporate in any jurisdiction;
(iv) acquire or agree to acquire (x) by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture, association or
other business organization or division thereof, except for such actions
undertaken in the ordinary course of business and consistent with past practice
and involving no more than $250,000 in the aggregate or (y) any assets that are
material, individually or in the aggregate, to FDESI;
(v) sell, lease, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of, any of its properties or assets, except sales of
properties or assets no longer used by FDESI in the conduct of its business and
sales of inventory in the ordinary course of business consistent with past
practice;
(vi) (y) incur any Indebtedness for borrowed money or guarantee any such
Indebtedness of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of FDESI, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, except for
short-term borrowing on an inter-company basis not in excess of $1,000,000 in
the aggregate incurred in the ordinary course of business consistent with past
practice, the endorsement of checks in the normal course of business
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and the extension of credit in the normal course of business or (z) make any
loans, advances or capital contributions to, or investments in, any other
person, other than to FDESI;
(vii) make or agree to make any new capital expenditures or commitments,
purchases of property or acquisitions of other businesses, capital assets or
properties which, individually, is in excess of $50,000 or, in the aggregate,
are in excess of $250,000 or enter into any new real property lease;
(viii) make any Tax election (other than in the ordinary course of
preparing and filing its Tax returns) or settle or compromise any material Tax
liability;
(ix) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, or liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of FDESI included in
the FDESI Disclosure Letter or incurred after the date of such financial
statements in the ordinary course of business consistent with past practice, or
waive the benefits of, or agree to modify in any manner, any confidentiality or
similar agreement to which FDESI is a party;
(x) adopt any shareholder rights or similar plan or take any other action
with the intention of, or which may have the effect of, discriminating against
the Company as a shareholder of FDESI (or any successor);
(xi) adopt or amend in any material respect any Plan;
(xii) enter into any contract, agreement, plan or arrangement covering any
director, officer or employee providing for the making of any payments, the
acceleration of vesting of any benefit or right or any other entitlement
contingent upon (A) the consummation of the transactions contemplated hereby or
by the Option Agreement or any acquisition by the Company of securities of FDESI
(whether by merger, tender offer, private or market purchases or otherwise) or
(B) the termination of employment after the occurrence of any such contingency
if such payment, acceleration of entitlement would not have been provided but
for such contingency; or amend any existing contract, agreement, plan or
arrangement to so provide.
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(xiii) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Other Actions. Neither FDESI nor Holdings shall take any action that
would, or that could reasonably be expected to, result in (i) any of the
representations and warranties of Holdings or FDESI set forth in this Agreement
or the Option Agreement becoming untrue, or (ii) any of the conditions to the
Merger set forth in Article VIII, not being satisfied.
(c) Advice of Changes. FDESI shall promptly advise the Company orally and in
writing of any change or event having, or which, insofar as can reasonably be
foreseen, would have, a material adverse effect on the Merger or the
Recapitalization, or a FDESI Material Adverse Effect.
Section 6.2 Access to Information. From the date hereof until the Closing,
FDESI and Holdings (with respect to the business of FDESI) shall give the
Company, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the offices,
properties, books and records of FDESI and Holdings (with respect to the
business of FDESI) and, to the extent FDESI may do so, the FDESI Joint Ventures,
shall furnish to the Company, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as such persons may reasonably request to the extent available to
FDESI and shall instruct FDESI's employees, counsel and financial advisors to
cooperate with the Company in its investigation of the business of FDESI and the
FDESI Joint Ventures; provided, that no investigation pursuant to this Section
6.2 shall affect any representation or warranty given by FDESI to the Company
hereunder. All requests for information made pursuant to this Section 6.2 shall
be directed to the President of FDESI or such other persons as may be designated
by him.
Section 6.3 Certain Additional Agreements of Holdings. With respect to
paragraphs (a), (b), (c), (d) and (e), until April 30, 1999, and with respect to
paragraph (f), for the periods specified therein (in each case the "Standstill
Period"), Holdings and the Company agree:
(a) Neither Holdings nor any of its Affiliates shall enter into any contract,
agreement or transaction with the Company or any of its Affiliates after the
Closing Date that is material to the Company's business, taken as a whole,
without the prior approval of a majority of the Independent Directors (as
defined herein) except for (i) any contract, agreement or transaction
contemplated by the Marketing Agreement or the Option Agreement, (ii) any
contract, agreement or transaction
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which is entered into between such parties in the ordinary course of business,
and (iii) any contract, agreement or transaction governed by paragraphs (b),
(c), (d) or (f);
(b) Neither Holdings nor any of its Affiliates shall, directly or indirectly,
purchase or otherwise acquire, any New Common Stock, securities of the Company
convertible into or exchangeable for New Common Stock or options, rights,
warrants and similar securities issued by the Company to acquire New Common
Stock, without the prior approval of a majority of the Independent Directors,
unless immediately after such purchase or acquisition, the percentage of then
outstanding New Common Stock that would be owned of record or beneficially by
Holdings of its Affiliates ("Holdings' Percentage") would not exceed 65%,
provided, however, that the foregoing restrictions on purchases shall not apply
to the exercise by Holdings of the Option; provided, however, further, that if
the Option is exercised by Holdings, the Option Shares held, directly or
indirectly, by Holdings shall be counted in any determination of Holdings'
Percentage with respect to any purchases by Holdings or its Affiliates after the
date of such exercise of the Option;
(c) The Company shall not, directly or indirectly, purchase any shares of New
Common Stock without the prior approval of a majority of the Independent
Directors, unless immediately after such repurchase, Holdings' Percentage would
not exceed 65%;
(d) Holdings shall not sell, transfer, mortgage or otherwise dispose of any of
the New Common Stock held by Holdings without the prior approval of a majority
of the Independent Directors; provided, however, that the prior approval of the
Independent Directors shall not be required if there occurs a substantial and
extreme adverse change in the business, prospects, or condition (financial or
otherwise) of the Company that arises from corresponding substantial adverse
changes of expected long term duration in the market for environmental services;
(e) The Company shall not enter into any amendment or terminate or waive any
provision of this Agreement, the Option Agreement or the Marketing Agreement
without the prior approval of a majority of the Independent Directors; and
(f) Until April 30, 1999, Holdings shall vote all shares of New Common Stock
owned by it in favor of fixing the size of the Board of Directors of the Company
at not more than seven and in favor of not less than three Independent
Directors. Until the annual stockholders' meeting of the Company (or written
consent in lieu thereof) held in 1998, Holdings shall vote all shares of New
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Common Stock owned by it in favor of Allan S. Bufferd and Robert P. Schechter
(whom Holdings shall also cause to be nominated) in any election of members of
the Company's Board of Directors.
For purposes of this Agreement, "Independent Director" means a director of the
Company who is not (apart from such directorship) (i) an officer, Affiliate,
employee, principal stockholder, consultant or partner of Holdings or any
Affiliate of Holdings or of any entity that was dependent upon Holdings or any
Affiliate of Holdings for more than 3% of its revenues or earnings in its most
recent fiscal year, (ii) an officer, employee, consultant or partner of the
Company or any Affiliate of the Company or an officer,employee, principal
stockholder, consultant or partner of an entity that was dependent upon the
Company or any Affiliate of the Company for more than 3% of its revenues or
earnings in its most recent fiscal year (unless agreed to in writing by
Holdings) or (iii) an officer, director, employee, principal stockholder,
consultant or partner of a person that is a competitor of Holdings or any of its
Affiliates (unless agreed to in writing by Holdings) or of the Company or any of
its Affiliates of such competitor for more than 3% of its revenues or earnings
in its most recent fiscal year.
Section 6.4 Holdings Debt. On or before the Closing Date, any and all
Holdings Debt shall be cancelled and forgiven.
Section 6.5 Tax Indemnification. Subject to the provisions of Section 7.7(c)
from and after the Closing Date, Holdings shall pay or cause to be paid and
shall indemnify and hold harmless the Company and any director, officer,
employee, advisor, parent, subsidiary or Affiliate of the Company, and any
successor thereof from any liability for or arising out of, any Taxes of
Holdings (including, without limiting the generality of the foregoing, any
obligation (including any joint and several liability pursuant to Treasury
Regulations Section 1.1502-6 or otherwise) to contribute to the payment of
Taxes) determined on a combined or consolidated basis (x) of Holdings and any
current or former member of Holdings' group of corporations filing on a combined
or consolidated basis for any taxable period or (y) attributable to the income,
business, property or operations of Holdings for which FDESI may be liable on
any basis, including, but not limited to, liability as a transferee or on a
joint and several basis under the consolidated return provisions in respect of a
pre-Closing Date tax period, or resulting from FDESI ceasing to be affiliated
with the affiliated group of corporations (as defined in Section 1504 of the
Code) of which Holdings is a member.
Section 6.6 Termination of Tax-Sharing Agreements. Before the Closing Date,
all agreements between FDESI and any member of Holdings' consolidated, unitary
or combined group of
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corporations with respect to the apportionment of consolidated, unitary or
combined tax liability imposed by any taxing jurisdiction shall have been
terminated and all payments required to be made by FDESI to any other member of
any such group pursuant to any such agreement shall have been made, other than
payments referred to in Section 7.7(c) hereof or reflected in the FDESI
Disclosure Letter.
Section 6.7 Contract Indemnification. From and after the Closing Date
Holdings shall indemnify and hold harmless the Company and its Subsidiaries
(including FDESI) from and against any and all loss, cost and expense arising
from or as a result of a breach by Holdings or FDESI of the representations and
warranties contained in Section 4.13 hereof.
ARTICLE VII
COVENANTS OF HOLDINGS AND THE COMPANY
The parties hereto agree that:
Section 7.1 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each party will use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
Transactions, including, without limitation, all reasonable efforts to oppose
any judgments, decrees or orders of the type referred to in Section 8.2(c).
Section 7.2 Certain Filings. The Company and Holdings shall cooperate with
one another (a) in connection with the preparation of the Company Disclosure
Documents, (b) in determining whether any action by or in respect of, or filing
with, any governmental body, agency or official, or authority is required, or
any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the Transactions and (c)
in seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents and seeking timely to obtain any such actions,
consents, approvals or waivers.
Section 7.3 Public Announcements. Holdings and the Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and will not
issue any such press release or make any such
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public statement prior to such consultation unless required by law or a party
has not responded to reasonable efforts to effect such consultation.
Section 7.4 Marketing Agreement. Holdings, FDESI and the Company each agree
to execute and deliver the Marketing Agreement concurrently with the Closing.
Section 7.5 Brokers or Finders. Each of Holdings and the Company represents,
as to itself, its subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with this Agreement or any of the transactions contemplated by
this Agreement, except Donaldson, Lufkin & Jenrette whose fees and expenses will
be paid by the Company in accordance with the Company's agreement with such
firm, and Merrill Lynch, whose fees and expenses, except as provided in Section
10.4, will be paid by Holdings in accordance with Holdings' agreement with such
firm, and each of the Company and Holdings respectively agrees to indemnify and
hold the other harmless from and against any and all claims, liabilities or
obligations with respect to any other broker's, finder's or similar fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates in
connection with this Agreement or any of the transactions contemplated hereby.
Section 7.6 Notices of Certain Events. The parties hereto will notify one
another of:
(a) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced of
which such party has received notice or, to its knowledge, threatened, against
the Company or which relate to the consummation of the transactions contemplated
by this Agreement.
Section 7.7 Post-Closing Tax Matters. The following provisions shall govern
the allocation of responsibility for certain Tax matters following the Closing:
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(a) The Company shall prepare and file all FDESI tax returns which are due,
originally or as extended, after the Closing (other than income tax returns with
respect to periods for which a consolidated, unitary or combined return includes
Holdings and the operations of FDESI).
(b) The Company, Holdings and FDESI shall cooperate fully, as and to the
extent reasonably requested, in connection with the filing of tax returns and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and, upon request, the provision of
records and information which are reasonably relevant to the filing of tax
returns or any such audit, litigation or other proceeding and employees shall be
made available on a mutually convenient basis to provide information and
explanation of any material provided hereunder.
(c) FDESI shall reimburse Holdings for such portion of the tax liability on
all consolidated, unitary and combined Tax returns which include FDESI and
Holdings, as is attributable to FDESI. This portion shall be determined as if
FDESI had filed a separate return for such purposes and the highest marginal
corporate tax rate had applied to all of FDESI's income. Holdings and the
Company shall cooperate to allocate on a fair and reasonable basis tax
liabilities which are reported for periods after the Closing Date on
consolidated, unitary or combined returns which include both Holdings or its
affiliates and the Company or its affiliates.
Section 7.8 FDESI Employee Benefits. Holdings agrees to provide, on a
reimbursed cost basis, continued participation by FDESI Employees in the
Holdings benefit plans and programs listed in Schedule 4.15(a) of the FDESI
Disclosure Letter during the period from the Closing through December 31, 1996.
Section 7.9 Use of Fluor Daniel Name. Effective upon Closing, Holdings
hereby grants to the Company the right and license to use the name "Fluor
Daniel" in its corporate name and in the conduct of its business, without
payment of any license fee or royalty. In the event that at any time Holdings
holds less than 20% of the outstanding New Common Stock of the Company and
provided that Holdings is not in breach of any of its obligations under Section
6.3(d) hereof, Holdings may by written notice to the Company revoke this right
and license; provided that the Company shall change its corporate name and cease
using the name Fluor Daniel as soon as reasonably possible but in no event later
than three months after such revocation.
52
<PAGE>
Section 7.10 Non-Permitted Actions. For a period of one year after the
Closing the Company shall cause FDESI to maintain its corporate existence and
will not allow it to transfer any of the contracts to which it is a party.
ARTICLE VIII
CONDITIONS TO THE CLOSING
Section 8.1 Conditions to the Obligations of Each Party. The obligations of
each of the Company, Newco, Holdings and FDESI to consummate the Merger are
subject to the satisfaction of the following conditions (which may be waived in
whole or in part by the party against whom the waiver is to be effective, unless
such a waiver is prohibited by law):
(a) the Transactions, including the Charter Amendments and the
Recapitalization, shall have been approved by the holders of a majority of the
outstanding Common Stock;
(b) any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree of any court or other governmental body of competent
jurisdiction shall be in effect which prohibits or makes illegal the
consummation of the Merger or the effectiveness as between the parties of the
Marketing Agreement;
(d) all consents or actions by or in respect of or filings with any
governmental body, agency, official, or authority required to permit the
consummation of the Merger and the effectiveness as between the parties of the
Marketing Agreement as between the parties shall have been obtained, taken or
made (other than those consents, actions or filings which, if not obtained,
taken or made prior to the consummation of the Merger and the effectiveness as
between the parties of the Marketing Agreement, as would not have a Company
Material Adverse Effect); and
(e) there shall not be in effect any banking moratorium or suspension of
payments in respect of banks in the United States.
53
<PAGE>
Section 8.2 Conditions to the Obligations of Holdings. The obligation of
Holdings and FDESI to consummate the Merger is subject to the satisfaction of
the following further conditions (which may be waived in whole or in part by
Holdings, unless such a waiver is prohibited by law):
(a) (i) the Company shall have performed, in all material respects, all of
its obligations hereunder required to be performed by it at or prior to the
Closing; (ii) each of the representations and warranties of the Company
contained in this Agreement shall be true in all material respects as of the
date hereof and as of the Closing (except to the extent such representations and
warranties are expressly made as of an earlier date) as if made at and as of
such time; and (iii) Holdings shall have received a certificate signed by an
officer of the Company to the foregoing effect;
(b) From the Interim Balance Sheet Date to the Closing Date, there shall have
been no Company Material Adverse Change;
(c) No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
constituted (and be pending) or threatened, by any government or governmental
authority, that seeks, or threatens to seek, to prevent or delay the
consummation of the Transactions or that challenges any of the terms or
provisions of this Agreement;
(d) No order, judgment or decree issued by any United States federal or state
or foreign governmental or regulatory authority or body, or by any court of
competent jurisdiction nor any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state or foreign
government or governmental authority that (i) prevents the consummation of the
Transactions; (ii) prohibits Holdings at any time after the Closing from
exercising all material rights and privileges pertaining to its ownership of the
Acquired Shares or the Option Shares purchasable upon exercise of the Option; or
(iii) materially and adversely affects the condition (financial or otherwise),
properties, assets, earnings, business or operations of the Company or a
Subsidiary shall be in effect;
(e) The Marketing Agreement shall have been executed and delivered by the
Company and shall be in full force and effect to the extent set forth therein;
(f) The Charter Amendments shall have been filed with the Delaware Secretary
of State for filing in accordance with the Delaware Law;
54
<PAGE>
(g) The Company shall have made the Company Deposit with the Exchange Agent
and furnished Holdings evidence, reasonably satisfactory to Holdings, thereof;
and
(h) The Company shall have furnished Holdings with:
(i) a copy of a resolution or resolutions duly adopted by the Board of
Directors of the Company approving this Agreement, the Option Agreement and the
Marketing Agreement, and the transactions contemplated hereby and thereby and
directing that a proposal to approve the Transactions be submitted to a vote of
the stockholders of the Company, certified by the Secretary of the Company;
(ii) a copy of a resolution or resolutions duly adopted by the holders of
a majority of the outstanding shares of Common Stock of the Company approving
the Transactions, certified by the Secretary of the Company; and
(iii) a favorable opinion of Testa, Hurwitz & Thibeault, counsel for the
Company, dated the Closing Date, with respect to the matters set forth in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.9 and 3.11.
Section 8.3 Conditions to the Obligations of the Company. The obligation of
the Company to consummate the Merger and the Recapitalization is subject to the
satisfaction of the following further conditions (which may be waived in whole
or in part by the Company, unless such waiver is prohibited by law):
(a) (i) Each of Holdings and FDESI shall have performed, in all material
respects, all its obligations hereunder required to be performed by it at or
prior to the Closing; (ii) each of the representations and warranties of
Holdings and FDESI contained in this Agreement shall be true in all material
respects as of the date hereof and at and as of the Closing (except to the
extent such representations and warranties are expressly made as of an earlier
date) as if made at and as of such time; and (iii) the Company shall have
received a certificate signed by an officer of Holdings to the foregoing effect;
(b) The Agreement of Merger shall have been submitted to the California
Secretary of State for filing in accordance with the California Code;
55
<PAGE>
(c) FDESI shall have made the FDESI Deposit with the Exchange Agent and
furnished the Company evidence, reasonably satisfactory to the Company, thereof
and evidence, reasonably satisfactory to the Company, of the Transfer
Authorization;
(d) Holdings shall have furnished the Company with:
(i) a certified copy of a resolution or resolutions duly adopted by the
Board of Directors of Holdings approving this Agreement, the Option Agreement
and the Marketing Agreement, and the transactions contemplated hereby and
thereby;
(ii) a certified copy of a resolution or resolutions duly adopted by the
Board of Directors and sole stockholder of FDESI approving this Agreement; and
(iii) a favorable opinion of Lawrence N. Fisher counsel for Holdings,
dated the Closing Date with respect to the matters set forth in Sections 4.1,
4.2, 4.3, 4.4, 4.5, 4.6, 4.8 and 4.10;
(e) from the FDESI Balance Sheet Date to the Closing Date there shall have
been no FDESI Material Adverse Change;
(f) No action or proceeding before any court or governmental or regulatory
authority or body, United States federal or state or foreign, shall have been
constituted (and be pending) or threatened, by any government or governmental
authority, that seeks, or threatens to seek, to prevent or delay the
consummation of the Transactions or that challenges any of the terms or
provisions of this Agreement;
(g) No order, judgment or decree issued by any United States federal or state
or foreign governmental or regulatory authority or body, or by any court of
competent jurisdiction nor any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state or foreign
government or governmental authority that (i) prevents the consummation of the
Transactions; (ii) prohibits Holdings at any time after the Closing from
exercising all material rights and privileges pertaining to its ownership of the
stock of the Surviving Corporation; or (iii) materially and adversely affects
the condition (financial or otherwise), properties, assets, earnings, business
or operations of FDESI, shall be in effect; and
56
<PAGE>
(h) The Marketing Agreement shall have been executed and delivered by Holdings
and shall be in full force and effect to the extent set forth therein.
(i) The Company shall have received the additional opinion of Donaldson,
Luftkin & Jenrette referenced in Section 5.8.
ARTICLE IX
TERMINATION
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing (notwithstanding any approval of the Transactions by the
stockholders of the Company):
(i) by mutual written consent of the Company and Holdings;
(ii) by the Company or Holdings, if the Closing shall not have occurred on
or before April 30, 1996; provided, however, that the right to terminate this
Agreement under this clause (ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date;
(iii) by the Company or Holdings, if there shall be any law or regulation
adopted or amended after the date hereof that makes consummation of the Merger
or the effectiveness as between the parties of the Option Agreement or the
Marketing Agreement illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Holdings or the Company from consummating
the Merger or the effectiveness as between the parties of the Option Agreement
and the Marketing Agreement is entered and such judgment, injunction, order or
decree shall become final and nonappealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause (iii) shall have used all
reasonable efforts to remove such judgment, injunction, order or decree;
(iv) by Holdings, or by the Company so long as the Company has complied
with Section 5.4, if the Board of Directors of the Company fails to recommend,
or modifies or withdraws its recommendation to the Company's stockholders that
they vote to approve the Transactions or shall have recommended to the Company's
stockholders an Acquisition Proposal.
57
<PAGE>
(v) by Holdings if it is not in material breach of its obligations under
this Agreement, and a person or group (as defined in Section 13(d)(iii) of the
Exchange Act) (other than Holdings or any of its Affiliates) shall have (a) made
an Acquisition Proposal and the Company shall have commenced discussions with
such person or group or (b) become the beneficial owner (as defined in Rule 13d-
3 promulgated under the Exchange Act) of at least 20% of the outstanding shares
of Common Stock;
(vi) (a) by Holdings or the Company, if the Company Stockholder Meeting
shall have been held and the stockholders of the Company shall have failed to
approve the Transactions at such meeting or (b) by Holdings if the Company
Stockholder Meeting shall not have been held on or before April 30, 1996;
(vii) by Holdings if there has been a breach of any representation,
warranty, covenant or agreement of the Company which breach is incurable, or
which is not cured on or prior to April 30, 1996; and/or
(viii) by the Company if there has been a breach of any representation,
warranty, covenant or agreement of Holdings contained in this Agreement, which
breach is incurable or has not been cured on or prior to April 30, 1996.
Section 9.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 9.1, this Agreement shall become void and of no effect with no
liability on the part of any party hereto, except (a) to the extent such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this Agreement
and (b) that the agreements contained in Section 7.5, Article X and this Section
9.2 shall survive the termination hereof.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be given (and shall be deemed to
have been given upon receipt) if delivered in person or sent by facsimile,
telegram, telex, by registered or certified mail (postage prepaid, return
receipt requested) or by reputable overnight courier to the respective parties
at the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 10.1):
58
<PAGE>
if to Holdings, to:
Fluor Daniel, Inc.
3333 Michelson Drive
Irvine, California 92730
Attention: David L. Myers
Facsimile: (714) 975-5545
with a copy to:
Fluor Daniel, Inc.
3333 Michelson Drive
Irvine, California 92730
Attention: General Counsel
Facsimile: (714) 975-4450
if to the Company, to:
Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, Massachusetts 02062
Attention: Walter C. Barber
Facsimile: (617) 769-7992
with a copy to:
Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, Massachusetts 02062
Attention: Brian D. Goldstein, Esq.
Facsimile: (617) 769-7992
and:
Testa, Hurwitz & Thibeault
125 High Street
Boston, Massachusetts 02110
Attention: Andrew E. Taylor, Jr., Esq.
Facsimile: (617) 248-7100
59
<PAGE>
Section 10.2 Non-Survival of Representations, Warranties and Covenants;
Indemnification. All representations, warranties and agreements contained in
this Agreement or in any instrument delivered pursuant to this Agreement (except
the Option Agreement) shall terminate and be extinguished at the Closing or the
earlier date of termination of this Agreement pursuant to Section 9.1, as the
case may be, except that this Section 10.2 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Closing, (including, without limiting the generality of the foregoing, Sections
6.3, 6.5, 6.7, 7.5, 7.7, 7.8, 7.9, 7.10 and 10.4.)
Section 10.3 Amendments; No Waivers. (a) Any provision of this Agreement may
be amended or waived prior to the Closing, if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the Company and
Holdings or in the case of a waiver, by the party against whom the waiver is to
be effective; provided that after the authorization and approval of the
Transactions by the stockholders of the Company, no such amendment or waiver
shall, without the further approval of such stockholders, alter or change any
term of the Charter Amendments or the By-law Amendments, respectively, if such
alteration or change would adversely affect the holders of any shares of capital
stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.4 Fees and Expenses. (a) Except as otherwise provided in this
Section 10.4, all costs and expenses incurred by Holdings or FDESI in connection
with this Agreement shall be paid by Holdings, and all costs and expenses
incurred by the Company or Newco shall be paid by the Company.
(b) So long as Holdings shall not have materially breached its obligations
under this Agreement, the Company will pay Holdings, in immediately available
funds, the amounts referred to below (x) promptly, but in no event later than
two business days, after the termination of this Agreement pursuant to clause
(iv) of Section 9.1 hereof or (y) simultaneously with the consummation of an
Acquisition Transaction effected after the termination of this Agreement
pursuant to clause (v), or paragraph (a) of clause (vi) of Section 9.1 hereof,
provided that (i) prior to or within 60 days after the termination of this
Agreement as aforesaid, an Acquisition Proposal has been received and (ii)
60
<PAGE>
if the Acquisition Transaction involves a merger, sale of assets, purchase of
shares from the Company or similar business combination, the agreement with
respect thereto shall have been entered into within twelve months of the date of
termination of this Agreement, or if the Acquisition Transaction involves a
tender or exchange offer, the tender or exchange offer shall have been commenced
within such twelve month period; and (z) simultaneously with the consummation of
an Acquisition Transaction effected after the termination of this Agreement
pursuant to clause (vii) of Section 9.1 due to a breach by the Company of a
covenant or agreement contained in this Agreement (it being understood that
termination pursuant to such clause (vii) due to a breach of a representation or
warranty shall not give rise to any fee payment or expense reimbursement
obligation hereunder, but without prejudice to any other rights of Holdings with
respect to such a breach), if (i) prior to or within 60 days after the
termination of this Agreement as aforesaid, any negotiations or discussions have
been held with, or information supplied to, any third party who makes an
Acquisition Proposal and (ii) the agreement with respect to such or any other
Acquisition Transaction is entered into, or if the Acquisition Transaction is a
tender or exchange offer, such offer is commenced, within twelve months after
such termination. In addition, if the Closing does not occur because of a
failure by the Company to obtain the additional opinion of Donaldson, Lufkin and
Jenrette referenced in Section 5.8 and such failure is not due to an FDESI
Material Adverse Change, then within two business days after the termination of
the Agreement pursuant to Section 9.1 hereof, the Company shall pay Holdings, in
immediately available funds, the amounts referred to below. The amounts
referred to in each of the two preceding sentences are (a) a termination fee
(the "Termination Fee") of $3,000,000 and (b) up to an additional $750,000 as
reimbursement for fees and expenses actually incurred by Holdings and FDESI in
connection with this Agreement and the transactions contemplated hereby. For
purposes of the foregoing, the reimbursement referred to in clause (b) shall be
payable only if and to the extent Holdings provides a written statement to the
Company that it or FDESI has incurred such fees and expenses.
Section 10.5 Successor and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other party hereto. This Agreement shall be binding
upon and is solely for the benefit of each of the parties hereto and their
respective successors and assigns, and nothing in this Agreement is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
61
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Section 10.6 Entire Agreement. This Agreement (including all Exhibits and
Disclosure Letters hereto), together with the Confidentiality Agreements dated
July 7, 1995, and September 26, 1995, between the Company and Holdings,
constitutes the entire agreement among the parties and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof.
Section 10.7 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware applicable to agreements
made and to be performed entirely within such state.
Section 10.8 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 10.9 Severability. If any provision of this Agreement or the
application of any provision hereof to any party hereto or set of circumstances
is held invalid, the remainder of this Agreement and the application of such
provision to the other parties hereto or sets of circumstances shall not be
affected, unless the provisions held invalid shall substantially impair the
benefits of the remaining portions of this Agreement.
Section 10.10 "To Knowledge". Any reference herein to the "knowledge of the
Company (or FDESI)" or "known to the Company (or FDESI)" or any variation
thereof shall mean to the actual knowledge of one or more officers of the
Company or FDESI, as the case may be.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date and year first
above written.
FLUOR DANIEL, INC.
By:
_________________________________
Name:
_________________________________
Title:
_________________________________
FLUOR DANIEL ENVIRONMENTAL SERVICES, INC.
By:
_________________________________
62
<PAGE>
Name:
_________________________________
Title:
_________________________________
GROUNDWATER TECHNOLOGY, INC.
By:
_________________________________
Name:
_________________________________
Title:
_________________________________
GTI ACQUISITION CORPORATION
By:
_________________________________
Name:
_________________________________
Title:
_________________________________
63
<PAGE>
EXHIBIT 3
EXECUTION COPY
STOCK OPTION AGREEMENT
between
FLUOR DANIEL, INC.
and
GROUNDWATER TECHNOLOGY, INC.
December 11, 1995
<PAGE>
STOCK OPTION AGREEMENT
----------------------
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of December 11, 1995,
is entered into between FLUOR DANIEL, INC. a Delaware corporation (the
"Purchaser"), and GROUNDWATER TECHNOLOGY, INC. a Delaware corporation (the
"Company").
WHEREAS, the Purchaser, Fluor Daniel Environmental Services, Inc., a
California corporation ("FDESI"), the Company and GTI Acquisition Corporation
("Newco") propose to enter into an Investment Agreement of even date herewith
(the "Investment Agreement") providing for the merger of FDESI and Newco and the
issuance to Purchaser of shares in a new class of shares of Common Stock par
value $0.001 per share (the "New Common Stock"), of the Company to be created in
the reclassification of the Common Stock, par value $0.01 per share, of the
Company (the "Old Common Stock") immediately prior to the closing (the
"Closing") of the merger under the Investment Agreement;
WHEREAS, as a condition to their willingness to enter into the Investment
Agreement, the Purchaser and FDESI have requested that the Company agree, and
the Company has agreed, to sell to the Purchaser an irrevocable option as set
forth herein to purchase up to 1,366,000 shares of Old Common Stock, if
exercised prior to the Closing, or up to 1,366,000 shares of New Common Stock
(subject to adjustment as set forth in Section 1) if exercised on or after the
Closing (such Old Common Stock and such New Common Stock, collectively, the
"Optioned Shares"), and grant Purchaser certain other rights;
2
<PAGE>
NOW THEREFORE, to induce the Purchaser and FDESI to enter into the Investment
Agreement, and in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
1. Purchase and Sale of Option. Upon the terms and subject to the
---------------------------
conditions set forth herein, the Company hereby sells, issues and delivers to
the Purchaser and the Purchaser hereby purchases and accepts, an irrevocable
option (the "Option") to purchase for $17.00 per share in cash (the "Per Share
Price") up to 1,366,000 (the "Base Shares") authorized but unissued shares of
the Optioned Shares; provided, however, that after the Closing, the Option shall
be automatically adjusted so that the Base Shares shall equal 1,366,000
multiplied by the Adjustment Fraction (as defined below) and the Per Share Price
shall equal $17.00 multiplied by a fraction equal to one divided by the
Adjustment Fraction. The Option shall expire if not exercised on or prior to
December 11, 1998. The price the Purchaser shall pay for the Option is
$1,650,000 (the "Option Purchase Price"). The Option Purchase Price shall be
payable by wire transfer of immediately available funds, in accordance with the
Company's written instructions, on the date hereof. For purposes of the
adjustments described in this section, the "Adjustment Fraction" means a
fraction, the numerator of which equals the Current Market Price (as defined
below) of a share of Old Common Stock, and the denominator of which equals the
Current Market Price of a share of Old Common Stock or a share of New Common
Stock. The "Current Market Price of a share of Old Common Stock or a share of
New Common Stock means the average per share closing price for the five trading
days immediately preceding the Closing Date, in the case of the
3
<PAGE>
Old Common Stock, and the five trading days immediately following the Closing
Date, in the case of the New Common Stock, as reported on the NASDAQ National
Market.
2. Exercise of Option. The Purchaser may exercise the Option in whole or
------------------
in part at any time or from time to time prior to the expiration of the Option
and after the first to occur of (a) December 11, 1996, or (b) the Purchaser
becoming entitled to terminate the Investment Agreement by virtue of Section 9.1
thereof. In the event that the Purchaser wishes to exercise the Option, the
Purchaser shall give written notice (the date of any such notice being herein
called a "Notice Date") to the Company specifying the number of Optioned Shares
it will purchase pursuant to such exercise and a place and date (the "Closing
Date") not later then 10 business days from such Notice Date for the closing of
such purchase ("Closing"); provided, however, that if any approvals under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall be
required with respect to such exercise, then the Closing shall be the later of
the Closing Date as specified or the next business day following the date on
which the applicable waiting periods under the HSR Act shall have expired.
3. Payment of Purchase Price and Delivery of Certificates for Optioned
-------------------------------------------------------------------
Shares. At any Closing hereunder, (a) the Purchaser will make payment to the
- ------
Company of the aggregate price for the Optioned Shares purchased at such Closing
in New York Clearing House funds by certified or official bank check payable to
the order of the Company, in an amount equal to the product of the Per Share
Price multiplied by the number of Optioned Shares being purchased at such
Closing and (b) the Company will deliver to the Purchaser a duly executed
certificate or
4
<PAGE>
certificates, as requested by the Purchaser, representing the number of Optioned
Shares so purchased, registered in the name of the Purchaser or its nominee in
the denominations designated by the Purchaser in its notice of exercise.
4. Representations and Warranties of the Company.
---------------------------------------------
(a) Incorporation of Company's Representations and Warranties by
------------------------------------------------------------
Reference. The representations and warranties of the Company contained in
- ---------
Article III of the Investment Agreement are incorporated by reference into this
Agreement with the same effect as though set forth in full at this place (the
representations and warranties contained in the first sentence of Section 3.1
and in Section 3.2 of the Investment Agreement being deemed repeated at each
Closing at which Optioned Shares are purchased).
(b) Compliance with Securities Laws. None of the Company, any of its
-------------------------------
Affiliates (as defined in the Investment Agreement) or anyone acting on its or
their behalf has issued, sold or offered any security of the Company to any
person under circumstances that would cause the issuance and sale of the
Optioned Shares, as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act of 1933 (the "Securities Act").
Assuming the representations of Purchaser contained in Section 4.14 of the
Investment Agreement are true and correct on the date hereof and on the date of
each Closing at which Optioned Shares are purchased, the issuance, sale and
delivery of the Optioned Shares hereunder are exempt from the registration and
prospectus delivery requirements of the Securities Act.
5
<PAGE>
(c) The Optioned Shares. The Company has taken all necessary
-------------------
corporate action to authorize and reserve for issuance upon exercise of the
Option 1,366,000 (as adjusted pursuant to Section 1) shares of authorized but
unissued Old Common Stock or New Common Stock, as the case may be, including
approval by the Board of Directors of the Company. Such approval by the Board
of Directors of the Company is intended to be and is sufficient to render
inapplicable to this Agreement and the transactions contemplated hereby as well
as any future acquisitions of Old Common Stock or New Common Stock or other
transactions involving the Purchaser or any of its Affiliates and the Company,
the provisions of Section 203 of the Delaware General Corporation Law (whether
or not this Agreement is terminated). No vote is required by the holders of any
securities of the Company to approve this Agreement and the transactions
contemplated hereby.
5. Representations and Warranties of the Purchaser.
-----------------------------------------------
(a) Incorporation of the Purchaser's Representations and Warranties
---------------------------------------------------------------
by Reference. The representation s and warranties of the Purchaser contained in
- ------------
Article IV of the Investment Agreement are incorporated by reference into this
Agreement with the same effect as though set forth in full at this place.
(b) Securities Act. Any Optioned Shares purchased by the Purchaser
--------------
will be acquired for investment only and not with a view to any public
distribution thereof and the Purchaser will not offer to sell or otherwise
dispose of any Optioned Shares so acquired by it in violation of the
registration requirements of the Securities Act.
6
<PAGE>
6. Adjustment upon Changes in Capitalization. In the event of any change
-----------------------------------------
in the number of outstanding shares of Old Common Stock or New Common Stock by
reason of any stock dividend, stock split, recapitalization, combination,
exchange of shares, merger, consolidation, reorganization or the like or any
other change in the corporate or capital structure of the Company (except for
the reclassification of Old Common Stock at the Closing) that would have the
effect of diluting the Purchaser's rights hereunder, the number of Optioned
Shares and the Per Share Price shall be adjusted appropriately so as to restore
the Purchaser to its rights hereunder; provided, however, that nothing in this
Agreement shall be construed as permitting the Company to take any action or
enter into any transaction prohibited by the Investment Agreement, it being
understood and agreed that Section 6.3 of the Investment Agreement shall not
restrict in any way the ability of the Purchaser to exercise this Option.
7. Registration Rights. Upon the request of the Purchaser at any time and
-------------------
from time to time within three years of any Closing hereunder, the Company
agrees (i) to effect, as promptly as practicable, up to two registrations (each
a "Demand Registration") under the Securities Act covering any part or all (as
may be requested by the Purchaser) of the Optioned Shares (or any other
securities that have been acquired by or are issuable to the Purchaser upon
exercise of the Option), and to use its best efforts to qualify such Optioned
Shares (or such other securities) under any applicable state securities laws and
to ensure that they are qualified for trading through the NASDAQ National Market
(or on any securities exchange on which the Common Stock is traded at such time)
and (ii) at the written request of the Purchaser delivered within ten (10) days
after notice of the intent to file such registration statements is delivered to
the Purchaser, to
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include any part or all of the Optioned Shares (or such other securities) in any
registration statement for common stock filed by the Company under the
Securities Act in which such inclusion is permitted under applicable rules and
regulations (other than a registration statement on Form S-8, S-4 or any
successor form) provided that no request for registration pursuant to clause (i)
of this Section 7 may be made within 120 days after the effective date of a
registration statement filed by the Company in which the Optioned Shares have
been entitled to join. So long as the Company satisfies the eligibility
requirements for use of a registration statement on Form S-3 under the
Securities Act, the Purchaser may request one Demand Registration for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act and will file all supplements to the prospectus and take all
other actions necessary to facilitate an offering thereunder. The Company will
use its best efforts to keep each such registration described above effective
for a period of not less than one year (or, if sooner, until the Purchaser shall
have disposed of all of the Optioned Shares). Notwithstanding anything to the
contrary herein, the Company's obligation to file a registration statement or to
cause such registration to become and remain effective shall be suspended upon
notice to Purchaser for a period of up to 90 days in any 12-month period if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed. Such
obligation of the Company shall continue after any such suspension. The
Purchaser shall choose the managing underwriter in any Demand Registration,
which managing underwriter shall be of recognized national standing. If the
managing underwriter of a proposed offering of securities by the Company shall
advise the Company in writing that, in the reasonable opinion of such managing
underwriter, the distribution of the Optioned Shares requested by the Purchaser
to be
8
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included in a registration statement concurrently with securities being
registered for sale by the Company would adversely affect the distribution of
such securities by the Company, then the Company shall, at its option, either
(x) include such Optioned Shares in the registration statement, but the
Purchaser shall agree to delay the offering and sale of such Optioned Shares for
such period of time as the managing underwriter may reasonably request (provided
that the Purchaser may at any time withdraw its request to include Optioned
Shares in such offering) or (y) include such portion, if any, of the Optioned
Shares in the registration statement as the managing underwriter advises may be
so included for sale simultaneously with sales by the Company. The registrations
effected under this Section 7 shall be effected at the Company's expense except
for underwriting commissions allocable to the Optioned Shares and the fees and
disburse ments of the Purchaser's counsel. The Company shall indemnify and hold
harmless the Purchaser its Affiliates and controlling persons and their
respective officers, directors, agents and representatives, and the underwriters
for any such offering, in accordance with the indemnification provisions
customarily included by the managing underwriter in its standard-form
underwriting agreement for offerings of common stock, from and against any and
all losses, claims, damages, liabilities and expenses (including, without
limitation, all out-of-pocket expenses and all fees and disbursements of counsel
and accountants) arising out of or based upon any statements contained in, or
omissions or alleged omissions from, each registration statement (and related
prospectus) filed pursuant to this Section 7 (other than statements or omissions
made in reliance upon, and in conformity with, written information furnished to
the Company with respect to it specifically for use in the preparation of such
documents by such indemnified persons). The Purchaser shall indemnify and hold
harmless the Company, its Affiliates and controlling persons and their
respective officers,
9
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directors, agents and representatives, and the underwriters for any such
offering, in accordance with the indemnification provisions customarily included
by the managing underwriter in its standard-form underwriting agreement for
offerings of common stock, from and against any and all losses, claims, damages,
liabilities and expenses and all fees and disbursements of counsel and
accountants) arising out of or based upon any statements contained in, or
omissions from, each registration statement (and related prospectus) filed
pursuant to this Section 7 which statements or omissions were made in reliance
upon, and in conformity with, written information furnished by the Purchaser to
the Company with respect to the Purchaser specifically for use in the
preparation of such documents by the Company.
8. Further Assurances.
------------------
(a) Each of the Company and the Purchaser shall as promptly as
practicable following the execution and delivery of this Agreement make all
necessary filings and use all reasonable efforts to obtain any clearance
required under the HSR Act for, and to provide assistance to the other in any
antitrust proceedings related to, the transactions contemplated by this
Agreement.
(b) If the Purchaser shall exercise the Option in whole or in part in
accordance with the terms of this Agreement, from time to time and without
additional consideration the Company will execute and deliver, or cause to be
executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as the Purchaser may reasonably
request for the purpose of effectively carrying out the transactions
contemplated
10
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by this Agreement, including the transfer of any and all of the Optioned Shares
to the Purchaser and the release of any and all liens, claims and encumbrances
with respect thereto.
9. Survival of Agreement: Termination. All representations and warranties
----------------------------------
made by the Company and the Purchaser herein (including those incorporated by
reference) survive the execution and delivery of this Agreement and any exercise
or expiration of the Option and shall terminate on the fifth anniversary of the
date of this Agreement. The covenants and agreements contained in this
Agreement shall survive and shall continue in accordance with their terms
notwithstanding the expiration of the Option provided in Section 1 hereof.
10. Assignment. This Agreement and the rights hereunder shall not be
----------
assignable or transferable by either party (except by operation of law in
connection with a merger, consolidation or sale of substantially all the assets
of such party) without the prior written consent of the other party hereto;
provided that the Purchaser may assign, in its sole discretion, any or all of
its rights, interests and obligations under this Agreement to any other wholly
owned, direct or indirect, subsidiary of the Purchaser. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
assigns.
11. Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses, except as otherwise provided in this
Agreement.
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<PAGE>
12. Waivers: Amendment.
------------------
(a) No failure or delay of the Purchaser or the Company in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Purchaser hereunder are cumu lative and are not exclusive of
any rights or remedies which the Purchaser would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Company
therefrom shall in any event be effective except pursuant to a writing signed by
the Purchaser, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Company in any case shall entitle the Company to any other or further notice
or demand in similar or other circumstance.
13. Severability. In the event any one or more of the provisions
------------
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or enforceable provisions.
14. Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by
12
<PAGE>
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Purchaser, to
Fluor Daniel, Inc.
3333 Michelson Drive
Irvine, California 92730
Attention: David L. Myers
with a copy to:
Fluor Daniel, Inc.
3333 Michelson Drive
Irvine, California 92730
Attention: General Counsel
(b) if to the Company, to
Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, Massachusetts 02062
Attention: Walter C. Barber
13
<PAGE>
with a copy to:
Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, Massachusetts 02062
Attention: Brian D. Goldstein, Esq.
and:
Testa, Hurwitz & Thibeault
125 High Street
Boston, Massachusetts 02110
Attention: Andrew E. Taylor, Jr., Esq.
15. Interpretation. When a reference is made in this Agreement to a
--------------
Section such reference shall be to a Section of 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".
16. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
17. Entire Agreement: No Third-Party Beneficiaries. This Agreement and
----------------------------------------------
the Investment Agreement constitute the entire agreement, and supersede all
prior agreements and
14
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understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and the Investment Agreement and are not
intended to confer upon any person other than the parties any rights or remedies
hereunder and therewith.
18. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
19. Enforcement. The parties agree that irreparable damage would occur in
-----------
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal Court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal or state court sitting in the
State of Delaware or a Delaware state court.
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<PAGE>
IN WITNESS WHEREOF, the Company and Purchaser have duly executed this Stock
Option Agreement as of the day and year first above written.
GROUNDWATER TECHNOLOGY, INC.
By: _____________________________________
Name: _____________________________________
FLUOR DANIEL, INC.
By: _____________________________________
Name: _____________________________________
16
<PAGE>
EXHIBIT 4
MARKETING AGREEMENT
BETWEEN
GROUNDWATER TECHNOLOGY, INC.
AND
FLUOR DANIEL, INC.
May 10, 1996
------
<PAGE>
THIS MARKETING AGREEMENT is entered into effective as of the 10th day of ,
----
May, 1996.
- ---
BETWEEN: GROUNDWATER TECHNOLOGY, INC., a corporation organized under the laws
of the State of Delaware, having its principal office at 100 River
Ridge Drive, Norwood, Massachusetts. ("GTI")
AND FLUOR DANIEL, INC. a corporation organized under the laws of the State
of California, having its principal office at 3333 Michelson Drive,
Irvine, California, ("FLUOR DANIEL")
WHEREAS, prior to the execution and delivery of this Agreement, GTI and FLUOR
DANIEL (both directly and through its wholly-owned subsidiary, Fluor Daniel
Environmental Services, Inc. ("FDESI")) were each engaged in the business of
providing investigation, evaluation, project management and remediation services
with regard to the restoration of environmentally impacted sites and facilities;
and
WHEREAS, concurrently with the execution of this Agreement, Fluor Daniel has
acquired a majority ownership interest in GTI and in connection therewith Fluor
Daniel has transferred to GTI all of the issued and outstanding shares of FDESI.
2
<PAGE>
WHEREAS, the Parties wish to enter into this Marketing Agreement to set forth
the basis upon which such Parties shall engage in the global conduct of the
environmental services business and the basis for providing mutual support and
assistance in conducting their own respective businesses.
NOW, THEREFORE, in consideration of the above premises and mutual covenants
contained herein, the Parties have agreed as follows:
1. DEFINITIONS
-----------
The following terms as used in this Agreement shall have the meanings set out
below:
1.1 "Affiliate" shall mean any corporation or other legal entity of which a
Party (either alone or together with other Affiliates of that Party) owns,
directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are ordinarily and generally, in the absence
of contingencies or other understandings, entitled to vote for the election
of a majority of the board of directors or governing body.
1.2 "Contract Support Services" shall mean services provided by one Party to or
on behalf of the other Party, in connection with a project being performed
for a client, but which by themselves do not constitute a scope of work
within the project being performed.
3
<PAGE>
1.3 "DOE Management and Operations/Operating and Maintenance/Management and
Integration (M&O/O&M/M&I) Projects" shall mean projects involving the
management and operation, and/or management integration of sites and
facilities and environmental engineering services for the U.S. Department
of Energy.
1.4 "Duality" shall mean the joint resolution of issues by the Parties to the
overall best combined market approach of the Parties balancing short and
long term considerations, and consistent with the spirit of this
Agreement.
1.5 "Engineering and Construction Business" and "Engineering and Construction
Services" shall mean the providing of feasibility studies, conceptual
design, engineering, procurement, project and construction management,
construction, maintenance, plant operations, technical, project finance,
quality control, start-up assistance, site evaluation, licensing and
consulting with respect to actual or proposed sites or facilities provided,
however, that "Engineering and Construction Business" and "Engineering and
Construction Services" does not include services that are typically
provided in connection with Environmental Services.
1.6 "Environmental Business" or "Environmental Services" shall mean the
providing of investigation, evaluation, design, feasibility studies,
management and pollution prevention, project management, remediation,
permitting, quality control, start-up assistance, licensing and consulting
services (including incidental project finance
4
<PAGE>
procurement, construction and maintenance) relating to (a) the treatment of
groundwater, wastewater, soil and hazardous waste, or (b) air emissions
controls; provided, however, that such terms shall not include:
a). the Excluded Projects.
b). DOE Management and Operations/Operating and Maintenance/ Management
and Integration (M&O/O&M/M&I) Projects.
c). Substantial Infrastructure projects related to government or
industrial water supply, water treatment, wastewater treatment or
pollution control facilities. Industrial wastewater facilities may be
performed by either Party, and shall be a subject of Duality.
d). Molten Metal Technology and M4 (and successor) Projects.
e). Facilities that are built due to environmental drivers but that are
mainly capital plant investments by a client, such as waste-to-energy
and oil refinery clean air emission process upgrades. The Parties shall
use Duality where there is uncertainty as to where services would fall
under this agreement.
1.8 "Excluded Projects" shall mean the Fernald environmental remediation
management contract and the contract with Ciba-Geigy for construction
management for remediation activities at their Toms River, New Jersey
facility.
5
<PAGE>
1.9 "Fluor Daniel Group" shall mean Fluor Daniel and each of its Affiliates,
excluding members of the GTI Group.
1.10 "GTI Group" shall mean GTI and each of its Affiliates, including without
limitation, FDESI.
1.11 "Investment Agreement" shall mean that certain Investment Agreement dated
as of December 11, 1995 by and among Fluor Daniel, FDESI, GTI and GTI
Acquisition Corporation.
1.12 "Marketing Agreement" or "Agreement" shall mean the present Agreement
together with its Exhibits, Schedules and any amendments thereof.
1.13 "Party" means either GTI on the one hand or FLUOR DANIEL on the other hand,
depending on the context. "Parties" means both of them.
1.14 "Project Services" shall mean services provided by one Party to or on
behalf of the other Party which constitute a scope of work within a
project being performed for a client.
6
<PAGE>
1.15 "TBS Opportunities" shall mean the pursuit of environmental opportunities
with clients to provide total business solutions to environmentally
impacted real estate and operating facilities, which opportunities are
differentiated from Environmental Business or Environmental Services in
that they (a) include providing, in the context of a single project or
program, substantial non-environmental services to a client in addition to
investigation, assessment, remediation and monitoring services currently
provided by GTI, or (b) involve a substantial increase in the scale and
scope of, and the integration of, solutions to be provided, including, in
the aggregate, the potential for high value of work (greater than $5
million), the complexity of the financing arrangement with the client and
the strategic value of the services to the client in connection with
solving the client's environmental issues.
1.16 The Exhibits to this Marketing Agreement are the following:
Exhibit A Terms and Conditions - Overhead Support Services
Exhibit B Intercompany Services Agreement
Exhibit C Contract Support Services - Billing Terms
Exhibit D Project Services - Billing Terms
2. BUSINESS PURPOSE/EXCLUSIVITY
----------------------------
2.1 The Parties agree that the purpose of this Marketing Agreement is to
establish the respective rights, roles and responsibilities of the Parties
and their Affiliates with regard to the pursuit of the Environmental
Business and TBS Opportunities on a
7
<PAGE>
worldwide basis. The Parties acknowledge that, in their opinion, the future
environmental services market will favor service providers that can
differentiate themselves from other providers by offering creative
solutions to environmental problems. These creative solutions may involve
the service provider becoming a "stakeholder" in the client's solution and
may include accepting more risk in exchange for more reward (beyond
accepting a fee for services rendered on a time and materials basis). The
Parties acknowledge that these creative solutions will be applicable to
both the Environmental Business and to TBS Opportunities, and the Parties
have agreed to enter into this Marketing Agreement and to work together in
Duality to provide services to their respective clients. The Parties also
agree to operate in Duality for areas of potential overlap, including where
such overlap is created by agreements with other parties.
2.2 The Parties agree that, subject to the terms of this Agreement, as between
the Fluor Daniel Group and the GTI Group, the GTI Group shall have primary
responsibility for the marketing and execution of the Environmental
Business and the Fluor Daniel Group shall have primary responsibility for
the marketing and execution of TBS Opportunities. Fluor Daniel , on its
behalf and on behalf of the Fluor Daniel Group, will promote the use of the
GTI Group for Environmental Services that are related or incidental to its
Engineering and Construction Business or its TBS Opportunities, provided
that the use of GTI is acceptable to the client, that GTI has adequate
available personnel and other resources to timely and
8
<PAGE>
satisfactorily perform the work and its proposed commercial terms are
competitive with the market. GTI shall commit in good faith to perform such
Environmental Services as may be requested by Fluor Daniel, but shall not
be obligated to provide such Environmental Services if there's a valid
business reason for its refusal to perform such services. For purposes of
this Agreement, Fluor Daniel will evaluate the competitiveness of GTI's
commercial terms by comparing them to terms and conditions of other
providers of Environmental Services of the same quality and scope in the
location of where the services are to be provided, and reviewing them with
GTI.
2.3 Within 30 day of the date of this Agreement, Fluor Daniel shall notify its
management and the management of its Affiliates of the marketing
relationship formed between the Parties and of the obligations of the Fluor
Daniel Group under this Agreement. Periodically throughout the terms of
this Agreement, Fluor Daniel will communicate with its management and the
management of its Affiliates to remind them of the marketing relationship
formed between the Parties and of the obligations of the Fluor Daniel Group
under this Agreement.
2.4 Within 30 days of the date of this Agreement, GTI shall notify its
management and the management of its Affiliates of the marketing
relationship formed between the Parties and of the obligations of the GTI
Group under this Agreement. Periodically throughout the term of this
Agreement, GTI will communicate with its
9
<PAGE>
management and the management of its Affiliates to remind them of the
marketing relationship formed between the Parties and of the obligations of
the GTI Group under this Agreement.
2.5 Prior to either Party forwarding a written communication to their
respective management pursuant to Sections 2.3 and 2.4 above, the Party
preparing to forward the communication shall give the other Party a
reasonable opportunity to review and comment on the communication.
3. INTERCOMPANY SERVICES
---------------------
3.1 Overhead Support Services. Subject to availability of qualified personnel,
-------------------------
each Party agrees to provide to the other Party, the services of its
employees (including technical, financial and administrative personnel) as
may be reasonably requested by the other Party in connection with
activities of a general nature which are not related to a specific contract
upon the terms and conditions set forth in Exhibit A attached, which terms
and conditions shall be reviewed by the Parties bi-annually.
3.2 Contract Support. All Contract Support Services to be provided by one
----------------
Party to the other Party, shall be performed pursuant to Work Releases
issued pursuant to the terms of the Intercompany Services Agreement
attached hereto as Exhibit B, and containing the commercial terms and
conditions set forth in Exhibit C, which terms and conditions shall be
reviewed by the Parties bi-annually.
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<PAGE>
3.3 Project Services. All Project Services to be provided by one Party to the
----------------
other Party shall be performed pursuant to Work Releases issued
pursuant to the terms of the Intercompany Services Agreement attached
hereto as Exhibit B and containing commercial terms and conditions set
forth in Exhibit D, which terms and conditions shall be reviewed by
the Parties bi-annually.
3.4 Facilities. If and to the extent that Fluor Daniel provides office space
----------
to GTI or a member of the GTI Group, applicable costs shall be
charged for such office space on the same basis as Fluor Daniel
charges its other operating subsidiaries. Fluor Daniel agrees to
maintain appropriate health and safety programs and procedures for the
benefit of Fluor Daniel and GTI employees at such office locations.
3.5 Each Party understands that the other Party will be involved in other
activities and undertakings not within the scope of this Marketing
Agreement. The Parties hereby agree that the execution of this
Marketing Agreement and the assumption by each of the Parties of its
duties hereunder shall be without prejudice to its rights to have such
other interests and activities and to receive and enjoy the profits or
compensation therefrom. Except as otherwise provided herein, the
Parties may engage in or possess any interest in any other business,
undertaking, or venture of any nature or description independently or
with others and neither Party shall have any right by virtue of this
Marketing Agreement in and to such business, undertaking or venture of
the other Party or the income or profits derived
11
<PAGE>
therefrom. The Parties agree to meet periodically to discuss joint
marketing opportunities and initiatives, to use reasonable efforts to keep
each other fully advised of its own marketing efforts with common clients
and, with respect to the foregoing, to establish mutually acceptable
communications procedures. With any such common clients it is understood
that GTI will have the marketing lead for projects that primarily involve
Environmental Services and that Fluor Daniel will have the marketing lead
for TBS Opportunities and for projects that primarily involve Engineering
and Construction Services.
4. LIABILITIES
-----------
4.1 Neither Party shall hold itself out as being the agent, representative,
employee or the principal of the other Party. This Marketing
Agreement does not constitute either Party the agent of the other, nor
does it create a partnership, a consortium, an association, a joint
venture, or any form of juristic person or entity. Neither Party shall
have any authority or right to assume or create obligations of any
kind or nature, express or implied, on behalf of, or in the name of
the other Party, not to accept service of any legal process of any
kind addressed to or intended for the other Party, nor to bind the
other Party in any respect, without the specific prior written
authorization of the other Party. If either Party acts in violation
of the foregoing, said Party hereby covenants to indemnify and hold
harmless the other Party from and against any and all claims, demands,
losses, damages, liabilities, law suits, and other proceedings,
judgments and awards, and costs and expenses
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<PAGE>
(including, but not limited to, reasonable attorneys' fees) arising
directly or indirectly in whole or in part out of the breach of this
Section by such Party or out of the breach of Section 4.1, whether
committed by the indemnifying Party, its employees, agents, successors,
assigns, or its Affiliates.
4.2 Each Party shall indemnify and hold harmless the other Party from and
against any and all claims, demands, losses, damages, liabilities,
lawsuits and other proceedings, judgments and awards, and the costs
and expenses (including, but not limited to, reasonable attorneys'
fees) of any action resulting from the death of any person, or for
damage or destruction of property, but only to the extent resulting
solely from the negligent acts or omissions of such Party.
4.3 In no event shall either Party ever be liable to, or required to provide
indemnity to, the other Party for any incidental, special,
consequential or punitive damages of the other Party, or its
Affiliates, including without limitation, liability for loss of
profits or business interruption, however the same may be caused.
4.4 Each Party shall be solely responsible for the accuracy and completeness of
information and representations supplied by each Party and
incorporated in any proposal, prime or sub contract, including, but
not limited to, cost or pricing data, materials, specifications, and
certifications, and each Party agrees to release defend, indemnify and
hold the other harmless from and against any and all claims,
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<PAGE>
liabilities and causes of action arising out of or relating to the
provision of such information and/or representations.
4.5 Indemnities against, releases from and limitation on liability expressed in
Sections 4.1 and 4.4 shall apply even in the event of the fault,
negligence or strict liability of the Party indemnified or released or
whose liability is limited.
4.6 The Parties make no other representations, covenants, warranties or
guarantees, express or implied, other than those set forth in this
Marketing Agreement, the Intercompany Services Agreement or in a Work
Release. The Parties' rights, and responsibilities with respect to
the matters set forth in this Marketing Agreement, shall be
exclusively those set forth in this Marketing Agreement, the
Intercompany Services Agreement or in a Work Release.
5. CONFIDENTIALITY
---------------
5.1 Restrictions on Use and Disclosure. Each Party covenants and agrees it
----------------------------------
will not, and it will not permit its Affiliates to, directly or
indirectly, or in any capacity whatsoever, divulge or disclose the
Confidential Information, in whole or in part, to any person or entity
(including its Affiliates or shareholders), except to the extent such
divulgence or disclosure is specifically permitted by the Party
disclosing the Confidential Information or is required by law. The
Recipient (as hereinafter defined) shall use Confidential Information
for the purpose of carrying
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<PAGE>
out the activities that are the subject of this Agreement, and the
Intercompany Services Agreement, and for no other purpose.
5.2 Confidential Information Defined. As used herein, the term "Confidential
--------------------------------
Information" shall mean: all technical, economic or descriptive
information, data, concepts, or know-how disclosed to a Party,
including any officers, directors, managers, partners or employees of
such Party or any of such Party's Affiliates (the "Recipient") by the
other Party (the "Originator") (1) in written or documentary form
marked "Confidential" or with words of similar import, or (2) in an
oral presentation or visual demonstration and identified as
confidential at the time of such disclosure, and then, within ten (10)
days, confirmed in written or tangible form marked "Confidential", or
with words of similar import, except any portion of such information
which:
(i) the Recipient can show was in its possession prior to the earliest
disclosure by the Originator, provided that the Recipient has the
right of free and unlimited disclosure thereof; or
(ii) is presently or hereafter becomes a part of the public knowledge
or literature without default by the Recipient of its obligations
pursuant to this Agreement; or
(iii) the Recipient can show was developed by the Recipient from
independent information not subject to restrictions of
confidentiality; or
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(iv) is or has been disclosed to the Recipient by a third Party, so long
as Recipient does not know or have reason to know such third Party
acquired that information directly or indirectly from the
Originator under an obligation of confidentiality, provided
Recipient's use of such information is in accordance with the terms
under which it is received.
5.3 Disclosure to Employees. The Recipient shall use all reasonable efforts to
-----------------------
(1) limit disclosure of Confidential Information within its
organization to only those employees who need to use such Confidential
Information for the purpose authorized in Section 5.3, and who are
obligated to the Recipient by a secrecy agreement with terms
concerning disclosure and use at least as restrictive as those herein
in a form acceptable to the disclosing Party, and (2) advise each of
those employees of Recipient's obligations under this Agreement.
5.4 No License. Nothing contained herein shall be construed to grant Recipient
----------
any immunity or license under any patent or other intellectual
property right.
5.5 Term. The Parties' obligations concerning non-disclosure and the use of
----
Confidential Information contained in this Section 6 shall continue
for five (5) years from the termination of this Agreement and shall
then terminate.
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6. USE OF FLUOR DANIEL NAME
------------------------
Fluor Daniel's name and logo are proprietary to Fluor Daniel. Fluor Daniel
hereby authorizes the use of the corporate name "Fluor Daniel/GTI, Inc." by
GTI until such right is terminated as set forth below. In addition, Fluor
Daniel will not unreasonably withhold its consent to the use of similar
name configurations by other Affiliates of GTI on the same terms and
conditions. In the event this Agreement is terminated pursuant to Article
8, or GTI or an Affiliate of GTI that is using the Fluor Daniel name (or
any derivation thereof) discontinues business operations or is otherwise
liquidated, then the right of GTI or any such member of the GTI Group to
continue to use the Fluor Daniel name (or any derivation thereof) shall
cease and the respective name shall be removed from all company documents
(including without limitation, its corporate name as reflected in its
charter documents) promptly and in any event within three months after
notice thereof and all future use is hereby prohibited. No further notice
of Fluor Daniel's rights pursuant to this Article is required.
7. TERM, TERMINATION
-----------------
7.1 This Marketing Agreement shall commence on the date set forth on the first
page hereof and, subject to earlier termination pursuant to Section 7.2
hereof, the term of this Marketing Agreement shall be ten (10) years,
whereupon it shall lapse and terminate without formality unless it has been
extended by mutual written agreement.
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7.2 If at any time during the ten year period referred to in Section 7.1
hereof, Fluor Daniel shall cease to own at least twenty percent (20%)
of the then issued and outstanding common shares of GTI or any
successor to GTI, then either Fluor Daniel, provided that Fluor Daniel
is not in breach of its obligations pursuant to Section 6.3(d) of the
Investment Agreement, or GTI may , elect to terminate this Agreement.
For such termination to be effective Fluor Daniel or GTI, as the case
may be, must give the other Party written notice of its election to so
terminate within 90 days after Fluor Daniel first ceased to maintain
such level of ownership. Upon the giving of such notice, the
termination shall be effective 30 days after the receipt of such
notice.
8. ASSIGNMENT, SUBCONTRACTING
--------------------------
8.1 Neither Party shall sell, assign or in any manner transfer, convey or
alienate its interest or part thereof in this Marketing Agreement
without first obtaining the written consent of the other Party.
8.2 This Marketing Agreement shall inure to the benefit of and be binding upon
the Parties, their successors, trustees, permitted assigns, receivers
and legal representatives, but shall not inure to the benefit of any
other person or entity.
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9. AMENDMENTS
----------
No amendment of this Marketing Agreement or its Exhibits or Schedules shall
be of any force or effect unless reduced to writing and executed in the
same manner as the present agreement.
10. NOTICES
-------
All notices under this Marketing Agreement shall be given in writing and
shall be delivered by (i) certified or registered mail, postage prepaid,
return receipt requested, or (ii) reputable overnight commercial courier or
delivery service, or (iii) by facsimile transmission confirmed by certified
or registered mail or commercial courier or delivery service as follows:
a) To: FLUOR DANIEL, INC.
3333 Michelson Drive
Irvine, California 92730
Attention: David L. Myers
Facsimile number: 714-975-5545
b) To: GROUNDWATER TECHNOLOGY, INC.
100 River Ridge Drive
Norwood, MA 02062
Attention: Walter C. Barber
Facsimile number: 617-769-7992
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or to such other address of which either Party shall have notified the
other. All notices shall be effective only upon receipt by the receiving
Party.
11. GOVERNING LAW
-------------
11.1 This Marketing Agreement shall be governed by the laws of the State of
Delaware without regard to conflict of law rules, whose courts, state
or federal, shall have sole and exclusive jurisdiction.
12. FORCE MAJEURE
-------------
A Party shall not be liable for non-performance or delay in performance
caused by any event reasonably beyond the control of such Party including,
but not limited to, hostilities, revolutions, riots, civil commotion,
national emergency, strikes, work stoppages, slowdowns, labor disputes,
lockouts, unavailability of supplies, epidemics, fire, flood, earthquake,
force of nature, explosion, embargo, or any other Act of God, or any law,
proclamation, regulation, ordinance, or other act or order of any court,
government, or governmental agency; provided, however, that this Article
shall not affect the liability of any Party for its failure to pay any sum
of money required by this Marketing Agreement.
13. SEVERABILITY
------------
In the event that any of the provisions of this Marketing Agreement are
held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall
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not affect any other provision thereof and this Marketing Agreement shall
be construed as if such invalid, illegal or unenforceable provision had
never been contained herein and the Parties shall to the fullest extent
possible modify any such provision to the extent required to carry out the
general intention of this Marketing Agreement and to impart validity
thereto.
14. EFFECT OF WAIVERS
-----------------
No forbearance, indulgence, or relaxation or inaction by any Party at any
time to require performance of any provisions of this Marketing Agreement
shall in any way affect, diminish or prejudice the right of a Party to
require performance of that provision and any waiver or acquiescence by
either Party in any breach of any provision of this Marketing Agreement
shall not be construed as a waiver or acquiescence in any continuing or
succeeding breach of such provision, a waiver or an amendment of the
provision itself or a waiver of any right under or arising out of this
Marketing Agreement or acquiescence in or recognition of rights and/or
positions other than as expressly stipulated in this Marketing Agreement.
15. COUNTERPARTS
------------
This Marketing Agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and all of which shall
constitute one and the same Marketing Agreement.
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IN WITNESS WHEREOF the Parties have signed this Marketing Agreement
effective on the date first above written.
GROUNDWATER TECHNOLOGY, INC. FLUOR DANIEL, INC.
By _______________________ By _______________________
Title _______________________ Title _______________________
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