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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED APRIL 29, 1995
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM ________ TO __________
COMMISSION FILE NUMBER 0-15067
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GROUNDWATER TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 02-0324047
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
100 RIVER RIDGE DRIVE, NORWOOD, MASSACHUSETTS 02062
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (617)769-7600
Securities registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, $.01 par value None
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on July 10, 1995, was $85,931,027 computed on the basis of the
closing price per share of such stock on the Nasdaq National Market System.
The number of shares of Common Stock outstanding on July 10, 1995, was
6,863,632 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
April 29, 1995, are incorporated by reference into Parts II and IV hereof.
The registrant intends to file a definitive proxy statement for the 1995
Annual Meeting of Stockholders to be held on September 19, 1995 pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended April 29,
1995. Portions of the proxy statement are incorporated by reference in Part
III hereof.
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GROUNDWATER TECHNOLOGY, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
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Item 1. Business........................................................ 1
General....................................................... 1
Governmental Regulation and Market............................ 1
Business Strategies........................................... 3
Services...................................................... 3
Remediation Technologies...................................... 4
Customers and Marketing....................................... 5
Personnel..................................................... 6
Competition and Seasonal Factors.............................. 6
Potential Liability and Insurance............................. 6
Patents and Publications...................................... 7
Item 2. Properties...................................................... 7
Item 3. Legal Proceedings............................................... 7
Item 4. Submission of Matters to a Vote of Security Holders............. 7
Executive Officers of the Company........................................ 8
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters........................................... 9
Item 6. Selected Financial Data......................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................... 9
Item 8. Consolidated Financial Statements and Supplementary Data........ 9
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.......................................... 9
PART III
Item 10. Directors and Executive Officers of the Registrant.............. 10
Item 11. Executive Compensation.......................................... 10
Item 12. Security Ownership of Certain Beneficial Owners and Management.. 10
Item 13. Certain Relationships and Related Transactions.................. 10
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 10
Signatures............................................................... 12
</TABLE>
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PART I
ITEM 1. BUSINESS
GENERAL
Groundwater Technology, Inc. and its subsidiaries ("GTI" or the "Company")
provides a full range of environmental, consulting, engineering and
remediation services to a variety of commercial and industrial customers and
federal, state and local government agencies. The Company was incorporated in
Delaware in October 1975 and currently operates from 47 consulting offices and
four laboratories throughout the United States and 13 offices in six foreign
countries, including Australia, New Zealand, the United Kingdom, Canada, Italy
and The Netherlands. Also, the Company's joint venture with a German company
has offices in six additional locations in Germany, Austria and Hungary.
The principal services provided by the Company are detailed, scientific
environmental assessment and remediation programs, which combine elements of
hydrogeology, geochemistry, chemistry, biochemistry and engineering. A typical
program generally includes interaction with the appropriate governmental
regulatory agencies, detailed site assessment that may include installation of
a series of monitoring wells, design and implementation of a cost-effective
remediation system, construction management services and ongoing monitoring
and maintenance of the system for the duration of the program. These
assessments and remediation programs are generally in response to regulatory
programs adopted by state agencies as well as U.S. Environmental Protection
Agency ("EPA") programs, such as the Resource Conservation and Recovery Act of
1976 ("RCRA") and the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA" or "Superfund Act"). The Company also provides human
health analyses and risk assessments.
Groundwater Technology Government Services, Inc., a wholly-owned subsidiary,
provides environmental services to the Department of Defense and other federal
and state agencies. GTEL Environmental Laboratories, Inc., another wholly-
owned subsidiary, operates analytical laboratories in New Hampshire,
California, Kansas and Florida for the analysis of inorganic and organic
contaminants present in soil, water and air. The Company does not own or
operate a hazardous waste landfill or any other hazardous waste treatment,
storage or disposal facility.
GOVERNMENTAL REGULATION AND MARKET
Environmental Legislation
In response to growing awareness and public concern over health and safety
and the environment, federal, state and local governments have enacted a large
number and wide range of environmental laws. These laws and the implementing
regulations affect nearly every industry, as well as the agencies of the
federal, state or local governments responsible for their enforcement. The
enforcement of these laws and regulations is responsible for creating much of
the demand for the services offered by the Company. The principal legislation
that affect the Company's business are as follows:
RCRA The Resource Conservation and Recovery Act of 1976 established a
framework for federal and state regulation of hazardous wastes. In 1988, the
EPA issued regulations under RCRA that govern underground storage tanks
containing certain hazardous substances or petroleum. These regulations
require the owners of underground storage tanks to upgrade or close existing
deficient tanks and to install release detection equipment on existing tanks.
In addition, these regulations prescribe the procedures by which tank owners
and operators should investigate and report confirmed or suspected releases
from tanks, and if applicable, proceed with corrective actions. RCRA is
currently scheduled for reauthorization in 1995, but the Company is unable to
ascertain the effect of the proposed reauthorization at this time.
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Superfund Act (CERCLA) The Comprehensive Environmental Response,
Compensation and Liability Act of 1980 generally addresses cleanup of inactive
sites at which hazardous treatment, storage or disposal occurred in the past.
The Superfund Act authorizes the federal government to cleanup or order
cleanup of these sites. As of January 1992, there were approximately 1,300
sites on the National Priority List ("NPL") subject to extensive monitoring
and cleanup work.
In 1986, the Superfund Amendment and Reauthorization Act ("SARA") was
enacted and increased environmental remediation activities significantly.
SARA, among other things, authorized additional federal expenditures and
expanded the EPA's enforcement powers, which encouraged and facilitated
settlements with potentially responsible parties. Superfund was reauthorized
as part of the 1991 federal budget, which appropriated $5.1 billion thorough
1994, and it is currently scheduled for reauthorization in 1995; however, the
Company is unable to ascertain the effect of the proposed reauthorization at
this time. The Company believes that, even apart from cleanup activity
attributable directly to funding authorized by SARA, industry and governmental
entities will continue to attempt to resolve hazardous waste problems in order
to comply with other statutory requirements and to avoid liabilities to
private parties.
Other Federal Legislation The Company believes that in addition to RCRA and
CERCLA, other federal laws will affect demand for its services. These laws
include the Toxic Substances Control Act, the Clean Water Act, the Clean Air
Act and the Safe Drinking Water Act.
State Legislation The federal statutes summarized above presuppose
significant state involvement in their administration and enforcement. Many
states have enacted their own statutes designed to protect and restore
environmental quality and to deal directly with the problem of soil and
groundwater contamination; and in some cases these statutes are different or
more stringent than the federal statutes. In addition, states have adopted
reimbursement programs to assist customers who are required to use the
Company's services. Some examples of these state reimbursement programs
include the Florida Inland Protection Trust Fund, the Massachusetts
Underground Storage Tank Petroleum Product Cleanup Fund, the Texas Petroleum
Storage Tank Remediation Fund and the California Underground Storage Tank
Cleanup Fund.
Permits, Licenses and Regulatory Approvals The installation and operation of
remediation systems are subject to various licensing, permitting, approval and
reporting requirements imposed by federal, state and local laws. For example,
National Pollutant Discharge Elimination System ("NPDES") permits and other
regulatory program permits are typically required in connection with the
installation of the recovery system, and the terms of these permits often
require ongoing reporting to governmental agencies concerning the operation of
the recovery system. Approvals of corrective action plans by the appropriate
regulatory agency is increasingly being required before a recovery system can
be installed to address contaminated soil or ground water due to a release
from an underground storage tank.
Various state and local laws require the monitoring wells and wells used in
the recovery process to be installed by licensed well drillers, and
installation of the recovery system may also require compliance with
applicable provisions of construction and zoning laws. Some states have also
adopted testing and licensing programs to regulate professionals who typically
conduct subsurface investigations and propose remedial action work plans.
The Company employs individuals who specialize in obtaining the required
federal, state and local environmental and operational permits necessary for
GTI and its customers to install and operate remedation systems. The Company
also provides the documentation of the recovery process necessary to assist
its customers in satisfying applicable reporting requirements.
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BUSINESS STRATEGIES
The Company has grown primarily by training or hiring geologists, engineers,
chemists and hydrogeologists in the specialized fields of environmental
services and cleanup of soil and groundwater in order to staff local offices.
It is the Company's belief that a local presence increases understanding of
local environmental statutes, regulations and regulatory agencies and fosters
a constructive working relationship with local agency personnel.
As of July 1, 1995, the Company had 60 consulting offices and four
laboratories in 31 states and six foreign countries, including Australia, New
Zealand, the United Kingdom, Canada, Italy and The Netherlands. Also, the
Company's joint venture with a German company had offices in six additional
locations in Germany, Austria and Hungary. The Company spends significant time
and resources on in-house educational programs at all levels to maintain and
improve the quality of its operations. The Company has also invested in
information systems to connect all of its U.S. offices by a computer network
that allows employees to share Company resources.
Within the North American operations, the Company focuses its marketing and
operational staff on three major markets--petroleum, industrial/commercial and
government. GTI believes this market-centered focus, along with its geographic
diversification, allows it to provide responsive services to its customers. In
fiscal year 1995, approximately 44% of gross revenues were derived from
petroleum customers, 35% from industrial/commercial customers and 12% from the
federal, state and local government agencies. In addition, approximately 9% of
gross revenues in fiscal year 1995 were derived from international customers.
On May 26, 1994, the Company purchased all the outstanding stock of Hall
Southwest Corporation, a Texas corporation ("Hall Southwest") to improve its
presence in the Gulf States region; and on February 28, 1995, the Company
purchased certain assets and assumed certain liabilities of the Hazardous
Waste Division of Chester Environmental, Inc., a Pennsylvania corporation
("Chester HWD"), to increase the Company's technical abilities to serve
industrial customers. Hall Southwest and Chester HWD provide services similar
to those of the Company, and the operations of those businesses are now
conducted under the name of GTI. The Company plans to continue this dual
strategy of enhancing geographic presence and increasing its technical
capabilities through internal growth as well as acquisitions.
SERVICES
GTI provides services for the assessment, remediation and monitoring of soil
and groundwater using a broad range of techniques and technologies. These
services are provided separately or in combination.
Remedial Investigation and Assessment. GTI prepares environmental
profiles of sites, including hydrogeological and chemical evaluations. A
team of the Company's hydrogeologists, geologists, engineers, chemists and
technicians may use a variety of techniques, such as soil gas mapping or
the installation of a diagnostic monitoring well system. These techniques
provide the data necessary to determine the extent of the contamination, as
well as soil characteristics and groundwater chemistry, flow and direction,
and form the basis for the selection of a remediation program.
GTI also offers health and environmental risk assessment services.
Working in multi-disciplinary teams of toxicologists, environmental
scientists and industrial hygienists, the staff ascertains the health
hazards and risks produced by chemicals in the environment and the
workplace. The risk assessment services include site-specific exposure
modeling and quantitative risk assessment, hazard and risk communication
programs, human health monitoring and regulatory compliance, education,
training and industrial hygiene services.
Design and Remediation. Using information obtained in an assessment of a
contaminated site and an evaluation of risks to human health, the Company
designs a remedial solution appropriate to the particular conditions
present at the site. These analyses help to define the
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appropriate level of remedial response and are used as the basis for
negotiating remediation goals with regulatory authorities.
The Company evaluates alternatives, often conducting feasibility studies,
and the most appropriate response is selected. If action is required, a
cost-effective remediation system is engineered for the specific site. The
Company uses a wide range of physical, chemical, biological and thermal
treatment technologies in performing its remediation services, which are
usually applied either on-site or in situ. With on-site restoration, the
contaminated media, soil or groundwater is removed and treated. With in
situ restoration, the contaminants themselves are directly removed or
treated in place, without removing the soil or groundwater.
Monitoring. The Company performs ongoing sampling and analysis of
groundwater, soils and air to regulate and adjust the remediation system.
The analysis also provides the data necessary to respond in a timely
fashion to changes in the levels of contaminants and other variables, and
forms the basis for ongoing reports to the appropriate governmental
regulatory agencies.
The Company generally charges its customers for its services on a time and
materials basis, typically with strict adherence to "not to exceed"
limitations contained in contracts for projects billed on this basis.
Moreover, services are subject to competitive bidding and are increasingly
being performed on a fixed contract or unit price basis. Revenues are also
realized when the Company subcontracts for drilling, well materials,
electrical installation and other outside services. The fee for a typical
restoration program (including equipment) ranges from $100,000 to $750,000,
but for complex and lengthy programs the Company has billed as much as several
million dollars. Typical restoration programs generally require one to five
years to complete, and certain programs may take as long as ten or more years.
Although the Company's assessment and restoration programs are the principal
services offered to customers, the Company currently offers two other related
service programs.
Analytical Laboratories. The Company's subsidiary, GTEL Environmental
Laboratories, Inc. ("GTEL"), operates four analytical laboratories in New
Hampshire, California, Kansas and Florida. On-site services are also
provided via three mobile laboratories. These laboratories analyze water,
soil and air samples for hydrocarbons and contaminants in order to specify
and quantify the treatment processes in groundwater remediation projects.
The techniques employed by these laboratories measure trace organics
concentrations in water and air. The laboratories are certified in 49
states and use state-of-the-art analytical instruments, such as gas
chromatographs, mass spectrometers, high pressure liquid chromatographs,
atomic absorption and inductively coupled plasma units.
Air Quality Services Program. The Company offers a variety of specialized
assessment and control services in the areas of air toxins and volatile
organic compounds (VOC) through a joint marketing agreement with
Environmental Quality Management, Inc., a firm of experienced air quality
and environmental professionals. Air quality services include Compliance
Order and Notice of Violation responses, air quality audits, emission
inventory plans and reports, air toxins and VOC control equipment, and
carcinogenic and health risk assessment and Right-to-Know reporting. The
latest air emission dispersion models and health impact analysis
information are utilized for air impact assessment.
REMEDIATION TECHNOLOGIES
GTI has substantial experience in the commercialization and practical field
application of new and existing technologies for the treatment of hazardous
wastes and uses many technologies to restore contaminated groundwater, soils
and air to acceptable standards. The primary approaches used by the Company--
physical, chemical, biological and thermal--are usually used for on-site and
in situ treatment. These techniques are often used in combination to achieve
desired results.
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Physical treatments include those technologies that physically impact the
contaminants and the media, and include air stripping, vapor extraction and
air sparging. Air stripping involves pumping contaminated groundwater through
either a stripping tower or an air stripper system, which increases the
evaporation rate of hydrocarbon contaminants. Air flows through the unit
countercurrent to the water flow, "stripping" off the dissolved hydrocarbons
at an increased rate. A number of states permit stripped-off vapor to be
discharged into the air. In the catalytic conversion process, the stripped-off
contaminant is passed over a catalyst and heated to a high temperature so that
the contaminant is broken down into its non-toxic components.
Soil vapor extraction is the removal of volatile organic compounds by
induced air flow. The air flow is induced by the application of a vacuum to
subsurface soils and may be enhanced by the simultaneous injection of air. An
important part of vapor extraction is treating the extracted contaminants.
Air sparging is a process for treating soils and groundwater below the water
table by injecting air into the formation under pressure. The air displaces
the water in the soil and volatilizes the organic compounds present. These
compounds are then carried by the air stream out of the water table into the
soil above the water table, where they are captured by a vapor extraction
system.
In situ bioremediation involves treating contaminated soil and groundwater
by adding an oxygen source and nutrients into the aquifer, where naturally
occurring bacteria biochemically break down the contaminants into non-toxic
materials. The added oxygen and nutrients enhance the population natural
bacteria which normally feed on contaminants. By stimulating the growth of
selected bacteria, soil and groundwater quality is restored to acceptable
levels. GTI's bioremediation, or Enhanced Natural Degradation (END(TM)),
process is directed at the job site by the Company's bioremediation
laboratory, which performs the biochemical culture work. The treatability
laboratory, currently located in California, is under the direction of
experienced microbiologists who participate directly in the field work.
Thermal treatment technologies take a number of forms. The principal form of
this technology used by the Company has been thermal desorption, which uses
heat to remove volatile compounds from a waste without oxidation of the
compounds. The Company has used steam injection and hot air injection to
enhance soil vapor extraction techniques on selected sites. GTI is also
exploring the use of co-burning of coal tar impacted soils.
The Company is also exploring potential soil treatment capabilities under
exclusive rights to proprietary fungal technology, which is presently directed
at the degradation of complex organics, hydrocarbon refining, wood-treating
utility (coal gasification) and chemical manufacturing industries.
CUSTOMERS AND MARKETING
The Company provides services to a broad range of customers, including
petroleum companies, industrial companies, government agencies and
international customers. The Company also works with a number of engineering
and consulting firms in both the private and public sectors that manage
projects requiring the Company's services. Although historically most work
performed for the petroleum companies was at the retail service station level,
the Company has increased its presence at bulk terminals, refineries,
pipelines and exploration and production facilities. The Company's three
largest petroleum customers accounted for approximately 14% of the Company's
gross revenue in fiscal year 1995, and the loss of these petroleum customers
could have an adverse effect on the Company's business.
Industrial customers principally include large companies in the chemicals,
manufacturing, electronics, real estate and transportation industries. In the
public sector, the Company's principal customers are federal government
agencies, including the Department of Defense and the U.S. Army Corps of
Engineers, and other federal and state agencies.
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Most of the Company's jobs are performed for repeat customers, and in the
case of the large petroleum companies, pursuant to year-to-year, non-exclusive
national buying contracts. There are no minimum purchase requirements
associated with these contracts. No single customer accounted for more than
10% of the Company's gross revenues.
Although GTI relies on repeat customers and work generated through referrals
and seminar appearances for a significant portion of its new business, the
Company maintains a dedicated sales force. At the end of fiscal year 1995, the
Company had 32 professionals dedicated to sales, and it has a National
Accounts Program to develop and maintain long-term relationships with
customers. In addition, the Company has instituted an extensive training and
marketing program featuring internal and external seminars and a comprehensive
sales incentive plan. The Company is focusing its direct sales and marketing
efforts towards retaining its position in the retail petroleum market and
achieving continued growth in the upstream petroleum, industrial, government
and international markets.
PERSONNEL
As of April 29, 1995, the Company had 1,652 employees. Of these 1,037 are
skilled professionals (geologists, hydrogeologists, engineers, chemists and
environmental scientists) who perform services in the field, 198 are engaged
in the Company's laboratory operations, 32 in sales, and 385 in administrative
support, financial, legal and accounting functions.
The soil and groundwater remediation services market is very competitive and
requires highly skilled, experienced technical and management personnel. The
Company's ability to remain competitive is partially dependant on its ability
to attract and retain qualified personnel. None of the Company's employees are
represented by a labor organization. The Company considers its relations with
its employees to be satisfactory.
COMPETITION AND SEASONAL FACTORS
The markets in which the Company competes are very competitive. In each
specific service area of its business the Company competes with many
engineering and consulting firms that are both larger and smaller than the
Company, although no firm currently dominates any significant portion of those
services. The Company competes primarily on the basis of differentiated
service quality, reputation, expertise, geographic location and, to a lessor
extent, price.
Although demand for the Company's services are not strictly seasonal, due
primarily to more holidays and inclement weather conditions, the Company's
third quarter operating results are generally lower in comparison to other
quarters.
POTENTIAL LIABILITY AND INSURANCE
A majority of the Company's net revenue is derived from work involving
hazardous materials, toxic wastes and other pollutants that present
significant risks of liability for environmental damage, personal injury,
fines and costs imposed by regulatory agencies. Although liabilities arising
from environmental regulations are more directly applicable to the Company's
customers, these regulations, under certain circumstances, could impose
liability on the Company, and these liabilities can be joint and several where
other parties are involved. Although the Company does not believe its services
generally fall within any of these categories, when the Company's remedial
activities at any site involve the treatment, storage or disposal of hazardous
waste, it must adhere to the permitting and substantive requirements of these
regulations. GTI, through its in situ and on-site capabilities, attempts to
minimize for its customers the need to transport hazardous substances. When
transportation is required, the customers themselves generally arrange for the
disposal of the hazardous substances. In certain circumstances, however, the
Company may for certain customers subcontract for the transportation and
disposal of the hazardous substances to treatment, storage or disposal
facilities.
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The non-environmental liabilities associated with the Company's services
also involve a significant degree of risk. In addition, a substantial number
of the Company's contracts with its customers require the Company to indemnify
the customer for claims, damages or losses for personal injury or property
damage relating to the Company's performance of the contracts, unless such
injury or damage is the result of the customer's negligent or willful acts or
omissions.
GTI maintains health and safety and quality assurance/quality control
programs to reduce the risk of potential damage to persons and property, as
well as other losses. During the fiscal year ended April 29, 1995, the Company
maintained its environmental impairment liability coverage with its
professional liability coverage under one policy. While the Company believes
it operates safely and prudently, there are various exclusions under its
insurance policies and there can be no assurance that all possible liabilities
that may be incurred by the Company are covered by its insurance or that the
dollar amount of such liabilities will not exceed the Company's policy limits.
Further, the cost and limited availability of insurance has resulted in the
Company's use of self-insurance under certain policies. Management believes an
adequate level of insurance coverage has been provided.
PATENTS AND PUBLICATIONS
GTI believes that its intellectual property and know-how are important to
its business and have been established by the Company through its technical
expertise, understanding of regulations, skill in the design and
implementation of treatment processes, and investment in technology
development. The Company may also seek patent protection for key technologies
where appropriate. The Company has been notified that a patent for "Container
and Package for Transporting Temperature Sensitive Samples" will soon issue to
its subsidiary, GTEL Environmental Laboratories, Inc., for its innovative
shipping container and packaging for soil and groundwater samples.
The Company's personnel have published numerous texts and professional
papers and frequently give presentations and seminars on soil and groundwater
restoration. Many of the Company's employees are nationally recognized as
leaders in soil and groundwater restoration from hydrocarbon contamination.
ITEM 2. PROPERTIES
The Company's executive offices are located in a 42,015 square foot office
leased in Norwood, Massachusetts, a suburb of Boston. The term of the
Company's lease for this office space expires July 31, 2002.
The Company owns two buildings--a 15,540 square foot, one-story brick and
concrete building in Wichita, Kansas, which houses a laboratory, and a 6,050
square foot, two-story building in Kingsgrove, Australia, which houses
consulting and administrative staff. The Company leases space for offices and
warehouses in 66 cities in the United States, Canada, the United Kingdom,
Australia, New Zealand, The Netherlands and Italy. Sizes of leased space range
from 150 square feet to 42,000 square feet. Lease terms for offices typically
range from one to seven years.
The Company believes that its existing facilities are adequate to meet
current requirements and that suitable additional or substitute space will be
available as needed to accommodate any expansion of operations and for
additional offices.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a number of claims and lawsuits incidental to the
ordinary conduct of its business. Based upon analyses of the facts underlying
these matters and upon discussions with counsel, management does not believe
that the outcome of any or all of these matters will have a material adverse
effect upon its business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
last quarter of the fiscal year ended April 29, 1995.
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EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are listed below:
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Walter C. Barber............. 54 Chairman of the Board, President, and Chief
Executive Officer
Wendell W. Lattz............. 43 Senior Vice President of Operations
Frank J. Gorry............... 44 Vice President and General Manager, Industrial
Division
J. Steven Paquette........... 41 Vice President, and President, Groundwater
Technology Government Services, Inc.
Robert E. Sliney, Jr. ....... 45 Vice President, Treasurer and Chief Financial
Officer
Guy Sylvester................ 39 Vice President and General Manager, GTEL
Environmental Laboratories, Inc.
Glenn V. Batchelder.......... 34 Vice President of Sales and Marketing
Catherine L. Farrell......... 50 Vice President, General Counsel and Secretary
</TABLE>
Walter C. Barber joined the Company in 1989 as President, Chief Executive
Officer and Director, and in 1993 he was elected as Chairman of the Board.
Prior to joining the Company, from 1983 to 1989, Mr. Barber was Vice President
of Environmental Management and Administration of Chemical Waste Management
Inc., a hazardous waste management services company. Previously, Mr. Barber
was Director of Research and Technology Development for the Uranium Mill
Tailings Project of Jacobs Engineering Group, Inc., an engineering and
construction firm. Mr. Barber was also an executive with the U.S.
Environmental Protection Agency, holding positions as its Acting
Administrator, as Director of the Office of Air Quality Planning and Standards
and as Director of the Standards and Regulations Division.
Wendell W. Lattz joined the Company in 1991 as Vice President and Regional
General Manager of the Southern Region, and he currently serves as Senior Vice
President of Operations. Prior to joining the Company, from 1985 to 1991, Mr.
Lattz was General Manager of Chemical Waste Management of Indiana, Inc., a
hazardous waste landfill treatment and disposal company.
Frank J. Gorry joined the Company in 1993 as Program Director of the
Company's National Industry Division, and he currently serves as General
Manager of the Industrial Division. Prior to joining the Company, from 1987 to
1993, Mr. Gorry was Manager, Environmental Services Division, and then Vice
President, Remediation and Groundwater Field Services, of International
Technology Corporation, an environmental consulting and remediation company.
Mr. Gorry was also an engineer and on-site coordinator with the U.S.
Environmental Protection Agency.
J. Steven Paquette joined the Company in February 1993 as Vice President,
and President of Groundwater Technology Government Services, Inc., a
subsidiary of the Company. Prior to joining the Company, from 1987 to 1990, he
served as Vice President--Eastern Operations, and from 1990 to 1992, he served
as Senior Vice President and Northeast Division Manager, for CDM Federal
Programs Corporation, a wholly-owned subsidiary of Camp Dresser & McKee, Inc.,
a provider of environmental engineering and consulting services to agencies
and departments of the federal government.
Robert E. Sliney, Jr. joined the Company in 1992 as Vice President,
Treasurer and Chief Financial Officer. Prior to joining the Company, from 1985
to 1992, he served as Controller and then Vice President and Chief Financial
Officer of Signal Technology Corporation, a component manufacturer in defense
electronics. From 1975 to 1985, Mr. Sliney was employed by the public
accounting firm of Coopers and Lybrand.
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Guy Sylvester joined the Company in 1993 as Vice President and General
Manager of GTEL Environmental Laboratories, Inc., a subsidiary of the Company.
Prior to joining the Company, from 1991 to 1993, Mr. Sylvester served as a
General Manager for National Environmental Testing, Inc., an analytical
laboratory company. From 1988 to 1991, Mr. Sylvester was employed by Med-Tox
Associates, Inc., an environmental laboratory company, where he was a Vice
President responsible for the environmental laboratory business in California.
Glenn V. Batchelder joined the Company in 1986 as a project engineer and
currently serves as Vice President of Sales and Marketing. Mr. Batchelder has
served the Company in several capacities, including Manager of the Company's
former ORS Environmental Equipment Division from 1992 until its sale in 1994,
Vice President of Engineering from 1989 to 1992, and District Manager from
1986 to 1989.
Catherine L. Farrell joined the Company in 1992 as Vice President, General
Counsel and Secretary. Prior to joining the Company, from 1988 to 1992, Ms.
Farrell served as General Counsel to the Massachusetts Water Resources
Authority, a state authority providing sewer and water services. From 1984 to
1988, Ms. Farrell served as corporate counsel for the New England Division of
Federated Department Stores, Inc., a holding company for several retail
clothing chains. Previously, Ms. Farrell served as an attorney with the U.S.
Environmental Protection Agency and the Massachusetts Attorney General's
Office.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to this item may be found in the section captioned
"Price Range of Common Stock" appearing on the inside front cover of the
Annual Report to Stockholders for the fiscal year ended April 29, 1995. Such
information is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to this item may be found in the section captioned
"Financial Highlights" appearing on the inside front cover of the Annual
Report to Stockholders for the fiscal year ended April 29, 1995. Such
information is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information with respect to this item may be found in the section captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages 12 through 14 of the Annual Report to
Stockholders for the fiscal year ended April 29, 1995. Such information is
incorporated herein by reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated financial statements of the Company at April 29, 1995 and April
30, 1994, and for each of the three years in the period ended April 29, 1995,
and the independent auditor's report, on pages 14 through 24, and the
Company's unaudited quarterly financial data for the two years in the period
ended April 29, 1995, appearing on page 24 of the Annual Report to
Stockholders for the fiscal year ended April 29, 1995, are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
9
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item, other than the information appearing
in Part I hereof in "Executive Officers", may be found in the section
captioned, "Election of Directors" in the Company's definitive Proxy Statement
in connection with the 1995 Annual Meeting of Stockholders to be held on
September 19, 1995. Such information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found in the section captioned,
"Executive Compensation" in the Company's definitive Proxy Statement in
connection with the 1995 Annual Meeting of Stockholders to be held on
September 19, 1995. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item may be found in the sections
captioned, "Share Ownership of Principal Holders and Management" and "Election
of Directors" in the definitive Proxy Statement in connection with the 1995
Annual Meeting of Stockholders to be held on September 19, 1995. Such
information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item may be found in the section captioned,
"Executive Compensation" in the definitive Proxy Statement in connection with
the 1995 Annual Meeting of Stockholders to be held on September 19, 1995. Such
information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements. The financial statements listed in the
accompanying Index to Financial Statements and financial statement schedules
are incorporated herein by reference to the 1995 Annual Report to
Stockholders.
(2) Financial Statement Schedules. The financial statement schedules listed
in the accompanying index to financial statements and financial statement
schedules are filed as part of this annual report.
(3) List of Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.01 Restated Certificate of Incorporation (filed as Exhibit 3.01 to
Quarterly Report on Form 10-Q for the period ended October 29, 1994
with the Securities and Exchange Commission and incorporated herein
by reference).
3.02 By-Laws, as amended.
10.01* Amended and Restated 1986 Employee Stock Purchase Plan, as amended.
10.02* Amended and Restated 1986 Employee Stock Purchase Plan Enrollment Form
(filed as Exhibit 10.02 to Annual Report on Form 10-K for the year
ended April 30, 1994 with the Securities and Exchange Commission and
incorporated herein by reference).
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.03* 1987 Stock Plan, as amended (filed as Exhibit 10.05 to Annual Report
on Form 10-K for the year ended May 2, 1992 with the Securities and
Exchange Commission and incorporated herein by reference).
10.04* Form of Incentive Stock Option Agreement under the Company's 1987
Stock Plan (filed as Exhibit 10.06 to Annual Report on Form 10-K for
the year ended April 29, 1989 with the Securities and Exchange
Commission and incorporated herein by reference).
10.05* Form of Non-qualified Stock Option Agreement under the Company's 1987
Stock Plan (filed as Exhibit 10.05 to Annual Report on Form 10-K for
the year ended May 2, 1993 with the Securities and Exchange
Commission and incorporated herein by reference).
10.06* 1988 Non-Employee Director Stock Option Plan, as amended (filed as
Exhibit 10.08 to Annual Report or Form 10-K for the year ended May 2,
1992 with the Securities and Exchange Commission and incorporated
herein by reference).
10.07* Form of Option Agreement under the Company's 1988 Non-Employee
Director Stock Option Plan (filed as Exhibit 4.2 to Registration
Statement No. 33-27781 on Form S-8 and incorporated herein by
reference).
10.08* 1995 Director Stock Option Plan.
10.09* Form of Option Agreement under the Company's 1995 Director Stock
Option Plan.
10.10* Retirement Savings Plan of the Company, as amended. (filed as Exhibit
10.10 to Annual Report on Form 10-K for the year ended May 2, 1993
with the Securities and Exchange Commission and incorporated herein
by reference).
10.11* Amendment to Retirement Savings Plan of the Company.
10.12 Lease for 100 River Ridge Drive, Norwood, Massachusetts (filed as
Exhibit 10.15 to Annual Report on Form 10-K for the year ended May 2,
1992 with the Securities and Exchange Commission and incorporated
herein by reference).
10.13 Third Amendment to Lease for 100 River Ridge Drive, Norwood,
Massachusetts.
10.14* Profit Sharing Plan.
13 Portions of Annual Report to Stockholders for fiscal year ended April
29, 1995 incorporated by reference into items 5, 6, 7, and 8 of this
Form 10-K pursuant to Item 601(b)(13)(ii) of Regulation S-K.
21 Subsidiaries of the Company.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
</TABLE>
- --------
* Indicates a management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form pursuant to Item 14(c) of Form 10-K.
(b) Reports on Form 8-K. None.
(c) Exhibits. The Company hereby files as exhibits to this Annual Report on
Form 10-K those exhibits listed in Item 14(a)(3) above.
(d) Financial Statement Schedules. The response to this portion of Item 14
is submitted as a separate section of this report.
11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Groundwater Technology, Inc.
By /s/ Walter C. Barber
----------------------------------
WALTER C. BARBER
CHAIRMAN OF THE BOARD, PRESIDENT,
AND CHIEF EXECUTIVE OFFICER
July 27, 1995
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES
INDICATED.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Walter C. Barber Chairman of the July 27, 1995
- -------------------------------------- Board, President,
WALTER C. BARBER and Chief Executive
Officer (Principal
Executive Officer)
/s/ Robert E. Sliney, Jr. Vice President, July 27, 1995
- -------------------------------------- Chief Financial
ROBERT E. SLINEY, JR. Officer, and
Treasurer
(Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Bayard Henry Director July 27, 1995
- --------------------------------------
BAYARD HENRY
/s/ Allan S. Bufferd Director July 27, 1995
- --------------------------------------
ALLAN S. BUFFERD
/s/ Robert P. Schechter Director July 27, 1995
- --------------------------------------
ROBERT P. SCHECHTER
12
<PAGE>
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(ITEM 14(A), (1) AND (2))
<TABLE>
<CAPTION>
PAGE REFERENCE
-----------------
ANNUAL
REPORT TO
10-K STOCKHOLDERS
---- ------------
<S> <C> <C>
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Auditors............................. 14
Consolidated Statements of Operations for each of the three
years in the period ended April 29, 1995.................. 15
Consolidated Balance Sheets at April 29, 1995 and April 30,
1994...................................................... 16
Consolidated Statements of Stockholders' Equity for each of
the three years in the period ended April 29, 1995........ 17
Consolidated Statements of Cash Flows for each of the three
years in the period ended April 29, 1995.................. 18
Notes to Consolidated Financial Statements................. 19-24
SUPPLEMENTARY FINANCIAL INFORMATION:
Selected Quarterly Financial Data (unaudited).............. 24
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:
Schedule VIII--Valuation and Qualifying Accounts........... 14
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are not applicable, and, therefore, have been
omitted.
The Consolidated Financial Statements of Groundwater Technology, Inc. which
are included in the 1995 Annual Report to Stockholders are incorporated by
reference in Item 8.
13
<PAGE>
GROUNDWATER TECHNOLOGY, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MAY 1, 1993, APRIL 30, 1994 AND APRIL 29, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
AND CREDIT MEMOS
-----------------
<S> <C>
Balance at 05/02/92........................................... $4,270
Deductions (A)................................................ (689)
------
Balance at 05/01/93........................................... 3,581
Deductions (B)................................................ (336)
------
Balance at 04/30/94........................................... 3,245
Deductions (B)................................................ (145)
------
Balance at 04/29/95........................................... $3,100
======
</TABLE>
- --------
(A) Reduction in allowance based on lower levels of accounts receivable
(B) Amounts written off
14
<PAGE>
INDEX TO EXHIBITS
(ITEM 14 (A)(3))
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3.01 Restated Certificate of Incorporation (filed as Exhibit 3.01 to
Quarterly Report on Form 10-Q for the period ended October 29, 1994
with the Securities and Exchange Commission and incorporated herein
by reference).
3.02 By-Laws, as amended.
10.01 Amended and Restated 1986 Employee Stock Purchase Plan, as amended.
10.02 Amended and Restated 1986 Employee Stock Purchase Plan Enrollment Form
(filed as Exhibit 10.02 to Annual Report on Form 10-K for the year
ended April 30, 1994 with the Securities and Exchange Commission and
incorporated herein by reference).
10.03 1987 Stock Plan, as amended (filed as Exhibit 10.05 to Annual Report
on Form 10-K for the year ended May 2, 1992 with the Securities and
Exchange Commission and incorporated herein by reference).
10.04 Form of Incentive Stock Option Agreement under the Company's 1987
Stock Plan (filed as Exhibit 10.06 to Annual Report on Form 10-K for
the year ended April 29, 1989 with the Securities and Exchange
Commission and incorporated herein by reference).
10.05 Form of Non-qualified Stock Option Agreement under the Company's 1987
Stock Plan (filed as Exhibit 10.05 to Annual Report on Form 10-K for
the year ended May 2, 1993 with the Securities and Exchange
Commission and incorporated herein by reference).
10.06 1988 Non-Employee Director Stock Option Plan, as amended (filed as
Exhibit 10.08 to Annual Report or Form 10-K for the year ended May 2,
1992 with the Securities and Exchange Commission and incorporated
herein by reference).
10.07 Form of Option Agreement under the Company's 1988 Non-Employee
Director Stock Option Plan (filed as Exhibit 4.2 to Registration
Statement No. 33-27781 on Form S-8 and incorporated herein by
reference).
10.08 1995 Director Stock Option Plan.
10.09 Form of Option Agreement under the Company's 1995 Director Stock
Option Plan.
10.10 Retirement Savings Plan of the Company, as amended, (filed as Exhibit
10.10 to Annual Report on Form 10-K for the year ended May 2, 1993
with the Securities and Exchange Commission and incorporated herein
by reference).
10.11 Amendment to Retirement Savings Plan of the Company.
10.12 Lease for 100 River Ridge Drive, Norwood, Massachusetts (filed as
Exhibit 10.15 to Annual Report on Form 10-K for the year ended May 2,
1992 with the Securities and Exchange Commission and incorporated
herein by reference).
10.13 Third Amendment to Lease for 100 River Ridge Drive, Norwood,
Massachusetts.
10.14 Profit Sharing Plan.
13 Portions of Annual Report to Stockholders for fiscal year ended April
29, 1995 incorporated by reference into items 5, 6, 7, and 8 of this
Form 10-K pursuant to Item 601(b)(13)(ii) of Regulation S-K.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
21 Subsidiaries of the Company.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
</TABLE>
16
<PAGE>
3.02
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BY-LAWS
OF
GROUNDWATER TECHNOLOGY, INC.
(A DELAWARE CORPORATION)
AS AMENDED THROUGH 03/21/95
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GROUNDWATER TECHNOLOGY, INC.
BY-LAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE 1 CERTIFICATE OF INCORPORATION................................... 1
Section 1.1 Contents................................................. 1
Section 1.2 Certificate in Effect.................................... 1
ARTICLE 2 MEETING OF STOCKHOLDERS........................................ 1
Section 2.1 Place.................................................... 1
Section 2.2 Annual Meeting........................................... 1
Section 2.3 Special Meetings......................................... 1
Section 2.4 Notice of Meetings....................................... 1
Section 2.5 Affidavit of Notice...................................... 1
Section 2.6 Quorum................................................... 2
Section 2.7 Voting Requirements...................................... 2
Section 2.8 Proxies and Voting....................................... 2
Section 2.9 Action Without Meeting................................... 2
Section 2.10 Stockholder List......................................... 2
Section 2.11 Record Date.............................................. 3
Section 2.12 Notice of Stockholder Business........................... 3
ARTICLE 3 DIRECTORS...................................................... 4
Section 3.1 Enumeration; Election and Term of Office................. 4
Section 3.2 Duties................................................... 5
Section 3.3 Compensation............................................. 5
Section 3.4 Reliance on Books........................................ 5
ARTICLE 4 MEETINGS OF THE BOARD OF DIRECTORS............................. 5
Section 4.1 Place.................................................... 5
Section 4.2 Annual Meeting........................................... 5
Section 4.3 Regular Meetings......................................... 5
Section 4.4 Special Meetings......................................... 5
Section 4.5 Quorum................................................... 6
Section 4.6 Action Without Meeting................................... 6
Section 4.7 Telephone Meetings....................................... 6
ARTICLE 5 COMMITTEES OF DIRECTORS........................................ 6
Section 5.1 Designation.............................................. 6
Section 5.2 Records of Meetings...................................... 6
ARTICLE 6 NOTICES........................................................ 7
Section 6.1 Method of Giving Notice.................................. 7
Section 6.2 Waiver................................................... 7
ARTICLE 7 OFFICERS....................................................... 7
Section 7.1 In General............................................... 7
Section 7.2 Election of President, Secretary and Treasurer........... 7
Section 7.3 Election of Other Officers............................... 7
Section 7.4 Salaries................................................. 7
Section 7.5 Term of Office........................................... 7
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Section 7.6 Duties of President and Chairman of the Board.......... 7
Section 7.7 Duties of Vice President............................... 8
Section 7.8 Duties of Secretary.................................... 8
Section 7.9 Duties of Assistant Secretary.......................... 8
Section 7.10 Duties of Treasurer.................................... 8
Section 7.11 Duties of Assistant Treasurer.......................... 8
ARTICLE 8 RESIGNATIONS, REMOVALS AND VACANCIES.......................... 9
Section 8.1 Directors.............................................. 9
Section 8.2 Officers............................................... 9
ARTICLE 9 CERTIFICATE OF STOCK.......................................... 10
Section 9.1 Issuance of Stock...................................... 10
Section 9.2 Right to Certificate; Form............................. 10
Section 9.3 Facsimile Signature.................................... 10
Section 9.4 Lost Certificates...................................... 10
Section 9.5 Transfer of Stock...................................... 10
Section 9.6 Registered Stockholders................................ 10
ARTICLE 10 EXECUTION OF PAPERS.......................................... 11
ARTICLE 11 FISCAL YEAR.................................................. 11
ARTICLE 12 SEAL......................................................... 11
ARTICLE 13 OFFICES...................................................... 11
ARTICLE 14 INDEMNIFICATION.............................................. 11
Section 14.1 Actions other than by or in the Right of the
Corporation........................................... 11
Section 14.2 Actions by or in the Right of the Corporation.......... 11
Section 14.3 Success on the Merits.................................. 12
Section 14.4 Specific Authorization................................. 12
Section 14.5 Advance Payment........................................ 12
Section 14.6 Non-Exclusivity........................................ 12
Section 14.7 Insurance.............................................. 12
Section 14.8 Continuation of Indemnification and Advancement of
Expenses.............................................. 12
Section 14.9 Severability........................................... 12
Section 14.10 Intent of Article...................................... 13
ARTICLE 15 AMENDMENTS................................................... 13
</TABLE>
iii
<PAGE>
GROUNDWATER TECHNOLOGY, INC.
FORMERLY
OIL RECOVERY SYSTEMS, INC.
ARTICLE 1 CERTIFICATE OF INCORPORATION
Section 1.1 Contents. The name, location of principal office and purposes of
the Corporation shall be as set forth in its Certificate of Incorporation.
These By-Laws, the powers of the Corporation and of its Directors and
stockholders, and all matters concerning the conduct and regulation of the
business of the Corporation shall be subject to such provisions in regard
thereto, if any, as are set forth in said Certificate of Incorporation. The
Certificate of Incorporation is hereby made a part of these By-Laws.
Section 1.2 Certificate in Effect. All references in these By-Laws to the
Certificate of Incorporation shall be construed to mean the Certificate of
Incorporation of the Corporation as from time to time amended, including
(unless the context shall otherwise require) all certificates and any
agreement of consolidation or merger filed pursuant to the Delaware General
Corporation Law, as amended.
ARTICLE 2 MEETING OF STOCKHOLDERS
Section 2.1 Place. All meetings of the stockholders may be held at such
place either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors as stated in the notice of the
meeting or in any duly executed waiver of notice thereof.
Section 2.2 Annual Meeting. Annual meetings of stockholders shall be held
either in the month of September or October of each year at such specific date
and time as shall be designated from time to time by the Board of Directors
and stated in the notice of the meeting. If such annual meeting has not been
held as herein provided, a special meeting of the stockholders in lieu of the
annual meeting may be held, and any business transacted or elections held at
such special meeting shall have the same effect as if transacted or held at
the annual meeting, and in such case all references in these By-Laws, except
in this Section 2.2, to the annual meeting of the stockholders shall be deemed
to refer to such special meeting.
Section 2.3 Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President, the Chairman of
the Board, or by the Board of Directors and shall be called by the President
or Secretary at the request in writing of a majority of the Directors then in
office, or at the request in writing of stockholders owning a majority in
amount of the entire stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 2.4 Notice of Meetings. A written notice of all meetings of
stockholders stating the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the special meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice.
Section 2.5 Affidavit of Notice. An affidavit of the Secretary or an
Assistant Secretary or the transfer agent of the Corporation that notice of a
stockholders meeting has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
1
<PAGE>
Section 2.6 Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute or by the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented by any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, except as hereinafter provided, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
presented or represented any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 2.7 Voting Requirements. When a quorum is present at any meeting,
the vote of the holders of a majority of the stock having voting power present
in person or represented by proxy shall decide any questions brought before
such meeting, unless the question is one upon which, by express provision of
any applicable statute or of the Certificate of Incorporation, a different
vote is required, in which case such express provision shall govern and
control the decision of such questions.
Section 2.8 Proxies and Voting. Unless otherwise provided in the Certificate
of Incorporation, each stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be
voted on after three years from its date, unless the proxy provides for a
longer period. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held, and persons whose stock is pledged shall be
entitled to vote the pledged shares, unless in the transfer by the pledgor on
the books of the Corporation he shall have expressly empowered the pledgee to
vote said shares, in which case only the pledgee, or his proxy, may represent
and vote such shares. Shares of the capital stock of the Corporation owned by
the Corporation shall not be voted, directly or indirectly.
Section 2.9 Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in
writing.
Section 2.10 Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address
of each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The original or duplicate stock ledger shall be
the only evidence as to who are the stockholders entitled to examine such
list, the stock ledger or the books of the Corporation, or to vote in person
or by proxy at any meeting of stockholders.
2
<PAGE>
Section 2.11 Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
If no record date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting
is held.
(b) The record date for determining stockholders entitled to express consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day which the first written
consent is expressed.
(c) The record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
Section 2.12 Notice of Stockholder Business. (a) For a proposal to be
properly brought before an annual meeting by a stockholder or for a
stockholder to nominate a person or persons for election as directors at an
annual meeting or any special meeting at which directors are to be elected,
the stockholder must give timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the Corporation not
less than 45 days, but not more than 60 days, prior to the meeting; provided,
however, if less than 60 days' notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to
be timely must be so received not later than the close of business on the 15th
business day following the day on which such notice or public disclosure of
the date of the meeting is made.
(b) A stockholder's notice to the Secretary relating to a proposal shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the proposal desired to be brought before
the annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder who intends to make the proposal and
any other stockholders known by such stockholder to support such proposal,
(iii) the class and number of shares of the Corporation's capital stock which
are beneficially owned by the stockholder and by any other stockholders known
by such stockholder to support such proposal as of the date of such
stockholder notice, and (iv) any financial interest of the stockholder in such
proposal.
(c) A stockholder's notice to the Secretary relating to a nominee for
election as a director shall set forth (i) the name and address, as they
appear on the Corporation's books, of the stockholder who intends to make the
nomination and any other stockholder's known by such stockholder to support
the nomination, (ii) the class and number of shares of the Corporation's
capital stock which are beneficially owned by the stockholder and by any other
stockholders known by such stockholder to support such proposal as of the date
of such stockholder notice (iii) a representation that such stockholder is a
holder of record of stock of the Corporation entitled to vote as such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice, (iv) a description of all
arrangements or understandings between such stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
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the nomination or nominations are to be made by such stockholder, (v) such
other information regarding each nominee proposed by such stockholder as would
have been required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had each nominee been
nominated, or intended to be nominated by the Board of Directors, and (vi) the
consent of each nominee to serve as a director of the Corporation if elected.
(d) The Board of Directors, or a designated committee thereof, may determine
whether a notice has complied with the requirements of this Section 2.12, and
may reject as invalid any stockholder proposal or nomination which was not the
subject of a notice timely made in accordance with, and containing all
information required by, the terms of this Section 2.12. If neither the Board
of Directors nor such committee makes a determination as to the compliance
with the requirements of this Section 2.12, the presiding officers at the
meeting shall determine and declare at the meeting whether such notice has so
complied. If the Board of Directors or a designated committee thereof or the
presiding officer determines that a stockholder proposal or nomination was the
subject of a notice made in accordance with the terms of this Section 2.12,
and if the stockholder giving such notice shall make such proposal or
nomination, the presiding officer shall so declare at the meeting, and ballots
shall be provided for use at the meeting with respect to such proposal or
nomination. If the Board of Directors or a designated committee thereof or the
presiding officer determines that a stockholder proposal or nomination was not
the subject of a notice made in accordance with the terms of this Section
2.12, and if the stockholder giving such notice shall make such proposal or
nomination, the presiding officer shall so declare at the meeting and any such
proposal shall not be acted upon at the meeting.
(e) Notwithstanding the foregoing, a stockholder may present at an annual
meeting any proposal which such stockholder has caused to be included in the
Corporation's proxy materials pursuant to Rule 14a-8 promulgated pursuant to
the Securities Exchange Act of 1934, as amended.
(f) This Section 2.12 shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed
and received as herein provided.
ARTICLE 3 DIRECTORS
Section 3.1 Enumeration; Election and Term of Office. (a) There shall be a
Board of Directors of the Corporation, the number to be determined by the
stockholders (except as that number may be enlarged by the Board of Directors
acting pursuant to the third sentence of this Section 3.1). The Board of
Directors shall consist of not less than three Directors, except that whenever
there shall be only two stockholders the number of Directors shall not be less
than two, and whenever there shall be only one stockholder the number of
Directors shall be not less than one. The Board of Directors may be enlarged
by the affirmative vote of the holders of two-thirds (66 2/3%) of the shares
entitled to vote in the election of Directors at any meeting or by vote of a
majority of the Directors then in office. The Directors shall be chosen at the
annual meeting of the stockholders by such stockholders as have the right to
vote thereon. At the 1988 special meeting in lieu of annual meeting of
stockholders, the Directors shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class (the
"Class A Directors") to expire at the 1989 annual meeting of stockholders, the
term of office of the second class (the "Class B Directors") to expire at the
1990 annual meeting of stockholders and the term of office of the third class
(the "Class C Directors") to expire at the 1991 annual meeting of
stockholders. At each annual meeting of stockholders following such initial
classification and election, Directors elected to succeed those Directors
whose terms expire shall be elected to hold office until their respective
successors are chosen and qualified and until the third succeeding annual
meeting of stockholders after their election, unless, by reason of any
intervening changes in the authorized number of Directors, the
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Board shall designate one or more of the then expiring directorships as
directorships of another class in order more nearly to achieve equality of the
number of Directors among the classes.
(c) Notwithstanding that the three classes shall be as nearly equal in
number of Directors as possible, in the event of any change in the authorized
number of Directors, each Director then continuing to serve as such shall
nevertheless continue as a Director of the class of which he is a member until
the expiration of his current term, or his prior death, resignation, removal
or disqualification. If any newly created directorship may, consistently with
the rule that the three classes shall be as nearly equal in number of
Directors as possible, be allocated to one of two or more classes, the Board
of Directors shall allocate it to that of the available classes whose term of
office is due to expire at the earliest date following such allocation. Any
election of Directors by stockholders shall be by ballot if so requested by
any stockholder entitled to vote thereon. No Director need be a stockholder.
Notwithstanding anything contained elsewhere in these By-Laws to the
contrary, the affirmative vote of the holders of at least two-thirds (66 2/3%)
of the shares entitled to vote in the election of Directors shall be required
to alter, amend or repeal this Section 3.1 or to adopt any provision
inconsistent therewith.
Section 3.2 Duties. The business of the Corporation shall be managed by or
under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Section 3.3 Compensation. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, the Board of Directors shall have the
authority to fix the compensation of Directors. The Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
Section 3.4 Reliance on Books. A member of Board of Directors or a member of
any committee designated by the Board of Directors shall, in the performance
of his duties, be fully protected in relying in good faith upon the books of
account or reports made to the Corporation by any of its officers, or by an
independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any committee, or in relying
in good faith upon other records of the Corporation.
ARTICLE 4 MEETINGS OF THE BOARD OF DIRECTORS
Section 4.1 Place. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 4.2 Annual Meeting. The first meeting of each newly elected Board of
Directors shall be held immediately following the annual meeting of
stockholders or any special meeting held in lieu thereof, and no notice of
such meeting shall be necessary to the newly elected Directors in order
legally to constitute the meeting.
Section 4.3 Regular Meetings. Regular meetings of the Board of Directors may
be held without notice at such time and at such place as shall from time to
time be determined by the Board.
Section 4.4 Special Meetings. Special meetings of the Board may be called by
the President on two days' notice to each Director either personally or by
mail or by telegram; special meetings
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shall be called by the President or Secretary in like manner and on like
notice on the written request of two Directors unless the Board consists of
only one Director, in which case special meetings shall be called by the
President or Secretary in like manner and on like notice on the written
request of the sole Director.
Section 4.5 Quorum. At all meetings of the Board a majority of the Directors
then in office shall constitute a quorum for the transaction of business and
the act of a majority of the Directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 4.6 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of proceedings of the Board or
committee.
Section 4.7 Telephone Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-Laws, members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
ARTICLE 5 COMMITTEES OF DIRECTORS
Section 5.1 Designation. (a) The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees,
each committee to consist of one or more of the Directors of the Corporation.
The Board may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee.
(b) In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
(c) Any such committee, to the extent provided in the resolution of the
Board of Directors designating the committee, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-Laws of the Corporation; and,
unless the resolution or the Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 5.2 Records of Meetings. Each committee shall keep regular minutes
of its meetings and report the same to the Board of Directors when required.
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ARTICLE 6 NOTICES
Section 6.1 Method of Giving Notice. Whenever, under any provision of the
law or of the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any Director or stockholder, such notice shall be
given in writing by the Secretary or the person or persons calling the meeting
by leaving such notice with such Director or stockholder at his residence or
usual place of business or by mailing it addressed to such Director or
stockholder at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail. Notice to
Directors may also be given by telegram.
Section 6.2 Waiver. Whenever any notice is required to be given under any
provision of law or of the Certificate of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends the meeting
for express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE 7 OFFICERS
Section 7.1 In General. The officers of the Corporation shall be chosen by
the Board of Directors and shall include a President, a Secretary and a
Treasurer. The Board of Directors may also choose a Chairman of the Board, one
or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any
number of offices may be held by the same person, unless the Certificate of
Incorporation or these By-Laws otherwise provide. In addition, the President
may designate one or more employees of the Corporation having the title of
vice president or assistant vice president, but who shall not be officers of
the Corporation, who shall hold such titles at the pleasure of the President
and who shall have such powers and duties as the President may from time to
time designate
Section 7.2 Election of President, Secretary and Treasurer. The Board of
Directors at its first meeting after each annual meeting of stockholders shall
choose a President, a Secretary and a Treasurer.
Section 7.3 Election of Other Officers. The Board of Directors may appoint
such other officers and agents as it shall deem appropriate who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board.
Section 7.4 Salaries. The salaries of all officers and agents of the
Corporation may be fixed by the Board of Directors.
Section 7.5 Term of Office. The officers of the Corporation shall hold
office until their successors are chosen and qualify. Any officer elected or
appointed by the Board of Directors may be removed at any time in the manner
specified in Section 8.2.
Section 7.6 Duties of President and Chairman of the Board. The President
shall be the chief executive officer of the Corporation, shall preside at all
meetings of the stockholders and, if he is a Director, at all meetings of the
Board of Directors if there shall be no Chairman of the Board or in the
absence of the Chairman of the Board, shall have general and active management
of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and
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executed and except where the signing and execution thereof shall be expressly
delegated by the Board of Directors to some other officer or agent of the
Corporation. The Chairman of the Board, if any, shall make his counsel
available to the other officers of the Corporation, shall be authorized to
sign stock certificates on behalf of the Corporation, shall preside at all
meetings of the Directors at which he is present, and, in the absence of the
President at all meetings of the stockholders, and shall have such other
duties and powers as may from time to time be conferred upon him by the
Directors.
Section 7.7 Duties of Vice President. In the absence of the President or in
the event of his inability or refusal to act, the Vice President (or in the
event there be more than one Vice President, the Vice Presidents in the order
designation by the Directors, or in the absence of any designation, then in
the order of their election) shall perform the duties of the President not
otherwise conferred upon the Chairman of the Board, if any, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
Section 7.8 Duties of Secretary. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, except as otherwise provided in these By-Laws, and shall perform
such other duties as may be prescribed by the Board of Directors or President,
under whose supervision he shall be. He shall have charge of the stock ledger
(which may, however, be kept by any transfer agent or agents of the
Corporation under his direction) and of the corporate seal of the Corporation.
Section 7.9 Duties of Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by
the Board of Directors (or if there be no such determination, then in the
order of their election) shall, in the absence of the Secretary or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 7.10 Duties of Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers from such
disbursements, and shall render the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account
of all of his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of this office and for the restoration to the Corporation, in case of
his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession
or under his control belonging to the Corporation.
Section 7.11 Duties of Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
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ARTICLE 8 RESIGNATIONS, REMOVALS AND VACANCIES
Section 8.1 Directors. (a) Resignations. Any Director may resign at any time
by giving written notice to the Board of Directors or the President or the
Secretary. Such resignation shall take effect at the time specified therein;
and unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
(b) Removals. Any Director may be removed from office only for cause and
only by the affirmative vote of the holders of two-thirds (66 2/3%) of the
shares entitled to vote in the election of Directors, provided that the
Directors elected by a particular class of stockholders may be removed only by
the affirmative vote of the holders of two-thirds (66 2/3%) of the shares of
the particular class of stockholders entitled to vote for election of such
Directors. Notwithstanding anything contained elsewhere in these By-Laws to
the contrary, the affirmative vote of the holders of at least two-thirds (66
2/3%) of the shares entitled to vote in the election of Directors shall be
required to alter, amend or repeal this Section 8.1(b) or to adopt any
provision inconsistent therewith.
The Directors may terminate or modify the authority of any agent or
employee. The Directors may remove any officer from office with or without
assignment of cause by vote of a majority of the Directors then in office.
If cause is assigned for removal of any Director or officer, such Director
or officer may be removed only after a reasonable notice and opportunity to be
heard before the body proposing to remove him.
No Director or officer who resigns or is removed shall have any right to any
compensation as such Director or officer for any period following his
resignation or removal, or any right to damages on account of such removal
whether his compensation be by the month or by the year or otherwise;
provided, however, that the foregoing provision shall not prevent such
Director or officer from obtaining damages for breach of any contract of
employment legally binding upon the Corporation.
(c) Vacancies. Vacancies resulting from any increase in the authorized
number of Directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office or other
cause may be filled only by a majority vote of the Directors then in office,
though less than a quorum, and Directors so chosen shall hold office for a
term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires. No decrease in
the number of authorized Directors shall shorten the term of any incumbent
Director. Notwithstanding anything contained elsewhere in these By-Laws to the
contrary, the affirmative vote of the holders of at least two-thirds (66 2/3%)
of the shares entitled to vote in the election of Directors shall be required
to alter, amend or repeal this Section 8.1(c) or to adopt any provision
inconsistent therewith.
If the office of any officer becomes vacant, the Directors may choose or
appoint a successor by vote of a majority of the Directors present at the
meeting at which such choice or appointment is made.
Each successor shall hold office for the unexpired term of his predecessor
and until his successor shall be chosen or appointed and qualified, or until
he sooner dies, resigns, is removed or becomes disqualified.
Section 8.2 Officers. The Board of Directors may, at any meeting called for
the purpose, by vote of a majority of their entire number, remove from office
any officer of the Corporation, with or without cause. The Board of Directors
may, at any meeting, by vote of a majority of the Directors present at such
meeting, accept the resignation of any officer of the Corporation or remove or
accept the resignation of any employee or agent or any member of any committee
regardless of how appointed, and any officer, agent or employee other than an
executive officer may also be removed
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with or without cause, or his resignation accepted, by the committee or
officer which appointed such person. Any vacancy occurring in the office of
President, Secretary or Treasurer shall be filled by the Board of Directors
and the officers so chosen shall hold office subject to the By-Laws for the
unexpired term in respect of which the vacancy occurred and until their
successors shall be elected and qualify.
ARTICLE 9 CERTIFICATE OF STOCK
Section 9.1 Issuance of Stock. The Directors may, at any time and from time
to time, if all of the shares of capital stock which the Corporation is
authorized by its Certificate of Incorporation to issue have not been issued,
subscribed for, or otherwise committed to be issued, issue or take
subscriptions for additional shares of its capital stock up to the amount
authorized in its Certificate of Incorporation. Such stock shall be issued and
the consideration paid therefor in the manner prescribed by law.
Section 9.2 Right to Certificate; Form. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman of the Board, the President or a Vice
President and the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned
by him in the Corporation. Certificates may be issued for partly paid shares
and in such case upon the face or back of the certificates issued to represent
any such partly paid shares, the total amount of the consideration to be paid
therefor, and the amount paid thereon shall be specified.
Section 9.3 Facsimile Signature. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
Section 9.4 Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
Section 9.5 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 9.6 Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
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ARTICLE 10 EXECUTION OF PAPERS
Except as otherwise provided in these By-Laws or as the Board of Directors
may generally or in particular cases otherwise determine, all deeds, leases,
transfers, contracts, bonds, notes, checks, drafts and other instruments
authorized to be executed on behalf of the Corporation shall be executed by
the President or the Treasurer.
ARTICLE 11 FISCAL YEAR
Except as from time to time otherwise provided by the Board of Directors,
the fiscal year of the Corporation shall be the twelve month period ending on
the Saturday closest to April 30.
ARTICLE 12 SEAL
The Corporate seal shall have inscribed thereon the name of the Corporation,
the year of its organization and the word "Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE 13 OFFICES
In addition to its principal office, the Corporation may have offices at
such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE 14 INDEMNIFICATION
Section 14.1 Actions other than by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 14.2 Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed
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to the best interests of the Corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable unless and only to the extent that the
Court of Chancery of the State of Delaware or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such exereses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.
Section 14.3 Success on the Merits. To the extent that any person described
in Sections 14.1 or 14.2 has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in said Sections, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
Section 14.4 Specific Authorization. Any indemnification under Sections 14.1
or 14.2 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
any person described in said Sections is proper in the circumstances because
he has met the applicable standard of conduct set forth in said Sections. Such
determination shall be made (1) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such action, suit
or proceeding, or (2) if such a quorum is not obtainable, or even if
obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders of the
Corporation.
Section 14.5 Advance Payment. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of any person described in said Section to repay
such amount if it shall ultimately be determined that he is not entitled to
indemnification by the Corporation as authorized in this Article 14.
Section 14.6 Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this
Article 14 shall not be deemed exclusive of any other rights to which those
provided indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 14.7 Insurance. The Board of Directors may authorize, by a vote of
the majority of the full board, the Corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article 14.
Section 14.8 Continuation of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article 14 shall continue as to a person who has
ceased to be a director, officer employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 14.9 Severability. If any word, clause or provision of this Article
14 or any award made hereunder shall for any reason be determined to be
invalid, the provisions hereof shall not otherwise be affected thereby but
shall remain in full force and effect.
Section 14.10 Intent of Article. The intent of this Article 14 is to provide
for indemnification and advancement of expenses to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware. To the
extent that such Section or any successor section may be
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<PAGE>
amended or supplemented from time to time, this Article 14 shall be amended
automatically and construed so as to permit indemnification and advancement of
expenses to the fullest extent from time to time permitted by law.
ARTICLE 15 AMENDMENTS
Except as otherwise provided herein, these By-Laws may be altered, amended
or repealed or new By-Laws may be adopted by the stockholders or by the Board
of Directors, when such power is conferred upon the Board of Directors by the
Certificate of Incorporation, at any regular meeting of the stockholders or of
the Board of Directors, or at any special meeting of the stockholders or of
the Board of Directors if notice of such alteration, amendment, repeal or
adoption of new By-Laws is contained in the notice of such special meeting, or
by the written consent of a majority in interest of the outstanding voting
stock of the Corporation or by the unanimous written consent of the Directors.
If the power to adopt, amend or repeal By-Laws is conferred upon the Board of
Directors by the Certificate of Incorporation, it shall not divest or limit
the power of the stockholders to adopt, amend or repeal By-Laws.
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<PAGE>
10.01
GROUNDWATER TECHNOLOGY, INC.
AMENDED AND RESTATED 1986 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1--PURPOSE.
This Employee Stock Purchase Plan (the "Plan") is intended as an incentive
to, and to encourage stock ownership by, all eligible employees of Groundwater
Technology, Inc., a Delaware corporation (the "Company") and its participating
subsidiaries (as defined in Article 17) so that they may share in the growth
of the Company by acquiring or increasing their proprietary interest in the
Company. The Plan is designed to encourage eligible employees to remain in the
employ of the Company. It is intended that options issued pursuant to this
Plan shall constitute options issued pursuant to an "employee stock purchase
plan" within the meaning of Section 423(b) of the Internal Revenue Code of
1986, as amended (the "Code").
ARTICLE 2--ADMINISTRATION OF THE PLAN.
The Plan may be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee shall consist of not
less than two members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by
the Board of Directors. The Committee may select one of its members as
Chairman, and shall hold meetings at such times and places as it may
determine. Acts by a majority of the Committee, or acts reduced to or approved
in writing by a majority of the members of the Committee, shall be the valid
acts of the Committee.
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time
adopt such rules and regulations for carrying out the Plan as it may deem
best, provided that any such rules and regulations shall be applied on a
uniform basis to all employees under the Plan. No member of the Board of
Directors or the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any option granted under it.
In the event the Board of Directors fails to appoint or refrains from
appointing a Committee, the Board of Directors shall have all power and
authority to administer the Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board of Directors.
ARTICLE 3--ELIGIBLE EMPLOYEES.
All employees of the Company or any of its participating subsidiaries who
have completed six months of employment with the Company or any of its
subsidiaries shall be eligible to receive options under this Plan to purchase
the Company's Common Stock, and all eligible employees shall have the same
rights and privileges hereunder. Persons who have been so employed for six
months or more on the first day of any Payment Period (as defined in Article
5) shall receive their options as of such day. Persons who attain the status
of employment for six months or more after the date on which the initial
options are granted under this Plan shall be granted options on the next date
on which options are granted to all eligible employees. Directors who are not
employees of the Company shall not be eligible to receive options under this
Plan.
In no event may an employee be granted an option if such employee,
immediately after the option is granted, owns stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of
stock of the Company or of its parent corporation or subsidiary corporations,
as the terms "parent corporation" and "subsidiary corporation" are defined in
Section
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424(e) and (f) of the Code. For purposes of determining stock ownership under
this paragraph, the rules of Section 424(d) of the Code shall apply, and stock
which the employee may purchase under outstanding options shall be treated as
stock owned by the employee.
For purposes of this Article 3, the term "employee" shall not include an
employee whose customary employment is twenty (20) hours or less per week or
whose customary employment is for not more than five (5) months in any
calendar year.
ARTICLE 4--STOCK SUBJECT TO THE PLAN.
The stock subject to the options under the Plan shall be shares of the
Company's authorized but unissued Common Stock, $.01 par value per share, or
shares of such Common Stock reacquired by the Company, including shares
purchased in the open market. The aggregate number of shares which may be
issued pursuant to the Plan is 312,500 subject to adjustment as provided in
Article 12. In the event any option granted under the Plan shall expire or
terminate for any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part, the unpurchased shares
subject thereto shall again be available under the Plan.
ARTICLE 5--PAYMENT PERIODS AND STOCK OPTIONS.
The six-month periods, December 1 to May 31 and June 1 to November 30, are
Payment Periods during which payroll deductions will be accumulated under the
Plan. Each Payment Period includes only regular pay days falling within it.
Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan an option to purchase on the last day of such Payment Period, at the
Option Price hereinafter provided for, a maximum of 300 shares, on condition
that such employee remains eligible to participate in the Plan throughout such
Payment Period. The participant shall be entitled to exercise such option so
granted only to the extent of the participant's accumulated payroll deductions
on the last day of such Payment Period. In the event that the participant's
accumulated payroll deductions on the last day of the Payment Period would
enable the participant to purchase more than 300 shares except for the 300-
share limitation, the excess of the amount of the accumulated payroll
deductions over the aggregate purchase price of the 300 shares shall be
promptly refunded to the participant by the Company, without interest. The
Option Price for each Payment Period shall be the lesser of (i) 85% of the
average market price of the Company's Common Stock on the first business day
of the Payment Period, or (ii) 85% of the average market price of the
Company's Common Stock on the last business day of the Payment Period, in
either event rounded up to avoid fractions of a dollar other than 1/4, 1/2 and
3/4. The foregoing limitation on the number of shares which may be granted in
any Payment Period and the Option Price per share shall be subject to
adjustment as provided in Article 12.
For purposes of this Plan the term "average market price" is the mean of the
closing bid and asked prices of the Common Stock of the Company in the over-
the-counter market as reported on NASDAQ (or other automated inter-dealer
quotation system selected by the Board of Directors), or, if the Common Stock
of the Company is then traded on the NASDAQ National Market System or on a
national securities exchange, the average of the high and low prices of the
Common Stock of the Company as reported on NASDAQ or on the principal national
securities exchange on which it is so traded or such other national securities
exchange as shall be designated by the Board of Directors, as the case may be.
For purposes of this Plan, the term "business day" means a day on which
there is trading in the over-the-counter market or on the aforementioned
national securities exchange, whichever is applicable pursuant to the
preceding paragraph.
2
<PAGE>
No employee shall be granted an option which permits the employee's right to
purchase Common Stock under this Plan, and under all other Section 423(b)
employee stock purchase plans of the Company or any parent or subsidiary
corporations, to accrue at a rate which exceeds $25,000 of fair market value
of such stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any time. The purpose of
the limitation in the preceding sentence is to comply with Section 423(b)(8)
of the Code.
ARTICLE 6--EXERCISE OF OPTION.
Each eligible employee who continues to be a participant in the Plan on the
last business day of a Payment Period shall be deemed to have exercised
his/her option on such date and shall be deemed to have purchased from the
Company such number of full shares of Common Stock for the purpose of the Plan
as his/her accumulated payroll deductions on such date will pay for at the
Option Price, subject to the 300-share limit of the option. If a participant
is not an employee on the last business day of a Payment Period, he/she shall
not be entitled to exercise his/her option. Only full shares of Common Stock
may be purchased under the Plan. Unused payroll deductions remaining in an
employee's account at the end of a Payment Period (other than amounts refunded
to the employee pursuant to Article 5) will be carried forward to the
succeeding Payment Period.
ARTICLE 7--AUTHORIZATION FOR ENTERING THE PLAN.
An employee may enter the Plan by filling out, signing and delivering to the
Company an authorization:
A. Stating the percentage to be deducted regularly from the employee's
pay;
B. Authorizing the purchase of stock for the employee in each Payment
Period in accordance with the terms of the Plan; and
C. Specifying the exact name in which stock purchased for the employee is
to be issued as provided under Article 11 hereof.
Such authorization must be received by the Company at least ten (10) days
before the beginning date of the next succeeding Payment Period.
Unless an employee files a new authorization or withdraws from the Plan, the
deductions and purchases under the authorization the employee has on file
under the Plan will continue from one Payment Period to succeeding Payment
Periods as long as the Plan remains in effect. The Company will accumulate and
hold for the employee's account the amounts deducted from his/her pay. No
interest will be paid on these amounts.
ARTICLE 8--MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS.
An employee may authorize payroll deductions in an amount not less than 2%
but not more than 10% of the employee's regular (i.e. base) pay.
ARTICLE 9--CHANGE IN PAYROLL DEDUCTIONS.
Deductions may not be increased or decreased during a Payment Period.
However, an employee may withdraw in full from the Plan, in accordance with
Article 10.
ARTICLE 10--WITHDRAWAL FROM THE PLAN.
An employee may withdraw from the Plan in whole, but not in part, at any
time prior to the last business day of each Payment Period by delivering a
withdrawal notice to the Company, in which event the Company will promptly
refund the entire balance of the employee's deductions not previously used to
purchase stock under the Plan.
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<PAGE>
To re-enter the Plan, an employee who has previously withdrawn must file a
new authorization at least ten (10) days before the beginning date of the next
Payment Period. The employee's re-entry into the Plan cannot, however, become
effective before the beginning of the next Payment Period following his/her
withdrawal.
ARTICLE 11--ISSUANCE OF STOCK.
A participant will receive statements of ownership for stock purchased under
the Plan, or may elect to receive stock certificates instead of statements of
ownership. In the event a participant elects to receive stock certificates,
the stock certificates will be delivered as soon as practicable after each
Payment Period by the Company's transfer agent.
Stock purchased under the Plan will be issued only in the name of the
employee, or if his/her authorization so specifies, in the name of the
employee and another person of legal age as joint tenants with rights of
survivorship.
ARTICLE 12--ADJUSTMENTS.
Upon the happening of any of the following described events, an optionee's
rights under options granted hereunder shall be adjusted as hereinafter
provided:
A. In the event shares of Common Stock of the Company shall be subdivided
or combined into a greater or smaller number of shares or if, upon a
merger, consolidation, reorganization, split-up, liquidation, combination,
recapitalization or the like of the Company, the shares of the Company's
Common Stock shall be exchanged for other securities of the Company or of
another corporation, each optionee shall be entitled, subject to the
conditions herein stated, to purchase such number of shares of Common Stock
or amount of other securities of the Company or such other corporation as
were exchangeable for the number of shares of Common Stock of the Company
which such optionee would have been entitled to purchase except for such
action, and appropriate adjustments shall be made in the purchase price per
share to reflect such subdivision, combination, or exchange; and
B. In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which
shall at the time be subject to option hereunder, each optionee upon
exercising such an option shall be entitled to receive (for the purchase
price paid upon such exercise) the shares as to which he/she is exercising
his/her option and, in addition thereto (at no additional cost), such
number of shares of the class or classes in which such stock dividend or
dividends were declared or paid, and such amount of cash in lieu of
fractional shares, as is equal to the number of shares thereof and the
amount of cash in lieu of fractional shares, respectively, which he/she
would have received if he/she had been the holder of the shares as to which
he/she is exercising his/her option at all times between the date of the
granting of such option and the date of its exercise.
Upon the happening of any of the foregoing events, the class and aggregate
number of shares set forth in Article 4 hereof which are subject to options
which have heretofore been or may hereafter be granted under the Plan and the
limitations set forth in the second paragraph of Article 5 shall also be
appropriately adjusted to reflect the events specified in paragraphs A and B
above. Notwithstanding the foregoing, any adjustments made pursuant to
subsections A or B shall be made only to the extent that the Committee, based
on advise of counsel for the Company, determines that such adjustments will
not constitute a change requiring stockholder approval under Section 423(b)(2)
of the Code. The Committee shall determine the adjustments to be made under
this Article 12, and its determination shall be conclusive.
ARTICLE 13--NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.
An employee's rights under the Plan are the employee's alone and may not be
transferred or assigned to, or availed of by, any other person other than by
will or the laws of descent and distribution. Any option granted under the
Plan to an employee may be exercised, during the employee's lifetime, only by
the employee.
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<PAGE>
ARTICLE 14--TERMINATION OF EMPLOYEE'S RIGHTS.
An employee's rights under the Plan will terminate when he/she ceases to be
an employee because of retirement, voluntary or involuntary termination,
resignation, lay-off, discharge, death, change of status or for any other
reason, except that if any employee is on a leave of absence from work during
the last three months of any Payment Period, he/she shall be deemed to be a
participant in the Plan on the last day of the Payment Period. A withdrawal
notice will be considered as having been received from the employee on the day
his/her employment ceases, and all payroll deductions not used to purchase
stock will be refunded.
If an employee's payroll deductions are interrupted by any legal process, a
withdrawal notice will be considered as having been received from the employee
on the day the interruption occurs.
ARTICLE 15--TERMINATION AND AMENDMENTS TO PLAN.
The Plan may be terminated at any time by the Company's Board of Directors
but such termination shall not affect options then outstanding under the Plan.
The Plan will terminate in any case when all or substantially all of the
unissued shares of stock reserved for the purposes of the Plan have been
purchased, unless the Board of Directors has previously authorized additional
shares of stock for issuance under the Plan subject only to stockholder
approval. If at any time shares of stock reserved for the purpose of the Plan
remain available for purchase but not in sufficient number to satisfy all then
unfilled purchase requirements, the available shares shall be apportioned
among participants in proportion to their options and all payroll deductions
not used to purchase stock will be refunded. Upon any termination of the Plan,
all payroll deductions not used to purchase stock will be refunded.
The Board of Directors also reserves the right to amend the Plan from time
to time in any respect, provided, however, that no amendment shall be
effective without prior approval of the stockholders which would (a) except as
provided in Article 12, increase the number of shares of Common Stock to be
offered above or (b) expand the class of employees eligible to receive options
under the Plan.
ARTICLE 16--LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN.
The Plan is intended to provide Common Stock for investment and not for
resale. The Company does not, however, intend to restrict or influence any
employee in the conduct of his/her own affairs. An employee may sell stock
purchased under the Plan at any time the employee chooses, subject to
compliance with any applicable Federal or state securities laws. However,
because of certain Federal tax requirements, each employee agrees by entering
the Plan, promptly to give the Company notice of any such stock disposed of
within two years after the date of grant of the applicable option or within
one year after the transfer of such stock to the employee showing the number
of such shares disposed of. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE STOCK.
ARTICLE 17--PARTICIPATING SUBSIDIARIES.
The term "participating subsidiaries" shall mean any subsidiary of the
Company which is designated by the Board of Directors to participate in the
Plan. The Board of Directors shall have the power to make such designation
before or after the Plan is approved by the stockholders.
ARTICLE 18--OPTIONEES NOT STOCKHOLDERS.
Neither the granting of an option to an employee nor the deductions from
his/her pay shall constitute such employee a stockholder of the shares covered
by an option until such shares have been purchased by and issued to the
employee.
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ARTICLE 19--APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock pursuant
to options granted under the Plan will be used for general corporate purposes.
ARTICLE 20--GOVERNMENTAL REGULATIONS.
The Company's obligation to sell and deliver shares of the Company's Common
Stock under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such
shares.
ARTICLE 21--APPROVAL OF BOARD OF DIRECTORS AND STOCKHOLDERS.
The Plan was adopted by the Board of Directors on August 8, 1986, and
approved by the stockholders of the Company on October 24, 1986.
Revised: June 23, 1992
June 28, 1994
June 27, 1995
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<PAGE>
10.08
GROUNDWATER TECHNOLOGY, INC.
1995 DIRECTOR STOCK OPTION PLAN
1. PURPOSE. This Non-Qualified Stock Option Plan, to be known as the 1995
Director Stock Option Plan (the "Plan"), is intended to promote the interests
of Groundwater Technology, Inc. (the "Company") by facilitating its ability to
obtain and retain the services of qualified persons who are not employees of
the Company to serve as members of the Board of Directors and to demonstrate
the Company's appreciation for their service upon the Company's Board of
Directors.
2. AVAILABLE SHARES. The total number of shares of Common Stock of the
Company for which options may be granted shall not exceed 100,000 shares,
subject to adjustment in accordance with Section 10 of this Plan. Shares
subject to the Plan are authorized but unissued shares or shares that were
once issued and subsequently reacquired by the Company. If any options granted
under this Plan are surrendered before exercise or lapse without exercise, in
whole or in part, the shares reserved therefor shall revert to the option pool
and continue to be available for grant under this Plan.
3. ADMINISTRATION. This Plan shall be administered by the Board of Directors
of the Company. The Board shall, subject to the provisions of this Plan, have
the power to construe this Plan, to determine all questions thereunder, and to
adopt and amend such rules and regulations for the administration of this Plan
as it may deem desirable. No member of the Board shall be liable for any
action or determination made in good faith with respect to this Plan or any
option granted under it.
4. AUTOMATIC GRANT OF OPTIONS. Subject to the availability of shares under
this Plan:
(a) Initial Grants. Each member of the Company's Board of Directors who is
not an employee of the Company serving on the date of the approval of this
Plan by the Board of Directors shall be automatically granted on such approval
date without further action by the Board an option to purchase 5,000 shares of
the Company's Common Stock. Each member of the Company's Board of Directors
who on the date of the approval of this Plan by the Board of Directors is an
employee of the Company who continues to serve as a Director of the Company
after ceasing to be an employee shall be automatically granted on the date
such person ceases to be an employee of the Company, without further action by
the Board, an option to purchase 5,000 shares of the Company's Common Stock.
Each person who is first elected or appointed to the Board of Directors after
the date of approval of this Plan by the Board of Directors and who is at that
time not an employee of the Company shall be automatically granted on the date
of such election or appointment and without further action by the Board of
Directors, an option to purchase 5,000 shares of the Company's Common Stock.
(b) Annual Grants. Each member of the Board of Directors who receives an
option pursuant to Section 4(a) above (the "Initial Grant") shall be
automatically granted on the third Tuesday of June of each year after the
Initial Grant, or if such date is a holiday, on the next business day
thereafter, and without further action by the Board of Directors, an option to
purchase 2,500 shares of the Company's Common Stock.
5. PERIOD OF OPTION. Unless sooner terminated in accordance with the
provisions of Section 9 of this Plan, any options granted hereunder shall
expire on a date which is seven years after the date of grant of that option.
6. OPTION PRICE. The purchase price of the stock covered by an option
granted pursuant to this Plan shall be 100% of the fair market value of such
shares on the day the option is granted. The option price will be subject to
adjustment in accordance with the provisions of Section 10 hereof. For
purposes of this Plan, "fair market value" shall mean (a) the average (on that
date) of the high
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and low prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if such Stock is then traded on
a national securities exchange; or (b) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market, if the Common Stock
is not then traded on a national securities exchange; or (c) the closing bid
price (or average of bid prices) last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on the NASDAQ National Market.
7. VESTING OF SHARES AND NON-TRANSFERABILITY OF OPTIONS.
(a) Vesting. Options granted under this Plan shall not be exercisable until
they become vested. Options granted under this Plan shall vest in the
optionee, and thus become exercisable, in accordance with the following
schedule, provided that the optionee has continuously served as a member of
the Board of Directors through such vesting date:
<TABLE>
<CAPTION>
PERCENTAGE OF OPTION
SHARES FOR WHICH OPTION
WILL BE EXERCISABLE DATE OF VESTING
----------------------- ---------------
<S> <C>
33 1/3% One year from the date of grant
66 2/3% Two years from the date of grant
100% Three years from the date of grant
</TABLE>
In addition to the foregoing, in the event of a change of control of the
Company, the optionee may, to the extent not prohibited by Rule 16b-3 (or any
successor or amended provision thereof) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), exercise an option for 100% of the
shares that were not otherwise vested. For purposes of this Plan, "change of
control" shall mean if any corporation, person, other entity or group of the
foregoing acting in concert (other than the Company or any entity that is
controlled by the Company) makes a tender or exchange offer the result of
which would be that such corporation, person, other entity or group would own
50% or more of the shares of the Company's Common Stock, and which offer has
not been approved by the Board (the "Offer"). In the event of a change of
control, the optionee may exercise options granted pursuant to this Plan
during the 90-day period following the first purchase of shares of stock
pursuant to the Offer.
(b) Non-Transferability. Any option granted pursuant to this Plan shall not
be assignable or transferable other than by will or the laws of descent and
distribution, and shall be exercisable only by the optionee during his or her
lifetime.
8. EXERCISE OF OPTION. (a) Subject to the terms and conditions of this Plan
and the option agreements, an option granted hereunder shall, to the extent
then vested, be exercisable in whole or in part by giving written notice to
the Company by mail or in person addressed to: Chief Financial Officer,
Groundwater Technology, Inc., 100 River Ridge Drive, Norwood, Massachusetts
02062, stating the number of shares with respect to which the option is being
exercised, accompanied by payment in full for such shares, which payment may
be in whole or in part in shares of the Common Stock of the Company already
owned by the person or persons exercising the option, valued at fair market
value determined in accordance with the provisions of Section 6 hereof;
provided, however, that any stock so tendered in payment must have been held
by the optionee for a period of not less than six (6) months prior to such
tender in payment.
(b) Upon notification from the Company, the transfer agent of the Company
shall, on behalf of the Company, prepare a certificate or certificates
representing such shares acquired pursuant to exercise of the option, shall
register the optionee as the owner of such shares on the books of the Company
and shall cause the fully executed certificates representing such shares to be
delivered to the optionee as soon as practicable after payment of the option
price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
upon the due exercise of the option.
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9. TERMINATION OF OPTION RIGHTS. (a) In the event an optionee ceases to be a
member of the Board of Directors of the Company for any reason other than
death or disability, any then-unexercised portion of options granted to such
optionee shall, to the extent not then vested, immediately terminate and
become void; any portion of an option which is then vested but has not been
exercised at the time the optionee so ceases to be a member of the Board of
Directors may be exercised, to the extent it is then vested, by the optionee
within a period of thirty (30) days following such time the optionee so ceases
to be a member of the Board of Directors, but in no event later than the
expiration date of the option; and all options shall terminate after such
thirty (30) days have expired.
(b) In the event that an optionee ceases to be a member of the Board of
Directors of the Company by reason of his or her disability or death, any
option granted to such optionee shall be immediately and automatically
accelerated and become fully vested and any unexercised option shall be
exercisable by the optionee (or by the optionee's personal representative,
heir or legatee, in the event of death) until the scheduled expiration date of
the option.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION AND OTHER MATTERS. Upon the
occurrence of any of the following events, an optionee's rights with respect
to options granted to him or her hereunder shall be automatically adjusted as
hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of the Company's Common
Stock shall be subdivided or combined into a greater or smaller number of
shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of options shall be appropriately increased or
decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such subdivision, combination or stock
dividend.
(b) Recapitalization Adjustments. In the event of a reorganization,
recapitalization, merger, consolidation or any other change in the corporate
structure of the Company, to the extent not prohibited by Rule 16b-3 under the
Exchange Act, adjustments in the number and kind of shares authorized by this
Plan, in the number and kind of shares covered by this Plan, and in the option
price of outstanding options under this Plan necessary to maintain the
proportionate interest of the optionee and preserve, without exceeding, the
value of such option, shall be made. Notwithstanding the foregoing, no such
adjustment shall be made which would, within the meaning of any applicable
provisions of the Internal Revenue Code of 1986, as amended, constitute a
modification, extension or renewal of any option or a grant of additional
benefits to the holder of an option.
(c) Fractional Shares. No fractional shares shall be issued under the Plan
and the optionee shall receive from the Company cash in lieu of such
fractional shares.
(d) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(e) Adjustments. Upon the happening of any of the foregoing events, the
class and aggregate number of shares set forth in Section 2 of this Plan that
are subject to options which previously have been or subsequently may be
granted under this Plan shall also be appropriately adjusted to reflect such
events. The Board shall determine the specific adjustments to be made under
this Section 10 and its determination shall be conclusive.
(f) Sale of Company. If an option hereunder shall be assumed, or a new
option substituted therefor, as a result of sale of the Company, whether by a
merger, consolidation or sale of property
3
<PAGE>
or stock, then membership on the Board of Directors of such assuming or
substituting corporation or by a parent corporation or a subsidiary thereof
shall be considered for purposes of vesting an option to be membership on the
Board of Directors of the Company.
11. RESTRICTIONS ON ISSUANCE OF SHARES. Notwithstanding the provisions of
Sections 4 and 8 of this Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied: (a) the issuance of shares with
respect to which the option has been exercised is at the time of the issue of
such shares effectively registered under applicable Federal and state
securities laws as now in force or hereafter amended; or (b) counsel for the
Company shall have given an opinion that such shares are exempt from
registration under Federal and state securities laws as now in force or
hereafter amended; and until the Company has complied with all applicable laws
and regulations, including without limitation all regulations required by any
stock exchange upon which the Company's outstanding Common Stock is then
listed.
12. LEGEND ON CERTIFICATES. The certificates representing shares issued
pursuant to the exercise of an option granted under this Plan shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel
to the Company in order to comply with the requirements of the Securities Act
of 1933 or any state securities laws.
13. REPRESENTATION OF OPTIONEE. If requested by the Company, the optionee
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with Federal and
state securities laws, including representations and warranties to the effect
that a purchase of shares under the option is made for investment and not with
a view to their distribution (as that term is used in the Securities Act of
1933).
14. OPTION AGREEMENT. Each option granted under this Plan shall be evidenced
by an option agreement, in such form as may be approved by the Board of
Directors, which option agreement shall be duly executed and delivered on
behalf of the Company and by the optionee to whom such option is granted. The
option agreement shall contain such terms, provisions, and conditions not
inconsistent with this Plan as may be determined by the Board of Directors.
15. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN. (a) This Plan was
adopted by the Board of Directors on March 21, 1995, and shall become
effective upon approval by the holders of a majority of shares of Common Stock
present in person or by proxy and entitled to vote on such matter at the
Annual Meeting of Stockholders to be held on September 19, 1995, or any
adjournment thereof. In the event that such approval has not been received on
or before March 20, 1996, then in such event the Plan and any options granted
hereunder shall be null and void; and upon the occurrence of such approval,
the Plan and all options granted hereunder shall become effective as of the
date of the Directors' approval of the Plan or the date the option was
automatically granted pursuant to the Plan, whichever is applicable.
(b) No options may be granted under this Plan subsequent to March 20, 2005,
but the term of options theretofore granted may extend beyond that date. This
Plan shall terminate when all options granted or to be granted hereunder are
no longer outstanding.
(c) The Board of Directors may at any time terminate this Plan or make such
modification or amendment thereof as it deems advisable; provided that the
provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor
or amended provision thereof) under the Exchange Act (including without
limitation provisions as to eligibility, amount, price and timing of awards)
may not be amended more than once every six months except as necessary to
comport with changes in the Employee Retirement Income Security Act of 1974,
as amended or the Internal Revenue Code of 1986, as amended; and provided,
further, that the Board of Directors may not, without approval by
4
<PAGE>
the affirmative vote of the holders of a majority of the shares present in
person or by proxy and voting on such matter at the meeting, (i) increase the
maximum number of shares for which options may be granted under this Plan or
the number of shares for which an option may be granted to any participating
director hereunder (except by adjustment pursuant to Section 10), (ii)
materially modify the requirements as to eligibility to participate in this
Plan, (iii) materially increase benefits accruing to option holders under this
Plan, or (iv) amend this Plan in any manner which would cause Rule 16b-3 under
the Exchange Act (or any successor or amended provision thereof) to become
inapplicable to this Plan. Termination or any modification or amendment of
this Plan shall not, without consent of a participant, affect his or her
rights under an option previously granted to him or her.
16. COMPLIANCE WITH REGULATIONS. It is the Company's intent that this Plan
comply in all respects with Rule 16b-3 under the Exchange Act and any
applicable Securities and Exchange Commission interpretations thereof. If any
provision of this Plan is deemed not to be in compliance with Rule 16b-3, the
provision shall be null and void.
17. GOVERNING LAW. The validity and construction of this Plan and the
instruments evidencing options shall be governed by the laws of the
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of law thereof.
5
<PAGE>
10.09
GROUNDWATER TECHNOLOGY, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER 1995 DIRECTOR STOCK OPTION PLAN
Groundwater Technology, Inc., a Delaware corporation (the "Company"), hereby
grants this 21st day of March, 1995 to (the "Optionee"), an option
to purchase a maximum of 5,000 shares of its Common Stock, $.01 par value, at
the price of $ per share (being 100% of the fair market value of such
shares), on the following terms and conditions:
1. GRANT UNDER 1995 DIRECTOR STOCK OPTION PLAN. This option is granted
pursuant to and is governed by the Company's 1995 Director Stock Option Plan
(the "Plan") and, unless the context otherwise requires, terms used herein
shall have the same meaning as in the Plan. Determinations made in connection
with this option pursuant to the Plan shall be governed by the Plan as it
exists on the date of this Agreement.
2. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This option is intended to
be a non-qualified option (rather than an incentive stock option), and the
Company intends to take appropriate action, if necessary, to achieve this
result. This option is in addition to any other option heretofore or hereafter
granted to the Optionee by the Company.
3. VESTING OF OPTION. If the Optionee has continued to serve the Company in
the capacity of a non-employee director on the following dates, the Optionee
may exercise this option for the number of shares set opposite the applicable
date.
<TABLE>
<CAPTION>
DATE OPTION NUMBER OF SHARES
BECOMES EXERCISABLE AVAILABLE FOR EXERCISE
------------------- ----------------------
<S> <C>
03/21/96 1,666
03/21/97 An Additional 1,667
03/21/98 An Additional 1,667
</TABLE>
Notwithstanding the foregoing, in the event of a change of control of the
Company, the Optionee may, to the extent not prohibited by Rule 16b-3 (or any
successor or amended provision thereof) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), exercise this option for 100% of the
shares that were not otherwise vested. For purposes of the Plan, "change of
control" shall mean if any corporation, person, other entity or group of the
foregoing acting in concert (other than the Company or any entity that is
controlled by the Company) makes a tender or exchange offer the result of
which would be that such corporation, person, other entity or group would own
50% or more of the shares of the Company's Common Stock, and which offer has
not been approved by the Board of Directors (the "Offer"). In the event of a
change of control, the Optionee may exercise this option during the 90-day
period following the first purchase of shares of stock pursuant to the Offer.
The foregoing rights are cumulative and, while the Optionee continues to be
a non-employee director of the Company, may be exercised up to and including
the scheduled expiration date. All of the foregoing rights are subject to
Sections 4(b) and (c), if the Optionee ceases to be a non-employee director of
the Company.
4. PERIOD OF OPTION.
(a) Expiration. This option shall expire on the date which is seven years
after the date of grant.
(b) Termination of Business Relationship. If the Optionee ceases to be a
non-employee director of the Company, other than by reason of death or
disability as defined in Section 4(c), no further installments of this option
shall become vested, and any portion of this option which is vested
1
<PAGE>
may be exercised by the Optionee within a period of thirty (30) days following
such date the Optionee ceases to be a non-employee director of the Company,
but in no event later than the scheduled expiration date.
(c) Death; Disability. In the event the Optionee ceases to be a member of
the Board of Directors of the Company by reason of his disability or death,
this option shall be immediately and automatically accelerated and become
fully vested and any unexercised portion of this option shall be exercisable
by Optionee (or by the Optionee's personal representative, heir or legatee, in
the event of death) during the period ending on the expiration date of this
option.
5. EXERCISE OF OPTION.
(a) Method of Exercise of Option. This option may be exercised by giving
written notice to the Company at its principal executive office. Such notice
shall state the number of shares being purchased, accompanied by payment in
full for such shares. The price for the shares shall be payable in cash or by
delivery to the Company of shares of the Common Stock of the Company already
owned by the Optionee and held at least six months prior to the date of
payment, or by any combination of such methods of payment.
(b) Delivery of Stock Certificates Upon Exercise. Upon each exercise of this
option and the satisfaction of all conditions set forth in this Agreement, the
transfer agent of the Company shall, on behalf of the Company, mail or deliver
to the Optionee, as promptly as practicable after payment of the option price
in full, a certificate or certificates representing the shares then being
purchased. Such certificates shall carry appropriate legends as may be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Securities Act of 1933, as amended, or any state
securities laws.
(c) Restrictions on Issuance of Shares. (i) Notwithstanding the foregoing,
the Company shall not be obligated to deliver any such certificate or
certificates upon exercise of this option until one of the following
conditions shall be satisfied: (1) the shares with respect to which this
option has been exercised are at the time of the issue of such shares
effectively registered under applicable Federal and state securities laws as
now in force or hereafter amended; or (2) counsel for the Company shall have
given an opinion that such shares are exempt from registration under
applicable Federal and state securities laws; and until the Company has
complied with all applicable laws and regulations, including without
limitation all regulations required by any stock exchange upon which the
Company's outstanding Common Stock is then listed.
(ii) The Company shall use its best efforts to bring about compliance with
the above conditions within a reasonable time, except that the Company shall
be under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely
for the purpose of covering the issue of shares in respect of which this
option may be exercised.
(d) Agreement to Purchase for Investment. By acceptance of this option, the
Optionee agrees that a purchase of shares under this option will be made for
investment purpose only and will not be made with a view to their
distribution, as that term is used in the Securities Act of 1933, as amended,
unless, in the opinion of counsel to the Company, such distribution is in
compliance with or exempt from the registration and prospectus requirements of
such Act. The Optionee agrees to deliver to the Company written warranties and
representations to such effect upon exercise of this option and agrees that
the certificate for shares so purchased may be inscribed with a legend to
ensure compliance with such Act and with any other applicable securities laws.
(e) Partial Exercise. Exercise of this option up to the extent vested at a
given time may be made in part at any time and from time to time, except that
this option may not be exercised for a fraction of a share.
2
<PAGE>
6. OPTION NOT TRANSFERABLE. This option is not transferable or assignable
except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
7. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until
a stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain
changes in the capitalization of the Company, no adjustment shall be made for
dividends or similar rights for which the record date is prior to the date
such stock certificate is issued.
8. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. It is the purpose of this
option to encourage the Optionee to work for the best interests of the Company
and its stockholders. Since, for example, that might require the issuance of a
stock dividend or a merger with another corporation, the purpose of this
option would not be served if such a stock dividend, merger or similar
occurrence would cause the Optionee's rights hereunder to be diluted or
terminated and thus be contrary to the Optionee's interest. The Plan contains
extensive provisions designed to preserve options at full value in a number of
contingencies. Therefore, provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
9. ENTIRE AGREEMENT, MODIFICATION. This Agreement contains the full and
complete understanding and agreement of the parties hereto as to the subject
matter hereof and may not be modified or amended, nor may any provisions
hereof be waived, except by a further written agreement duly signed by each of
the parties.
10. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns; provided, however,
that with respect to the Optionee, this Agreement is deemed to be personal in
nature and may not be assigned or transferred.
11. INTERPRETATION AND CONSTRUCTION. Any interpretation or construction of
this Agreement by the Company's Board of Directors, or a duly authorized
committee appointed by the Board, shall be final and conclusive. The section
headings are for convenience of reference only and shall not be deemed germane
to the interpretation or construction of this Agreement.
12. SURVIVAL. All representations, warranties and acknowledgements made in
this Agreement shall survive the delivery of the certificate or certificates
representing the shares purchased pursuant to the exercise of this option.
13. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the Commonwealth of Massachusetts.
14. REQUIRED APPROVALS. This option is granted pursuant to and subject to
all the terms and conditions of the Plan, which was adopted by the Board of
Directors on March 21, 1995, and which is incorporated herein by reference.
Anything in this Agreement to the contrary notwithstanding, this option shall
be of no force and effect unless and until, and shall in no way vest or become
exercisable in any respect unless and until, and its effectiveness is subject
to, all the events as set forth in Section 15 of the Plan and shall be null
and void if such events have not occurred, all as provided in such Section 15.
3
<PAGE>
IN WITNESS WHEREOF the Company and the Optionee have caused this Agreement
to be executed, and the Optionee whose signature appears below acknowledges
receipt of a copy of the Plan and acceptance of a copy of this Agreement.
Groundwater Technology, Inc.
By: __________________________________
Optionee
4
<PAGE>
10.11
AMENDMENT TO
GROUNDWATER TECHNOLOGY, INC. 401(K) RETIREMENT SAVINGS PLAN
WHEREAS, Groundwater Technology, Inc. (the "Employer") heretofore adopted
the Groundwater Technology, Inc. 401(K) Retirement Savings Plan (the "Plan");
and
WHEREAS, the Employer reserved the right to amend the Plan; and
WHEREAS, the Employer desires to amend the Plan;
NOW THEREFORE, the Plan is hereby amended, effective as of January 1, 1995,
as follows:
1. Section 2.1 of the Plan shall be amended by adding the following
paragraph to the conclusion of such section:
With respect to any Employee who transferred employment from Chester
Environmental, Inc. in connection with the Employer's acquisition of the
Hazardous Waste Division of such company, service with Chester
Environmental, Inc. shall be taken into account in determining any such
Employee's Years of Service.
2. Section 3.1 of the Plan shall be amended by adding the following
paragraph to the conclusion of such Section:
Notwithstanding the foregoing provisions of this Section, any participant
in the Chester Environmental, Inc. Employees' Retirement Plan of the
Chester Engineers who transferred employment to the Employer as a "full-
time Employee" in connection with the Employer's acquisition of Chester
Environmental, Inc.'s Hazardous Waste Division (a "Chester Participant"),
shall become a Participant in the Plan as of the date of his employment
with the Employer.
3. Section 4.2 of the Plan shall be amended by adding the following
subsections (c), (d) and (e):
(c) Additional Employer Contributions. Additional Employer contributions
may be made at the discretion of the Employer's board of directors for any
Plan Year on behalf of the Chester Participants. Any such contribution
shall be made subject to the tax deduction limitations under the Code and
provided that the special allocation in Section 13.3 has been satisfied if
the Plan is a "Top-Heavy Plan" (within the meaning of Section 13.2). In
general, the Plan shall be deemed a discretionary contribution plan within
the meaning of Section 401(a)(27) of the Code.
(d) Allocation of Additional Employer Contributions. Any contribution
made under Section 4.2(c) for a Plan Year shall be allocated among the
Accounts of eligible Chester Participants in accordance with the ratio that
each such eligible Chester Participant's "points" for the Plan Year bears
to the total "points" of all such eligible Chester Participants for the
Plan Year. In this regard, any such Chester Participant shall receive one
(1) point for each Year of Benefit Service credited under the Plan as of
the last day of the Plan Year for which the contribution is made and an
additional point for each one hundred dollars ($100) of Compensation for
such Plan Year. For purposes of this subsection (d), any such Chester
Participant shall be credited with a Year of Benefit Service for each
twelve (12)-month period commencing on his Employment Date and the twelve
(12)-month anniversaries of that date and ending on the date he retires,
dies or otherwise separates from Service. Each Chester Participant shall be
credited with prior consecutive service with Chester Environmental, Inc.
and its predecessors as of the date he became an employee of the Employer
in determining such Chester Participant's Year(s) of Benefit Service.
(e) Eligibility for Additional Employer Contributions. To be eligible for
an allocation of additional Employer contributions under Section 4.2(c) for
a Plan Year, a Chester Participant must be employed by the Employer on the
last day of the Plan Year.
1
<PAGE>
4. Section 6.1 of the Plan shall be amended to read in its entirety as
follows:
6.1 VESTING. A Participant shall at all times have a nonforfeitable
(vested) right to his Account derived from elective deferrals, additional
Employer contributions under Section 4.2(c), Employer "fail-safe"
contributions under Section 10.2, and any rollovers or transfers from other
plans, as adjusted for investment experience. Except as otherwise provided
with respect to Normal Retirement, disability, or death a Participant shall
have a nonforfeitable (vested) right to a percentage of the value of his
Account derived from Employer matching contributions under Section 4.2(a)
as follows:
<TABLE>
<CAPTION>
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
Less than 1 year.................... 0%
1 year but less than 2.............. 25%
2 years but less than 3............. 50%
3 years but less than 4............. 75%
4 years and thereafter.............. 100%
</TABLE>
5. Except as hereinabove amended, the provisions of the Plan shall continue
in full force and effect.
IN WITNESS WHEREOF, the Employer, by its duly authorized officer, has caused
this Amendment to be executed on the 27th day of June, 1995.
Groundwater Technology, Inc.
/s/ Walter C. Barber
By: _________________________________
Walter C. Barber, President
2
<PAGE>
10.13
THIRD AMENDMENT TO LEASE
WHEREAS, Alexander H. McNeil, Trustee of First Stone Ridge Nominee Trust
III, under a Declaration of Trust dated May 25, 1988 and registered with the
Norfolk County Registry District of the Land Court as Document No. 545593 (the
"Landlord") entered into a lease dated February 13, 1991 (the "Lease") with
Groundwater Technology, Inc. (the "Tenant"); and
WHEREAS, on May 24, 1991, the Landlord and Tenant executed a First Amendment
to Lease; and,
WHEREAS, on August 20, 1991, the Landlord and Tenant executed a Second
Amendment to Lease; and,
WHEREAS, the Landlord and Tenant desire to further amend the Lease,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, the parties hereto hereby agree to the
following changes in the Lease which shall become effective August 1, 1994:
The designation of the Landlord and Tenant as set forth in Exhibit I of the
Lease is amended to read as follows:
TENANT: Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
ATTENTION: Mary Stack, Corporate Controller
LANDLORD: First Stone Ridge Nominee Trust III
Paul E. Tryder, Trustee
c/o Cornerstone Corporation
725 Canton Street
Norwood, MA 02062
1) The description of the Premises set forth in Exhibit I of the Lease is
amended to read as follows:
Suite 102, Suite 103, Suite 110 and Suite 300 together consisting of
approximately 42,015 rentable square feet. Suite(s) 102 and 103 are further
identified by Exhibit A annexed hereto.
2) Exhibit I, Article 3, as amended by the Second Amendment to Lease, is
further amended to read:
<TABLE>
<C> <S>
Term Commencement Date: August 1, 1991
Rent Commencement Date: August 1, 1992
Termination Date: July 31, 2002
</TABLE>
3) Exhibit I, Article 4 is amended to read as follows:
Use of Premises: Professional Office/Warehouse
4) Basic Rent, as set forth in Exhibit I, Article 5 is amended to read:
<TABLE>
<CAPTION>
YEAR 1 YEARS 2-4 YEARS 5-11
------ ----------- -----------
<S> <C> <C> <C>
Per Year...................................... 0 $546,996.00 $621,822.00
Per Month..................................... 0 $ 45,583.00 $ 51,818.50
Per Square Foot............................... 0 $ 14.80 $ 14.80
</TABLE>
1
<PAGE>
5) The amount of the Tenant's Proportionate Building Share is amended to
read:
Tenant Square
Footage 42,015
------- = 41.3%
Building Square 101,667
Footage
6) The first sentence of Article 2 is amended to read as follows:
The Premises ("Premises") are that portion of the ("Building") described
in Exhibit I, substantially outlined in the Lease Plans (Exhibit B) hereto
attached and incorporated by reference as a part hereof.
7) Article 7.1 of the Lease is hereby deleted and the following Article 7.1
is inserted in place thereof:
7. ESCALATION (See Addendum attached hereto)
7.1 Additional Rent/Tax Escalation. Tenant shall pay to Landlord, as
additional rent, Tenant's Proportionate Share (41.3%) of any increase in
Building Operating Expenses, Office Operating Expenses and Real Estate
Taxes exceeding a combined total of $6.00 per rentable square foot. Tenant
shall pay to Landlord Tenant's Proportionate Share of such increase within
thirty (30) days after delivery of a statement by Landlord to Tenant.
Landlord may require monthly payments on account thereof, based upon the
most current estimates for Operating Expenses and Real Estate Taxes for the
Property. If the total of such monthly remittance is greater than the
amount due hereunder, Tenant may credit the difference against the next
installment of rental or other charges due to Landlord hereunder; if the
total of remittances is less than the amount due hereunder, Tenant shall
pay the difference to Landlord upon being billed therefor. This obligation
is due over and above the basic rent and shall constitute additional rent,
with Landlord having all rights in respect of nonpayment thereof as it
shall have under this lease and principles of law and equity for and in
respect of the nonpayment of the basic rent.
8) Article 15.5 is amended to read as follows:
The Tenant, at its sole expense, shall comply with all laws, rules,
orders and regulations of federal, state, county and municipal authorities
and with any direction of any public officer or officers, pursuant to law,
which shall impose any duty on Landlord or Tenant and/or with all rules,
orders, regulations or requirements of the Board of Fire Underwriters or
similar organization having jurisdiction thereof with respect to or arising
out of Tenant's use or occupancy of the Premises. The Landlord hereby
covenants and agrees to comply with the provisions of the "Americans With
Disabilities Act of 1990", any amendments thereto and all rules and
regulations promulgated thereunder.
9) Article 26.6 of the Lease is amended by adding thereto the following:
Prior to August 12, 1994, the Landlord will complete all of the work
specified on Exhibit C attached hereto.
10) Article 27.4 of the Lease is amended by adding thereto the following:
The Tenant will be provided with fourteen (14) labeled reserved parking
spaces in the rear of the parking lot identified by Exhibit D annexed
hereto for the purpose of parking and storage of service trucks.
11) Article 27.8 of the Lease is amended by adding the following:
No rent shall be due from Tenant to Landlord for the period of time
beginning August 1, 1994 and ending July 31, 1995 for the space in Suite(s)
102 and 103.
2
<PAGE>
12) Section B., Subsection 4h. of the "Addendum" to lease is amended to add
the following sentence(s):
6) Real estate taxes on vacant land not used by Tenant.
7) Vacant land development expenses unless development is requested by
Tenant.
8) Cafeteria subsidy charges for the cafeteria located at 100 River Ridge
Drive shall be reduced from Eighteen Thousand ($18,000.00) in 1994 to a
total annual amount of Nine Thousand ($9,000.00) Dollars for calendar year
1995. For the remaining subsequent years of Tenant's lease, the cafeteria
subsidy shall be eliminated.
9) Any overhead or central office management or administrative operating
costs (i.e., accounting fees payable to the management company, office
supplies, office equipment, advertising/marketing, office telephone
expenses, donations, etc.) shall not exceed Two Thousand Five Hundred
($2,500.00) Dollars per year.
13) Capitalized terms not otherwise defined herein shall have the meaning
for such terms ascribed in the Lease.
14) In all other respects, the terms and provisions of the Lease are hereby
ratified and confirmed and remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Third
Amendment to Lease as an instrument under seal this 28th day of November,
1994.
LESSOR: First Stone Ridge Nominee Trust III
/s/ Paul E. Tryder
By___________________________________
Paul E. Tryder, Successor Trustee
TENANT: Groundwater Technology, Inc.
/s/ Mary Stack
By___________________________________
Mary Stack, Corporate Controller
3
<PAGE>
10.14
GROUNDWATER TECHNOLOGY, INC.
PROFIT SHARING PLAN
1. PURPOSE AND STATUS
1.1 Name This plan shall be known as the Groundwater Technology, Inc. Profit
Sharing Plan (the "Plan").
1.2 Purpose of Plan. The purpose of this Plan is to provide financial
incentives for each eligible employee to help the Company achieve its profit
goals.
1.3 Plan Status. This is a non-qualified plan and payments are made based on
the Company's profitability.
2. DEFINITIONS
For the purposes of this Plan, the following terms shall have the meanings
set forth below:
2.1 Administrator means the Company, or such other person or committee as
may be appointed from time to time by the Company to administer the Plan.
2.2 Company means Groundwater Technology, Inc., a corporation organized
under the laws of the State of Delaware, and wholly-owned subsidiaries of the
Company.
2.3 Regular Full-time Employees means all employees regularly scheduled to
work a minimum of 40 hours per week.
2.4 Part-time Employees means all employees regularly scheduled to work one
or more hours per week.
2.5 Temporary Employees means all employees who are not regularly scheduled
to work a minimum number of hours per week or who have an assignment of less
than six months.
2.6 Fiscal Half-year means the two fiscal six month periods, one covering
the first and second fiscal quarters and one covering the third and fourth
fiscal quarters.
2.7 Leave of Absence means any Company approved separation which is of a
temporary nature, with the employee expected to return.
2.8 Pre-tax Operating Profit means Company profit before taxes and income
from investments.
2.9 Annual Salary means the annual salary of exempt employees and the
annualized equivalent of non-exempt employees. Salaries of part-time employees
will be annualized based on the employees's regular work schedule.
2.10 Annual Salary Pool means the aggregate of the Annual Salaries of all
Regular Full-time Employees and Part-time Employees.
2.11 Profit Sharing Pool means, for each Fiscal Half-year, 10% of the
Company's Pre-tax Operating Profit for that Fiscal Half-year.
2.12 Profit Sharing Multiplier means the product of the equation: Profit
Sharing Pool divided by the Annual Salary Pool.
1
<PAGE>
3. ELIGIBILITY
3.1 All Regular Full-time and Part-time Employees who are employed for the
full Fiscal Half-year during which profits are earned by the Company and who
are employed on the day checks are processed for that period as set forth in
Section 4.2 hereof are eligible to participate in the Plan.
3.2 Any employee on a Leave of Absence (paid or unpaid) for less than a
three month period will be eligible relating to payment for that Fiscal Half-
year. Any employee on a Leave of Absence (paid or unpaid) for more than a
three month period will not be eligible for payment that Fiscal Half-year.
4. PAYMENTS
4.1 Payments to eligible participants shall be calculated by multiplying the
Profit Sharing Multiplier by the eligible participant's Annual Salary.
4.2 Checks to eligible participants shall be issued twice each year, in
December and July, for the preceding Fiscal Half-year, providing there are
profits to distribute.
5. ADMINISTRATION
5.1 Plan Administrator. The Plan shall be administered by the Administrator.
The Administrator, acting in its sole discretion, shall have all powers
necessary of appropriate to carry out the purpose and provisions of the Plan.
Without limiting the language, and in addition to all other powers provided by
this Plan and applicable law the Administrator shall have the authority to:
(a) make and enforce such rules and regulations as it deems necessary or
proper for the efficient administration of the Plan; (b) interpret the Plan;
and (c) decide all questions concerning the Plan and the eligibility of any
person to participate in the Plan.
5.2 Indemnification of Administration. The Company agrees to indemnify and
to defend to the fullest extent permitted by law the Administrator and any
member of a committee designated by the Administrator (including an employee
or former employee of the Company) against all liabilities, damages, costs and
expenses (including attorneys' fees and amounts paid in settlement of any
claim approved by the Administrator) occasioned by any act or omission to act
in connection with the Plan, if such act or omission is made in good faith.
6. MISCELLANEOUS PROVISIONS
6.1 Amendment and Terminations. The Plan may at any time be amended or
terminated by the Company (any such amendment shall take effect as provided
therein).
6.2 Limitation of Rights. Neither the establishment or maintenance of this
Plan, nor any amendment hereof, nor the payment of any funds, shall be
construed as giving to any participant or other person legal or equitable
rights against the Company or Administrator, except as expressly provided
herein, and in no event shall the terms of employment or services of any
participant be modified or in any way be affected thereby. The rights of any
person to receive any payment under the Plan shall not be alienable by
assignment or any other method.
6.3 Governing Law. The validity and construction of this Plan shall be
governed by the laws of the Commonwealth of Massachusetts, without giving
effect to the principles of conflicts of law thereof.
6.4 Effective Date. This written Plan is effective as of June 27, 1995, the
date of adoption by the Company's Board of Directors.
2
<PAGE>
Inside Front Cover
FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended April 29, April 30, May 1, May 2, April 27,
1995 1994 1993/1/ 1992/1/ 1991/1/
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Revenue $190,074 $170,778 $171,436 $189,400 $153,951
Net Revenue 126,205 118,649 127,148 142,168 115,340
Income from continuing operations 5,624 853 6,948 11,060 7,595
Income per share from continuing operations .80 .11 .89 1.39 .95
Net income (loss) 5,624 (205) 5,923 10,310 8,777
Earnings (loss) per share of common stock .80 (.03) .76 1.30 1.10
Working capital 76,328 72,793 76,250 75,537 66,551
Total assets 120,745 112,926 121,108 124,205 108,301
Stockholders' equity 96,770 93,650 101,098 100,976 89,549
Weighted average shares outstanding 7,050 7,458 7,779 7,931 7,980
Stockholders' equity per share 13.73 12.56 12.99 12.73 11.22
</TABLE>
/1/ Amounts for fiscal 1993, 1992, and 1991 have been restated to reflect the
discontinued manufacturing operations.
PRICE RANGE OF COMMON STOCK
The Company's common stock is traded under the symbol "GWTI" on the NASDAQ
National Market System. The following table sets forth by quarter the high and
low bid prices of the Company's common stock as reported by the NASDAQ National
Market System.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Fiscal 1995 Fiscal 1994
High Low High Low
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $15.00 $11.50 $16.25 $12.38
Second Quarter 13.25 11.50 13.75 11.00
Third Quarter 15.25 11.75 15.00 11.00
Fourth Quarter 15.50 12.00 15.75 12.75
</TABLE>
As of July 10, 1995, the Company's common stock was held by 1,325 holders of
record. The Company has never paid cash dividends on its common stock and
currently has no intention to pay cash dividends in the foreseeable future. The
Company currently intends to retain any future earnings to finance the growth of
the Company.
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------------------------------------------------------------
The following table sets forth for the years indicated the percentage of net
revenues represented by certain items reflected in the Company's consolidated
statements of operations and the percentage change in each item from the prior
year. This table and subsequent discussion should be read in conjunction with
the Financial Highlights and the Consolidated Financial Statements and Notes to
Consolidated Financial Statements contained elsewhere herein.
<TABLE>
<CAPTION>
Percentage of net revenue Year-to-year percentage changes
Years ended Fiscal years
- --------------------------------------------------------------------------------------------------------------------------------
April 29, April 30, May 1, 1995 1994
1995 1994 1993 vs.1994 vs.1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 6.4% (6.7)%
Cost of net revenue 62.6 65.4 62.4 1.9 (2.3)
Gross profit 37.4 34.6 37.6 14.8 (14.0)
Selling, general and administrative expenses 31.4 32.1 30.6 4.1 (2.3)
Provision for restructuring and consolidation 0.0 4.2 1.1 (100.0) 250.9
License and other income 0.5 1.3 1.5 (55.4) (21.3)
Income (loss) before investment and other income 6.5 (.4) 7.3 * (104.9)
Income from continuing operations
before provision for income taxes 7.4 1.1 8.8 628.8 (88.6)
Income from continuing operations 4.5 .7 5.5 559.3 (87.7)
Loss from discontinued operations 0.0 (.9) (.8) (100.0) 3.2
Net income (loss) 4.5 (.2) 4.7 * (103.5)
</TABLE>
*Percentages not meaningful.
All numbers and amounts for fiscal 1993 have been restated to reflect the
discontinued manufacturing operations.
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
GENERAL The Company's services are primarily related to the assessment and
remediation of contaminated soil and groundwater for customers in a variety of
industries and for federal and state governments. The demand for the Company's
services is a result of governmental regulation and enforcement related to
hazardous contaminants in the environment and increased public awareness of
environmental issues.
The Company, in the course of providing its services, routinely
subcontracts for certain specialized services. These costs are passed through to
customers and, in accordance with industry practice, are included in gross
revenue. Because subcontractor services can vary significantly from project to
project, changes in gross revenue may not be truly indicative of business
activity or trends. Accordingly, the Company views net revenue, which excludes
the cost of services performed by subcontractors, as a more meaningful measure
of business performance.
Net revenue includes fees billed for services provided directly by the
Company, fees charged by the Company for arranging and managing subcontractor
services, and fees for laboratory services. Cost of net revenue includes
professional salaries incurred in rendering services to customers, other direct
labor, purchases of equipment and materials, and certain direct and indirect
overhead costs. Selling, general and administrative expenses include management
salaries, facility costs, and clerical and administrative overhead. License and
other income includes license and royalty income earned on the Company's
intellectual property and income from equity investments in the environmental
industry.
The Company's results may fluctuate from quarter to quarter. Factors
influencing such variations include: spending decisions by major customers,
delays in the release of committed projects, modifications of delivery orders
issued by contracting government entities, and holidays and vacation time which
limit the amount of time Company personnel and subcontracted services have in
the field.
At April 29, 1995, the Company had 59 consulting offices and four
laboratories in 31 states and 5 foreign countries. Additionally, the Company's
joint venture with a German company had offices in Germany, Austria and Hungary.
Total employees increased by 80 to 1,652 at fiscal 1995 year-end, from 1,572 at
fiscal 1994 year-end, reflecting the acquisition of two environmental consulting
and remediation firms.
1995 COMPARED TO 1994 Gross revenue increased to $190.1 million for fiscal 1995,
an increase of 11.3% as compared to gross revenue of $170.8 million for fiscal
1994. Net revenue was $126.2 million, an increase of 6.4% from $118.6 million in
the prior fiscal year.
Management believes the increase in gross revenues for the year as compared
to the prior year reflects improved economic conditions, recent acquisitions,
and the Company's success in increasing work with industrial/commercial,
government, and international customers. Rebillable activity in fiscal 1995
increased primarily due to the elimination of the Company's internal drilling
resources, the sale of the Company's internal equipment manufacturing division,
and the closing of one laboratory during fiscal 1994.
Gross profit for fiscal 1995 was $47.2 million, an increase of 14.8%
compared to $41.1 million for fiscal 1994. As a percentage of net revenue, gross
profit for fiscal 1995 was 37%, compared to 35% in fiscal 1994. The increase in
gross profit reflects an increase in uti-
12
<PAGE>
lization by the Company's work force, decreases in health and commercial
insurance expenses, and improvements in laboratory performance. Company
utilization increased to 56% in fiscal 1995 from 54% in fiscal 1994.
Selling, general and administrative expenses were $39.7 million, or 31% of
net revenue, in fiscal 1995, compared to $38.1 million, or 32% of net revenue in
the prior year. During the second quarter of fiscal 1995, the Company completed
the consolidation of five operating locations. Management believes this action
will contribute to the reduction of operating costs as a percentage of net
revenue in the future. The Company executed its restructuring activities
according to plan during the year. The remaining reserve is for contractual
costs under lease arrangements. In fiscal 1995, nonbilled travel decreased
$300,000 and management will continue to search for areas of savings.
The Company introduced a profit sharing program in May 1994 that
distributes 10% of pre-tax operating income to its employees at the end of the
second and fourth quarters of each fiscal year, which management believes has
motivated employees to further reduce overall operating costs as a percentage of
net revenue. The profit sharing cost was approximately $837,000 in fiscal 1995.
On May 26, 1994, the Company acquired all of the outstanding stock of Hall
Southwest Corporation, an environmental consulting firm based in Austin, Texas.
The stock purchase agreement provided for the payment of cash and stock on the
closing date, and provides for contingent cash and stock payments over three
years from the closing date. On February 28, 1995, the Company acquired the
assets of the Hazardous Waste Division of Chester Environmental, Inc., based in
Pittsburgh, Pennsylvania. The asset purchase agreement provided for the payment
of cash on the closing date, and provides for contingent cash payments over two
years from the closing date. The contingent payments of each acquisition will be
included in goodwill when incurred. The acquisitions were not material to the
Company's financial position and the accounts have been included in the
accompanying financial statements since the dates of the acquisition, May 1994
and March 1995, respectively.
License and other income was $689,000 for fiscal 1995 compared to
$1,544,000 for the prior year. The decrease primarily reflects the completion of
the transfer of technology and related training associated with the Company's
licensing agreement with Kurita Water Industries Ltd. during fiscal 1994.
Investment income decreased to $1,046,000 in fiscal 1995 from $1,566,000
for the prior year. The decrease in investment income was primarily due to the
decrease in cash available for investments.
The Company's effective tax rate was 39.6% for the period ended April 29,
1995 as compared to a 33.3% tax rate for the period ended April 30, 1994. The
increase in the tax rate was principally due to a decrease in interest income
exempt from federal tax, increases in non-deductible expenses and an increase in
operating income.
1994 COMPARED TO 1993 Gross revenue for fiscal 1994 was $170.8 million, compared
to gross revenue of $171.4 million in fiscal 1993. Net revenue was $118.6
million, a year-to-year decrease of $8.5 million, or 7%, compared to $127.1
million in the prior year.
While gross revenue in fiscal 1994 remained relatively unchanged from the
prior year, net revenue declined from fiscal 1993 due to the Company's strategic
decision to discontinue internal drilling and construction services, the
increased use of external labs due to the consolidation of the Company's two
California labs, and the impact of a $4.5 million nationwide tank removal
project that consisted significantly of rebillable revenues. Historically, the
Company's revenues were generated primarily from the retail marketing divisions
of the major petroleum companies. The Company has been actively implementing
strategies to increase its presence in the upstream petroleum,
industrial/commercial, government, and international markets.
Gross profit decreased $6.7 million from $47.8 million in fiscal 1993. The
increase in rebillable revenue, as a percent of total revenue, which represents
lower margin work than consulting revenue, had a significant impact on gross
profits. Price competition in the retail petroleum market during fiscal 1994
impacted overall consulting revenue gross profit. The losses generated by the
laboratory business also adversely affected gross profit. In fiscal 1994, the
Company, driven by overcapacity in the laboratory industry, consolidated its two
California laboratories into one location.
The Company sold its ORS Environmental Equipment Division on March 31,
1994. The ORS Environmental Equipment Division included the manufacture, sales,
and service of equipment for the soil and groundwater remediation market. The
Company recorded a provision for loss on the disposal of the ORS Environmental
Equipment Division of $453,000, net of tax benefit. The loss from discontinued
operations was $605,000 and $1,025,000 net of tax benefit for fiscal 1994 and
1993, respectively.
Selling, general and administrative expenses decreased to $38.1 million, or
32.1% of net revenue, for fiscal 1994, compared to $39.0 million, or 30.6% of
net revenue, for fiscal 1993. The decrease in expenses was primarily due to the
on-going company-wide effort to reduce operating expenses.
A provision for restructuring and consolidation of $5.0 million was
recorded by the Company in July 1993. The charge reduced income from continuing
operations by approximately $0.43 per share. The provision included costs for
the consolidation of the analytical laboratories, asset writeoffs, severance
costs, expense related to excess space, and costs associated with the
reorganization of the Company's industrial division, including the provision for
losses on certain contracts.
License and other income for fiscal 1994 decreased to $1.6 million compared
to $2.0 million for fiscal 1993. During both fiscal 1994 and 1993, approximately
$1.5 million of license revenue reflected the amortization of a $3.0 million
payment made to the Company by Kurita Water Industries Ltd., of Japan, under an
exclusive technology license agreement entered into in December 1992. Revenue
under the agreement for disclosure fees, training and documentation was
completed in fiscal 1994.
Investment income, net, declined 7% to $1.6 million for fiscal 1994,
compared to $1.7 million for fiscal 1993, primarily due to a decrease in
interest bearing cash, cash equivalents and marketable securities balances.
The Company's effective tax rate for fiscal 1994 was 33.3%, compared to
38.3% for fiscal 1993. The fiscal 1994 tax rate reflected the effects of
interest income exempt from federal tax and losses of international subsidiaries
in a year in which the Company incurred pre-tax operating losses.
13
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Management's Discussion and Analysis of Financial Condition
and Results of Operations (cont'd)
- --------------------------------------------------------------------------------
INFLATION/FOREIGN CURRENCY TRANSACTIONS The Company's operations have not been,
and in the foreseeable future are not expected to be, materially affected by
inflation or changing prices or fluctuations in the exchange rates for foreign
currency transactions.
LIQUIDITY AND CAPITAL RESOURCES At April 29, 1995, the Company's primary source
of liquidity was $25.9 million in cash, cash equivalents and marketable
securities, a decrease of $4.6 million, compared to $30.5 million at April 30,
1994. This reduction is principally attributable to the repurchase of common
stock and the acquisition of two environmental consulting and remediation firms.
The Company has no long-term borrowings.
Approximately $5.5 million in net cash was generated from operating
activities during fiscal 1995, principally due to the growth in net income. The
increase in accounts receivable balances during fiscal 1995 was primarily
attributable to the increase in revenue. A substantial portion of the increase
in unbilled revenue was related to the government services unit, which reflects
the nature of government contracts and payment terms which are based on the
attainment of certain milestones. The Company used approximately $7.3 million to
fund operating activities for the same period in fiscal 1994. The use of cash to
fund operating activities for the period ended April 30, 1994 was primarily due
to the $5.0 million restructuring charge, a $1.0 million loss from discontinued
operations and increases in accounts receivable due to a conversion of the
Company's invoice processing systems.
At April 29, 1995, the Company's working capital increased to $76.3 million
from $72.8 million at April 30, 1994. Total assets increased to $120.7 million
at April 29, 1995 from $112.9 million at April 30, 1994. Changes in working
capital and total assets are primarily attributed to the increase in accounts
receivable related to the growth in revenues and the Company's purchase of two
environmental consulting and remediation firms.
Cash flows from investing activities were impacted by expenditures in
property, plant and equipment that were made to upgrade the Company's computer
hardware and software and rental equipment, $4.9 million in fiscal 1995 and $7.0
million in fiscal 1994. The maturing and sale of marketable securities and the
reduction in purchases of marketable securities provided cash flows from
investing activities which were primarily utilized for the funding of
acquisitions, the purchase of treasury stock, and the expenditures for property,
plant and equipment. Although the Company had no material commitments for
capital expenditures at April 29, 1995, the Company anticipates that capital
expenditures of approximately $5.0 million will be made in fiscal 1996,
principally for the general expansion of operations and replacement of
depreciated assets.
The Company used cash to finance the purchase of 248,000 shares of its
common stock during the year ended April 29, 1995, as compared to 560,000 shares
purchased during the year ended April 30, 1994. The Board of Directors has
authorized the repurchase of the Company's shares from time to time through open
market purchases or privately negotiated transactions. At April 29, 1995, there
were approximately 1,545,000 shares available for repurchase under the Company's
Stock Repurchase Program. Cash flows from financing activities were provided
from the sale of stock under the Company's employee stock purchase plan and the
exercise of previously awarded stock options.
Funding requirements for operations, repurchases of the Company's stock,
and future growth are expected to be met from existing cash, marketable
securities and cash generated from operations. The Company believes that cash
provided from these areas will be sufficient to meet its operating requirements
for the near term.
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Board of Directors and Stockholders
Groundwater Technology, Inc.
We have audited the accompanying consolidated balance sheets of Groundwater
Technology, Inc. as of April 29, 1995 and April 30, 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended April 29, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Groundwater
Technology, Inc. at April 29, 1995 and April 30, 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended April 29, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the consolidated financial statements, in 1994
the Company changed its method of accounting for income taxes.
Boston, Massachusetts
May 26, 1995
14
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Consolidated Statements of Operations
Years ended April 29, 1995, April 30, 1994, and May 1, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross revenue $190,074 $170,778 $171,436
Cost of subcontracted services 63,869 52,129 44,288
-------- -------- --------
NET REVENUE 126,205 118,649 127,148
Cost of net revenue 79,052 77,569 79,398
-------- -------- --------
Gross profit 47,153 41,080 47,750
Selling, general and administrative expenses (39,651) (38,081) (38,961)
Provision for restructuring and consolidation (note 9) -- (5,000) (1,425)
License and other income, net (note 6) 689 1,544 1,962
-------- -------- --------
Income (loss) before investment and other income 8,191 (457) 9,326
Investment income, net 1,046 1,566 1,683
Other income (expense), net 77 169 243
-------- -------- --------
Income from continuing operations
before provision for income taxes 9,314 1,278 11,252
Provision for income taxes (note 7) 3,690 425 4,304
-------- -------- --------
Income from continuing operations 5,624 853 6,948
Discontinued manufacturing operations, net of
applicable income taxes (note 10):
Loss from operations -- (605) (1,025)
Loss on disposal -- (453) --
-------- -------- --------
Loss from discontinued operations -- (1,058) (1,025)
-------- -------- --------
NET INCOME (LOSS) $ 5,624 $ (205) $ 5,923
======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE:
Income from continuing operations $ .80 $ .11 $ .89
Loss from discontinued operations -- (.14) (.13)
-------- -------- --------
$ .80 $ (.03) $ .76
======== ======== ========
SHARES USED TO COMPUTE EARNINGS PER COMMON SHARE 7,050 7,458 7,779
======== ======== ========
</TABLE>
See accompanying notes.
15
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Consolidated Balance Sheets
April 29, 1995 and April 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
(In thousands, except share amounts) 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
ASSETS CURRENT ASSETS:
Cash and cash equivalents $ 10,747 $ 4,909
Marketable securities (note 2) 15,173 25,614
Accounts receivable, less allowances of
$3,100 in 1995 and $3,245 in 1994 46,139 39,426
Unbilled revenues (note 3) 21,172 14,473
Other current assets 7,072 7,647
-------- --------
TOTAL CURRENT ASSETS 100,303 92,069
Property, plant and equipment, net (note 4) 14,193 17,383
Other assets, net of accumulated amortization
of $339 in 1995 and $181 in 1994 (note 5) 6,249 3,474
-------- --------
$120,745 $112,926
======== ========
LIABILITIES AND CURRENT LIABILITIES:
STOCKHOLDERS' Accounts payable $ 10,989 $ 6,174
EQUITY Accrued compensation 4,441 3,330
Other accrued liabilities 8,050 9,647
Income taxes payable (note 7) 495 125
-------- --------
TOTAL CURRENT LIABILITIES 23,975 19,276
Commitments and contingencies (note 8) -- --
STOCKHOLDERS' EQUITY (NOTE 11):
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued -- --
Common stock, $.01 par value, 25,000,000 shares
authorized, 8,078,748 issued in 1995 and
8,061,996 in 1994 80 80
Capital in excess of par value 54,315 54,113
Retained earnings 60,980 55,525
Treasury stock, at cost, 1,145,116 shares in 1995
and 947,500 shares in 1994 (17,353) (14,804)
Cumulative currency translation adjustment (1,252) (1,264)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 96,770 93,650
-------- --------
$120,745 $112,926
======== ========
</TABLE>
See accompanying notes.
16
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Consolidated Statements of Stockholders' Equity
Years ended April 29, 1995, April 30, 1994, and May 1, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
(In thousands, except share amounts) Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK
Balance at beginning of year 8,061,996 $ 80 8,023,121 $ 80 7,968,541 $ 80
Shares issued under stock plans 16,752 -- 38,875 -- 54,580 --
--------- -------- --------- -------- --------- --------
Balance at end of year 8,078,748 $ 80 8,061,996 $ 80 8,023,121 $ 80
========= ======== ========= ======== ========= ========
CAPITAL IN EXCESS OF PAR VALUE
Balance at beginning of year $ 54,113 $ 53,409 $ 52,411
Shares issued under stock plans 202 704 998
-------- -------- --------
Balance at end of year $ 54,315 $ 54,113 $ 53,409
======== ======== ========
RETAINED EARNINGS
Balance at beginning of year $ 55,525 $ 55,730 $ 49,807
Net income (loss) 5,624 (205) 5,923
Unrealized loss on marketable securities (117) -- --
Shares issued under stock plans (52) -- --
-------- -------- --------
Balance at end of year $ 60,980 $ 55,525 $ 55,730
======== ======== ========
TREASURY STOCK
Balance at beginning of year 947,500 $(14,804) 387,500 $ (7,110) 61,000 $ (1,270)
Purchase of common stock 248,000 (3,238) 560,000 (7,694) 326,500 (5,840)
Shares issued to employees (50,384) 689 -- -- -- --
--------- -------- --------- -------- --------- --------
Balance at end of year 1,145,116 $(17,353) 947,500 $(14,804) 387,500 $ (7,110)
========= ======== ========= ======== ========= ========
CUMULATIVE CURRENCY TRANSLATION ADJUSTMENT
Balance at beginning of year $ (1,264) $ (1,011) $ (52)
Currency translation adjustment 12 (253) (959)
-------- -------- --------
Balance at end of year $ (1,252) $ (1,264) $ (1,011)
======== ======== ========
TOTAL STOCKHOLDERS' EQUITY $ 96,770 $ 93,650 $101,098
======== ======== ========
</TABLE>
See accompanying notes.
17
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
Years ended April 29, 1995, April 30, 1994, and May 1, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,624 $ (205) $ 5,923
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 8,029 8,205 7,881
Allowance for doubtful accounts and credit memos (200) (336) (689)
Deferred income taxes 1,053 (560) (378)
Loss from discontinued operations -- 1,058 --
Other -- -- 980
Changes in operating assets and liabilities, net of effects of
acquisitions and discontinued operations:
Accounts receivable and unbilled revenues (9,651) (15,832) 5,073
Other current assets (483) 1,093 (857)
Accounts payable 4,698 (771) (1,420)
Accrued compensation 980 300 (3,265)
Other accrued liabilities (1,722) (75) 3,687
Income taxes payable 60 (188) (2,658)
------- ------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 8,388 (7,311) 14,277
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (4,213) (6,998) (5,623)
Sale of marketable securities 12,650 22,261 14,115
Purchase of marketable securities (2,200) (18,810) (15,334)
Assets acquired, net of cash acquired (5,855) -- --
Proceeds from sale of discontinued operations -- 1,627 --
Other (278) 149 (2,325)
------- ------- -------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 104 (1,771) (9,167)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (3,238) (7,694) (5,840)
Proceeds from sale of stock under employee
stock plans and payments on employee notes 579 704 950
------- ------- -------
NET CASH USED IN FINANCING ACTIVITIES (2,659) (6,990) (4,890)
Effect of exchange rate changes on cash and cash equivalents 5 (253) (167)
------- ------- -------
Net increase (decrease) in cash and cash equivalents 5,838 (16,325) 53
Cash and cash equivalents at beginning of year 4,909 21,234 21,181
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR $10,747 $ 4,909 $21,234
======= ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes paid $ 2,731 $ 538 $ 6,293
</TABLE>
See accompanying notes.
18
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of Groundwater Technology, Inc. and its wholly-owned subsidiaries (the
Company). All material intercompany transactions and accounts have been
eliminated. The Company utilizes a 52/53 week fiscal year ending on the Saturday
closest to April 30. Fiscal 1995, 1994, and 1993 were 52-week years. The Company
accounts for its investments in unconsolidated affiliated companies under the
equity method.
CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on hand,
demand deposit accounts, and investments in tax exempt money market funds and
tax exempt municipal bonds having original maturities of three months or less,
or which contain a put option which can be exercised at par within three months
of the date of acquisition. These investments are highly liquid and are
considered cash equivalents. Cash equivalents are stated at cost which
approximates market.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION Property, plant and equipment are
stated at cost. Depreciation and amortization are computed on the straight-line
method over the estimated useful lives of the assets, which range from two to
twenty-five years.
INTANGIBLES Intangibles are included in other assets and consist principally of
goodwill and other intangible assets resulting from acquisitions. Amortization
is computed on a straight-line basis over five to twenty years. The carrying
value of intangible assets is periodically reviewed by the Company and
impairments are recognized when the expected future operating cash flows derived
from such intangible assets is less than their carrying value.
FOREIGN CURRENCY TRANSLATION Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at exchange rates prevailing during the year.
Translation adjustments are accumulated as a separate component of stockholders'
equity. Transaction gains and losses are included in the determination of net
income and are not material.
EARNINGS PER COMMON SHARE The calculation of earnings per common share is based
on the weighted average number of shares outstanding, including all common stock
and stock options outstanding considered to be common stock equivalents. In
periods in which a loss is incurred, common stock equivalents are excluded as
the effect would be anti-dilutive.
REVENUE RECOGNITION Revenue is recognized when services are performed. Equipment
rental revenue is recognized over the rental period.
LICENSE AND OTHER INCOME License and other income includes license and royalty
income earned on the Company's intellectual property and income from equity
investments in the environmental industry.
CREDIT RISK Credit is extended based on an evaluation of the customer's
financial condition, with terms consistent in the industry and normally
collateral is not required. Losses from credit sales are provided for in the
financial statements and have been consistently within the allowance provided.
- --------------------------------------------------------------------------------
NOTE 2 - MARKETABLE SECURITIES
- --------------------------------------------------------------------------------
In May 1993, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." This Statement is effective for
fiscal years beginning after December 15, 1993 and expands the use of fair value
accounting and reporting for certain investments in debt and equity securities.
The Company has adopted the Statement effective May 1, 1994. In accordance with
the Statement, prior period financial statements have not been restated to
reflect the change in accounting principle. The effect of adopting Statement 115
on the Company's consolidated financial position was not material. Under this
Statement, the Company's investments are classified as available-for-sale
securities and recorded at current market value with an offsetting adjustment
included in stockholders' equity.
Marketable securities consisted principally of municipal obligations which
contain a put option that can be exercised at par with various maturity dates.
The Company considers these investments, which represent funds available for
current operations, an integral component of its cash management activities. The
investments in municipal obligations represent principally "A" rated or better
investment grade securities with no significant concentrations in any one issue.
At April 29, 1995, investments in debt and equity securities were stated at
their fair value of $15,172,737. Gross unrealized holding losses at April 29,
1995 were $116,652. The amortized cost basis of investments aggregated
$15,289,389. In addition, included in cash and cash equivalents are debt
securities with a fair value of approximately $4,794,000.
- --------------------------------------------------------------------------------
NOTE 3 - UNBILLED REVENUES
- --------------------------------------------------------------------------------
Unbilled revenues represent amounts earned under the Company's contracts but not
billed or not yet billable to customers according to contract terms, which
usually consider passage of time, achievement of certain project milestones or
completion of the project. The unbilled revenues at April 29, 1995 are expected
to be billed and collected within one year.
19
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Property, plant and equipment consisted of the following:
------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land, buildings and improvements $ 1,848 $ 1,836
Leasehold improvements 4,217 4,124
Machinery and equipment 1,982 2,541
Laboratory equipment 9,304 9,353
Furniture, fixtures and computer equipment 24,301 21,031
Rental equipment 7,582 6,800
------- -------
49,234 45,685
Less accumulated depreciation and amortization 35,041 28,302
------- -------
$14,193 $17,383
======= =======
</TABLE>
- --------------------------------------------------------------------------------
NOTE 5 - ACQUISITIONS
- --------------------------------------------------------------------------------
During the year ended April 29, 1995, the Company acquired two environmental
consulting and remediation firms, one for cash plus future payments and one for
cash and stock plus future payments. These acquisitions were accounted for as
purchases and were not material individually or in the aggregate to the
consolidated financial position or results of operations from the dates of
acquisition (May 1994 and March 1995). The total costs in excess of net tangible
assets acquired aggregated approximately $2,564,000 and are being amortized over
periods of the expected benefit, not to exceed 20 years. The contingent payments
of each acquisition will be included in goodwill when incurred.
- --------------------------------------------------------------------------------
NOTE 6 - LICENSE AND OTHER INCOME, NET
- --------------------------------------------------------------------------------
A significant portion of license and other income in fiscal 1994 and 1993
related to a $3,000,000 payment in the third quarter of fiscal 1993 from Kurita
Water Industries Ltd., of Japan, in connection with an exclusive technology
license agreement. During both fiscal 1994 and 1993, approximately $1,500,000 of
the license revenue was recognized as the Company's obligations under the
agreement were fulfilled during the initial contract period, which ended in
March 1994.
- --------------------------------------------------------------------------------
NOTE 7 - INCOME TAXES
- --------------------------------------------------------------------------------
Effective May 2, 1993, the Company changed its method of accounting for income
taxes from the deferred method to the liability method as required by Statement
of Financial Accounting Standard (SFAS) No. 109. Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities, and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Prior to this adoption, income tax expense was determined
using the deferred method. As permitted under SFAS No. 109, prior years'
financial statements have not been restated. There was no cumulative effect of
adopting SFAS No. 109.
<TABLE>
<CAPTION>
The components of the provision (benefit) for income taxes consisted of the following:
-------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994 1993
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Continuing operations $3,690 $ 425 $4,304
Discontinued operations:
Loss from operations -- (395) (674)
Loss on disposal -- (297) --
------ ------- ------
$3,690 $ (267) $3,630
====== ======= ======
</TABLE>
20
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements (cont'd)
- --------------------------------------------------------------------------------
The provisions for income taxes attributable to continuing operations consisted
of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
(in thousands) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $1,825 $ 816 $3,751
State and foreign 812 169 931
------ ------- ------
2,637 985 4,682
Deferred (prepaid):
Federal and state 1,053 (560) (378)
------ ------- ------
$3,690 $ 425 $4,304
====== ======= ======
</TABLE>
The provisions for income taxes were at rates other than the U.S. federal
statutory income tax rate for the following reasons:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. federal statutory income tax rate 35.0% 35.0% 34.0%
State and foreign income taxes,
net of federal income tax benefit 5.7 4.6 5.3
Interest income exempt from federal tax (3.5) (41.3) (5.6)
Losses of international subsidiaries 0.8 31.4 1.8
Other, net 1.6 3.6 2.8
---- ---- ----
39.6% 33.3% 38.3%
==== ==== ====
</TABLE>
Deferred tax assets, which are included in other current assets, reflect the net
tax effect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets as of
April 29, 1995 and April 30, 1994 are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
(In thousands) 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Depreciation $1,843 $1,076
Allowance for doubtful accounts 1,308 1,278
Restructuring and consolidation accruals 278 1,059
Other accrued liabilities 190 901
Alternative Minimum Tax credit carryforward -- 358
Net operating loss carryforwards of international subsidiaries 810 664
------ ------
Total deferred tax assets 4,429 5,336
Valuation allowance attributable to net operating loss carryforwards
of international subsidiaries (810) (664)
------ ------
Net deferred tax assets $3,619 $4,672
====== ======
</TABLE>
The tax effects of the principal timing differences under the deferred method
resulting in deferred (prepaid) tax expense were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
(In thousands) 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Deferred compensation $ 209
Allowance for doubtful accounts 370
Depreciation (498)
Deferred income (675)
Provision for restructuring (562)
Other, principally various accruals 778
------
$ (378)
======
</TABLE>
The foreign component of income (loss) before income taxes was $(320,000),
$(1,100,000), and $(516,000) in fiscal 1995, 1994, and 1993, respectively.
21
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 8 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------------------------------------------------
LEASE COMMITMENTS The Company leases virtually all of its facilities under
operating leases. Most of these leases have renewal options, and certain of them
require increasing rent payments over the term of the lease and payments for
additional expenses such as taxes and maintenance. One of the leases also
contains a purchase option. Additionally, the Company leases equipment and
vehicles under operating leases.
Future minimum payments under all noncancelable leases are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(In thousands)
- --------------------------------------------------------------------------------
<S> <C>
1996 $ 6,119
1997 4,009
1998 2,147
1999 1,449
2000 884
2001 and thereafter 777
-------
$15,385
=======
</TABLE>
Rent expense charged to continuing operations was $5,159,000, $6,032,000, and
$6,755,000 in fiscal 1995, 1994, and 1993, respectively.
OTHER COMMITMENTS A substantial number of the Company's contracts with its
customers require the Company to indemnify the customer for claims, damages, or
losses for personal injury or property damage relating to the Company's
performance of the contracts unless such injury or damage is solely the result
of the customer's negligent or willful acts or omissions. A number of the
insurance policies maintained by the Company for this purpose are provided
through arrangements which require the Company to indemnify the insurance
carrier for all losses and expenses under the policies and to support its
indemnity commitments with letters of credit. At both April 29, 1995 and April
30, 1994, such letters of credit aggregated $7,339,000. In addition, provisions
for losses expected under these policies of $4,352,000 and $5,172,000 are
included in other accrued liabilities at April 29, 1995 and April 30, 1994,
respectively. Management believes an adequate level of insurance coverage has
been provided.
CONTINGENCIES In the ordinary course of conducting its business, the Company
becomes involved in a number of lawsuits and administrative proceedings,
including environmentally related matters. Some of these proceedings may result
in fines, penalties or judgments being assessed against the Company, which, from
time to time, may have an impact on earnings for a particular quarter. The
Company does not believe that these matters, individually or in the aggregate,
will have a material adverse effect on its business or financial condition.
- --------------------------------------------------------------------------------
NOTE 9 - PROVISION FOR RESTRUCTURING AND CONSOLIDATION
- --------------------------------------------------------------------------------
In April 1993, the Company recorded a restructuring charge of approximately
$1,400,000 as a result of the Company's review of its operating strategies. The
charge was related principally to the reorganization of the Company's operating
structure and the consolidation of certain administrative support functions.
In July 1993, the Company provided an additional restructuring charge of
$5,000,000. This provision includes costs for the consolidation of the Company's
two California laboratories, certain asset writeoffs, severance costs for
certain employees, lease expense related to excess space, and costs associated
with the reorganization of the Company's industrial division, including the
provision for losses on certain contracts. The remaining balance at April 29,
1995, of accrued restructuring and consolidation costs was immaterial and
included in other accrued liabilities.
- --------------------------------------------------------------------------------
NOTE 10 - DISCONTINUED MANUFACTURING OPERATIONS
- --------------------------------------------------------------------------------
In the first quarter of fiscal 1994, the Company announced its intention to sell
its equipment manufacturing division, ORS Environmental Equipment. The Company
recorded a provision for the estimated losses from discontinued manufacturing
operations of $605,000 (net of income tax benefit of $395,000), and for the
estimated loss on the disposal of the manufacturing operations of $1,058,000
(net of income tax benefit of $692,000). On March 31, 1994, the Company
completed the sale of the net assets of the manufacturing operations and
received a total of $1,627,000 in cash. As a result, the ultimate loss on
disposal was reduced in April 1994 to $453,000 net of related income tax benefit
of $297,000.
Information regarding the results of the ORS Environmental Equipment
discontinued operations in the fiscal year ended prior to the effective date of
the discontinuance is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended
(In thousands) May 1, 1993
- --------------------------------------------------------------------------------
<S> <C>
Revenues $ 3,567
Loss from discontinued operations, net
of related income taxes of $674 $(1,025)
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements (cont'd)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTE 11 - CAPITAL STOCK AND STOCK PLANS
- --------------------------------------------------------------------------------
PREFERRED STOCK Terms of the preferred stock will be established at time of
issuance.
1987 STOCK PLAN Pursuant to the plan, as amended, 1,600,000 shares of common
stock have been reserved for issuance upon the exercise of options or in
connection with awards or authorizations to make direct purchases of stock. The
plan provides for the granting of both nonstatutory stock options and incentive
stock options. The recipients, terms, and option prices are to be determined by
the Compensation Committee of the Board of Directors and, in the case of
incentive stock options, may not be less than the fair market value of the
common stock at the date of grant. The exercise of incentive stock options is
limited by the provisions of the plan, but in no case may the exercise period
extend beyond ten years from the date of grant.
On September 28, 1993, the Board of Directors authorized the Company to
offer to exchange with each holder of stock options granted under the 1987 Stock
Plan, a new stock option equal to two thirds of the number of options remaining
unexercised under the holder's original grants at the time of the exchange. The
option price of each new option granted under this offer was equal to the fair
market value of the Company's common stock on the date of authorization, $12.25
per share. The new options included a new four-year vesting period commencing on
the date of grant.
Information related to the 1987 stock plan is summarized as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Options outstanding
Shares Per share
- --------------------------------------------------------------------------------
<S> <C> <C>
Balance at May 2, 1992 1,009,299 $15.50-28.00
Granted 222,400 15.75-20.00
Exercised (13,281) 17.17-22.00
Canceled/expired (202,426) 17.17-28.00
---------- ------------
Balance at May 1, 1993 1,015,992 15.50-26.75
Granted 787,538 11.13-13.25
Canceled/expired (1,066,350) 11.13-26.75
---------- ------------
Balance at April 30, 1994 737,180 11.13-25.00
Granted 279,578 12.75-13.38
Exercised (8,370) 11.13-13.25
Canceled/expired (108,642) 11.13-25.00
---------- ------------
Balance at April 29, 1995 899,746 $11.13-25.00
========== ============
</TABLE>
At April 29, 1995, 564,482 shares were available for grant and 148,110 shares
were exercisable under the 1987 stock plan.
- --------------------------------------------------------------------------------
1986 EMPLOYEE STOCK PURCHASE PLAN Under the Company's 1986 Employee Stock
Purchase Plan, as amended in fiscal 1994, up to 312,500 shares of common stock
may be sold to eligible employees. Those individuals employed a minimum of 20
hours per week are eligible to participate in the plan. Shares are issuable at
the lesser of 85% of the average market price of the Company's common stock on
the first day or last day of semi-annual payment periods. At April 29, 1995,
59,741 shares were available for issuance under the plan.
1995 DIRECTOR STOCK OPTION PLAN During fiscal 1995, the Board of Directors
adopted the 1995 Director Stock Option Plan, which replaced the 1988 Non-
Employee Director Stock Option Plan. The plan provides for issuance of up to
100,000 shares of common stock. Each non-employee director who satisfies certain
other requirements is granted an initial option to purchase 5,000 shares of the
Company's common stock. Once per year each non-employee Board member will
receive an option to purchase an additional 2,500 shares of common stock. The
purchase price of the option granted is the fair market value of the shares on
the day the option is granted. Each option becomes exercisable with respect to
one third of the shares subject to such option on the first three anniversaries
of the date of the grant. Options expire seven years after the date of grant and
are nonassignable and nontransferable. Options to purchase 15,000 common shares
at the price of $13.38 per share were outstanding as of April 29, 1995. At April
29, 1995, 85,000 shares were available for grant.
- --------------------------------------------------------------------------------
NOTE 12 - EMPLOYEE BENEFIT PLANS
- --------------------------------------------------------------------------------
PROFIT SHARING PLAN AND BONUS PERFORMANCE PLAN During fiscal 1995, the Company
instituted a profit sharing plan for the benefit of all employees meeting
certain minimum service requirements. The plan distributes 10% of pre-tax
operating income to the employees at the end of the second and fourth quarters
of each fiscal year. The plan is designed to encourage employees to reduce
overall operating costs as a percentage of net revenue. The profit sharing
expense was $837,000 in fiscal 1995. At April 29, 1995 the Company had accrued
approximately $437,000 for the plan.
The Company has a bonus performance program covering eligible employees
under which awards are made at the discretion of the Compensation Committee of
the Board of Directors. Bonus expense was approximately $1,311,000, $475,000,
and $283,000 in fiscal 1995, 1994, and 1993, respectively.
RETIREMENT SAVINGS PLAN The Company has a Retirement Savings Plan under Section
401(k) of the Internal Revenue Code for the benefit of all U.S. employees
meeting certain minimum service requirements. Eligible employees may elect to
contribute to the plan up to
23
<PAGE>
- --------------------------------------------------------------------------------
GROUNDWATER TECHNOLOGY, INC.
Notes to Consolidated Financial Statements (cont'd)
- --------------------------------------------------------------------------------
12% of their cash compensation, subject to limitations established by the
Internal Revenue Code. The trustees of the plan select investment opportunities
from which participants may choose to contribute.
The plan requires a matching contribution by the Company of 100% on the first
1%, and 25% on the next 4% of each participant's contribution up to a maximum of
5% of each participant's cash compensation, but not greater than the maximum
allowable under the Internal Revenue Code. The Company may also contribute a
discretionary amount to the plan which may be allocated to employees based upon
employees' contributions to the plan. The Company's matching contributions
currently vest at a rate of 25% per year based upon years of service. The
Company's contributions to this plan were $986,000, $778,000, and $680,000 in
fiscal 1995, 1994, and 1993, respectively.
The Company has various defined contribution plans covering substantially
all non-U.S. employees. The Company's contributions to these plans were
$231,000, $216,000, and $140,000 in fiscal 1995, 1994, and 1993, respectively.
<TABLE>
<CAPTION>
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------
Income
(In thousands, (loss) from Net Earnings Weighted
except per share Gross Net Gross continuing income (loss) average
amounts) revenue revenue profit operations (loss) per share shares
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FISCAL 1995
First quarter $ 45,911 $ 30,545 $11,489 $ 1,139 $ 1,139 $ .16 7,179
Second quarter 49,022 32,588 12,313 1,754 1,754 .25 7,074
Third quarter 47,352 30,144 11,322 1,192 1,192 .17 7,017
Fourth quarter 47,789 32,928 12,029 1,539 1,539 .22 6,985
-------- -------- ------- ------- -------
$190,074 $126,205 $47,153 $ 5,624 $ 5,624
======== ======== ======= ======= =======
FISCAL 1994
First quarter $ 40,090 $ 29,018 $ 9,390 $(2,692) $(4,355) $(.57) 7,657
Second quarter 43,168 30,225 9,818 803 803 .11 7,610
Third quarter 43,722 30,265 10,667 1,396 1,396 .19 7,455
Fourth quarter 43,798 29,141 11,205 1,346 1,951 .27 7,273
-------- -------- ------- ------- -------
$170,778 $118,649 $41,080 $ 853 $ (205)
======== ======== ======= ======= =======
</TABLE>
The Company's results may fluctuate from quarter to quarter. Factors influencing
such variations include: spending decisions by major customers; delays in the
release of committed projects; holidays and vacation time, which limit the
amount of time Company professional and technical personnel have in the field;
and the level of subcontracted services.
Fiscal 1994 amounts include a first quarter restructuring and consolidation
charge of approximately $5,000,000, and the loss on discontinued operations and
the provision for the sale of ORS Environmental Equipment division of
approximately $1,058,000 (net of income tax benefit).
24
<PAGE>
21
SUBSIDIARIES OF REGISTRANT
The following is a list of the subsidiaries of the Registrant.
<TABLE>
<CAPTION>
SUBSIDIARY PLACE OF INCORPORATION
---------- ----------------------
<C> <S> <C>
1. Groundwater Technology Government Services,
Inc. Delaware
2. GTEL Environmental Laboratories, Inc. Delaware
3. GTI Investment Company, Inc. Delaware
4. Groundwater Technology International, Inc. Delaware
5. Groundwater Technology Canada, Limited* Province of Ontario, Canada
6. Groundwater Technology International
Limited* United Kingdom
7. Groundwater Technology B.V.* The Netherlands
8. Groundwater Technology Overseas Corp.* Delaware
9. Groundwater Technology Australia PTY,
Limited* Australia
10. Groundwater Technology Italia S.r.l.* Italy
11. Groundwater Technology (NZ) Limited+ New Zealand
</TABLE>
- --------
* Groundwater Technology Canada, Limited ("GTC"), Groundwater Technology
International Limited ("GTIL"), Groundwater Technology B.V. ("GTBV"),
Groundwater Technology Overseas Corp ("GTOC"), Groundwater Technology
Australia PTY, Limited ("GTA"), and Groundwater Technology Italia S.r.l.
("GTI") are indirect or "second-tier" subsidiaries of the Registrant. GTC,
GTIL, GTBV, GTOC, GTA, and GTI are subsidiaries of Groundwater Technology
International, Inc., which, in turn, is a wholly-owned subsidiary of the
Registrant.
+ Groundwater Technology (NZ) Limited is a subsidiary of GTA.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-
K) of Groundwater Technology, Inc. of our report dated May 26, 1995, included
in the 1995 Annual Report to Stockholders of Groundwater Technology, Inc.
Our audits also included the financial statement schedules of Groundwater
Technology, Inc. listed in Item 14(a). These schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 33-9754, 33-9756, 33-19289, 33-28059, 33-27781, and
33-43156) pertaining to the 1982 Stock Option Plan, the 1986 Employee Stock
Purchase Plan, the 1987 Stock Plan, the 1987 Stock Plan, as amended, the 1988
Non-Employee Director Stock Option Plan, and the 1987 Stock Plan and the 1986
Employee Stock Purchase Plan, as amended, respectively, of Groundwater
Technology, Inc. of our report dated May 26, 1995, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedules included in this Annual Report (Form 10-K) of Groundwater
Technology, Inc.
/s/ Ernst & Young LLP
Boston, Massachusetts
July 24, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GROUNDWATER
TECHNOLOGY, INC. ANNUAL REPORT 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-29-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-29-1995
<CASH> 10,747
<SECURITIES> 15,173
<RECEIVABLES> 46,139
<ALLOWANCES> 3,100
<INVENTORY> 0
<CURRENT-ASSETS> 100,303
<PP&E> 14,193
<DEPRECIATION> 0
<TOTAL-ASSETS> 120,745
<CURRENT-LIABILITIES> 23,975
<BONDS> 0
<COMMON> 80
0
0
<OTHER-SE> 96,690
<TOTAL-LIABILITY-AND-EQUITY> 120,745
<SALES> 0
<TOTAL-REVENUES> 190,074
<CGS> 0
<TOTAL-COSTS> 79,052
<OTHER-EXPENSES> 39,651
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,314
<INCOME-TAX> 3,690
<INCOME-CONTINUING> 5,624
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,624
<EPS-PRIMARY> .80
<EPS-DILUTED> 0
</TABLE>
