<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Groundwater Technology, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Groundwater Technology, Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
GROUNDWATER TECHNOLOGY, INC.
100 RIVER RIDGE DRIVE
NORWOOD, MASSACHUSETTS 02062
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
To the Stockholders:
The Annual Meeting of Stockholders of Groundwater Technology, Inc. will be
held on Tuesday, September 19, 1995, at 9:30 a.m., at Fleet Bank, 8th Floor,
75 State Street, Boston, Massachusetts for the following purposes:
1. To fix the number of Directors at four and to elect two members to
the Board of Directors to serve for a three-year term as Class A
Directors.
2. To consider and act upon a proposal to amend the Amended and
Restated 1986 Employee Stock Purchase Plan to increase the number of
shares of Common Stock authorized for issuance pursuant to the
Amended and Restated 1986 Employee Stock Purchase Plan from 312,500
shares to 600,000 shares and to remove the limitation on the number
of shares that can be purchased by participants in each plan period.
3. To consider and act upon a proposal to approve the 1995 Director
Stock Option Plan.
4. To consider and act upon the matter of ratifying the selection of
the firm of Coopers & Lybrand LLP as auditors for the fiscal year
ending April 27, 1996.
5. To transact such other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on August 1, 1995 as
the record date for determining stockholders entitled to notice of and to vote
at the Annual Meeting. Only stockholders of record at the close of business on
that date are entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting. Whether
or not you plan to attend the Annual Meeting, please complete the enclosed
proxy card, and sign, date and return it promptly so that your shares will be
represented. Sending in your proxy will not prevent you from voting in person
at the Annual Meeting.
By Order of the Board of Directors
/s/ Catherine L. Farrell
Catherine L. Farrell
Vice President, General Counsel
and Secretary
August 10, 1995
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY COMPLETE, SIGN, DATE AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
<PAGE>
GROUNDWATER TECHNOLOGY, INC.
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 19, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Groundwater Technology, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders to
be held on Tuesday, September 19, 1995 and any adjournment thereof for the
purpose of considering and voting upon the matters set forth in the
accompanying notice of Annual Meeting. The address of the Company's principal
executive office is 100 River Ridge Drive, Norwood, Massachusetts 02062. This
proxy statement and the form of proxy are first being mailed to stockholders
on or about August 10, 1995.
REVOCABILITY OF PROXY AND VOTING OF PROXY
Any stockholder giving a proxy has the right to revoke it by written notice
to the Secretary of the Company at any time before it is exercised, or by
voting in person at the Annual Meeting. All shares of Common Stock represented
at the Annual Meeting by properly executed proxies received prior to or at the
Annual Meeting, and not revoked, will be voted in accordance with the
instructions indicated. If no instructions are indicated with respect to any
shares for which properly executed proxies have been received, such proxies
will be voted FOR the election of the two nominees for directors; FOR
amendment to the Amended and Restated 1986 Employee Stock Purchase Plan to
increase the number of shares authorized for issuance thereunder to 600,000
and to remove the limitation on the number of shares that can be purchased by
participants in each plan period; FOR approval of the 1995 Director Stock
Option Plan; and FOR the ratification of the appointment of Coopers & Lybrand
LLP as independent auditors for the 1996 Fiscal Year. If any other matters are
properly presented at the Annual Meeting for action, the persons named in the
proxies and acting thereunder will have the discretion to vote on such matters
in accordance with their best judgment as to the best interests of the
Company. The Board of Directors does not know of any other matters to be
brought before the Annual Meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on August 1, 1995, are
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 6,906,392 shares of Common Stock, par value
$.01 per share. Each stockholder is entitled to one vote for each share of
Common Stock held of record on that date on all matters that are properly
presented for action at the Annual Meeting. The Company has no other
outstanding voting securities.
A majority of the outstanding shares of Common Stock entitled to vote must
be represented in person or by proxy at the Annual Meeting in order to conduct
the election of directors and other matters described in this Proxy Statement.
If a majority of shares is represented, then the two nominees for director
will be elected if more shares are voted for than against them. On all other
matters considered at the Annual Meeting, a majority of the shares represented
at the Annual Meeting is required for approval. Abstentions and "non-votes"
are counted as present in determining whether the quorum requirement is
satisfied. Under the Company's Restated Certificate of Incorporation and By-
laws, abstentions have the same effect as a vote "against" the matter. Under
Delaware law, "non-votes" will be treated as neither a vote "for" nor
"against" the matter. A "non-vote" occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on another proposal
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.
<PAGE>
ANNUAL REPORT
The Company's Annual Report to Stockholders, containing consolidated
financial statements for the 1995 Fiscal Year, is being mailed with this Proxy
Statement to each stockholder's address of record. That Report is not
incorporated in this Proxy Statement by reference.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, each elected
to serve for a term of three years. Upon approval of the stockholders to fix
the number of Directors at four, the Board, in accordance with the Company's
Restated Certificate of Incorporation and By-Laws, has established that there
shall be two Class A Directors, one Class B Director and one Class C Director.
Set forth below is information concerning the nominees for Director to be
elected at the Annual Meeting, as well as information concerning the Directors
whose terms of office will extend beyond the Annual Meeting. The nominees for
Class A Directors, Allan S. Bufferd and Robert P. Schechter, are presently
serving as Directors. The Board of Directors expects that the nominees will be
available for election. In the event that the nominees for any reason should
become unavailable, proxies will be voted for a nominee or nominees designated
by the Board of Directors, unless the Board of Directors reduces the number of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF MR. BUFFERD AND MR.
SCHECHTER AS DIRECTORS.
NOMINEES FOR ELECTION AT THIS MEETING FOR TERM EXPIRING 1998 (CLASS A
DIRECTORS):
Allan S. Bufferd, 58, has been a Director of the Company since 1988. Since
1986 Mr. Bufferd has been the Deputy Treasurer and Director of Investments of
the Massachusetts Institute of Technology ("M.I.T."). In such capacity Mr.
Bufferd manages the assets of M.I.T.'s endowment and pension funds. Prior to
1986, Mr. Bufferd served as the Associate Treasurer and Recording Secretary of
M.I.T. In that position he was primarily responsible for private placements
and international and venture capital investments of M.I.T.'s endowment and
pension assets.
Robert P. Schechter, 46, has been a Director of the Company since 1988. Mr.
Schechter is currently the President and Chief Executive Officer of Natural
MicroSystems Corporation, a provider of hardware and software platforms for
the computer telephony integration market. From 1991 to 1994 Mr. Schechter was
the Senior Vice President, International Business Group, and from 1987 to
1991, the Senior Vice President of Finance and Operations and Chief Financial
Officer, of Lotus Development Corporation, a computer software company. From
1973 to 1987, Mr. Schechter was employed by the public accounting firm of
Coopers & Lybrand, where he was a partner and served as Northeast Regional
Chairman of the High Technology Group. Mr. Schechter is also a director of MRS
Technology, Inc.
DIRECTOR WHOSE TERM CONTINUES UNTIL 1996 (CLASS B DIRECTOR):
Bayard Henry, 64, has been a Director of the Company since 1976. Mr. Henry
is currently a corporate advisor in the offices of Kestrel Venture Management,
Boston, Massachusetts. From 1979 through 1985, Mr. Henry was associated with
Transatlantic Capital Corporation and Transatlantic Investment Corporation,
both venture capital companies, as President and a Director of each. Mr. Henry
is also a Director of a number of funds sponsored by the John Hancock Mutual
Life Insurance Company, and of The Fiduciary Trust Company, Boston.
DIRECTOR WHOSE TERM CONTINUES UNTIL 1997 (CLASS C DIRECTOR):
Walter C. Barber, 54, has been a Director of the Company since 1989 and was
appointed Chairman of the Board in 1993. Mr. Barber joined the Company in 1989
as President and Chief Executive Officer. Prior to joining
2
<PAGE>
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.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
GENERAL
The Board of Directors of the Company held six meetings during the Fiscal
Year ended April 29, 1995. Each of the Directors attended at least 75% of the
meetings of the Board of Directors and of each Committee on which he serves.
The Board of Directors has two standing committees, the Audit Committee and
the Compensation Committee. The Audit Committee, of which Messrs. Bufferd,
Henry and Schechter are members, oversees the accounting and tax functions of
the Company, including matters relating to the appointment and activities of
the Company's auditors. The Audit Committee met three times during the fiscal
year ended April 29, 1995. The Compensation Committee, of which Messrs.
Bufferd, Henry and Schechter are members, reviews and makes recommendations
concerning executive salaries, bonuses and the Company's stock plans. The
Compensation Committee met six times during the fiscal year ended April 29,
1995. The Board of Directors does not currently have a standing nominating
committee.
COMPENSATION OF DIRECTORS
The Fiscal Year 1995 compensation for the non-employee Directors was $10,000
without regard to attendance at meetings of the Board of Directors or
Committees plus $5,000 to Messrs. Bufferd and Schechter for serving as
Chairmen of the Audit and Compensation Committees, respectively. In addition,
Directors were reimbursed for out-of-pocket expenses for attending Board and
Committee meetings.
On March 21, 1995, the Board of Directors, subject to stockholder approval,
adopted the 1995 Director Stock Option Plan (the "1995 Director Plan"), which
replaced the 1988 Non-Employee Director Stock Option Plan. Under the 1995
Director Plan, each non-employee director automatically receives a one-time
option to purchase 5,000 shares of the Company's Common Stock. In addition,
annually on the third Tuesday of June, each non-employee director receives an
option to purchase 2,500 shares of the Company's Common Stock. The exercise
price of the options is 100% of the fair market value of the Common Stock on
the date options are granted. In the event of a change of control of the
Company, all outstanding options automatically become fully exercisable.
Options become exercisable in equal annual installments over three years, and
they expire seven years from their date of grant. Options granted pursuant to
the 1995 Director Plan are not assignable or transferable other than by will
or the laws of descent and distribution, and are exercisable during an
optionee's lifetime only by him.
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 options granted to such optionee under the 1995 Director Plan
will, to the extent not then exercisable, immediately terminate and become
void, and any options which are then exercisable but have 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 they are then exercisable, by the optionee
within a period of thirty 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.
In the event an optionee ceases to be a member of the Board of Directors of
the Company by reason of his disability or death, any option granted under the
1995 Director Plan to such optionee shall be immediately and automatically
accelerated and become fully vested, and any unexercised option may be
exercised by the optionee (or by the optionee's personal representative, heir
or legatee) until the scheduled expiration date of the option.
As of April 29, 1995, outstanding options to purchase 5,000 shares of Common
Stock at $13.375 per share were held by each of Messrs. Bufferd, Henry and
Schechter.
3
<PAGE>
SHARE OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS
The following table sets forth information as of July 10, 1995 concerning
the ownership of Common Stock by each current member of the Board of
Directors, each nominee for Director at the Annual Meeting, each of the
executive officers named in the Summary Compensation Table included in this
Proxy Statement, all current Directors and executive officers as a group and
each stockholder known by the Company to be the beneficial owner of more than
5% of its outstanding shares of Common Stock. Except as otherwise noted, the
persons or entities identified have sole voting and investment power with
respect to such shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS** BENEFICIAL OWNERSHIP PERCENT
------------------ -------------------- -------
<S> <C> <C>
Walter C. Barber............................... 43,409(1) *
Bayard Henry................................... 228,000(2) 3.3%
Allan S. Bufferd............................... 1,972(3) *
Robert P. Schechter............................ 1,872(4) *
Robert E. Sliney, Jr........................... 8,008(5) *
Wendell W. Lattz............................... 7,376(6) *
Frank J. Gorry................................. 3,916(7) *
J. Steven Paquette............................. 3,916(8) *
All Current Directors and Executive Officers as
a group (11 persons).......................... 315,528(9) 4.6%
The Parnassus Fund
244 California Street, Ste. 400
San Francisco, CA 94111........................ 435,000(10) 6.3%
</TABLE>
--------
* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
** Addresses are given for beneficial owners of more than 5% of the
outstanding Common Stock only.
(1) Includes 21,700 shares subject to options under the Company's 1987 Stock
Plan which are exercisable at July 10, 1995, or within 60 days
thereafter.
(2) Does not include shares subject to an option granted under the Company's
1995 Director Stock Option Plan because none were exercisable at July 10,
1995, or within 60 days thereafter.
(3) Does not include shares subject to an option granted under the Company's
1995 Director Stock Option Plan because none were exercisable at July 10,
1995, or within 60 days thereafter. The Massachusetts Institute of
Technology ("M.I.T.") owns 24,582 shares with respect to which Mr.
Bufferd has voting and investment power by virtue of his position as
Deputy Treasurer and Director of Investments of M.I.T., subject to the
policies and procedures of the Investment Committee of M.I.T. Mr. Bufferd
disclaims beneficial ownership of such shares.
(4) Does not include shares subject to an option granted under the Company's
1995 Director Stock Option Plan because none were exercisable at July 10,
1995, or within 60 days thereafter.
(5) Includes 6,816 shares subject to options granted under the Company's 1987
Stock Plan which are exercisable at July 10, 1995, or within 60 days
thereafter.
(6) Includes 6,600 shares subject to options granted under the Company's 1987
Stock Plan which are exercisable at July 10, 1995, or within 60 days
thereafter.
(7) Includes 3,916 shares subject to options granted under the Company's 1987
Stock Plan which are exercisable at July 10, 1995, or within 60 days
thereafter.
(8) Includes 3,916 shares subject to options granted under the Company's 1987
Stock Plan which are exercisable at July 10, 1995, or within 60 days
thereafter.
(9) Includes an aggregate of 58,411 shares subject to options granted under
the Company's 1987 Stock Plan which are exercisable at July 10, 1995, or
within 60 days thereafter.
EXECUTIVE OFFICERS
In addition to biographical information about its Directors, the Company
wishes to provide stockholders information about all of its executive
officers. Executive officers are elected annually and serve until their
successors are duly elected or until their earlier resignation or removal.
4
<PAGE>
Wendell W. Lattz, 43, 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.
Robert E. Sliney, Jr., 45, 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 & Lybrand.
Frank J. Gorry, 44, 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, 41, joined the Company in 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.
Guy Sylvester, 38, 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
General Manager for National Environmental Testing, Inc., an analytical
laboratory company. From 1988 to 1991, he was employed by Med-Tox Associates,
Inc., an environmental laboratory company, where he served as Vice President
responsible for the environmental laboratory business in California.
Glenn V. Batchelder, 34, 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, 50, 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.
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation for
services in all capacities to the Company and its subsidiaries during each of
the last three years of those persons who were, at April 29, 1995, the
Company's Chief Executive Officer and its other four most highly compensated
executive officers (collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------
LONG-TERM COMPENSATION
NAME AND ------------------------
PRINCIPAL POSITION AWARDS/SECURITIES ALL OTHER
IN FISCAL 1995 YEAR SALARY($) BONUS($)(1) UNDERLYING OPTIONS(#)(2) COMPENSATION($)(3)
------------------ ---- --------- ----------- ------------------------ ------------------
<S> <C> <C> <C> <C> <C>
Walter C. Barber........
President, Chief Execu- 1995 260,000 114,400 7,500 8,178
tive Officer and 1994 260,000 0 76,300 5,410
Chairman of the Board 1993 260,000 0 9,200 44,168(4)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------------
LONG-TERM COMPENSATION
NAME AND ------------------------
PRINCIPAL POSITION AWARDS/SECURITIES ALL OTHER
IN FISCAL 1995 YEAR SALARY($) BONUS($)(1) UNDERLYING OPTIONS(#)(2) COMPENSATION($)(3)
------------------ ---- --------- ----------- ------------------------ ------------------
<S> <C> <C> <C> <C> <C>
Robert E. Sliney, Jr.... 1995 157,418 52,800 12,500 4,945
Vice President, 1994 145,080 0 12,767 3,600
Treasurer and
Chief Financial Officer 1993 128,340(5) 0 7,900 632
Wendell W. Lattz........ 1995 150,000 56,250 7,500 4,540
Sr. Vice President of 1994 130,000 0 15,900 2,011
Operations 1993 130,000 0 2,600 1,665
Frank J. Gorry.......... 1995 144,014 54,005 7,500 14,047(6)
Vice President and 1994 144,014 6,265 6,667 2,261
General Manager of 1993 11,078(5) 6,774 2,500 0
Industrial Division
J. Steven Paquette...... 1995 139,138 26,250 7,500 15,889(7)
Vice President and 1994 135,018 15,190 6,667 20,193(7)
President of
Groundwater 1993 25,446(5) 15,000 2,500 331
Technology Government
Services, Inc.
</TABLE>
--------
(1) The amounts indicated under "Bonus" are based on service during the fiscal
years indicated, although paid during the following fiscal year.
(2) Includes options to purchase shares of the Company's Common Stock granted
to the named executive officers in the 1994 Fiscal Year in connection with
a company-wide option exchange offer. These officers exchanged all of
their options granted in prior years in the option exchange offer.
(3) The amounts indicated under "All Other Compensation" for the 1995 Fiscal
Year consist of (a) amounts contributed by the Company to match a portion
of the employees' contributions under the Company's 401(k) Retirement
Savings Plan (Mr. Barber, $3,000; Mr. Sliney, $2,220; Mr. Lattz, $1,875;
Mr. Gorry, $2,781; and Mr. Paquette, $2,552) (the Company currently
matches each participating employee's contribution to the extent of 100%
on the first 1%, and 25% on the next 4%, up to a maximum match on 5% of
each employee's cash compensation, but not greater than the maximum
allowable under the Internal Revenue Code); (b) the dollar value of
premiums paid by the Company during the Fiscal Year with respect to life
insurance for the benefit of the named executive officers (Mr. Barber,
$1,210; Mr. Sliney, $283; Mr. Lattz, $376; Mr. Gorry, $194; and Mr.
Paquette, $166); and (c) amounts paid by the Company under the Profit
Sharing Plan, which distributes 10% of pre-tax earnings on a semi-annual
basis to all employees in proportion to their base compensation.
(4) In Fiscal Year 1993 the Company terminated the Supplemental Executive
Retirement Plan ("SERP"), which was financed by life insurance policies on
individual participants. Amounts included for Mr. Barber under this column
include the premiums for policies covering him under the SERP. After
termination of the SERP, the Company offered participants an opportunity
to purchase policies covering them for the cash surrender value, and the
Company received $94,536 from Mr. Barber for his policies.
(5) The named executive officer was hired during Fiscal Year 1993, and the
amounts indicated were earned by the named executive officer from the date
he joined the Company. These officers' base salaries were not increased
for Fiscal Year 1994.
(6) Includes $8,874 relating to forgiveness of a loan. Upon hiring Mr. Gorry
in April 1993, the Company agreed to continue a loan he received from his
previous employer for relocation expenses, which was required to be repaid
when he left to join the Company.
(7) Includes $11,035 relating to forgiveness of a loan. Upon hiring Mr.
Paquette in February 1993, the Company agreed to continue a loan he
received from his previous employer for relocation expenses, which was
required to be repaid when he left to join the Company.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides details regarding the stock options indicated
in the Summary Compensation Table as having been granted to the named
executive officers in the 1995 Fiscal Year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME GRANTED(1) IN FISCAL YEAR(2) ($/SH) DATE PRESENT VALUE ($)(3)
---- ---------- ----------------- -------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
Walter C. Barber........ 7,500 2.68 $13.25 6/28/01 47,400
Robert E. Sliney, Jr.... 12,500 4.47 $13.25 6/28/01 79,000
Wendell W. Lattz........ 7,500 2.68 $13.25 6/28/01 47,400
Frank J. Gorry.......... 7,500 2.68 $13.25 6/28/01 47,400
J. Steven Paquette...... 7,500 2.68 $13.25 6/28/01 47,400
</TABLE>
--------
(1) Options to purchase the indicated numbers of shares of the Company's
Common Stock. All options granted to the named executive officers were
granted at an exercise price equal to the closing market price of the
Common Stock on the date of grant and have a term of seven years. Options
vest annually in five equal installments commencing one year from the date
of grant. Upon any acquisition of more than 50% of the voting power of the
Company's Common Stock by any person, entity or group, and the optionee's
employment is terminated, all unexercisable options immediately become
exercisable. Options are non-transferable other than by will or the laws
of descent and distribution.
(2) The Company granted options to purchase 279,578 shares of Common Stock to
all employees in the 1995 Fiscal Year.
(3) The estimated values of the option grants were determined using the Black-
Scholes option pricing model, based on assumed volatility of 37%, risk-
free rate of return of 7.25%, dividend yield of 0%, a seven year option
expiration and a 10% discount for non-transferability. The Company's use
of this model in accordance with the executive compensation disclosure
rules adopted by the SEC does not constitute an endorsement of this model
nor an acknowledgment that such model can accurately determine the value
of options. No assurance can be given that the actual value, if any,
realized by an executive officer upon the exercise of these options will
approximate the estimated values established by this Black-Scholes model.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding options exercised by
the named executive officers during the 1995 Fiscal Year, as well as the
number of shares covered by all exercisable and non-exercisable stock options
held by these individuals at year-end.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS
END AT FISCAL YEAR-END($)(1)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Walter C. Barber........ 0 0 18,700 65,100 12,900 38,700
Robert E. Sliney, Jr.... 0 0 2,816 22,451 987 2,963
Wendell W. Lattz........ 0 0 3,600 19,800 1,575 4,725
Frank J. Gorry.......... 0 0 1,416 12,751 312 938
J. Steven Paquette...... 0 0 1,416 12,751 312 938
</TABLE>
--------
(1) The value of unexercised in-the-money options at year-end assumes a fair
market value for the Company's Common Stock of $13.00, the average of the
high and low prices of the Company's Common Stock on April 28, 1995 (the
last business day prior to end of the 1995 Fiscal Year).
7
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The executive compensation program is administered by the Compensation
Committee of the Board of Directors (the "Committee"), which is currently
composed of the three independent, non-employee directors listed below this
report with the responsibility for all compensation matters for the Company's
senior management. The Committee alone sets the compensation for Walter C.
Barber (the "CEO") and sets the compensation of the other executive officers
with recommendation from the CEO. All decisions by the Committee are submitted
to the full Board of Directors for final approval.
The Securities and Exchange Commission requires disclosure of companies'
policies for executive compensation to enable stockholders to better
understand the reasons for the compensation of the CEO and the other four most
highly compensated executive officers. The disclosure required for these named
executive officers includes compensation tables and a report explaining the
rationale and considerations that form the bases of the Committee's executive
compensation decisions affecting those individuals. Set forth below is the
Committee's report addressing these matters.
COMPENSATION PHILOSOPHY AND PRINCIPLES
Under the direction of the Committee, the Company has maintained the
philosophy that compensation of all employees should be closely linked to
performance. Consequently, increases of employees' cash compensation in the
form of salary and bonus historically have been greater in more profitable
years and less in less profitable years. In addition, to provide incentive for
the Company's long-term success, certain employees receive options at fair
market value that vest over a period of years, and all employees participate
in the Company's Profit Sharing Plan and have an opportunity to participate in
the Company's Amended and Restated 1986 Employee Stock Purchase Plan, which
provides a discount on purchases of the Company's Common Stock through payroll
deductions. The Committee believes that executive officers, who are ultimately
responsible for the successful financial performance of the Company, should be
compensated under these same principles.
The Company's mission is to be the world leader in on-site remediation by
being dedicated to total customer satisfaction, creating opportunities for
employees' development and success, encouraging innovation and continuous
improvement of technology and aggressively pursuing profitable growth. To
achieve this mission, the Committee believes the executive compensation
program must create financial opportunities for senior managers. The guiding
principles of the Committee are to:
. Create a compensation program that supports the Company's strategic goals
in its industry and thus enhances stockholder value;
. Provide a competitive compensation program to attract and retain
qualified senior managers necessary for long-term success;
. Establish a direct and substantial relationship between cash compensation
and performance to motivate senior managers for short-term results;
. Align the interests of senior managers with the long-term interests of
stockholders through award opportunities to acquire the Company's stock;
and
. Reevaluate compensation decisions annually to ensure alignment of
compensation practices with the Company's goals.
COMPENSATION POLICIES AND PRACTICES TOWARD EXECUTIVE OFFICERS
The Committee attempted to design compensation policies and components of
the Company's executive compensation program for Fiscal Year 1995 consistent
with the philosophy and principles described above. To balance short- and
long-term financial goals of the Company, the program currently is comprised
of cash compensation in the form of base salary, profit sharing and bonus,
options as long-term incentives and benefits typically offered executives in
corporations of similar size and in similar businesses as the Company.
8
<PAGE>
Cash Compensation
The Committee believes that compensation of the Company's executive
officers, including the named executive officers, should be substantially
linked to operating performance. Base salaries are designed to be competitive
within the industry and reflect individual performance. For Fiscal Year 1995,
total cash compensation, however, was significantly affected by bonuses for
the achievement of business unit and Company-wide financial performance goals
established by the Committee in June 1994. The payment of bonuses to the CEO;
Robert E. Sliney, Jr., the Chief Financial Officer; Glenn V. Batchelder, Vice
President of Sales and Marketing; and Catherine L. Farrell, Vice President and
General Counsel of the Company was entirely based on the degree of achievement
of a target earnings per share ("EPS") goal. Payment of bonuses to the other
executive officers, who are general managers of the Company's business units,
was based in part on EPS and in part on operating profit of the individual
manager's business unit. In the event the minimum target EPS and operating
profit were not reached, bonuses would not have been paid. The Bonus
Performance Plan is intended to provide opportunity for cash compensation
competitive with median levels of the Company's competitors included in the
peer group index set forth in the Performance Graph contained elsewhere in
this proxy statement, as well as other companies of similar size included in
independent survey data.
At its June 1994 meeting the Committee, on the CEO's recommendation,
approved base salary increases for several of the executive officers in
recognition of their contributions to the Company and the salary freeze in
effect for the prior two years. To provide cash incentives to all employees,
including the CEO and the other executive officers, in Fiscal Year 1995 the
Company adopted a profit sharing plan. This plan distributes 10% of pre-tax
earnings on a semi-annual basis to employees in proportion to their base
compensation.
Long-Term Incentive Program
Under the 1987 Stock Plan, the Committee established an incentive program to
reward executive officers and others in the Company for delivering long-term
value to the Company's stockholders. Currently, stock option grants provide
executive officers and other senior managers rights to purchase shares of the
Company's Common Stock at the fair market value (the closing price of the
Common Stock) on the date of grant, which vest over a period of time. Since
June 1990 the Committee has typically granted options upon hire of the
executive officer and at its June meeting each year for all senior managers.
For Fiscal Year 1995, the Committee decided to grant most executive officers
options to purchase 7,500 shares of the Company's Common Stock. Mr. Sliney was
granted an option to purchase 12,500 shares of the Company's Common Stock
based on the CEO's recommendation and the Committee's subjective assessment of
Mr. Sliney's individual performance and leadership during Fiscal Year 1995.
Tax Deductibility Limit
The Omnibus Budget Reconciliation Act of 1993 added a new Section 162(m) to
the Internal Revenue Code of 1986 (the "Code"). Section 162(m) generally
provides that certain compensation in excess of $1 million per year paid to a
company's chief executive officer and any of its four other highest paid
executive officers is no longer deductible by a company beginning in the 1995
tax year unless the compensation qualifies for an exception. This deduction
limit generally applies only to compensation that could otherwise be deducted
by a company in a taxable year. The Committee has reviewed the Company's
executive compensation plans and believes that the impact of Section 162(m)
upon the Company will not be significant for the next several years because no
executive officer the Company is likely to be paid compensation exceeding $1
million. The Committee will consider the effect of Section 162(m) in
authorizing or recommending future executive compensation arrangements.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
For the 1995 Fiscal Year, Mr. Barber's planned cash compensation mix was set
in June 1994 at approximately 70% base salary and 30% bonus. The Committee set
the CEO's base salary of $260,000 and targeted bonus as a percentage of
planned total cash compensation at the same level and percentage as that of
the prior year after giving consideration to competitive data and the
Company's performance. A bonus of
9
<PAGE>
$114,400 was paid to Mr. Barber for the 1995 Fiscal Year because the Company
achieved 104% of the target EPS established by the Committee. In June 1994,
Mr. Barber was granted an option to purchase 7,500 shares of the Company's
Common Stock at an exercise price of $13.25 per share (the market value on
date of grant) under the Company's option program.
Robert P. Schechter, Chairman
Bayard Henry
Allan S. Bufferd
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return (assuming an investment of $100 on April 30, 1990) on its Common Stock
during the five year period presented with the cumulative return of the Nasdaq
Stock Market--U.S. Index and a new and former index of peer companies selected
by the Company consisting of companies engaged in the environmental services
industry.(1) The stock price performance on the graph below is not necessarily
indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG GROUNDWATER TECHNOLOGY INC., THE NASDAQ STOCK MARKET-US INDEX,
THE FORMER PEER GROUP AND THE NEW PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period GROUNDWATER FORMER PEER NEW PEER NASDAQ STOCK
(Fiscal Year Covered) TECHNOLOGY GROUP GROUP MARKET-US
------------------- ----------- ----------- -------- ------------
<S> <C> <C> <C> <C>
Measurement Pt- 4/90 $100 $100 $100 $100
FYE 4/91 $ 99 $123 $121 $119
FYE 4/92 $100 $ 93 $ 91 $144
FYE 4/93 $ 73 $ 70 $ 70 $166
FYE 4/94 $ 66 $ 72 $ 73 $184
FYE 4/95 $ 59 $ 56 $ 56 $214
</TABLE>
--------
(1) In addition to the Company, the new and former peer groups include: Smith
Environmental Services Corp. (formerly Canonie Environmental Services
Corp., which acquired Reidel Environmental Technologies, Inc., a former
peer company, in November 1994), Dames & Moore Inc., EMCON, Handex
Environmental Recovery, Inc., Harding Associates, Inc., International
Technology Corporation, OHM Corporation, TRC Companies, Inc., and Roy F.
Weston, Inc. The new peer group also includes Earth Tech, a company that
diversified through acquisitions in 1994 from primarily a government
contractor to a provider of services to the private sector, as well; and
accordingly, the Company believes this Company should be included in its
peer group. Geraghty & Miller, Inc., which was included in the Company's
former peer groups was eliminated from this graph due to the purchase of
Geraghty & Miller by Heidemij N.V. in January 1994. Information concerning
the peer groups and the Nasdaq Stock Market-U.S. was supplied to the
Company by Research Data Group of San Francisco, CA.
10
<PAGE>
The Board Compensation Committee Report on Executive Compensation and the
Performance Graph above shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file with the Securities and Exchange
Commission reports of ownership and changes in ownership of the Company's
Common Stock. Copies of those reports must also be furnished to the Company.
The Company is required to identify any of those persons who do not file those
reports on a timely basis. Based solely on a review of the copies of reports
furnished to the Company and written representations that no other reports
were required, the Company believes that during the 1995 Fiscal Year all
filing requirements applicable to directors and executive officers have been
complied with.
PROPOSAL TO AMEND THE AMENDED AND RESTATED
1986 EMPLOYEE STOCK PURCHASE PLAN
At a meeting held on June 27, 1995, the Board of Directors voted unanimously
to recommend to the stockholders that the Amended and Restated 1986 Employee
Stock Purchase Plan, as amended (the "1986 Plan") be amended to increase the
number of shares of Common Stock issuable pursuant to the 1986 Plan to 600,000
shares and to remove a limitation of 300 shares that can be purchased by
employees in a plan period. The 1986 Plan presently authorizes the issuance of
312,500 shares of Common Stock, of which 31,981 shares remain available for
issuance thereunder.
DESCRIPTION OF THE 1986 PLAN
The Company adopted the 1986 Plan to provide incentives to, and to encourage
stock ownership by, all eligible employees of the Company. The 1986 Plan is
administered by the Committee, and the interpretation and construction by the
Committee of any provisions of the 1986 Plan or of any option granted under it
is binding. Management of the Company believes that this increase and the
removal of the restriction are important to permit the Board of Directors to
continue to provide incentives to present and future employees. The complete
text of the Plan is attached as Exhibit A.
ELIGIBLE EMPLOYEES. Substantially all employees of the Company who have
completed six months of employment with the Company and whose customary
employment is more than 20 hours per week and more than five months per
calendar year are eligible to participate in the 1986 Plan. Employees who own
five percent or more of the stock of the Company and directors who are not
employees of the Company may not participate in the 1986 Plan. As of July 10,
1995, approximately 1,450 employees were eligible to participate in the 1986
Plan.
SHARES TO BE ISSUED; ENROLLMENT IN THE PLAN. The 1986 Plan, as proposed to
be amended, authorizes the issuance of 600,000 shares of Common Stock (subject
to adjustment of capital changes) pursuant to the exercise of nontransferable
options granted to participating employees. On December 1 and June 1 of each
year, the first day of a designated six month payroll deduction period (the
"Payment Period"), the Company grants to each eligible employee who has
elected in writing to participate in the 1986 Plan an option to purchase
shares of Common Stock of the Company as follows: The employee may authorize
an amount (not less than 2% or more than 10% of his regular pay) to be
deducted by the Company from his pay during the Payment Period. On the last
day of the Payment Period the employee is deemed to have exercised his option,
at the option price, to the extent of his accumulated payroll deductions.
Pursuant to the Code, no participant may purchase more than $25,000 of Common
Stock in any calendar year. Under the terms of the 1986 Plan, the option price
is an amount equal to 85% of the fair market value of the Common stock on
either the first day or last day of the Payment
11
<PAGE>
Period, whichever is lower. As of July 10, 1995, the closing bid for the
Company's Common Stock on the Nasdaq National Market System was $13.00.
PARTICIPATION IN THE PLAN. If an employee is not a participant on the last
day of the Payment Period, he is not entitled to exercise his option, and the
amount of his accumulated payroll deductions is refunded to him. An employee's
rights under the 1986 Plan terminate upon his voluntary withdrawal from the
1986 Plan at any time, or when he ceases employment because of retirement,
resignation, lay-off, discharge, death, change of status or any other reason,
except that if an employee is on a level of absence from work during the last
three months of any Payment Period, he is nevertheless deemed to be a
participant in the 1986 Plan on the last day of the Payment Period.
CHANGES IN CORPORATE STRUCTURE; AMENDMENT. Option holders are protected
against dilution in the event of merger, consolidation, reorganization, split-
up, liquidation, combination, recapitalization, stock dividend or similar
transactions. The Committee or the Board of Directors may from time to time
adopt amendments to the 1986 Plan, provided that, without the prior approval
of the stockholders, no amendment may increase the number of shares that may
be issued under the 1986 Plan or expand the class of employees eligible to
receive options under the 1986 Plan. The Board of Directors may terminate the
1986 Plan at any time, but such action cannot affect options previously
granted. The 1986 Plan will terminate in any case when all or substantially
all of the unissued shares of Common Stock reserved for the purposes of the
1986 Plan have been purchased, unless the Board of Directors has previously
authorized additional shares of stock for issuance under the 1986 Plan subject
only to stockholder approval.
FEDERAL INCOME TAX CONSEQUENCES
An option granted under the 1986 Plan is intended to qualify as an option
granted under an employee stock purchase plan as defined in Section 423 of the
Code, and is taxed in accordance with Sections 421 and 423 of the Code and the
regulations issued thereunder.
The following general rules are applicable to participating employees for
Federal income tax purposes under existing law:
1. The employee will not realize any income on the grant of the option
pursuant to the 1986 Plan or at the time of the exercise of the option.
2. If the employee disposes of the shares purchased pursuant to the
option two years or more after the first day of the Payment Period in which
the option was granted, the employee will at such time recognize as
ordinary compensation income an amount equal to the lesser of: (a) the
excess of the fair market value of the shares at the time of such
disposition over the amount paid for the shares, or (b) 15% of the fair
market value of the shares as of the first day of the Payment Period in
which the option was granted.
In addition, the employee will recognize a long-term capital gain or loss in
an amount equal to the difference between the amount realized upon the
disposition of the shares and his basis in the shares (that is, his purchase
price plus the amount, if any, taxed to him as compensation income).
3. If the employee disposes of the shares purchased pursuant to the
option within two years after the first day of the Payment Period in which
the option was granted, the employee will at that time recognize ordinary
compensation income in an amount equal to the difference between the fair
market value of the shares on the last day of such Payment Period and his
purchase price for the shares. In addition, the employee will recognize a
capital gain or loss in an amount equal to the difference between the
amount realized upon the sale of the shares and his basis in the shares
(that is, his purchase price plus the amount taxed to him as compensation
income). If the shares have been held for more than one year, such gain or
loss will be a long-term capital gain or loss.
4. If the two-year holding period is satisfied, the Company will not
receive any deduction for Federal income tax purposes with respect to the
option or shares issued pursuant thereto. If the two-year holding period is
not satisfied, the Company will be entitled to a deduction in an amount
equal to the amount which is recognized as compensation income to the
employee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENTS
TO THE 1986 PLAN.
12
<PAGE>
PROPOSAL TO APPROVE THE
1995 DIRECTOR STOCK OPTION PLAN
On March 21, 1995, the Board of Directors adopted the 1995 Director Stock
Option Plan (the "1995 Director Plan"), subject to stockholder approval, to
replace the 1988 Non-Employee Director Stock Option Plan (the "1988 Director
Plan"). Options outstanding under the 1988 Director Plan have an exercise
price of $22.25 and expire in September 1995. No further options may be
granted to the present directors under that plan. A total of 100,000 shares of
Common Stock may be granted under the 1995 Director Plan. The complete text of
the 1995 Director Plan is attached hereto as Exhibit B.
PURPOSE. The purpose of the 1995 Director Plan is to promote the interests
of 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 Board of Directors.
ADMINISTRATION. The 1995 Director Plan is administered by the Board of
Directors. The Board of Directors, subject to the provisions of the 1995
Director Plan, has the power to construe the 1995 Director Plan, to determine
all questions thereunder and to adopt and amend such rules and regulations for
the administration of the 1995 Director Plan as it may deem desirable.
SHARES SUBJECT TO THE PLAN. The 1995 Director Plan authorizes the grant of
options for up to 100,000 shares of Common Stock. As of July 10, 1995, 77,500
shares remained available for further grants of options under the 1995
Director Plan. Outstanding options under the 1995 Director Plan are subject to
adjustment as described below under "Changes in Stock; Recapitalization and
Reorganization". If any options granted under the 1995 Director Plan are
surrendered before exercise or lapse without exercise, in whole or in part,
the shares reserved therefor revert to the option pool and continue to be
available for grant under the 1995 Director Plan.
ELIGIBILITY; AUTOMATIC GRANT OF OPTIONS UNDER THE 1995 DIRECTOR
PLAN. Options are granted pursuant to the 1995 Director Plan only to non-
employee members of the Board of Directors of the Company. Options are granted
automatically under the 1995 Director Plan initially for 5,000 shares and
annually on the third Tuesday in June for 2,500 shares. On March 21, 1995 (the
"Board Approval Date"), each Director eligible under the 1995 Director Plan
was automatically granted an option to purchase 5,000 shares of Common Stock;
and on June 20, 1995, each Director eligible under the 1995 Director Plan was
automatically granted an option to purchase 2,500 shares of Common Stock. As
of July 10, 1995, there were three eligible participants in the 1995 Director
Plan.
Under the 1995 Director Plan, each member of the Board of Directors who
after the Board Approval Date continues to serve as a Director of the Company
but who ceases to be an employee of the Company will be automatically granted,
on the date such person ceases to be an employee of the Company, an option to
purchase 5,000 shares of Common Stock. Each person who is neither an employee
nor an officer of the Company who is first elected to the Board of Directors
after the Board Approval Date will be automatically granted, on the date of
such election, an option to purchase 5,000 shares of Common Stock.
OPTION PRICE. The exercise price per share of options granted under the 1995
Director Plan is 100% of the fair market value of the Common Stock on the date
the option is granted. As of July 10, 1995, the closing bid for the Company's
Common Stock on the Nasdaq National Market System was $13.00.
OPTION DURATION. The 1995 Director Plan requires that options granted
thereunder will expire seven years from the date of option grant.
VESTING UNDER THE 1995 DIRECTOR PLAN. Options granted under the 1995
Director Plan first become exercisable with respect to one-third of the shares
one year after the date of the grant of such option. Thereafter, an additional
one-third of the shares covered by the option will become exercisable on each
anniversary of the option grant until all shares covered by the option are
exercisable.
13
<PAGE>
In addition to the foregoing, an optionee may exercise an option for 100% of
the shares that were not otherwise exercisable immediately prior to the
consummation of the sale of all or substantially all of the Company's assets
or a merger of the Company in which a majority in interest of the Company's
securities shall have been transferred to, or issued to, the other party
thereto or the stockholders of such other party.
EFFECT OF TERMINATION AS A DIRECTOR OR OF DEATH OR DISABILITY. 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 options
granted to such optionee under the 1995 Director Plan will, to the extent not
then exercisable, immediately terminate and become void, and any options which
are then exercisable but have 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 they are then exercisable, by the optionee within a period of thirty
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.
In the event an optionee ceases to be a member of the Board of Directors of
the Company by reason of his disability or death, any option granted under the
1995 Director Plan to such optionee shall be immediately and automatically
accelerated and become fully vested and any unexercised option shall be
exercised by the optionee (or by the optionee's personal representative, heir
or legatee) during the period ending on the scheduled expiration date of the
option.
EXERCISE OF OPTIONS AND PAYMENT FOR STOCK. Exercise of an option under the
1995 Director Plan is effected by a written notice to exercise, delivered to
the Company together with payment for the shares in full, which payment may be
made in part or in full by tendering shares of Common Stock of the Company
valued at fair market value.
Notwithstanding any other provisions of the 1995 Director Plan, the Company
has no obligation to deliver any certificate or certificates upon exercise of
an option under the 1995 Director Plan until one of the following conditions
is satisfied: (i) the shares with respect to which the option has been
exercised are at the time of issue of such shares effectively registered under
applicable Federal and state securities acts as are now in force or hereafter
amended; or (ii) counsel for the Company shall have given an opinion that such
shares are exempt from registration under the Federal and state securities
acts 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. Under the 1995 Director Plan, the
Company will use its best efforts to bring about compliance with the above
conditions within a reasonable time, except that the Company is under no
obligation to cause a registration statement or 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 any option is
exercised.
NON-ASSIGNABILITY OF OPTIONS. Any option granted pursuant to the 1995
Director Plan will not be assignable or transferable other than by will or the
laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by him.
CHANGES IN STOCK; RECAPITALIZATION AND REORGANIZATION. In the event that the
outstanding shares of the Common Stock of the Company are changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another company by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, or in the event of a stock
split, combination of shares or dividends payable in capital stock, automatic
adjustment shall be made in the number and kind of shares as to which
outstanding options or portions thereof then unexercised shall be exercisable
and in the available shares set forth in the 1995 Director Plan, to the end
that the proportionate interest of the option holder will be maintained as
before the occurrence of such event. Such adjustment in outstanding options
will be made without change in the total price applicable to the unexercised
portion of such options and with a corresponding adjustment in the option
price per share.
If an option under the 1995 Director Plan is assumed, or a new option
substituted therefor, as a result of sale of the Company, whether by a merger,
consolidation or sale of property or stock, then membership on the
14
<PAGE>
Board of Directors of such assuming or substituting company or by a parent
company or a subsidiary therefor will be considered for purposes of an option
to be membership on the Board of Directors of the Company.
TERMINATION AND AMENDMENT OF THE 1995 DIRECTOR PLAN. The 1995 Director Plan
automatically terminates when all options granted thereunder have terminated.
The Board of Directors may at any time terminate the 1995 Director Plan or
make such modification or amendment thereof as it may deem advisable,
provided, however, that the Board of Directors may not, without approval by
the affirmative vote of the holders of a majority of the shares of Common
Stock present in person or by proxy and entitled to vote at a meeting (a)
increase the maximum number of shares for which options may be granted under
the 1995 Director Plan or the number of shares for which an option may be
granted to any participating Director thereunder except as previously
described under "Changes in Stock; Recapitalization and Reorganization"; (b)
materially modify the eligibility requirements under the 1995 Director Plan;
(c) materially increase benefits accruing to option holders under the 1995
Director Plan; or (d) amend the 1995 Director Plan in any manner which would
cause Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") to become inapplicable. Termination or any modification or
amendment of the 1995 Director Plan shall not, without consent of a
participant, affect his rights under an option previously granted to him.
FEDERAL INCOME TAX CONSEQUENCES. An option granted under the 1995 Director
Plan is taxed for Federal income tax purposes in accordance with Section 83 of
the Code and regulations issued thereunder. For such purposes, the following
general rules are applicable under existing law to Directors who receive and
exercise options pursuant to the 1995 Director Plan and to the Company, based
upon the assumption that the options do not have a readily ascertainable value
at the date of the grant:
1. The Director does not recognize any income upon the grant of an
option, and the Company is not allowed a business expense deduction by
reason of such grant.
2. If, upon exercise of the option, the Director timely files an election
pursuant to Section 83(b) of the Code) as described in paragraph 7 below),
the Director will recognize ordinary compensation income at the time of
exercise of the option in an amount equal to the excess, if any, of the
fair market value of the shares on the date of exercise over the exercise
price.
3. If the Director does not file a timely election pursuant to Section
83(b) of the Code upon exercise of the option, he will be treated for tax
purposes as if he had exercised the option on the day on which Common Stock
received by exercise of the option becomes free of certain Federal
securities laws restrictions. The tax consequences to the Director of the
exercise of an option absent a Section 83(b) election are discussed more
fully in paragraph 7, below.
4. When the Director sells the shares acquired by exercise of the option,
he will recognize a capital gain or loss in an amount equal to the
difference between the amount realized upon the sale of the shares and his
basis in the shares (i.e. the exercise price plus the amount taxed to the
Director as compensation income as a result of his exercise of the option).
If the Director holds the shares for longer than the statutory holding
period (currently one year), this gain or loss will be a long-term capital
gain or loss. As discussed more fully in paragraph 7 below, a Director's
holding period is tolled (ordinarily for six months) if the Director does
not file a Section 83(b) election at the time of exercise.
5. In general, the Company will be entitled to a tax deduction in the
year in which compensation income is recognized by the Director in the
amount of such compensation income.
6. A Director is able to exercise an option by delivering shares of
Common Stock ("old stock") to the Company in exchange for the stock
received by exercise of the option ("option stock"). In general, if the
Director exchanges old stock for option stock instead of, or in addition
to, paying part of all of the exercise price in cash, no gain or loss will
be recognized with respect to the exchange of the old stock. However, if
the fair market value of the option stock received exceeds the fair market
value of the old stock (at the time of exercise) delivered to acquire the
option stock, the transaction will be separated into two parts for tax
purposes. In the first part, the number of shares of old stock delivered
will be deemed exchanged tax-free, for a like number of shares of option
stock received, and the basis of the shares received will be the same as
the basis of the shares of old stock delivered. In the second part of the
transaction, the
15
<PAGE>
balance of the shares of option stock received will be treated as ordinary
compensation income, and the fair market value of these shares constitutes
both the taxable amount and the basis for the shares.
7. The Common Stock is registered under Section 12(g) of the Exchange
Act. Accordingly, Directors are subject to the provisions of Section 16 of
the Exchange Act and the rules promulgated thereunder. Section 16(b) of the
Exchange Act generally seeks to discourage speculative trading by insiders
by imposing on them liability to pay to the Company any profit realized
through any purchase and sale, or sale and purchase, of the Company's
equity securities within a six-month period.
Common Stock that is subject to restrictions on transfer and also to a
substantial risk of forfeiture (as defined in Regulations under Section 83
of the Code), referred to herein as "Restricted Stock", is subject to
special tax rules. Directors who exercise options pursuant to the 1995
Director Plan will receive stock treated as Restricted Stock for this
purpose because of the securities law rules applicable to the Directors (as
described above). Because Common Stock acquired by a Director upon exercise
of an option is Restricted Stock, the Director's recognition of ordinary
income will be deferred from the actual exercise date to the date on which
the Common Stock becomes free of the Section 16(b) restrictions (ordinarily
six months after the actual exercise date). Accordingly, the amount of
ordinary income recognized by a Director as a result of his exercise of an
option will be determined with regard to the fair market value of the
Common Stock on the later date (which may be higher or lower than its fair
market value on the actual exercise date). In addition, if a Director
transfers Restricted Stock to the Company to exercise an option, the
restrictions on that Restricted Stock may be deemed to have lapsed on the
date of transfer, and the Director may recognize income at that time.
Under Section 83(b) of the Code, an election is available to a Director
to include in gross income, in the taxable year that Restricted Stock is
first transferred to the Director, the amount of any excess of the fair
market value of the Restricted Stock on the date of exercise (ad determined
under Section 83) over the amount, if any, paid for such stock. By filing
the Section 83(b) election with the Internal Revenue Service within 30 days
after exercising an option, a Director may voluntarily elect to have the
Section 16(b) restrictions disregarded for Federal income tax purposes, and
no further tax liability will arise at the time the restrictions on the
Restricted Stock lapse. If such an election is filed, the Federal income
tax consequences of exercising an option granted under the 1995 Director
Plan and disposing of the stock will be the same for such Director as it
would be for optionees under other non-qualified stock option plans
generally. However, if shares of Restricted Stock for which a Section 83(b)
election is in effect are forfeited while such shares are both
nontransferable and subject to substantial risk or forfeiture, the loss
realized by the director on the forfeiture, for tax purposes, is limited to
the amount paid for such shares (not including any compensation income
recognized by the Director at the time of transfer) less any amount
realized by the Director on such forfeiture.
Normally an optionee's holding period for purposes of determining the
applicability of the long-term capital gain or loss provisions of the Code
begins on the date on which the option is exercise. If a Director timely
files the Section 83(b) election described above, his holding period will
begin on the date of exercise. However, if a Director exercises an option
and does not timely file the Section 83(b) election, the Director will be
treated for Federal income tax purposes as if he had exercised the option
on the day on which the Common Stock becomes free of the Section 16(b)
restriction (ordinarily six months after the actual exercise date), and his
holding period for purposes of determining whether any gain or loss upon
disposition of the Common Stock will be treated as a long-term gain or loss
will not begin until that later date.
8. The Tax Reform Act of 1986 eliminated the deduction previously
allowable to individuals for 60% of long-term capital gains, effective for
gains recognized in 1987 and later years. As a result, long-term gains
generally are now subject to Federal income tax at the same rates as
ordinary income.
9. The 1995 Director Plan is not an employee benefit plan which is
subject to the provisions of the Employee Retirement Income Security Act of
1974, and the provisions of Section 401(a) of the Code are not applicable
to the 1988 Director Plan.
16
<PAGE>
STOCKHOLDER APPROVAL. Approval of the 1995 Director Plan requires the
affirmative vote at the Meeting. If such approval is not obtained, all options
granted under the 1995 Director Plan and the 1995 Director Plan itself will be
null and void. Upon approval of the 1995 Director Plan, the 1988 Director Plan
will be terminated without further action of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1995
DIRECTOR PLAN.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand LLP for
appointment by the stockholders as independent public accountants for the
purpose of auditing and reporting upon the financial statements of the Company
for its Fiscal Year ending April 27, 1996. The firm of Coopers & Lybrand LLP
was engaged on July 26, 1995. At no time preceding the engagement of Coopers &
Lybrand were there any material disagreements between the Company and its
former auditing firm, Ernst & Young LLP, on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures. The reports of Ernst & Young on the combined financial statements
for the year ended April 29, 1995 contained no adverse opinion or disclaimer
of opinion and were not qualified or modified as to uncertainty, audit scope
or accounting principle.
The selection of Coopers & Lybrand to serve as independent public
accountants was based upon a recommendation by the Audit Committee after
request by management for competitive bids by three independent auditing
firms, including Ernst & Young, and was approved by the full Board.
Representatives of Coopers & Lybrand are expected to be present at the Annual
Meeting to make such statements and answer such questions as are appropriate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS SELECTION.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be mailed to all stockholders entitled to vote at the next annual meeting of
the Company must be received at the Company's principal executive offices not
later than April 12, 1996. In order to curtail controversy as to the date on
which a proposal was received by the Company, it is suggested that proponents
submit their proposals by Certified Mail-Return Receipt Requested.
On September 28, 1994, the Board of Directors amended the Company's By-laws
to require the stockholders to give advance notice and furnish certain
information to the Company in order to bring a matter of business before an
annual meeting or to nominate a person for election as a director at an annual
meeting or special meeting at which directors are to be elected. For purposes
of the Annual Meeting, such notice must be received on or before, August 25,
1995 by Catherine L. Farrell, Secretary, at the Company's executive offices.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks and brokers to solicit their customers who have
stock of the Company registered in the name of the nominee and, if so, will
reimburse such banks and brokers for their reasonable out-of-pocket costs.
Solicitation by officers and employees of the Company may also be made of some
stockholders in person or by mail, telephone or telecopy, following the
original solicitation.
17
<PAGE>
EX A
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 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.
<PAGE>
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.
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
A-2
<PAGE>
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.
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.
A-3
<PAGE>
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.
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
A-4
<PAGE>
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.
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
A-5
<PAGE>
EX B
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 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
<PAGE>
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.
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
B-2
<PAGE>
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 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.
B-3
<PAGE>
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 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.
B-4
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT
1.) To fix the number of Directors at [_] [_] [_]
four and to vote for the election of
the nominees listed below.
Allan S. Bufferd and Robert P. Schechter
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR"
ANY INDIVIDUAL NOMINEE, MARK THE "FOR ALL
EXCEPT" BOX AND STRIKE A LINE THROUGH THE
NOMINEE'S NAME.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
-------------------------------------------
Date
-------------------------------------------
Stockholder sign here
-------------------------------------------
Co-owner sign here
FOR AGAINST ABSTAIN
2.) To consider and act upon a proposal to [_] [_] [_]
amend the Amended and Restated 1986
Employee Stock Purchase Plan to increase
the number of shares of Common Stock
authorized for issuance pursuant to
the Amended and Restated 1986 Employee
Stock Purchase Plan from 312,500 shares
to 600,000 shares and to remove the
limitation on the number of shares that
can be purchased by participants in each
plan period.
FOR AGAINST ABSTAIN
3.) To consider and act upon a proposal to [_] [_] [_]
approve the 1995 Director Stock Option
Plan.
4.) To consider and act upon the matter of [_] [_] [_]
ratifying the selection of the firm of
Coopers & Lybrand LLP as auditors for
the fiscal year ending April 27, 1996.
To transact such other business as may
properly come before the meeting and
any adjournment thereof.
Mark box at right if comments or address change have been noted on the
reverse side of this card. [_]
DETACH CARD DETACH CARD
GROUNDWATER TECHNOLOGY, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders,
September 19, 1995.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Groundwater Technology, Inc.
<PAGE>
GROUNDWATER TECHNOLOGY, INC.
Proxy for Annual Meeting of Stockholders - September 19, 1995
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Groundwater Technology, Inc., a Delaware
corporation, revoking all prior proxies, hereby appoints WALTER C. BARBER and
BAYARD HENRY and each of them, proxies, with full power of substitution, to vote
all of the shares of common stock of Groundwater Technology, Inc., which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Groundwater Technology, Inc. to be held at Fleet Bank, 75 State Street, Boston,
Massachusetts on Tuesday, September 19, 1995, at 9:30 a.m., local time, and at
any adjournment or adjournments thereof, as set forth on the reverse side and,
in their discretion, upon any other business that may properly come before the
meeting. Attendance of the undersigned at the meeting or any adjournment session
thereof will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate thereat the intention of the undersigned to vote said
shares in person.
If no direction is given, this proxy will be voted FOR the election of both
directors and FOR proposals 2, 3 and 4.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
Please sign this proxy exactly at your name appears on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
--------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
----------------------------------- -------------------------------------
----------------------------------- -------------------------------------
----------------------------------- -------------------------------------
DETACH CARD
