SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended April 27, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from............to...........
COMMISSION FILE NUMBER 0-15067
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FLUOR DANIEL GTI, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 02-0324047
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 RIVER RIDGE DRIVE, NORWOOD, MASSACHUSETTS 02062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 769-7600
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $.001 par value None
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. X
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The aggregate market value of the voting stock held by non-affiliates
of the registrant on July 5, 1996, was $40,964,275 computed on the basis of the
closing price per share of such stock on the Nasdaq National Market System. The
number of shares of Common Stock outstanding on July 5, 1996, was 8,152,953
shares.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant intends to file a definitive proxy statement for the
1996 Annual Meeting of Stockholders to be held on September 18 , 1996 pursuant
to Regulation 14A within 120 days of the end of the fiscal year ended April 27,
1996. Portions of the proxy statement are incorporated by reference in Part III
hereof.
FLUOR DANIEL GTI, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
<TABLE>
<S> <C>
Item 1. Business..............................................................................................1
General............................................................................................1
Services...........................................................................................1
Remediation and Containment Technologies...........................................................3
Business Strategies................................................................................4
Governmental Regulation and Market.................................................................5
Customers and Marketing............................................................................7
Personnel..........................................................................................8
Competition and Seasonal Factors...................................................................8
Potential Liability and Insurance..................................................................8
Patents and Technology.............................................................................9
Factors Affecting Future Performance...............................................................9
Item 2. Properties...........................................................................................10
Item 3. Legal Proceedings....................................................................................11
Item 4. Submission of Matters to a Vote of Security Holders..................................................11
Executive Officers of the Company................................................................................11
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters............................13
Item 6. Selected Financial Data..............................................................................14
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................................................14
Item 8. Consolidated Financial Statements and Supplementary Data.............................................20
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.............................................................................20
PART III
Item 10. Directors and Executive Officers of the Registrant...................................................20
Item 11. Executive Compensation...............................................................................21
Item 12. Security Ownership of Certain Beneficial Owners and Management.......................................21
Item 13. Certain Relationships and Related Transactions.......................................................21
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K......................................21
Signatures ................................................................................................25
</TABLE>
This Report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Reference is made in
particular to the desription of the Company's plans included in the Letter to
Stockholders that accompanies the Annual Report to Stockholders, and the
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections in this Report. Certain factors that may affect
these forward-looking statements are discussed on page 9.
PART I
ITEM 1. BUSINESS
GENERAL
Fluor Daniel GTI, Inc. (formerly Groundwater Technology, Inc.) and its
subsidiaries (collectively, "Fluor Daniel GTI" or the "Company") provide a broad
range of environmental, consulting, engineering and remediation services to a
variety of commercial and industrial customers and federal, state and local
government agencies. The Company was incorporated in Delaware in October 1975
and currently operates from 58 consulting offices throughout the United States
and in six foreign countries including Australia, New Zealand, the United
Kingdom, Canada, Italy and The Netherlands. Also, the Company's joint venture
with a German company has offices in six additional locations in Germany,
Austria and Hungary.
The principal services provided by the Company are detailed, scientific
environmental assessment and remediation programs, which combine elements of
hydrogeology, geochemistry, chemistry, biochemistry and engineering. The Company
also provides compliance, permitting and other environmental support services. A
typical program generally includes interaction with appropriate governmental
regulatory agencies, detailed site assessments, design and implementation of a
cost-effective remediation system, construction management services and ongoing
monitoring and maintenance of the system for the duration of the program. These
assessments and remediation programs are generally in response to regulatory
programs adopted by state agencies as well as U.S. Environmental Protection
Agency ("EPA") programs, such as the Resource Conservation and Recovery Act of
1976 ("RCRA") and the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA" or "Superfund Act"). The Company does not own or operate
a hazardous waste landfill or any other hazardous waste treatment, storage or
disposal facility.
On May 10, 1996, the Company closed a series of transactions pursuant to
which it became a majority-owned subsidiary of Fluor Daniel, Inc. ("Fluor
Daniel"), a global construction, engineering, maintenance and services company.
The transactions included a recapitalization of the Company's common stock; the
acquisition by the Company of Fluor Daniel Environmental Services, Inc.
("FDESI"), a wholly-owned subsidiary of Fluor Daniel that provides environmental
services primarily to agencies of the federal government, and the Company
entered into a Marketing Agreement with Fluor Daniel. Immediately following the
closing of the transactions, the Company was owned approximately 55% by Fluor
Daniel and 45% by public stockholders. The Company also changed its name from
"Groundwater Technology, Inc." to "Fluor Daniel GTI, Inc." to emphasize the new
relationship.
SERVICES
Fluor Daniel GTI provides a broad range of environmental consulting,
engineering and construction management services, which currently focus on the
assessment, remediation and monitoring of soil and groundwater using a broad
range of techniques and technologies. These services are provided separately or
in combination.
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Remedial Investigation and Assessment. Fluor Daniel GTI prepares
environmental profiles of sites, including hydrogeological and chemical
evaluations. A team of the Company's hydrogeologists, geologists, engineers,
chemists and technicians may use a variety of techniques, such as soil gas
mapping or the installation of a diagnostic monitoring well system. These
techniques provide the data necessary to determine the extent of the
contamination, as well as soil characteristics and groundwater chemistry, flow
and direction, and form the basis for the selection of a remediation program.
Fluor Daniel GTI also offers health and environmental risk assessment
services. Working in multi-disciplinary teams of toxicologists, environmental
scientists and industrial hygienists, the staff ascertains the health hazards
and risks produced by chemicals in the environment and the workplace. The risk
assessment services include site-specific exposure modeling and quantitative
risk assessment, hazard and risk communication programs, human health monitoring
and regulatory compliance, education, training and industrial hygiene services.
Design and Remediation. The Company has particular experience in the
design and installation of remedial systems for the removal of contaminants from
soil and groundwater. Using information obtained in a site investigation and
assessment, and an evaluation of risks to human health, the Company designs a
remedial solution appropriate to the particular conditions present at the site.
These analyses help to define the appropriate level of remedial response and are
used as the basis for negotiating remediation goals with regulatory authorities.
The Company evaluates alternatives, often conducting feasibility
studies, and the most appropriate response is selected. If action is required, a
cost-effective remediation system is engineered for the specific site. In some
instances, systems designed to contain existing contamination are appropriate.
Where remediation is required, the Company uses a wide range of physical,
chemical, biological and thermal treatment technologies in performing its
services, which are usually applied either on site or in situ. With on-site
restoration, the contaminated media, soil or groundwater is removed and treated.
With in situ restoration, the contaminants themselves are directly removed or
treated in place, without removing the soil or groundwater.
Monitoring. The Company performs ongoing sampling and analysis of
groundwater, soils and air to regulate and adjust the remediation system. The
analysis also provides the data necessary to respond in a timely fashion to
changes in the levels of contaminants and other variables, and forms the basis
for ongoing reports to the appropriate governmental regulatory agencies.
The Company generally charges its customers for its services on a time
and materials basis, typically with strict adherence to "not to exceed"
limitations contained in contracts for projects billed on this basis. Moreover,
services are subject to competitive bidding and are increasingly being performed
on a fixed contract or unit price basis. The Company is also increasing the
marketing of its services on a "pay for performance" incentive basis, and
anticipates that this will become a larger portion of its business in the
future. Revenues are also realized when the Company subcontracts for drilling,
well materials, electrical installation, laboratory analysis and other outside
services. The fee for a typical restoration program (including equipment) ranges
from $100,000 to $750,000, but for complex and lengthy programs the Company has
billed as much as several million dollars. Typical
2
restoration programs generally require one to five years to complete, and
certain programs may take as long as ten or more years.
REMEDIATION AND CONTAINMENT TECHNOLOGIES
Fluor Daniel GTI has substantial experience in the commercialization and
practical field application of new and existing technologies for the treatment
or containment of hazardous wastes and uses many technologies to restore
contaminated groundwater, soils and air to acceptable standards. The primary
approaches used by the Company -- physical, chemical, biological and thermal --
are usually used for on-site and in situ treatment. These techniques are often
used in combination to achieve desired results.
Physical treatments include those technologies that physically impact
the contaminants and the media, and include air stripping, vapor extraction and
air sparging. Air stripping involves pumping contaminated groundwater through
either a stripping tower or an air stripper system, which increases the
evaporation rate of hydrocarbon contaminants. Air flows through the unit
countercurrent to the water flow, "stripping" off the dissolved hydrocarbons at
an increased rate.
Soil vapor extraction is the removal of volatile organic compounds by
induced air flow. The air flow is induced by the application of a vacuum to
subsurface soils and may be enhanced by the simultaneous injection of air. An
important part of vapor extraction is treating the extracted contaminants.
Air sparging is a process for treating soils and groundwater below the
water table by injecting air into the formation under pressure. The air
displaces the water in the soil and volatilizes the organic compounds present.
These compounds are then carried by the air stream out of the water table into
the soil above the water table, where they are captured by a vapor extraction
system. The Company has pioneered the use of ozone to enhance air sparging by
direct oxidation of contaminants.
In situ bioremediation involves treating contaminated soil and
groundwater by adding an oxygen source and nutrients into the aquifer, where
naturally occurring bacteria biochemically break down the contaminants into
non-toxic materials. The added oxygen and nutrients enhance the population of
natural bacteria which normally feed on contaminants. By stimulating the growth
of selected bacteria, soil and groundwater quality is restored to acceptable
levels.
Thermal treatment technologies take a number of forms. The principal
form of this technology used by the Company has been thermal desorption, which
uses heat to remove volatile compounds from a waste without oxidation of the
compounds. The Company has used steam injection and hot air injection to enhance
soil vapor extraction techniques on selected sites. Fluor Daniel GTI is also
exploring the use of co-burning of coal tar impacted soils.
For certain wastes that are not amenable to biological or chemical
degradation, such as metals, the Company uses several in situ technologies that
can be used to reduce or prevent further leaching of contamination from soil to
groundwater or surface water, or to reduce or prevent further migration of the
contamination horizontally. These technologies can be used in combination with
3
control measures such as capping, which involves placing a physical barrier
above the contaminated area, and slurry walls, which involves placing a physical
barrier adjacent to the contaminated area.
In situ fixation is a process that involves mixing chemical reagents
with a smaller volume of pumped groundwater, and then reinjecting the treated
water around the perimeter of a contaminated area. As the treated water moves
through the contaminated area, it promotes subsurface reactions that cause
metals to fix onto soil particles, thus rendering them immobile. The Company has
used as reagents lime and ferrous sulfate, and has also developed proprietary
reagents for in situ metals fixation.
BUSINESS STRATEGIES
Between 1992 and 1995, the Company diversified its core enivronmental
consulting and engineering services away from a dependence on retail petroleum
customers and into government and industrial markets with the intention to have
its customer base roughly equate with the proportions of the total market for
soil and groundwater remediation services being purchased by those customers.
During this period, the Company perceived an evolving shift from governmental
enforcement of environmental laws and regulations to commercial considerations
as the primary source of demand for the Company's services, and the Company
increasingly faced strong price competition as a result of this shift. The
Company also divested non-core businesses -- its drilling operations and
equipment manufacturing business in 1993 and 1994, respectively, and its
analytical laboratories in December 1995. During this period the Company changed
its business mix through a combination of internal focus and two acquisitions,
and pursued teaming arrangements with larger engineering and construction firms
for specific projects in the government market.
On May 10, 1996 the Company closed a series of transactions (the "Fluor
Daniel Transactions") under an Investment Agreement, as amended, among the
Company, Fluor Daniel and wholly-owned subsidiaries of the Company and Fluor
Daniel (the "Investment Agreement"), pursuant to which the Company became a
majority-owned subsidiary of Fluor Daniel. Immediately following the closing of
the transactions, the Company was owned approximately 55% by Fluor Daniel and
45% by public stockholders. In addition, the Company acquired Fluor Daniel
Environmental Services, Inc. ("FDESI"), a wholly-owned subsidiary of Fluor
Daniel, and the Company entered into a Marketing Agreement with Fluor Daniel.
The Company views the relationship with Fluor Daniel as beneficial for the
strategy pursued since 1992. In particular, the affliation with Fluor Daniel is
intended to increase the Company's ability to be competitive given the shift
from regualtory to commercial considerations in the environmental services
market.
Under the Marketing Agreement, the Company has access to Fluor Daniel's
worldwide marketing, engineering and construction, and program management
resources, which is intended to better enable the Company to penetrate potential
markets and, more generally, to respond to the competitive challenges posed by
current and anticipated developments in the environmental services market. Fluor
Daniel GTI serves as the preferred supplier for environmental assessment,
permitting and remediation services to Fluor Daniel and its affiliates. However,
there are no assurances provided in the Marketing Agreement. Fluor Daniel will
continue to provide its customers with engineering and construction services, as
well as certain environmental services, such as Department of Energy Management
and Operations, Operating and Management, Management and Integration services
and
4
so-called "Total Business Solutions" services. Total Business Solutions services
are differentiated from the environmental services that will continue to be
provided by the Company in that they involve an integration of such services
with substantial non-environmental services or involve a substantial increase in
the scale and scope of services beyond those currently provided by the Company.
The term of the Marketing Agreement expires in May 2006 unless further
extended by the parties. In the event Fluor Daniel ceases to own at least 20% of
the issued and outstanding equity of the Company, then (a) Fluor Daniel,
provided it is not in breach of its obligations pursuant to Section 6.3(d) of
the Investment Agreement (described below), or the Company may terminate the
Marketing Agreement prior to expiration of the term; and (b) Fluor Daniel may
revoke the license of the Company and its subsidiaries to use the name "Fluor
Daniel" in the Company's corporate name. Section 6.3(d) of the Investment
Agreement provides that, until April 30, 1999, and with very limited exception,
Fluor Daniel is not permitted to dispose of any of its shares of the Company
without the prior approval of a majority of the independent directors serving on
the Company's Board of Directors.
In addition to developing its new relationship with Fluor Daniel, the
Company will continue to hire and train geologists, engineers, chemists and
hydrogeologists in the specialized fields of environmental services and cleanup
of soil and groundwater in order to staff local offices. It is the Company's
belief that a local presence increases understanding of local environmental
statutes, regulations and regulatory agencies and fosters a constructive working
relationship with local agency personnel. The Company spends significant time
and resources on in-house educational programs at all levels to maintain and
improve the quality of its operations; and it has invested in information
systems to connect all of its U.S. offices by a computer network that allows
employees to share resources.
GOVERNMENTAL REGULATION AND MARKET
Public concern over health, safety and preservation of the environment
has resulted in the enactment of Federal, state and local environmental laws and
the implementing regulations that affect nearly every industry. The enforcement
of these laws and regulations is responsible for creating much of the demand for
the services offered by the Company, and the renewal, modification or
elimination of these laws and regulations could significantly affect the
Company's business. Recently, the level of enforcement has waned due to
governmental budgeting constraints, and a number of laws set for reauthorization
for some time have not been reauthorized. The Company believes that, even apart
from cleanup activity attributable directly to funding authorized by these laws,
industry and governmental entities will continue to attempt to resolve hazardous
waste problems in order to comply with other statutory requirements and to avoid
liabilities to private parties.
The principal legislation that affect the Company's business are as
follows:
RCRA The Resource Conservation and Recovery Act of 1976 established a
framework for federal and state regulation of hazardous wastes. In 1988, the EPA
issued regulations under RCRA
5
that govern underground storage tanks containing certain hazardous substances or
petroleum. These regulations require the owners of underground storage tanks to
upgrade or close existing deficient tanks and to install release detection
equipment on existing tanks. In addition, these regulations prescribe the
procedures by which tank owners and operators should investigate and report
confirmed or suspected releases from tanks, and if applicable, proceed with
corrective actions.
Superfund Act (CERCLA) The Comprehensive Environmental Response,
Compensation and Liability Act of 1980 generally addresses cleanup of inactive
sites at which hazardous treatment, storage or disposal occurred in the past.
The Superfund Act authorizes the federal government to cleanup or order cleanup
of these sites. As of January 1996, there were approximately 1,200 sites on the
National Priority List ("NPL") subject to extensive monitoring and cleanup work.
In 1986, the Superfund Amendment and Reauthorization Act ("SARA") was
enacted and increased environmental remediation activities significantly. SARA,
among other things, authorized additional federal expenditures and expanded the
EPA's enforcement powers, which encouraged and facilitated settlements with
potentially responsible parties. Superfund was reauthorized as part of the 1991
federal budget, which appropriated $5.1 billion through 1994, and is currently
set for reauthorization. There has been considerable debate about several
provisions of SARA, and the Company is unable to ascertain the effect of the
proposed reauthorization at this time.
Other Federal Legislation The Company believes that in addition to RCRA
and CERCLA, other federal laws will affect demand for its services. These laws
include the Toxic Substances Control Act, the Clean Water Act, the Clean Air Act
and the Safe Drinking Water Act.
State Legislation The federal statutes summarized above presuppose
significant state involvement in their administration and enforcement. Many
states have enacted their own statutes designed to protect and restore
environmental quality and to deal directly with the problem of soil and
groundwater contamination; and in some cases these statutes are different or
more stringent than the federal statutes. In addition, states have adopted
reimbursement programs to assist customers who are required to use the Company's
services. Some examples of these state reimbursement programs include the
Florida Inland Protection Trust Fund, the Massachusetts Underground Storage Tank
Petroleum Product Cleanup Fund, the Texas Petroleum Storage Tank Remediation
Fund and the California Underground Storage Tank Cleanup Fund.
Permits, Licenses and Regulatory Approvals The installation and
operation of remediation systems are subject to various licensing, permitting,
approval and reporting requirements imposed by federal, state and local laws.
For example, National Pollutant Discharge Elimination System ("NPDES") permits
and other regulatory program permits are typically required in connection with
the installation of the recovery system, and the terms of these permits often
require ongoing reporting to governmental agencies concerning the operation of
the recovery system. Approvals of corrective action plans by the appropriate
regulatory agency is increasingly being required before a recovery system can be
installed to address contaminated soil or groundwater due to a release from an
underground storage tank.
Various state and local laws require the monitoring wells and wells used
in the recovery process to be installed by licensed well drillers, and
installation of the recovery system may also
6
require compliance with applicable provisions of construction and zoning laws.
Some states have also adopted testing and licensing programs to regulate
professionals who typically conduct subsurface investigations and propose
remedial action work plans.
Fluor Daniel GTI employs individuals who specialize in obtaining the
required federal, state and local environmental and operational permits
necessary for the Company and its customers to install and operate remedation
systems. The Company also provides the documentation of the recovery process
necessary to assist its customers in satisfying applicable reporting
requirements.
CUSTOMERS AND MARKETING
The Company provides services to a broad range of customers, including
petroleum companies, industrial companies, government agencies and international
customers. The Company has also worked with a number of engineering and
consulting firms in both the private and public sectors that manage projects
requiring the Company's services; however, given the new affiliation with Fluor
Daniel, the Company anticipates that it will have fewer opportunities to work as
a subcontractor with other engineering and construction firms.
Industrial customers principally include large companies in the
chemicals, manufacturing, utility, electronics, real estate and transportation
industries. In the public sector, the Company's principal customers are federal
government agencies, including the Department of Defense and the U.S. Army Corps
of Engineers, and other federal and state agencies. FDESI's primary clients
include the Department of Defense and the EPA.
The Company anticipates that the affiliation with Fluor Daniel will
create new opportuities for the Company to market its services. The government
market has recently begun to indicate a preference for awarding substantial work
to single source providers. In addition, customers in the industrial markets are
moving from the assessment phase of their environmental projects into the
remediation phase. In this next phase of the environmental projects, substantial
resources in engineering and construction capabilities will be required. Under
the Marketing Agreement, the Company has access to the program management and
engineering and construction capabilities of Fluor Daniel necessary to compete
for this work.
Within the North American operations, the Company focuses its marketing
and operational staff on three major markets - petroleum, industrial/commercial
and government. Fluor Daniel GTI believes this market-centered focus, along with
its geographic diversification, allows it to provide responsive services to its
customers. Currently, most of the Company's jobs are performed for repeat
customers, and in the case of large petroleum and certain industrial customers,
pursuant to year-to-year, non-exclusive national buying contracts. There are no
minimum purchase requirements associated with these contracts. In fiscal year
1996, no single customer accounted for more than 10% of the Company's gross
revenues; and approximately 36% of gross revenues were derived from petroleum
customers, 41% from industrial/commercial customers and 15% from federal, state
and local government agencies. In addition, approximately 8% of gross revenues
in fiscal year 1996 were derived from international customers.
7
Although Fluor Daniel GTI relies on repeat customers and work generated
through referrals and seminar appearances for a significant portion of its new
business, the Company maintains a dedicated sales force. At the end of fiscal
year 1996, the Company had 32 professionals dedicated to sales, and it has a
National Accounts Program to develop and maintain long-term relationships with
customers.
In the last several years, an increasing amount of work has been done on
a competitive basis in response to customer requests for proposals. This has
required the dedication of significantly greater resources to proposal writing
and general business development. In addition, the Company has instituted an
extensive training and marketing program featuring internal and external
seminars and a comprehensive sales incentive plan. The Company is focusing its
direct sales and marketing efforts towards retaining its position in the retail
petroleum market and achieving continued growth in the upstream petroleum,
industrial and government markets.
PERSONNEL
As of April 27, 1996, the Company had 1,264 employees. Of these 847 are
skilled professionals (geologists, hydrogeologists, engineers, chemists and
environmental scientists) who perform services in the field, 32 in sales and 385
in administrative support, financial, legal and accounting functions.
The soil and groundwater remediation services market is very competitive
and requires highly skilled, experienced technical and management personnel. The
Company's ability to remain competitive is partially dependant on its ability to
attract and retain qualified personnel. None of the Company's employees are
represented by a labor organization. The Company considers its relations with
its employees to be satisfactory.
COMPETITION AND SEASONAL FACTORS
The markets in which the Company competes are very competitive. In each
specific service area of its business the Company competes with many engineering
and consulting firms that are both larger and smaller than the Company, although
no firm currently dominates any significant portion of those services. The
Company competes primarily on the basis of differentiated service quality,
reputation, expertise, geographic location and, to a lessor extent, price.
Although demand for the Company's services is not strictly seasonal, the
Company's third quarter operating results are generally lower in comparison to
other quarters due primarily to more holidays and inclement weather conditions.
POTENTIAL LIABILITY AND INSURANCE
A majority of the Company's net revenue is derived from work involving
hazardous materials, toxic wastes and other pollutants that present significant
risks of liability for environmental damage,
8
personal injury, fines and costs imposed by regulatory agencies. Although
liabilities arising from environmental regulations are more directly applicable
to the Company's customers, these regulations, under certain circumstances,
could impose liability on the Company, and these liabilities can be joint and
several where other parties are involved. Although the Company does not believe
its services generally fall within any of these categories, when the Company's
remedial activities at any site involve the treatment, storage or disposal of
hazardous waste, it must adhere to the permitting and substantive requirements
of these regulations. Fluor Daniel GTI, through its in situ and on-site
capabilities, attempts to minimize for its customers the need to transport
hazardous substances. When transportation is required, the customers themselves
generally arrange for the disposal of hazardous substances. In certain
circumstances, however, the Company may subcontract for the transportation and
disposal of hazardous substances to treatment, storage or disposal facilities
for certain customers.
The non-environmental liabilities associated with the Company's services
also involve a significant degree of risk. In addition, a substantial number of
the Company's contracts with its customers require the Company to indemnify the
customer for claims, damages or losses for personal injury or property damage
relating to the Company's performance of the contracts, unless such injury or
damage is the result of the customer's negligent or willful acts or omissions.
Fluor Daniel GTI maintains health and safety and quality
assurance/quality control programs to reduce the risk of potential damage to
persons and property, as well as other losses. During the fiscal year ended
April 27, 1996, the Company maintained its environmental impairment liability
coverage with its professional liability coverage under one policy. While the
Company believes it operates safely and prudently, there are various exclusions
under its insurance policies and there can be no assurance that all possible
liabilities that may be incurred by the Company are covered by its insurance or
that the dollar amount of such liabilities will not exceed the Company's policy
limits. Further, the cost and limited availability of insurance has resulted in
the Company's use of self-insurance under certain policies. Management believes
an adequate level of insurance coverage has been provided.
PATENTS AND TECHNOLOGY
Fluor Daniel GTI believes that its intellectual property and know-how
are important to its business and have been established by the Company through
its technical expertise, understanding of regulations, skill in the design and
implementation of treatment processes, and investment in technology development.
The Company has filed several patent applications covering remediation processes
and claims copyright and trade secret protection on certain computer software,
publications and technical standard operating procedures. The Company does not
believe that such patent applications and copyrights are a material factor in
its business.
FACTORS AFFECTING FUTURE PERFORMANCE
This Report contains a discussion of a number of factors that may affect
future performance of the Company. In addition to those factors, the following
discussion highlights other risks.
9
Uncertainty of Government Market for Environmental Services. The
Company's affiliation with Fluor Daniel is intended to increase the ability of
the Company to further penetrate the market for environmental services,
particularly services for the federal government. The size of the government
market and the extent of that market's demand for environmental services,
however, is subject to change based on, among other factors, legislative and
regulatory developments and budget and spending decisions of governmental
bodies. There can be no assurance that the demand for environmental services in
the government market will achieve or remain at levels that will permit the
Company to grow by penetration of such market, and any reduction in the size of
the government market could have an adverse effect on the Company's financial
condition and operating results.
Difficulty of Implementing Marketing Strategy. Growth of the Company
through further penetration of the environmental services market, particularly
services for the federal government, is dependent upon the Company's ability to
realize the benefits of the relationship with Fluor Daniel contemplated by the
Marketing Agreement and the integration of FDESI with the Company. Substantial
attention and a high level of coordination from management of both the Company
and Fluor Daniel will be required to realize the anticipated benefits of the
relationship. Further, the attention and resources devoted by Fluor Daniel to
the implementation and realization of the potential benefits of the relationship
are not within the control of the Company, and there can be no assurance that
Fluor Daniel will either devote the necessary attention and resources to
successfully implement the Marketing Agreement or that it will perform its
obligations under the Marketing Agreement. The diversion of the attention of the
Company's management from other aspects of the Company's business, and any
difficulties encountered in the implementation process, could have an adverse
impact on the revenues and operating results of the Company. There can be no
assurance that the anticipated benefits of the relationship will be realized.
Deterrence of Potential Customers. The Company anticipates that its
close affiliation with Fluor Daniel could deter other large engineering and
construction firms that compete with Fluor Daniel from retaining the Company as
a subcontractor or teaming partner for projects requiring environmental
services.
ITEM 2. PROPERTIES
The Company's executive offices are located in a 40,340 square foot
office leased in Norwood, Massachusetts, a suburb of Boston. The term of the
Company's lease for this office space expires July 31, 2002.
The Company owns two buildings - a 15,540 square foot, one-story brick
and concrete building in Wichita, Kansas, which is leased to a third party, and
a 6,050 square foot, two-story building in Kingsgrove, Australia, which houses
consulting and administrative staff. The Company leases space for offices and
warehouses in 58 cities in the United States, Canada, the United Kingdom,
Australia, New Zealand, The Netherlands and Italy. Sizes of leased space range
from 150 square feet to 42,000 square feet. Lease terms for offices typically
range from one to seven years.
10
The Company believes that its existing facilities are adequate to meet
current requirements and that suitable additional or substitute space will be
available as needed to accommodate any expansion of operations and for
additional offices.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a number of claims and lawsuits incidental to
the ordinary conduct of its business. Based upon analyses of the facts
underlying these matters and upon discussions with counsel, management does not
believe that the outcome of any or all of these matters will have a material
adverse effect upon its business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
last quarter of the fiscal year ended April 27, 1996.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are listed below:
<TABLE>
<S> <C> <C>
Walter C. Barber....................55 President and Chief Executive Officer
Wendell W. Lattz....................44 Senior Vice President and General Manager, South
Region
J. Steven Paquette..................42 Vice President and General Manager, North Region
David L. Backus.....................55 Vice President and General Manager, West Region
Rhonnie L. Smith....................54 Vice President and General Manager, Government
Services Division
Robert E. Sliney, Jr................46 Vice President, Treasurer and Chief Financial Officer
Glenn V. Batchelder.................35 Vice President of Sales and Marketing
Anne Nolan..........................48 Vice President of Human Resources
Catherine L. Farrell................51 Vice President, General Counsel and Secretary
</TABLE>
Walter C. Barber has served as President and Chief Executive Officer
since joining the Company in 1989. From 1983 to 1989, Mr. Barber was Vice
President of Environmental Management and Administration of Chemical Waste
Management Inc., a hazardous waste management services
11
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 Director
of the Office of Air Quality Planning and Standards and as Director of the
Standards and Regulations Division.
Wendell W. Lattz joined the Company in 1991 and currently serves as
Senior Vice President and General Manager, South Region. Prior to joining the
Company, from 1985 to 1991, Mr. Lattz was General Manager of Chemical Waste
Management of Indiana, Inc., a hazardous waste treatment and disposal company.
J. Steven Paquette is Vice President and General Manager, East Region
for the Company. Between 1993 and May 1996, he served as President of
Groundwater Technology Government Services, Inc., a subsidiary of the Company.
Prior to joining the Company, from 1990 to 1992, he served as Senior Vice
President and Northeast Division Manager, and from 1987 to 1990, he served as
Vice President of Eastern Operations, 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.
David L. Backus joined the Company in June 1996 as Vice President and
General Manager, West Region. Since June 1994, Mr. Backus has served as Vice
President of Environmental Strategies for Fluor Daniel, Inc., a global
construction, engineering, maintenance and services company. From 1991 to 1994,
he served as Vice President of Operations in charge of environmental operations
in the western United States for Dow Chemical Corporation; and from 1972 to
1991, he served as President of Morrison Knudsen Environmental Services, a unit
of Morrison Knudsen Corporation, an engineering and construction firm. Mr.
Backus continues to be employed by Fluor Daniel while serving the Company.
Rhonnie L. Smith joined the Company on May 10, 1996 as part of the
merger of the Company with Fluor Daniel Environmental Services, Inc., a
subsidiary of Fluor Daniel, Inc.; and he was formally elected Vice President and
General Manager, Government Services Division in June 1996. Prior to joining the
Company, from September 1994 to May 1996, Mr. Smith served as Vice President,
and General Manager, Federal Programs of Environmental Strategies for Fluor
Daniel. From 1989 to 1994, he served as Vice President of Eastern Operations for
Enserch Environmental Corporation, a provider of environmental engineering and
consulting services to agencies and departments of the federal government.
Robert E. Sliney, Jr. has served as Vice President, Treasurer and Chief
Financial Officer since joining the Company in 1992. From 1985 to 1992, Mr.
Sliney served as Controller and then Vice President and Chief Financial Officer
of Signal Technology Company, a component manufacturer in defense electronics.
From 1975 to 1985, Mr. Sliney was employed by the public accounting firm of
Coopers & Lybrand.
Glenn V. Batchelder has served as Vice President of Sales and Marketing
since 1995. Between 1986 and 1995, he served the Company in several capacities,
including Manager of the
12
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.
Anne Nolan joined the Company in October 1994 as Director of Human
Resources and was elected Vice President of Human Resources in 1995. Prior to
joining the Company, from August 1989 to April 1994, Ms. Nolan served as Senior
Vice President and Director of Training and Organizational Development for Fleet
Financial Group, Inc., and from June 1987 to August 1989, she served as Human
Resources Manager for Digital Equipment Corporation.
Catherine L. Farrell has served as Vice President, General Counsel and
Secretary since joining the Company in 1992. From 1988 to 1992, Ms. Farrell
served as General Counsel to the Massachusetts Water Resources Authority, a
state agency providing sewer and water services. From 1984 to 1988, she served
as corporate counsel for the New England Division of Federated Department
Stores, Inc., a holding company for several retail clothing chains. Previously,
Ms. Farrell served as an attorney with the U.S. Environmental Protection Agency
and the Massachusetts Attorney General's office.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock was traded under the symbol "GWTI" on the National
Market System during the 1996 Fiscal Year. The following table sets forth, by
quarter, the high and low bid prices of the Company's common stock as reported
by the National Market System.
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
--------------------------- -------------------------
High Low High Low
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First quarter $13.25 $11.50 $15.00 $11.50
Second quarter 13.63 11.75 13.25 11.50
Third quarter 19.25 12.25 15.25 11.75
Fourth quarter 14.00 12.75 15.50 12.00
</TABLE>
As of July 5, 1996, the Company's common stock is traded under the symbol "FDGT"
on the NASDAQ National Market System and was held by 1,057 holders of record.
The Company has never paid cash dividends on its common stock and currently has
no intention to pay cash dividends in the foreseeable future. The Company
currently intends to retain any future earnings to finance the growth of the
Company.
13
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended
----------
April 27, April 29, April 30, May 1, May 2,
1996 19951 19941 19931 19921
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross revenue $168,939 $178,280 $157,749 $161,120 $179,473
Net revenue 104,477 109,198 98,349 108,145 123,258
Income from continuing operations 2,491 5,438 2,607 6,689 10,428
Income per share from continuing operations .36 .77 .35 .86 1.31
Net income (loss) 1,157 5,624 (205) 5,923 10,310
Earnings (loss) per share of common stock .17 .80 (.03) .76 1.30
Working capital 82,320 76,328 72,793 76,250 75,537
Total assets 118,807 120,745 112,926 121,108 124,205
Stockholders' equity 100,081 96,770 93,650 101,098 100,976
Weighted average shares outstanding 6,990 7,050 7,458 7,779 7,931
Stockholders' equity per share 14.32 13.73 12.56 12.99 12.73
</TABLE>
The Company has never paid cash dividends on its common stock and has no present
intention to pay cash dividends in the foreseeable future.
1 Amounts for fiscal 1993 and 1992 have been restated to reflect the
discontinued manufacturing operations. Amounts for fiscal 1995, 1994, 1993,
and 1992 have been restated to reflect the discontinued laboratory
operations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth for the years indicated the percentage of net
revenues represented by certain items reflected in the Company's consolidated
statements of operations and the percentage change in each item from the prior
year. This table and subsequent discussion should be read in conjunction with
the Financial Highlights and the Consolidated Financial Statements and Notes to
Consolidated Financial Statements contained elsewhere herein.
<TABLE>
<CAPTION>
Year-to-year
Percentage of net revenue Percentage changes
------------------------- ------------------
Years ended Fiscal years
----------- ------------
April 27, April 29, April 30, 1996 1995
1996 1995 1994 vs.1995 vs.1994
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% (4.3)% 11.0%
Cost of net revenue 61.4 57.1 57.3 2.9 10.6
Gross profit 38.6 42.9 42.7 (13.9) 11.7
Selling, general and administrative expenses 36.8 36.3 38.6 (3.0) 4.4
Provision for restructuring and consolidation 0.0 0.0 5.1 0.0 (100.0)
License and other income 0.8 0.6 3.2 24.9 (78.6)
Income before investment and other income 2.6 7.2 2.2 (65.4) *
14
Income from continuing operations
before provision for income taxes 4.0 8.3 4.0 (54.0) 131.9
Income from continuing operations 2.4 5.0 2.6 (54.2) 108.6
Income (loss) from discontinued operations (1.3) 0.2 (2.9) * *
Net income (loss) 1.1 5.2 (.2) (79.4) *
</TABLE>
* Percentages not meaningful.
RESULTS OF OPERATIONS
General
- -------
The Company's services are primarily related to the assessment and remediation
of contaminated soil and groundwater for customers in a variety of industries
and for federal and state governments. The demand for the Company's services is
a result of governmental regulation and enforcement and related to hazardous
contaminants in the environment.
The Company, in the course of providing its services, routinely subcontracts for
certain specialized services. These costs are passed through to customers and,
in accordance with industry practice, are included in gross revenue. Because
subcontractor services can vary significantly from project to project, changes
in gross revenue may not be truly indicative of business activity or trends.
Accordingly, the Company views net revenue, which excludes the cost of services
performed by subcontractors, as a more meaningful measure of business
performance.
Net revenue includes fees billed for services provided directly by the Company
and fees charged by the Company for arranging and managing subcontractor
services. Cost of net revenue includes professional salaries incurred in
rendering services to customers, other direct labor, purchases of equipment and
materials, and certain direct and indirect overhead costs. Selling, general and
administrative expenses include management salaries, facility costs, and
clerical and administrative overhead. License and other income include license
and royalty income earned on the Company's intellectual property and income from
equity investments in the environmental industry.
The Company's results may fluctuate from quarter to quarter. Factors influencing
such variations include: spending decisions by major customers, delays in the
release of committed projects, modifications of delivery orders issued by
contracting government entities, weather, holidays and vacation time which limit
the amount of time Company personnel and subcontracted services have in the
field.
At April 27, 1996, the Company had 58 consulting offices in 31 states and 6
foreign countries. Additionally, the Company's joint venture with a German
company had offices in Germany, Austria and Hungary. Total employees decreased
by 388 to 1,264 at fiscal 1996 year-end from 1,652 at fiscal 1995 year-end,
reflecting the sale of the laboratory operations as well as a reduction in
consulting staff.
On December 11, 1995, the Company reached an agreement with Fluor Daniel, Inc.
for Fluor Daniel to acquire approximately 55% of the Company. Under the terms of
the agreement, Fluor Daniel contributes
15
cash of $35 million along with the ownership of its Fluor Daniel Environmental
Services, Inc. unit to the Company. As part of the transaction, the Company
undergoes a recapitalization and current shareholders receive a cash
distribution of $8.62, or approximately $60 million in aggregate, and 0.5274 of
the "new" share in the Company in exchange for each "old" share of stock. The
Company issued an option to Fluor Daniel in connection with the agreement for
Fluor Daniel to acquire 1,366,000 shares of $17.00 per share, which is
exercisable between December 11, 1996 and December 11, 1998. The agreement with
Fluor Daniel is subject to the approval of shareholders and other customary
conditions. A proxy statement was mailed in the beginning of April for a
shareholders meeting to be held May 10, 1996. Upon approval, the Company will
change its name to "Fluor Daniel GTI, Inc."
In the first quarter of fiscal 1996, the Company determined that a captive
laboratory did not provide a strategic advantage to either the Company or GTEL
Environmental Laboratories, Inc., the Company's analytical laboratory business.
Effective December 31, 1995, the Company sold GTEL to Nytest Environmental Inc.
and has accounted for the business as a discontinued operation. Results of
operations of the GTEL laboratory business have been reflected in the loss from
discontinued operations and have been removed from the continuing operations
portion of the consolidated statements of operations. The net assets of the
discontinued operation have been shown separately on the balance sheet at April
29, 1995.
1996 COMPARED TO 1995
- ---------------------
Gross revenue was $168.9 million for fiscal 1996, a decrease of 5% as compared
to gross revenue of $178.3 million for fiscal 1995. Net revenue was $104.5
million, a decrease of 4% from $109.2 million in the prior fiscal year. The
reduction in revenues reflect the general state of the industry as revenues have
been impacted by reduced government spending and lessened regulatory
enforcement.
Gross profit for fiscal 1996 was $40.3 million, a decrease of 14% compared to
$46.9 million for fiscal 1995. As a percentage of net revenue, gross profit for
fiscal 1996 was 39%, compared to 43% in fiscal 1995. A reduction in total hours
billed in 1996 of 5% was due to a decrease in consulting headcount of 195 people
from the end of fiscal 1995 as well as a total company utilization rate of 55%
in fiscal 1996 as compared to a 56% rate in fiscal 1995. The decrease in gross
profit, year over year, reflects the competitive pressure on market pricing
which continues to push profit margins downward as well as the impact of reduced
revenues on productivity.
Selling, general and administrative expenses were $38.5 million, or 37% of net
revenue, in fiscal 1996, compared to $39.6 million, or 36% of net revenue in the
prior year. The Company executed its restructuring activities according to plan
during the year, and the reserve was depleted as of April 27, 1996. Reduced
operating profits resulted in a decrease of profit sharing cost which was
approximately $214,000 in fiscal 1996 as compared to $837,000 in fiscal 1995.
Operating expenses were also reduced by approximately $214,000 in group health
costs as well as $605,000 in depreciation expense due to assets becoming fully
depreciated. Total net costs of remediation research and development activities
for fiscal 1996 were $914,500 as compared to $975,400 for fiscal 1995.
16
License and other income was $853,000 for fiscal 1996 compared to $682,000 for
the same period of the prior year. An increase of $197,000 in royalty income
from the Company's licensing agreement with Kurita Water Industries Ltd. of
Japan is the primary reason for the change in license income.
Investment income increased to $1,419,000 in fiscal 1996 from $1,138,000 for the
same period in the prior year. The increase in investment income was primarily
due to the increase in cash available for investments.
The Company's effective tax rate for continuing operations was 40% for the
period ended April 27, 1996 as compared to a 39.8% tax rate for the period ended
April 29, 1995.
1995 COMPARED TO 1994
- ---------------------
Gross revenue increased to $178.3 million for fiscal 1995, an increase of 13% as
compared to gross revenue of $157.7 million for fiscal 1994. Net revenue was
$109.2 million, an increase of 11% from $98.3 million in the prior fiscal year.
Management believes the increase in gross revenues for fiscal 1995 as compared
to the prior year reflected improved economic conditions, recent acquisitions,
and the Company's success in increasing work with industrial/ commercial ,
government, and international customers. Rebillable activity in fiscal 1995
increased primarily due to the elimination of the Company's internal drilling
resources, the sale of the Company's internal equipment manufacturing division,
and the closing of one laboratory during fiscal 1994.
Gross profit for fiscal 1995 was $46.9 million, an increase of 12% compared to
$42.0 million for fiscal 1994. As a percentage of net revenue, gross profit for
both fiscal 1995 and fiscal 1994 was 43%. The increase in gross profit reflected
an increase in utilization by the Company's work force, decreases in health and
commercial insurance expenses, and improvements in laboratory performance.
Company utilization increased to 56% in fiscal 1995 from 54% in fiscal 1994.
Selling, general and administrative expenses were $39.6 million, or 36% of net
revenue in fiscal 1995, compared to $38.0 million, or 39% of net revenue in the
prior year. During the second quarter of fiscal 1995, the Company completed the
consolidation of five operating locations. Management believes this action will
contribute to the reduction of operating costs as a percentage of net revenue in
the future.
The Company executed its restructuring activities according to plan during the
year. The remaining reserve was for contractual costs under lease arrangements.
In fiscal 1995, nonbilled travel decreased $300,000 and management will continue
to search for areas of savings. Total net costs of remediation research and
development activities for fiscal 1995 were $975,400 as compared to $1,132,000
for fiscal 1994.
The Company introduced a profit sharing program in May 1994 that distributes 10%
of pre-tax operating income to its employees at the end of the second and fourth
quarters of each fiscal year,
17
which management believes motivates employees to further reduce overall
operating costs as a percentage of net revenue. The profit sharing cost was
approximately $837,000 in fiscal 1995.
On May 26, 1994, the Company acquired all of the outstanding stock of Hall
Southwest Corporation, an environmental consulting firm based in Austin, Texas.
The stock purchase agreement provided for the payment of cash and stock on the
closing date, and provides for contingent cash and stock payments over three
years from the closing date. On February 28, 1995, the Company acquired the
assets of the Hazardous Waste Division of Chester Environmental, Inc., based in
Pittsburgh, Pennsylvania. The asset purchase agreement provides for the payment
of cash on the closing date, and provides for contingent cash payments over two
years from the closing date. The contingent payments of each acquisition have
been included in goodwill when incurred. The acquisitions were not material to
the Company's financial position and the accounts have been included in the
accompanying financial statements since the dates of the acquisitions, May 1994
and March 1995, respectively.
License and other income was $683,000 for fiscal 1995 compared to $3,186,000 for
the same period of the prior year. The decrease primarily reflects the
completion of the transfer of technology and related training associated with
the Company's licensing agreement with Kurita Water Industries Ltd.
during fiscal 1994.
Investment income decreased to $1,138,000 in fiscal 1995 from $1,735,000 for the
same period in the prior year. The decrease in investment income was primarily
due to the decrease in cash available for investments.
The Company's effective tax rate was 39.6% for the period ended April 29, 1995
as compared to a 33.3% tax rate for the period ended April 30, 1994. The
increase in the tax rate was principally due to a decrease in interest income
exempt from federal tax, increases in non-deductible expenses and an increase in
operating income.
Inflation/Foreign Currency Transactions
- ---------------------------------------
The Company's operations have not been, and in the foreseeable future are not
expected to be, materially affected by inflation, changing prices or
fluctuations in the exchange rates for foreign currency transactions.
Liquidity and Capital Resources
- -------------------------------
At April 27, 1996, the Company's primary source of liquidity was $36.7 million
in cash, cash equivalents and marketable securities, an increase of $10.8
million, compared to $25.9 million at April 29, 1995. The Company has no
long-term borrowings. In conjunction with the transactions with Fluor Daniel,
Inc., the Company expects to distribute $26.75 million of its cash to its
shareholders, along with the $33.35 million to be contributed by Fluor Daniel,
in the recapitalization of the Company, providing shareholders with
approximately $60.1 million in cash.
Approximately $10.5 million in net cash was generated from operating activities
during fiscal 1996, principally due to the improvement in accounts receivable
balances during the year. The decrease in
18
accounts receivable balances during fiscal 1996 was primarily attributable to
improvements in the collections process within the Company as well as the
reduction in unbilled revenue related to the government services unit. The
Company generated approximately $8.4 million to fund operating activities for
the same period in fiscal 1995, primarily due to growth in net income.
At April 27, 1996, the Company's working capital increased to $82.3 million from
$76.3 million at April 29, 1995. The increase in working capital can be
attributed mainly to the increase in federal income tax recoverable due to a
federal tax refund of $1.5 million. Total assets decreased to $118.8 million at
April 27, 1996 from $120 million at April 29, 1995. Total assets decreased
mainly due to decreases in property, plant and equipment related to laboratory
closings and the sale of the GTEL laboratory business to Nytest Environmental
Inc.
Cash flows from investing activities increased to $13.7 million in fiscal 1996
as compared to $104,000 in the prior year, mainly due to all investments in debt
and equity securities being sold in April of fiscal 1996 to fund the
recapitalization of the Company. Although the Company had no material
commitments for capital expenditures at April 27, 1996, the Company anticipates
that capital expenditures of approximately $4.0 million will be made in fiscal
1997, principally for the general expansion of operations and replacement of
depreciated assets.
The Company used cash to finance the purchase of 70,000 shares of its common
stock during the year ended April 27, 1996, as compared to 248,000 shares
purchased during the year ended April 29, 1995. Cash flows from financing
activities were provided from the sale of stock under the Company's employee
stock purchase plan and the exercise of previously awarded stock options. In
December 1995, the Company received $1.65 million from Fluor Daniel in exchange
for an option to purchase 1.366 million shares of the Company at $17 per share
(to be adjusted after the recapitalization), which is exercisable between
December 1996 and December 1998.
Funding requirements for operations and future growth are expected to be met
from existing cash and cash generated from operations. The Company believes that
cash provided from these areas will be sufficient to meet its operating
requirements for the near term. The Company also secured a $10 million revolving
line of credit with a bank in the fourth quarter of fiscal 1996, which adds
additional funding capabilities for the future should it be required. Borrowings
under the line of credit are unsecured, and the Company is required to maintain
certain financial ratios and minimum levels of net worth. The Company is also
prohibited from paying cash dividends or repurchasing stock if the financial
requirements would be breached as a result of such actions.
19
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information called for by this item is set forth in the Company's
Consolidated Financial Statements and supplementary data contained in this
report and is incorporated herein by this reference. Specific financial
statements and supplementary data can be found at the pages listed in the
following index.
Index Page
----- ----
Reports of Independent Auditors.............................................F-2
Consolidated Statements of Operations for each of the three
years in the period ended April 27, 1996....................................F-3
Consolidated Balance Sheets at April 27, 1996 and April 29, 1995............F-4
Consolidated Statements of Cash Flows for each of the three
years in the period ended April 27, 1996....................................F-5
Consolidated Statements of Stockholders' Equity for each
of the three years in the period ended April 27, 1996.......................F-6
Notes to Consolidated Financial Statements..................................F-7
Selected Quarterly Financial Data (unaudited)..............................F-16
Schedule VIII - Valuation and Qualifying Accounts...........................S-1
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are not applicable, and, therefore, have been omitted.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item, other than the information appearing in
Part I hereof in "Executive Officers", may be found in the section captioned,
"Election of Directors" in the Company's definitive Proxy Statement in
connection with the 1996 Annual Meeting of Stockholders to be held on September
18, 1996. Such information is incorporated herein by reference.
20
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item may be found in the section captioned,
"Executive Compensation" in the Company's definitive Proxy Statement in
connection with the 1996 Annual Meeting of Stockholders to be held on September
18, 1996. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item may be found in the sections captioned,
"Share Ownership of Principal Holders and Management" and "Election of
Directors" in the definitive Proxy Statement in connection with the 1996 Annual
Meeting of Stockholders to be held on September 18, 1996. Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item may be found in the section captioned,
"Executive Compensation" in the definitive Proxy Statement in connection with
the 1996 Annual Meeting of Stockholders to be held on September 18, 1996. Such
information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
(1) FINANCIAL STATEMENTS:
The list of financial statements required by this item is set forth in
Item 8 "Consolidated Financial Statements and Supplementary Data" and is
incorporated herein by reference.
(2) FINANCIAL STATEMENT SCHEDULE:
<TABLE>
<CAPTION>
Location in
this Report
-----------
<S> <C>
Schedule VIII - Valuation and Qualifying Accounts...............................................S-1
</TABLE>
All other schedules are omitted because they are inapplicable, not
required, or the information is included elsewhere in the Consolidated Financial
Statements or the notes thereto.
21
(3) EXHIBITS:
The following exhibits are filed herewith or incorporated by reference
as indicated below.
<TABLE>
<CAPTION>
Number Description of Exhibit
------ ----------------------
<S> <C>
3.01 Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to
Current Report on Form 8-K for May 10, 1996 with the Securities and
Exchange Commission and incorporated herein by reference).
3.02 By-Laws, as amended (filed as Exhibit 3.2 to Current Report on Form 8-K for
May 10, 1996 with the Securities and Exchange Commission and
incorporated herein by reference).
10.01* Amended and Restated 1986 Employee Stock Purchase Plan, as amended.
10.02* Amended and Restated 1986 Employee Stock Purchase Plan Enrollment
Form.
10.03* Amended and Restated 1987 Stock Plan, as amended.
10.04* Form of Non-qualified Stock Option Agreement under the Company's
Amended and Restated 1987 Stock Plan.
10.05* Amended and Restated 1995 Director Stock Option Plan, as amended.
10.06* Form of Option Agreement under the Company's Amended and Restated
1995 Director Stock Option Plan.
10.07* Retirement Savings Plan of the Company, as amended (filed as Exhibit 10.10
to Annual Report on Form 10-K for the year ended May 2, 1993 with the
Securities and Exchange Commission and incorporated herein by reference).
10.08* Amendment to Retirement Savings Plan of the Company (filed as Exhibit
10.11 to Annual Report on Form 10-K for the year ended April 29, 1995 with
the Securities and Exchange Commission and incorporated herein by
reference).
10.09* Employment Agreement between the Company and Walter C. Barber.
10.10* Form of Employment Agreement between the Company and each of its
Executive Officers.
10.11* Restricted Stock Award Agreement under the Company's Amended and
Restated 1987 Stock Plan between the Company and Walter C. Barber.
22
10.12* Non-Qualified Option Agreement under the Company's Amended and
Restated 1987 Stock Plan between the Company and Walter C. Barber.
10.13* Profit Sharing Plan (filed as Exhibit 10.14 to Annual Report on Form 10-K
for the year ended April 29, 1995 with the Securities and Exchange
Commission and incorporated herein by reference) .
10.14 Lease for 100 River Ridge Drive, Norwood, Massachusetts (filed as Exhibit
10.15 to Annual Report on Form 10-K for the year ended May 2, 1992 with
the Securities and Exchange Commission and incorporated herein by
reference).
10.15 Third Amendment to Lease for 100 River Ridge Drive, Norwood,
Massachusetts (filed as Exhibit 10.13 to Annual Report on Form 10-K for the
year ended April 29, 1995 with the Securities and Exchange Commission and
incorporated herein by reference).
10.16 Fourth Amendment to Lease for 100 River Ridge Drive, Norwood,
Massachusetts.
10.17 Revolving Credit Agreement and Revolving Time Note, each dated April 4,
1996 between the Company and Fleet National Bank.
10.18 Investment Agreement dated as of December 11, 1995 between the Company
and Fluor Daniel, Inc. (with respect to Section 6.3 thereof) (filed as
Exhibit 2.1 to Quarterly Report on Form 10-Q for the period ended
January 27, 1996 with the Securities and Exchange Commission and
incorporated herein by reference).
10.19 Option Agreement dated as of December 11, 1995 between the Company and
Fluor Daniel, Inc. (filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for
the period ended January 27, 1996 with the Securities and Exchange
Commission and incorporated herein by reference).
10.20 First Amendment to Option Agreement dated as of May 30, 1996 between the
Company and Fluor Daniel, Inc.
10.21 Marketing Agreement dated as of May 10, 1996 between the Company and
Fluor Daniel, Inc. (filed as Exhibit 10.2 to Current Report on Form 8-K for
May 10, 1996 with the Securities and Exchange Commission and
incorporated herein by reference).
21.1 Subsidiaries of the Company.
23
23.1 Consent of Coopers & Lybrand LLP.
23.2 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
</TABLE>
- --------
* Indicates a management contract or compensatory plan or arrangement required
to be filed as an exhibit to this form pursuant to Item 14(c) of Form 10-K.
(B) REPORTS ON FORM 8-K. None for the quarter ended April 27, 1996.
(C) EXHIBITS. The Company hereby files as exhibits to this Annual Report on
Form 10-K those exhibits listed in Item 14(a)(3) above.
(D) FINANCIAL STATEMENT SCHEDULES. The response to this portion of Item 14
is submitted as a separate section of this report.
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FLUOR DANIEL GTI, INC.
by /s/ Walter C. Barber
----------------------------------------
WALTER C. BARBER
President and Chief Executive Officer
July 22, 1996
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Walter C. Barber President and
- --------------------------------- Chief Executive Officer
WALTER C. BARBER (Principal Executive Officer) July 22, 1996
Vice President,
/s/ Robert E. Sliney, Jr. Chief Financial Officer, and
- --------------------------------- Treasurer (Principal Financial Officer
ROBERT E. SLINEY, JR. and Principal Accounting Officer) July 22, 1996
/s/ David L. Myers Chairman of the Board July 22, 1996
- ---------------------------------
DAVID L. MYERS
Director July 22, 1996
/s/Ernie Green
- ---------------------------------
ERNIE GREEN
25
Director July 22, 1996
/s/ Allan S. Bufferd
- ---------------------------------
ALLAN S. BUFFERD
Director July 22, 1996
/s/ Robert P. Schechter
- ---------------------------------
ROBERT P. SCHECHTER
/s/ James C. Stein Director July 22, 1996
- ---------------------------------
JAMES C. STEIN
/s/ J. Michal Conaway Director July 22, 1996
- ---------------------------------
J. MICHAL CONAWAY
</TABLE>
26
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(ITEM 14(A)(1) AND (2))
PAGE
----
Reports of Independent Auditors..........................................F-2
Consolidated Statements of Operations for each of the three
years in the period ended April 27, 1996.................................F-3
Consolidated Balance Sheets at April 27, 1996 and April 29, 1995.........F-4
Consolidated Statements of Cash Flows for each of the three
years in the period ended April 27, 1996.................................F-5
Consolidated Statements of Stockholders' Equity for each
of the three years in the period ended April 27, 1996....................F-6
Notes to Consolidated Financial Statements...............................F-7
Selected Quarterly Financial Data (unaudited)...........................F-16
Schedule VIII - Valuation and Qualifying Accounts. . ....................S-1
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are not applicable, and, therefore, have been omitted.
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Fluor Daniel GTI, Inc.
We have audited the accompanying consolidated balance sheet of Fluor Daniel GTI,
Inc. as of April 27, 1996 and the related consolidated statements of operations,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements of Fluor Daniel GTI, Inc. for
the years ended April 29, 1995 and April 30, 1994 were audited by other auditors
whose report, dated May 26, 1995, expressed an unqualified opinion on those
statements and included an explanatory paragraph that described a change in the
Company's method for accounting for income taxes discussed in Note 7 to the
consolidated financial statements. We also reviewed the adjustments described in
Note 11 that were applied to restate the years ended April 29, 1995 and April
30, 1994 financial statements. In our opinion, such adjustments are appropriate
and have been properly applied.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Fluor Daniel GTI,
Inc. at April 27, 1996, and the consolidated results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
Boston, Massachusetts
May 23, 1996
/s/ Coopers & Lybrand LLP
Board of Directors and Stockholders
Fluor Daniel GTI, Inc.
We have audited the accompanying consolidated balance sheet of Fluor Daniel GTI,
Inc., formerly Groundwater Technology, Inc., as of April 29, 1995 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the two years in the period ended April 29, 1995. Our audits
also included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
a reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Fluor Daniel GTI,
Inc. at April 29, 1995, and the consolidated results of its operations and its
cash flows for each of the two years in the period ended April 29, 1995, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 8 to the consolidated financial statements, in 1994 the
Company changed its method of accounting for income taxes.
ERNST & YOUNG LLP
Boston, Massachusetts
May 26, 1995
F-2
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended April 27, 1996, April 29, 1995, and April 30, 1994
(In thousands, except per share amounts)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Gross revenue $168,939 $178,280 $157,749
Cost of subcontracted services 64,462 69,082 59,400
--------- --------- --------
Net revenue 104,477 109,198 98,349
Cost of net revenue 64,133 62,339 56,388
-------- --------- --------
Gross profit 40,344 46,859 41,961
Selling, general and administrative expenses (38,465) (39,646) (37,986)
Provision for restructuring and consolidation (note 10) -- -- (5,000)
License and other income, net (note 6) 853 682 3,186
---------- ------- ----------
Income from continuing operations 2,732 7,895 2,161
Investment and other income, net 1,419 1,138 1,735
---------- ---------- ---------
Income from continuing operations
before provision for income taxes 4,151 9,033 3,896
Provision for income taxes (note 8) 1,660 3,596 1,289
--------- ---------- --------
Net Income from continuing operations 2,491 5,438 2,607
---------- ---------- ---------
Discontinued operations, net of applicable taxes (note 8, 11):
Gain (loss) from operations (1,334) 186 (2,359)
Loss on disposal -- -- (453)
-------------- -------------- -------------
Loss from discontinued operations (1,334) 186 (2,812)
---------- ------------ -----------
Net income (loss) $ 1,157 $ 5,624 $ (205)
========== =========== =========
Earnings (loss) per common share:
Income from continuing operations $ .36 $ .77 $ .35
Income (loss) from discontinued operations (.19) .03 (.38)
------------ ---------- ----------
$ .17 $ .80 $ (.03)
========= ======== ===========
Shares used to compute earnings per common share 6,990 7,050 7,458
========= ========= ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
F-3
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
April 27, 1996 and April 29, 1995
(In thousands, except share amounts)
Assets 1996 1995
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 36,729 $ 10,747
Marketable securities (note 2) -- 15,173
Accounts receivable, less allowance of
$2,063 at April 27, 1996 and $3,100 at April 29, 1995 38,730 46,139
Unbilled revenues (note 3) 16,835 21,172
Deferred income taxes 1,220 1,776
Other current assets 5,255 3,453
----------- ----------
Total current assets 98,769 98,460
Deferred income taxes 2,277 1,843
Property, plant and equipment, net (note 4) 8,634 14,193
Other assets, net of accumulated amortization
of $623 at April 27, 1996 and $339 at April 29, 1995 (note 5) 9,127 6,249
---------- ----------
$118,807 $120,745
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 8,636 $ 10,989
Accrued salaries and benefits 2,710 4,441
Other accrued liabilities 7,006 8,050
Income taxes payable 374 495
------------ -----------
Total current liabilities 18,726 23,975
Commitments and contingencies (note 9) -- --
Stockholders' equity (note 12):
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued -- --
Common stock, $.01 par value, 25,000,000 shares
authorized, 8,098,748 issued at April 27, 1996
and 8,078,748 issued at April 29, 1995 81 80
Capital in excess of par value 55,965 54,315
Retained earnings 62,069 60,980
Treasury stock, at cost, 1,127,264 shares at
April 27, 1996 and 1,145,116 shares at April 29, 1995 (17,108) (17,353)
Cumulative currency translation adjustment (926) (1,252)
--------- -----------
Total stockholders' equity 100,081 96,770
------------ --------
$118,807 $120,745
======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
F-4
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended April 27, 1996, April 29, 1995, and April 30, 1994
(In thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,157 $ 5,624 $ (205)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 5,834 8,029 8,205
Allowance for doubtful accounts and credit memos (197) (200) (336)
Deferred income taxes (122) 1,053 (560)
Loss from discontinued operations -- -- 1,058
Changes in operating assets and liabilities, net of effects of
acquisitions and discontinued operations:
Accounts receivable and unbilled revenues 11,943 (9,651) (15,832)
Other current assets (1,559) (483) 1,093
Other assets (1,350) -- --
Accounts payable (2,353) 4,698 (771)
Accrued salaries and benefits (1,731) 980 300
Other accrued liabilities (1,044) (1,722) (75)
Income taxes payable (121) 60 (188)
------------- ------- --------
Net cash provided by (used in) operating activities 10,457 8,388 (7,311)
Cash flows from investing activities:
Expenditures for property, plant and equipment (4,137) (4,213) (6,998)
Sale of marketable securities 39,078 12,650 22,261
Purchase of marketable securities (23,729) (2,200) (18,810)
Assets acquired, net of cash acquired (1,303) (5,855) --
Proceeds from sale of discontinued operations 1,000 -- 1,627
Investment in joint ventures (319)
Other 3,079 (278) 149
----------- ----------- -------
Net cash provided by (used in) investing activities 13,669 104 (1,771)
Cash flows from financing activities:
Purchase of treasury stock (893) (3,238) (7,694)
Proceeds from issuance of Stock warrants 1,650 -- --
Proceeds from sale of stock under employee
stock plans and payments on employee notes 773 579 704
------------ ---------- ---------
Net cash provided by (used in) financing activities 1,530 (2,659) (6,990)
Effect of exchange rate changes on cash and cash equivalents 326 5 (253)
------------ ---------- ----------
Net increase(decrease) in cash and cash equivalents 25,982 5,838 (16,325)
Cash and cash equivalents at beginning of year 10,747 4,909 21,234
------------ --------- --------
Cash and cash equivalents at end of year $ 36,729 $ 10,747 $ 4,909
========= ========= =======
Supplemental disclosures of cash flow information:
Income taxes paid $ 2,188 $ 2,731 $ 538
Non-Cash Investing Activities:
Reissued $180 of Treasury Stock related to prior acquisition.
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
F-5
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended April 27, 1996, April 29, 1995, and April 30, 1994
(In thousands, except share amounts)
1996 1995 1994
-------------------------- ------------------------------ --------------------------
Shares Amount Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stock
Balance at beginning of year 8,078,748 $ 80 8,061,996 $ 80 8,023,121 $ 80
Shares issued under stock plans 20,000 1 16,752 -- 38,875 --
--------- ----------- --------- ------------ ---------- ----------
Balance at end of year 8,098,748 $ 81 8,078,748 $ 80 8,061,996 $ 80
========= ----------- ========= ------------ ========== ----------
Capital in excess of par value
Balance at beginning of year $ 54,315 $ 54,113 $ 53,409
Shares issued under stock plans -- 202 704
Warrants 1,650 -- --
------------ ------------ ----------
Balance at end of year $ 55,965 $ 54,315 $ 54,113
------------ ------------ ----------
Retained earnings
Balance at beginning of year $ 60,980 $ 55,525 $ 55,730
Net income (loss) 1,157 5,624 (205)
Unrealized gain/(loss) on
marketable securities 117 (117) --
Shares issued under stock plans (185) (52) --
------------ ------------ ----------
Balance at end of year $ 62,069 $ 60,980 $ 55,525
------------ ------------ ----------
Treasury stock
Balance at beginning of year 1,145,116 $ (17,353) 947,500 $ (14,804) 367,500 $ (7,110)
Purchase of common stock 70,000 (893) 248,000 (3,238) 560,000 (7,694)
Shares issued to employees (87,852) 1,138 (50,384) 689 -- --
--------- ----------- --------- ------------ --------- ----------
Balance at end of year 1, 127,264 $ (17,108) 1,145,116 $ (17,353) (947,500) $ (14,804)
=========== ---------- ========= ------------ ========= ----------
Cumulative currency translation
adjustment
Balance at beginning of year $ (1,252) $ (1,264) $ (1,011)
Currency translation adjustment 326 12 (253)
---------- ------------ ----------
Balance at end of year $ (926) $ (1,252) $ (1,264)
---------- ------------ ----------
Total stockholders' equity $ 100,081 $ 96,770 $ 93,650
========== ============ ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS The Company's services are primarily related to the
assessment and remediation of contaminated soil and groundwater for customers in
a variety of industries and for federal and state governments.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of Fluor Daniel GTI, Inc. (known as "Groundwater Technology, Inc." at
April 27, 1996) and its wholly-owned subsidiaries (the Company). All material
intercompany transactions and accounts have been eliminated. Certain prior
period amounts have been reclassified to conform with current period
presentation. The Company utilizes a 52/53 week fiscal year ending on the
Saturday closest to April 30. Fiscal 1996, 1995 and 1994 were 52-week years. The
Company accounts for its investments in unconsolidated affiliated companies
under the equity method.
CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on hand,
demand deposit accounts, and investments in tax-exempt money market funds and
tax-exempt municipal bonds having original maturities of three months or less,
or which contain a put option which can be exercised at par within three months
of the date of acquisition. These investments are highly liquid and are
considered cash equivalents. Cash equivalents are stated at cost which
approximates market.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION Property, plant and equipment are
stated at cost. Repairs and maintenance costs are charged to operations when
incurred, while betterments are capitalized. Depreciation and amortization are
computed on the straight-line method over the estimated useful lives of the
assets. The estimated useful life of each class of asset is as follows:
Land, building and equipment 25 years
Leasehold improvements 1-7 years
Machinery and equipment 3 years
Laboratory equipment 7 years
Furniture, fixtures and computer equipment 3-5 years
Rental equipment 2 years
Upon retirement or disposal, the cost of the asset disposed of and the related
accumulated depreciation are removed from the accounts and any gain or loss is
reflected in income.
INTANGIBLES Intangibles are included in other assets and consist principally of
goodwill and other intangible assets resulting from acquisitions. Amortization
is computed on a straight-line basis over five to twenty years. The carrying
value of intangible assets is periodically reviewed by the Company and
impairments are recognized when the expected future operating cash flows derived
from such intangible assets is less than their carrying value.
F-7
TRANSLATION OF FOREIGN CURRENCIES AND FOREIGN EXCHANGE TRANSACTIONS For non-U.S.
operations, the functional currency is the applicable local currency. The
translation of the functional currencies into U.S. dollars is performed for
balance sheet accounts using current exchange rates in effect at the balance
sheet date and for revenue and expense accounts using average rates of exchange
prevailing during the reporting period. Adjustments resulting from the
translation of foreign currency financial statements are accumulated in a
separate component of stockholders' equity until the entity is sold or
substantially liquidated. Gains or losses resulting from foreign currency
transactions are included in the results of operations.
EARNINGS PER COMMON SHARE The calculation of earnings per common share is based
on the weighted average number of shares outstanding, including all common stock
and stock options outstanding considered to be common stock equivalents. In
periods in which a loss is incurred, common stock equivalents are excluded as
the effect would be anti-dilutive. Primary and fully diluted net income per
share data are the same for each period presented.
REVENUE RECOGNITION Revenue is recognized when services are performed. Certain
government projects are accounted for on a percent complete basis. Equipment
rental revenue is recognized over the rental period.
LICENSE AND OTHER INCOME License and other income includes license and royalty
income earned on the Company's intellectual property and income from equity
investments in the environmental industry.
RISK AND UNCERTAINTIES Credit is extended based on an evaluation of the
customer's financial condition, with terms consistent in the industry and
normally collateral is not required. Losses from credit sales are provided for
in the financial statements and have been consistently within the allowance
provided. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to provide estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and would
impact future results of operations and cash flows.
NEWLY ISSUED ACCOUNTING STANDARDS In October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" ("SFAS 123"). This statement
establishes financial accounting and reporting standards for stock-based
employee compensation plans. While the Company is reviewing the adoption and
impact of SFAS 123, it expects to adopt the disclosure only alternative and
accordingly this standard will have no impact on the Company's results of
operations or its financial position.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121"). This
statement establishes financial accounting and reporting standards for the
recognition of impairment losses for long-lived assets and certain identified
intangibles when the carrying amount of these assets may not be recoverable.
While the Company is reviewing the adoption and impact of FAS 121, it does not
expect the adoption to have an impact on the Company's results of operations or
its financial position.
F-8
NOTE 2
MARKETABLE SECURITIES
The Company accounts for its investments under the provision of Statement of
Financial Accounting Standard (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The Company's investments are
classified as available-for-sale securities and recorded at current market value
with an offsetting adjustment included in stockholders' equity.
Marketable securities consisted principally of municipal obligations which
contain a put option that can be exercised at par with various maturity dates.
The Company considers these investments, which represent funds available for
current operations, an integral component of its cash management activities. The
investments in municipal obligations represent principally "A" rated or better
investment grade securities with no significant concentrations in any one issue.
At the end of April 27, 1996, proceeds from sales of securities available for
sale were approximately $39,195,000. Net gains realized were $117,000.
At April 29, 1995, investments in debt and equity securities were stated at
their fair value of $15,172,737. Gross unrealized holding losses at April 29,
1995 were $116,652. The amortized cost basis of investments aggregated
$15,289,389. In addition, included in cash and cash equivalents are debt
securities with a fair value of approximately $4,794,000.
NOTE 3
UNBILLED REVENUES
Unbilled revenues represent amounts earned under the Company's contracts but not
billed or not yet billable to customers according to contract terms, which
usually consider passage of time, achievement of certain project milestones or
completion of the project. The unbilled revenues at April 27, 1996 are expected
to be billed and collected within one year.
NOTE 4
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
(In thousands) 1996 1995
- --------------------------------------------------------------------------------
Land, buildings and improvements $ 1,911 $ 1,848
Leasehold improvements 1,851 4,217
Machinery and equipment 2,076 1,982
Laboratory equipment 550 9,304
Furniture, fixtures and computer equipment 22,475 24,301
Rental equipment 9,338 7,582
--------- --------
38,201 49,234
Less accumulated depreciation 29,567 35,041
--------- -------
$ 8,634 $14,193
======= =======
Depreciation expense was $5,983,000, $7,864,000 and $7,976,000 in fiscal years
1996, 1995 and 1994, respectively.
F-9
NOTE 5
ACQUISITIONS
During the year ended April 29, 1995, the Company acquired two environmental
consulting and remediation firms, one for cash plus future payments and one for
cash and stock plus future payments. These acquisitions were accounted for as
purchases and were not material, individually or in the aggregate, to the
consolidated financial position or results of operations from the dates of
acquisition (May 1994 and March 1995). The total costs in excess of net tangible
assets acquired aggregated approximately $2,564,000 and are being amortized over
periods of the expected benefit, not to exceed 20 years. The contingent payments
of each acquisition are included in goodwill when incurred. In fiscal 1996, a
total of $952,000 was made in contingent payments related to both acquisitions.
NOTE 6
LICENSE AND OTHER INCOME, NET
A significant portion of license and other income in fiscal 1994 related to a
$3,000,000 payment in the third quarter of fiscal 1993 from Kurita Water
Industries Ltd., of Japan, in connection with an exclusive technology license
agreement. During both fiscal 1994 and 1993, approximately $1,500,000 of the
license revenue was recognized, each year, as the Company's obligations under
the agreement were fulfilled during the initial contract period, which ended in
March 1994.
NOTE 7
LINE OF CREDIT
At April 27, 1996, the Company had a line of credit with a bank providing for
borrowings up to $10,000,000 through April 30, 1999. Borrowings under the line
bear interest at the prime rate (8.25% at April 27, 1996) and are unsecured.
There have been no borrowings under the line of credit. The full amount of the
line of credit was available to the Company at April 27, 1996. The line of
credit is unsecured; however, the Compnay is required to maintain certain
financial ratios and minimum level of net worth, and the Company's ability to
pay dividends to shareholders is restricted.
NOTE 8
INCOME TAXES
Effective May 2, 1993, the Company changed its method of accounting for income
taxes from the deferred method to the liability method as required by Statement
of Financial Accounting Standard (SFAS) No. 109. Under this method, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities, and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse. There was no cumulative effect of adopting SFAS No. 109.
The components of the provision (benefit) for income taxes consisted of the
following:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Continuing Operations $ 1,660 $ 3,596 $1,289
Discontinued Operations:
Loss from operations (665) 94 (1,259)
Loss on disposal -- -- (297)
---------- ---------- --------
$ 995 $ 3,690 $ (267)
======== ======== =======
F-10
The provision for income taxes attributable to continuing operations consisted
of the following:
(In thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Current:
Federal $ 1,127 $ 1,964 $ 1,888
State and foreign 411 850 248
-------- -------- --------
1,538 2,814 2,136
Deferred (prepaid):
Federal and state 122 782 (847)
------- --------- --------
$ 1,660 $ 3,596 $ 1,289
======== ======== =======
The provisions for income taxes were at rates other than the U.S. federal
statutory income tax rate for the following reasons:
1996 1995 1994
---- ---- ----
U.S. federal statutory income tax rate 34.0% 35.0% 35.0%
%
State income taxes,
net of federal income tax benefit 5.5 5.7 4.6
Interest income exempt from federal tax (7.8) (3.3) (41.3)
Losses of international subsidiaries 1.5 0.8 31.4
Meals & entertainment 2.7 0.8 3.4
Goodwill .6 -- --
Other, net 3.5 0.8 --
-------- -------- --------
40.0% 39.8% 33.1%
======= ===== =====
Deferred assets, which are included in other current assets, reflect the net tax
effect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company' s deferred tax assets as of
April 27, 1996 and April 29, 1995, are as follows (in thousands):
Deferred tax assets 1996 1995 1994
---- ---- ----
Depreciation $1,278 $1,843 1,076
Allowance for doubtful accounts 1,174 1,308 1,278
Restructuring and consolidation accruals 25 278 1,051
Other accrued liabilities 1,019 190 901
Alternative Minimum Tax credit carryforward -- -- 358
Net operating loss carryforwards of
international subsidiaries 810 810 664
------ ------ ---
Total deferred tax assets 4,306 4,429 5,336
Valuation allowance attributable to net operating
loss carryforwards of international subsidiaries (810) (810) (664)
------ ------ -----
Net deferred tax assets $3,496 $3,619 $4,672
====== ====== ======
F-11
The foreign component of income (loss) before income taxes was $(188,000),
$(320,000) and $(1,100,000) in fiscal 1996, 1995, and 1994, respectively. The
valuation allowance is attributable to foreign net operating losses which are
likely to expire before being utilized and which do not meet the recognition
criteria under SFAS No. 109.
NOTE 9
COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS The Company leases virtually all of its facilities under
operating leases. Most of these leases have renewal options, and certain of them
require increasing rent payments over the term of the lease and payments for
additional expenses such as taxes and maintenance. One of the leases also
contains a purchase option.
Additionally, the Company leases equipment and vehicles under operating leases.
Future minimum payments under all noncancelable leases are as follows:
(In thousands)
- -----------------------------------------------------
1997 4,617
1998 2,952
1999 2,093
2000 1,360
2001 and thereafter 1,140
-----
$12,162
=======
Rent expense charged to continuing operations was $5,288,000, $5,159,000, and
$6,032,000 in fiscal 1996, 1995, and 1994, respectively.
OTHER COMMITMENTS A substantial number of the Company's contracts with its
customers require the Company to indemnify the customer for claims, damages, or
losses for personal injury or property damage relating to the Company's
performance of the contracts unless such injury or damage is solely the result
of the customer's negligent or willful acts or omissions. A number of the
insurance policies maintained by the Company for this purpose are provided
through arrangements which require the Company to indemnify the insurance
carrier for all losses and expenses under the policies and to support its
indemnity commitments with letters of credit. At April 27, 1996, such letters of
credit aggregated $7,324,000, as compared to $7,339,000 at April 29, 1995. In
addition, provisions for losses expected under these policies of $2,652,000 and
$4,352,000 are included in other accrued liabilities at April 27, 1996 and April
29, 1995, respectively. Management believes an adequate level of insurance
coverage has been provided.
CONTINGENCIES In the ordinary course of conducting its business, the Company
becomes involved in a number of lawsuits and administrative proceedings,
including environmentally related matters. Some of these proceedings may result
in fines, penalties or judgments being assessed against the Company which, from
time to time, may have an impact on earnings for a particular quarter. The
Company does not believe that these matters, individually or in the aggregate,
will have a material adverse effect on its operations, cash flows or financial
condition.
NOTE 10
PROVISION FOR RESTRUCTURING AND CONSOLIDATION
In July 1993, the Company provided a restructuring charge of $5,000,000. This
provision included costs for the consolidation of the Company's two California
laboratories, certain asset writeoffs, severance costs for certain
F-12
employees, lease expense related to excess space, and costs associated with the
reorganization of the Company's industrial division, including the provision for
losses on certain contracts. The reserve was depleted as of April 27, 1996. As
of April 29, 1995, the balance of accrued restructuring and consolidation costs
was immaterial and included in other accrued liabilities.
NOTE 11
DISCONTINUED OPERATIONS
DISCONTINUED MANUFACTURING OPERATIONS In the first quarter of fiscal 1994, the
Company announced its intention to sell its equipment manufacturing division,
ORS Environmental Equipment. The Company recorded a provision for the estimated
losses from discontinued manufacturing operations of $605,000 (net of income tax
benefit of $395,000), and for the estimated loss on the disposal of the
manufacturing operations of $1,058,000 (net of income tax benefit of $692,000).
On March 31, 1994, the Company completed the sale of the net assets of the
manufacturing operations and received a total of $1,627,000 in cash. As a
result, the ultimate loss on disposal was reduced in April 1994 to $453,000 net
of related income tax benefit of $297,000.
Information regarding the results of the ORS Environmental Equipment
discontinued operations in the fiscal year ended prior to the effective date of
the discontinuance is as follows:
Year ended
(In thousands) May 1, 1993
- --------------------------------------------------------------------------------
Revenues $3,567
Loss from discontinued operations, net of related
income taxes of $674 $(1,025)
DISCONTINUED LABORATORY OPERATIONS In the first quarter of fiscal 1996, the
Company announced that it had determined that a captive laboratory did not
provide a strategic advantage to either the Company or GTEL Environmental
Laboratories, the analytical laboratory business. In the first quarter of fiscal
1996, the loss for the discontinued laboratory business was $196,000. In the
second quarter of fiscal 1996, the Company established a plan for disposal of
this business and recorded a provision for the estimated losses, for the
remaining year, from discontinued laboratory operations of $1,138,000 (net of
income tax benefit of $665,000). After retaining certain assets and liabilities,
the Company sold the analytical laboratory operations to Nytest Environmental
Inc. on December 31, 1995 for $1,000,000 in cash and a $1,094,981 secured
convertible note. The note is payable over three years and at an interest rate
of 9.5%. Net assets of $4,902,000 for the year ended April 29, 1995 for the
discontinued laboratory operations consisted mainly of accounts receivable and
property, plant and equipment.
Information regarding the results of the GTEL Environmental Laboratories, Inc.
is as follows:
Year ended Year ended
(In thousands) April 27, 1996 April 29, 1995
- --------------------------------------------------------------------------------
Revenues $9,076 $17,018
Gain (loss) from discontinued operations,
net of related income taxes of $94 ($1,334) $186
F-13
NOTE 12
CAPITAL STOCK AND STOCK PLANS
PREFERRED STOCK Terms of the preferred stock will be established at time of
issuance.
1987 STOCK PLAN Pursuant to the plan, as amended, 1,600,000 shares of common
stock have been reserved for issuance upon the exercise of options or in
connection with awards or authorizations to make direct purchases of stock. The
plan provides for the granting of both nonstatutory stock options and incentive
stock options. The recipients, terms, and option prices are to be determined by
the Compensation Committee of the Board of Directors and, in the case of
incentive stock options, may not be less than the fair market value of the
common stock at the date of grant. The exercise of incentive stock options is
limited by the provisions of the plan, but in no case may the exercise period
extend beyond ten years from the date of grant.
On September 28, 1993, the Board of Directors authorized the Company to offer to
exchange with each holder of stock options granted under the 1987 Stock Plan, a
new stock option equal to two thirds of the number of options remaining
unexercised under the holder's original grants at the time of the exchange. The
option price of each new option granted under this offer was equal to the fair
market value of the Company's common stock on the date of authorization, $12.25
per share. The new options included a new four year vesting period commencing on
the date of grant.
Information related to the 1987 Stock Plan is summarized as follows:
Options Outstanding
Shares Per Share
------ ---------
Balance at May 1, 1993 1,015,992 $15.50- 26.75
Granted 787,538 11.13- 13.25
Canceled/expired (1,066,350) 11.13- 26.75
------------- ------------------
Balance at April 30, 1994 737,180 11.13- 25.00
Granted 279,578 12.75- 13.38
Exercised (8,370) 11.13- 13.25
Canceled/expired (108,642) 11.13- 25.00
------------- ----------------
Balance at April 29, 1995 899,746 11.13- 25.00
Granted 454,800 12.38- 12.38
Exercised (15,506) 11.13- 13.25
Canceled/expired (254,229) 11.13- 13.25
------------- ----------------
Balance at April 27, 1996 1,084,811 $11.13- 13.25
============= ===============
At April 27, 1996, 363,911 shares were available for grant and 274,102 shares
were exercisable under the 1987 stock plan.
1986 EMPLOYEE STOCK PURCHASE PLAN Under the Company's 1986 Employee Stock
Purchase Plan, as amended in fiscal 1996, up to 600,000 shares of common stock
may be sold to eligible employees. Those individuals employed a minimum of 20
hours per week are eligible to participate in the plan. Shares are issuable at
the lesser of 85% of the average market price of the Company's common stock on
the first day or last day of semi-annual payment periods. At April 27, 1996,
289,927 shares were available for issuance under the plan.
F-14
1995 DIRECTOR STOCK OPTION PLAN During fiscal 1995, the Board of Directors
adopted the 1995 Director Stock Option Plan which replaced the 1988 Non-Employee
Director Stock Option Plan. The plan provides for issuance of up to 100,000
shares of common stock. Each non-employee director who satisfies certain other
requirements is granted an initial option to purchase 5,000 shares of the
Company's common stock. Once per year each non-employee Board member will
receive an option to purchase an additional 2,500 shares of common stock. The
purchase price of the option granted is the fair market value of the shares on
the day the option is granted. Each option becomes exercisable with respect to
one third of the shares subject to such option on each anniversary of the date
of the grant. Options expire seven years after the date of grant and are
nonassignable and nontransferable. Options to purchase 15,000 common shares at
the price of $13.38 and 7,500 common shares at the price of $13.00 were
outstanding as of April 27, 1996. At April 27, 1996, 77,500 shares were
available for grant.
NOTE 13
EMPLOYEE BENEFIT PLANS
PROFIT SHARING PLAN AND BONUS PERFORMANCE PLAN During fiscal 1995, the Company
instituted a profit sharing plan for the benefit of all employees meeting
certain minimum service requirements. The plan distributes 10% of pre-tax
operating income to the employees at the end of the second and fourth quarters
of each fiscal year. The plan is designed to encourage employees to reduce
overall operating costs as a percentage of net revenue. The profit sharing
expense was $214,000 in fiscal 1996 and $837,000 in fiscal 1995.
The Company has a bonus performance program covering eligible employees under
which awards are made at the discretion of the Compensation Committee of the
Board of Directors. Bonus expense was approximately $727,000, $1,311,000, and
$475,000 in fiscal 1996, 1995, and 1994, respectively.
RETIREMENT SAVINGS PLAN The Company has a Retirement Savings Plan under Section
401(k) of the Internal Revenue Code for the benefit of all U. S. employees
meeting certain minimum service requirements. Eligible employees may elect to
contribute to the plan up to 12% of their cash compensation, subject to
limitations established by the Internal Revenue Code. The trustees of the plan
select investment opportunities from which participants may choose to
contribute.
The plan requires a matching contribution by the Company of 100% on the first
1%, and 25% on the next 4% of each participant's contribution up to a maximum of
5% of each participant's cash compensation, but not greater than the maximum
allowable under the Internal Revenue Code. The Company may also contribute a
discretionary amount to the plan which may be allocated to employees based upon
employees' contributions to the plan. The Company's matching contributions
currently vest at a rate of 25% per year based upon years of service. The
Company's contributions to this plan were $1,097,000, $986,000, and $778,000 in
fiscal 1996, 1995, and 1994, respectively.
The Company has various defined contribution plans covering substantially all
non-U. S. employees. The Company's contributions to these plans were $242,000,
$231,000, and $216,000 in fiscal 1996, 1995, and 1994, respectively.
NOTE 14
SUBSEQUENT EVENTS
On May 10, 1996 the Company closed a series of transactions (the "Fluor Daniel
Transactions") pursuant to which it became a majority-owned subsidiary of Fluor
Daniel, Inc. ("Fluor Daniel"), a global construction, engineering, maintenance
and services company. The transactions included a recapitalization of the
Company's common stock; the acquisition by the Company of Fluor Daniel
Environmental Services, Inc. ("FDESI"), a wholly-owned subsidiary
F-15
of Fluor Daniel that provides environmental services primarily to agencies of
the Federal government, and the Company entered into a Marketing Agreement with
Fluor Daniel. The Company also changed its name from "Groundwater Technology,
Inc." to "Fluor Daniel GTI, Inc." to emphasize the new relationship.
Under the terms of the Fluor Daniel Transactions, Fluor Daniel acquired 4.4
million shares of the Company's common stock, or approximately 55 percent
interest, in exchange for $33.35 million in cash and ownership of FDESI. The
Company's shareholders received a cash payment of $8.62 in cash and 0.5274 of a
"new" share of common stock of the Company in exhange for each "old" share of
common stock, resulting in approximately 45 percent ownership in the Company.
<TABLE>
<CAPTION>
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
In thousands, except per share amounts
Income
(loss) From Net Earnings Weighted
Gross Net Gross Continuing Income (loss) Average
Revenue Revenue Profit Operations (loss) Per Share Shares
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal 1996
First quarter $ 43,606 $ 27,318 $ 10,059 $ 608 $ 412 $ .06 6,932
Second quarter 43,374 27,462 11,254 1,176 38 .01 6,907
Third quarter 41,901 24,824 9,862 581 581 .08 7,063
Fourth quarter 40,058 24,873 9,169 126 126 .02 7,008
---------- ---------- ---------- ---------- -----------
$168,939 $104,477 $ 40,344 $ 2,491 $ 1,157
======== ======== ======== ========== ==========
Fiscal 1995
First quarter $ 42,520 $ 26,043 $ 11,245 $ 977 $1,139 $ .16 7,179
Second quarter 45,738 27,830 11,902 1,485 1,754 .25 7,074
Third quarter 44,778 26,200 11,236 1,136 1,192 .17 7,017
Fourth quarter 45,244 29,125 12,476 1,840 1,539 .22 6,985
---------- ---------- --------- ---------- ---------
$178,280 $109,198 $46,859 $ 5,438 $ 5,624
======== ======== ======= ========= ========
</TABLE>
The Company's quarterly results may fluctuate from quarter to quarter. Factors
influencing such variations include: spending decisions by major customers;
delays in the release of committed projects; weather; holidays and vacation
time, which limit the amount of time Company professional and technical
personnel have in the field; and the level of subcontracted services.
F-16
FLUOR DANIEL GTI, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
Years ended April 30, 1994, April 29, 1995 and April 27, 1996
(In thousands)
Allowance for
Doubtful Accounts
and Credit Memos
----------------
Balance at 05/01/93 3,581
Deductions (A) (336)
------
Balance at 04/30/94 3,245
Deductions (A) (145)
------
Balance at 04/29/95 $3,100
Deductions (A,B) (1,037)
------
Balance at 04/27/96 2,063
(A) Amounts written off
(B) Reduction in allowance based on lower levels of accounts receivable
S-1
INDEX TO EXHIBITS
(ITEM 14 (A)(3))
<TABLE>
<CAPTION>
Number Description of Exhibit
- ------ ----------------------
<S> <C>
3.01 Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to Current
Report on Form 8-K for May 10, 1996 with the Securities and Exchange
Commission and incorporated herein by reference).
3.02 By-Laws, as amended (filed as Exhibit 3.2 to Current Report on Form 8-K for May
10, 1996 with the Securities and Exchange Commission and incorporated herein by
reference).
10.01 Amended and Restated 1986 Employee Stock Purchase Plan, as amended.
10.02 Amended and Restated 1986 Employee Stock Purchase Plan Enrollment Form.
10.03 Amended and Restated 1987 Stock Plan, as amended.
10.04 Form of Non-qualified Stock Option Agreement under the Company's Amended and
Restated 1987 Stock Plan.
10.05 Amended and Restated 1995 Director Stock Option Plan, as amended.
10.06 Form of Option Agreement under the Company's Amended and Restated 1995
Director Stock Option Plan.
10.07 Retirement Savings Plan of the Company, as amended (filed as Exhibit 10.10 to
Annual Report on Form 10-K for the year ended May 2, 1993 with the Securities and
Exchange Commission and incorporated herein by reference).
10.08 Amendment to Retirement Savings Plan of the Company (filed as Exhibit 10.11 to
Annual Report on Form 10-K for the year ended April 29, 1995 with the Securities
and Exchange Commission and incorporated herein by reference).
10.09 Employment Agreement between the Company and Walter C. Barber.
10.10 Form of Employment Agreement between the Company and each of its Executive
Officers.
10.11 Restricted Stock Award Agreement under the Company's Amended and Restated
1987 Stock Plan between the Company and Walter C. Barber.
10.12 Non-Qualified Option Agreement under the Company's Amended and Restated 1987
Stock Plan between the Company and Walter C. Barber.
10.13 Profit Sharing Plan (filed as Exhibit 10.14 to Annual Report on Form 10-K for the
year ended April 29, 1995 with the Securities and Exchange Commission and
incorporated herein by reference) .
10.14 Lease for 100 River Ridge Drive, Norwood, Massachusetts (filed as Exhibit 10.15 to
Annual Report on Form 10-K for the year ended May 2, 1992 with the Securities and
Exchange Commission and incorporated herein by reference).
10.15 Third Amendment to Lease for 100 River Ridge Drive, Norwood, Massachusetts
(filed as Exhibit 10.13 to Annual Report on Form 10-K for the year ended April 29,
1995 with the Securities and Exchange Commission and incorporated herein by
reference).
10.16 Fourth Amendment to Lease for 100 River Ridge Drive, Norwood, Massachusetts.
10.17 Revolving Credit Agreement and Revolving Time Note, each dated April 4, 1996
between the Company and Fleet National Bank.
10.18 Investment Agreement dated as of December 11, 1995 between the Company and
Fluor Daniel, Inc. (with respect to Section 6.3 thereof) (filed as Exhibit 2.1 to
Quarterly Report on Form 10-Q for the period ended January 27, 1996 with the
Securities and Exchange Commission and incorporated herein by reference).
10.19 Option Agreement dated as of December 11, 1995 between the Company and Fluor
Daniel, Inc. (filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the period
ended January 27, 1996 with the Securities and Exchange Commission and
incorporated herein by reference).
10.20 First Amendment to Option Agreement dated as of May 30, 1996 between the
Company and Fluor Daniel, Inc.
10.21 Marketing Agreement dated as of May 10, 1996 between the Company and Fluor
Daniel, Inc. (filed as Exhibit 10.2 to Current Report on Form 8-K for May 10, 1996
with the Securities and Exchange Commission and incorporated herein by reference).
21.1 Subsidiaries of the Company.
23.1 Consent of Coopers & Lybrand LLP.
23.2 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
</TABLE>
2
EX 10.01
FLUOR DANIEL GTI, INC.
AMENDED AND RESTATED 1986 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1 - PURPOSE.
This Amended and Restated 1986 Employee Stock Purchase Plan (the
"Plan") is intended as an incentive to, and to encourage stock ownership by, all
eligible employees of Fluor Daniel GTI, 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
whose customary employment is more than twenty (20) hours per week and whose
customary employment is for
more than five (5) months in any calendar year, and who have completed six
months of employment with the Company or any of its participating 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 are eligible employees on the first business
day of any Payment Period (as defined in Article 5) shall receive their options
as of such day. Persons who become eligible employees after any date on which
options are granted under this Plan shall be granted options on the first day of
the next succeeding Payment Period 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.
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 600,000 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, commencing on December 1 and June 1 and ending
on May 31 and November 30 of each calendar year, 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 1,300 shares of the Company's
Common Stock, 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. If the
participant's accumulated payroll deductions on the last day of the Payment
Period would enable the participant to purchase more
-2-
than 1,300 shares except for the 1,300 share limitation, the excess of the
amount of the accumulated payroll deductions over the aggregate purchase price
of the 1,300 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 (i) 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 (ii) 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 or (iii) if the Common Stock is not publicly traded, the fair
market value of the Common Stock as determined by the Committee after taking
into consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
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. If the participant's accumulated payroll deductions on the last day of the
Payment Period would otherwise enable the participant to purchase Common Stock
in excess of the Section 423(b)(8) limitation described in this Article, the
excess of the amount of the accumulated payroll deductions over the aggregate
purchase price of the shares actually purchased shall be promptly refunded to
the participant by the Company, without interest.
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
-3-
Option Price subject to the 1,300share limit of the option and the Section
423(b)(8) limitation described in Article 5. 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 by reason of the inability to purchase a fractional
share 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; or in the event an employee
elects to participate in the next-day sale program, delivering to the Company
properly executed irrevocable instructions to a broker designated by the Company
to sell the shares and to deliver to the Company applicable withholding taxes
and to deliver to the employee the sales proceeds available on the settlement
date less commission pursuant to the employee's agreement with the broker.
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.
-4-
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.
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, provided that no such adjustment shall occur upon the
recapitalization of the Company's Common Stock (the "Recapitalization")
contemplated by that certain Investment Agreement among the Company, Fluor
Daniel, Inc., Fluor Daniel Environmental Services, Inc. and GTI Acquisition
Corporation dated as of December 11, 1995 (the "Investment Agreement"); and
-5-
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 and also in connection
with the Recapitalization of the Company's Common Stock pursuant to the
Investment Agreement, 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 advice 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, or a modification as that term is defined
in Section 424 of the Code. If the Committee determines that such adjustments
would constitute a modification, it may refrain from making such adjustments.
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 bona fide leave of absence from work
for up to 90 days, or for so long as the participant's right to re-employment is
guaranteed either by statute or by contract, if longer than 90 days, he/she
shall be deemed to be an eligible employee throughout such 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.
-6-
If an employee's payroll deductions are interrupted by any legal process,
a withdrawal notice will be considered as having been received from the employee
on the day the interruption occurs.
ARTICLE 15 - TERMINATION AND AMENDMENTS TO PLAN.
The Plan may be terminated at any time by the Company's Board of Directors
but such termination shall not affect options then outstanding under the Plan.
The Plan will terminate in any case when all or substantially all of the
unissued shares of stock reserved for the purposes of the Plan have been
purchased, unless the Board of Directors has previously authorized additional
shares of stock for issuance under the Plan subject only to stockholder
approval. If at any time shares of stock reserved for the purpose of the Plan
remain available for purchase but not in sufficient number to satisfy all then
unfilled purchase requirements, the available shares shall be apportioned among
participants in proportion to their options and all payroll deductions not used
to purchase stock will be refunded. Upon any termination of the Plan, all
payroll deductions not used to purchase stock will be refunded, without
interest.
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 if the amendment would (a) except as
provided in Article 12, increase the number of shares of Common Stock to be
offered above, (b) expand the class of employees eligible to receive options
under the Plan or (c) cause Rule 16b-3 under the Securities Exchange Act of 1934
to become inapplicable to 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, as that term is defined in Section 424(f) of the Code, 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.
-7-
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 - WITHHOLDING OF ADDITIONAL INCOME TAXES.
By electing to participate in the Plan, each participant acknowledges that
the Company and its participating subsidiaries are required to withhold taxes
with respect to the amounts deducted from the participant's compensation and
accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant's
accumulated payroll deductions and apply the net amount to the purchase of
Common Stock, unless the participant pays to the Company, prior to the exercise
date, an amount sufficient to satisfy such withholding obligations. Each
participant further acknowledges that the Company and its participating
subsidiaries may be required to withhold taxes in connection with the
disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements.
-8-
ARTICLE 21 - 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 22 - 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.
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EX 10.02
FLUOR DANIEL GTI EMPLOYEE STOCK PURCHASE PLAN ELECTION FORM
Name: ___________________________ Social Security Number: ___________________
Address: ________________________ Employee Number: __________________________
_________________________________ Region: ___________________________________
_________________________________ Office Location: __________________________
Date of Hire: ___________________
(PLEASE COMPLETE SECTIONS A, B, C, AND E FOR ENROLLMENT. COMPLETE SECTIONS D AND
E FOR TERMINATIONS ONLY.)
- --------------------------------------------------------------------------------
SECTION A - PARTICIPATION
I accept participation in the Employee Stock Purchase Plan: ___
I acknowledge that I have received a copy of the Prospectus (which includes a
copy of the Plan) relating thereto and that this document shall constitute my
authorization for participation in the Plan. In accordance with Article 7 of the
Plan, all unused payroll deductions will be refunded without interest to me upon
my termination of participation in the Plan.
- --------------------------------------------------------------------------------
SECTION B - WAGE DEDUCTION
The undersigned employee of Fluor Daniel GTI, Inc. (the "Company") pursuant to
its 1986 Employee Stock Purchase Plan (the "Plan") hereby agrees to purchase
from the Company shares of its Common Stock in each payment period in accordance
with the terms of the Plan, and in accordance with the provisions of Article 7
of the Plan, the undersigned employee authorizes the following wage deduction:
Wage Deduction: _________ % base pay (not less than 2% or more than 10%
in whole % only).
- --------------------------------------------------------------------------------
SECTION C - SHARE ISSUANCE ELECTIONS (Choose one only)
I. Next Day Sale Election: ___
I hereby instruct Smith Barney to immediately sell any and all shares of Fluor
Daniel GTI common stock at the market, upon receipt of said shares delivered or
transferred into my account pursuant to the Fluor Daniel GTI Employee Stock
Purchase Plan.
II. Shares Held Election: ___
I hereby elect to have my Employee Stock Purchase Plan shares deposited or
transferred into my Smith Barney account.
III. Certificate Election: ___
I hereby elect to receive my shares of Fluor Daniel GTI common stock in a
certificate form. I do ___ do ___ not want to register a joint tenant with right
of survivorship on my stock certificate. Name of Joint Tenant: _________________
- --------------------------------------------------------------------------------
SECTION D - TERMINATION
I. I wish to stop my contributions to the Employee Stock Purchase Plan on ______
___________. I request a full refund of all my contributions to the Plan period
to date.
II. I wish to stop my contributions to the Employee Stock Purchase Plan on _____
___________. I request to leave my money in the Plan for the future stock
purchase.
III. My employment with Fluor Daniel GTI will terminate as of ________________ .
I request a refund of all my contributions to the Plan period to date.
- --------------------------------------------------------------------------------
SECTION E - AUTHORIZATION
Signature: ____________________________ Date: _______________
EX 10.03
FLUOR DANIEL GTI, INC.
AMENDED AND RESTATED 1987 STOCK PLAN
1. PURPOSE. This Amended and Restated 1987 Stock Plan (the "Plan") is
intended to provide incentives (a) to the employees of Fluor Daniel GTI, Inc.
(the "Company"), its parent (if any) and any present or future subsidiaries of
the Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" ("ISO" or "ISOs") under
Section 422(b) of the Internal Revenue Code of 1986 (the "Code"); (b) to
employees and consultants of the Company and Related Corporations by providing
them with opportunities to purchase stock in the Company pursuant to options
granted hereunder which do not quality as ISOs ("Non-Qualified Option" or
"Non-Qualified Options"); (c) to employees and consultants of the Company and
Related Corporations by providing them with awards of stock in the Company
("Awards"); and (d) to employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
stock of the Company ("Purchases"). Both ISOs and Non-Qualified Options are
referred to hereafter individually as an "Option" and collectively as "Options."
Options, Awards and Purchases are referred to hereafter collectively as "Stock
Rights." As used herein, the terms "parent" and "subsidiary" mean "parent
corporation" and "subsidiary corporation," respectively as those terms are
defined in Section 424 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be administered by
the Board of Directors of the Company (the "Board") by a committee appointed by
the Board of no less than two members (the "Committee"); provided, that, to the
extent required by Rule 16b-3 or any successor provision ("Rule 16b-3") of the
Securities Exchange Act of 1934, with respect to specific grants of Stock
Rights, the Plan shall be administered by a disinterested administrator or
administrators within the meaning of Rule 16b-3. Subject to ratification of the
grant or authorization of each Stock Right by the Board (if so required by
applicable state law), and subject to the terms of the Plan, the Committee, if
so appointed, shall have the authority to (i) determine the employees of the
Company and Related Corporations (from among the class of employees eligible
under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under paragraph 3 to
receive Non-Qualified Options and Awards and to make Purchases) to whom
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted; (ii) determine the time or times at which Options or Awards may be
granted or Purchases made; (iii) determine the option price of shares subject to
each Option, which price shall not be less than the minimum price specified in
paragraph 6, and the purchase price of shares subject to each Purchase; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such restrictions, if
any;, and (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the
Committee determines to issue a Non-Qualified Option, it shall take whatever
actions it deems necessary, under Section 422 of the Code and the regulations
promulgated thereunder, to ensure that such Option is not treated as an ISO. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option, Award or authorization for
Purchase granted under it.
B. COMMITTEE ACTIONS. The Committee may select one of its members as
its chairman, and shall hold meetings at such time 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 (if consistent with
applicable state law), shall be the valid acts of the Committee. All references
in this Plan to the Committee shall mean the Board if no Committee has been
appointed. From time to time the Board may increase the size of the Committee
and appoint additional members thereof, remove members (with or without cause)
and appoint new members in substitution therefore, fill vacancies however
caused, or remove all members of the Committee and thereafter directly
administer the Plan.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS. No Stock Right shall be
granted to any person who is, at the time of the proposed grant, a member of the
Board, unless such member of the Board is also an employee of the Company and
such grant is awarded consistent with the provisions of the first sentence of
paragraph 2(A) above, if applicable. All grants of Stock Rights to members of
the Board in all other respects shall be made in accordance with the provisions
of this Plan applicable to other eligible persons. Subject to the first sentence
of paragraph 2(A), members of the Board who are either (i) eligible for Stock
Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on
any matters affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan, except that no such member shall act upon the
granting to himself of Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting to him of Stock Rights.
3. ELIGIBLE EMPLOYEE AND OTHERS. ISOs may be granted to any employee of
the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee or consultant of
the Company or any Related Corporation. Directors who are not employees of the
Company or any Related Corporation shall not be eligible to receive ISOs,
Non-Qualified Options, Awards or authorizations authorizations to make
Purchases. The Committee may take into consideration a recipient's individual
circumstances in determining whether to grant an ISO, a Non-Qualified Option or
an authorization to make a Purchase. Granting of any Stock Right to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify him from, participation in any other grant of Stock Rights.
-2-
4. STOCK. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share ("Common Stock"), or shares of Common Stock reacquired by the Company
in any manner. The aggregate number of shares which may be issued pursuant to
the Plan is 1,917,089 (as adjusted on May 20, 1996 pursuant to the Investment
Agreement (as defined in Section 13.A(2) below)), subject to adjustment as
provided in paragraph 13. Any such shares may be issued pursuant to ISOs,
Non-Qualified Options or Awards, or to persons or entities making Purchases, so
long as the number of shares so issued does not exceed such number, as adjusted.
If 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 to such Options
shall again be available for grants of Stock Rights under the Plan.
5. GRANTING OF OPTIONS, AWARDS AND AUTHORIZATIONS TO MAKE PURCHASES. Stock
Rights may be granted under the Plan at any time after January 30, 1987 and
prior to January 30, 1997. The date of grant of a Stock Right under the Plan
will be the date specified by the Committee at the time it grants the Stock
Rights; provided, however, that such date shall not be prior to the date on
which the Committee acts to approve the grant. The Committee shall have the
right, with the consent of the optionee, to convert an ISO granted under the
Plan to a Non-Qualified Option pursuant to paragraph 16.
6. MINIMUM OPTION PRICE; ISO LIMITATIONS.
A. PRICE FOR NON-QUALIFIED OPTIONS. The price per share specified in
the agreement relating to each Non-Qualified Option granted under the Plan shall
in no event be less than the lesser of (i) the book value per share of Common
stock as of the end of the fiscal year of the Company immediately preceding the
date of such grant, or (ii) 50 percent of the fair market value per share of
Common Stock on the date of such grant.
B. PRICE FOR ISOS. The price per share specified in the agreement
relating to each ISO granted under the Plan shall not be less than fair market
value per share of Common Stock on the date of such grant. In the case of an ISO
to be granted to an employee owning stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the agreement relating to
such ISO shall not be less than 110 percent of the fair market value of Common
Stock on the date of grant.
C. $100,000 ANNUAL LIMITATION ON ISO'S. In no event shall the aggregate
fair market value (determined at the time the option is granted) of Common Stock
for which ISOs granted to any employee are exercisable for the first time by
such employee during any calendar year (under all stock option plans of the
Company and any Related Corporation) exceed $100,000.
D. DETERMINATION OF FAIR MARKET VALUE. If, at any time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be
-3-
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the NASDAQ National
Market List, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National Market
List; or (iv) if the Common Stock is not publicly traded at the time an Option
is granted under the Plan, "fair market value" shall be deemed to be the fair
value of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an employee owning stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or any
Related Corporation. Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The option shall either be fully exercisable on the date of
grant or shall become exercisable thereafter in such installments as the
Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once and installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided that
the Committee shall not accelerate the exercise date of any installment of any
Option granted to any employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to paragraph 16) if such acceleration would
violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in paragraph 6(c).
-4-
9. TERMINATION OF EMPLOYMENT. If an ISO optionee ceases to be employed by
the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate on the date he ceases to be
employed, but in no event later than on their specified expiration dates, except
to the extent that such ISOs (or unexercised installment thereof) have been
converted into Non-Qualified Options pursuant to paragraph 16. Leave of absence
with the written approval of the Committee shall not be considered an
interruption of employment under the Plan, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the employee after the approved period of absence. Employment
shall also be considered as continuing uninterrupted during any other bona fide
leave of absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any Related Corporation. Nothing in the Plan shall be deemed to give any
grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY; DISSOLUTION.
A. DEATH. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he could
have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the earlier of the ISO's
specified expiration date or 180 days from the date of the optionee's death.
B. DISABILITY. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have the
right to exercise any ISO held by him on the date of termination of employment,
to the extent of the number of shares with respect to which he could have
exercised it on that date, at any time prior to the earlier of the ISO's
specified expiration date or 180 days from the date of the termination of the
optionee's employment. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the Code
or successor statute.
C. DISSOLUTION. If the grantee of a Stock Right is a corporation,
partnership, trust or other entity that is dissolved, liquidated, becomes
insolvent or enters into a merger or acquisition with respect to which such
grantee is not the surviving entity, any Stock Right granted to such entity
under this Plan shall immediately terminate as of the date of such event, and
the only rights hereunder shall be those as to which the Stock Right was
properly exercised before such dissolution or other event.
-5-
11. ASSIGNABILITY. No Stock Right shall be assignable or transferable by
the grantee except by will or by the laws of descent and distribution, and
during the lifetime of the grantee each Stock Right shall be exercisable only by
him.
12. TERMS AND CONDITIONS OF OPTIONS. Stock Rights shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. ADJUSTMENTS. Upon the happening of any of the following described
events, an optionee's rights with respect to Options granted to him hereunder,
and the recipient's rights with respect to Common Stock acquired pursuant to a
Purchase or Award hereunder, shall be adjusted as hereinafter provided, unless
otherwise specifically provided in the written agreement between the recipient
and the Company relating to such Stock Right.
A. COMBINATIONS, MERGERS, CONSOLIDATIONS, REORGANIZATIONS OR
RECAPITALIZATIONS. (1) In the event shares of Common Stock 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 Common Stock shall be
exchanged for other securities of the Company or of another corporation, each
grantee of a Stock Right 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 which such grantee 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.
(2) Notwithstanding the provisions of paragraph 13(A)(1)
above, in the event of a recapitalization (the "Recapitalization") pursuant to
the terms of that certain Investment Agreement by and among Fluor Daniel, Inc.,
Fluor Daniel Environmental Services, Inc., the Company and GTI Acquisition
Corporation dated as of December 11, 1995 (the "Investment Agreement"), each
holder of any Option outstanding hereunder on the date of the closing (the
"Closing Date') of the transactions under the Investment Agreement (an "Existing
Option") shall be entitled to receive a substitute option (an "Adjusted
Option"). The Adjusted Option shall be for the purchase of a number of shares of
common stock, par value $.001, of the Company (the "New Common Stock")
authorized in connection with the Recapitalization equal to the number of
-6-
shares of Common Stock, $.01 par value (the "Common Stock") purchasable under
the Existing Option multiplied by the Adjustment Fraction (defined below),
rounded up to the nearest whole share. The per share exercise price of the
Adjusted Option shall be equal to the per share exercise price of the Existing
Option divided by the Adjustment Fraction. For purposes hereof, the term
"Adjustment Fraction" means a fraction, the numerator of which equals the
Current Market Price of a share of Common Stock and the denominator of which
equals the Current Market Price of a share of New Common Stock. The "Current
Market Price" of a share of Common Stock or of New Common Stock means the
average per share closing price for the five trading days immediately preceding
the Closing Date, in the case of the Common Stock, and the five days immediately
following the Closing Date, in the case of New Common Stock, as reported on the
Nasdaq National Market System. Notwithstanding anything to the contrary herein,
this paragraph 13(A)(2) shall constitute the exclusive provision respecting the
treatment of any Existing Option in connection with the transactions
contemplated under the Investment Agreement (subject to paragraph 15 hereof).
B. STOCK DIVIDENDS. 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 at the time shall be subject to a Stock Right hereunder, each
grantee upon exercising a Stock Right shall be entitled to receive (for the
purchase price paid upon such exercise) the shares as to which he is exercising
his Stock Right and, in addition thereof (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 he
would have received if he had been the holder of the shares as to which he is
exercising his Stock Right at all times between the date of grant of such Stock
Right and the date of its exercise.
C. RESTRICTIONS ON NEW SECURITIES. If any person or entity owning
restricted Common Stock obtained by exercise of a Stock Right made hereunder
receives new or additional of different shares or securities ("New Securities")
in connection with a corporate transaction described in subparagraph A above or
a stock dividend described in subparagraph B above as a result of owning such
restricted Common Stock, such New Securities shall be subject to all of the
conditions and restrictions applicable to the restricted Common Stock with
respect to which such New Securities were issued.
D. MODIFICATIONS OF ISOS. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A or B with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments.
E. CASH DIVIDENDS. No adjustments shall be made for dividends paid
in cash or in property other than securities of the Company.
-7-
F. FRACTIONAL SHARES. No fractional shares shall be issued under the
Plan. Any fractional shares which, but for this subparagraph F, would have been
issued to a grantee pursuant to a Stock Right shall be deemed to have been
issued and immediately sold to the Company for their fair market value, and the
grantee shall receive from the Company cash in lieu of such fractional shares.
G. ADJUSTMENTS. Upon the happening of any of the foregoing events
described in subparagraphs A(1) or B above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect such events. Upon the happening of the events
described in subparagraph A(2) above, the class and aggregate number of shares
set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall be
adjusted as follows: (i) the class of shares set forth in paragraph 4 hereof
shall be deemed to be the class of New Common Stock and (ii) the number of
shares set forth in paragraph 4 hereof shall be adjusted upward or downward by
the number of shares equal to the net change between all of the Existing Options
and all of the Adjusted Options. The Board shall determine, subject to paragraph
2, the specific adjustments to be made under this Article 13, and its
determination shall be conclusive.
14. MEANS OF EXERCISING STOCK RIGHTS. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Stock Right
being exercised and specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase price share for
either (a) in United States dollars in cash or by check, or (b) at the
discretion of the Committee, through delivery of shares of Common Stock having
fair market value equal as of the date of the exercise to the cash exercise
price of the Option, or (c) at the discretion of the Committee, by delivery of
the grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, or (d) at the discretion of the Committee, by
any combination of (a), (b) and (c) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means of the
methods set forth in clauses (b), (c), or (d) of the preceding sentence, such
discretion shall be exercised in writing at the time of the grant of the ISO in
question. The holder of a Stock Right shall not have the rights of a shareholder
with respect to the shares covered by his Stock Right until the date of issuance
of a stock certificate to him for such shares. Except as expressly provided
above in paragraph 13 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights for which
the record date is before the date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
January 20, 1987, subject to approval of the Plan by the holders of a majority
of the outstanding shares of Common Stock of the Company at the next Meeting of
Stockholders. Such approval was obtained at the Special Meeting in Lieu of
Annual Meeting of Stockholders on September 28, 1987. The Plan shall expire on
January 30, 1997 (except as to Options outstanding on that date). The Board may
terminate or amend the Plan in any respect at any time, except that, without the
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approval of the stockholders obtained within 12 months before or after the Board
adopts resolutions authorizing any of the following actions: (a) the total
number of shares that may be issued under the Plan may not be increased (except
by adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of ISOs may not be modified; (c) the provisions
of paragraph 6(B) regarding the exercise price at which shares may be offered
pursuant to ISOs may not be modified (except by adjustment pursuant to paragraph
13); and (d) the expiration date of the Plan may not be extended. Except as
provided in this paragraph 15, in no event may action of the Board or
stockholders alter or impair the rights of a grantee, without his consent, under
any Stock Right previously granted to him.
16. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS. The
Committee, at the written request of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercises of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.
18. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the 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.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includable in such person's gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock for
less than its fair market value, or (iv) the vesting of restricted
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Common Stock acquired by exercising a Stock Right on the grantee's payment of
such additional withholding taxes.
20. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each employee who
receives ISOs shall agree to notify the Company in writing immediately after the
employee makes a Disqualifying Disposition of any Common Stock received pursuant
to the exercise of an ISO. A Disqualifying Disposition is any disposition
(including any sale) of such stock before the later of (a) two years after the
employee was granted the ISO under which he acquired such stock, or (b) one year
after the employee acquired such stock by exercising such ISO. If the employee
has died before such stock is sold, these holding period requirements do not
apply and no Disqualifying Disposition can occur thereafter.
21. GOVERNING LAW; CONSTRUCTIONS. The validity and construction of the Plan
and the instruments evidencing Options, Awards and Purchases shall be governed
by the laws of the State of Delaware. In construing this Plan, the singular
shall include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
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EX 10.04
FLUOR DANIEL GTI, INC.
Non-Qualified Stock Option Agreement
Under Amended and Restated 1987 Stock Plan
Fluor Daniel GTI, Inc., a Delaware corporation (the "Company"), hereby
grants this ____ day of __________, 1996 to _______________________ (the
"Optionee"), an option to purchase a maximum of _________ shares of its Common
Stock, $.001 par value, at the price of $______ per share, on the following
terms and conditions:
1. Grant Under Amended and Restated 1987 Stock Plan. This option is
granted pursuant to and is governed by the Company's Amended and Restated 1987
Stock Plan (the "Plan") and, unless the context otherwise requires, terms used
herein shall have the same meaning as in the Plan. Determinations made in
connection with this option pursuant to the Plan shall be governed by the Plan
as it exists on this date.
2. Grant as Non-Qualified Option; Other Options. This option is
intended to be a non- qualified option (rather than an incentive stock option),
and the Company intends to take appropriate action, if necessary, to achieve
this result. This option is in addition to any other option heretofore or
hereafter granted to the Optionee by the Company.
3. Extent of Option if Business Relationship Continues. If the Optionee
has continued to serve the Company or any Related Corporation in the capacity of
an employee, officer or director (such service is described herein as
maintaining or being involved in a "Business Relationship" with the Company) on
the following dates, the Optionee may, subject to Article 2, exercise this
option for the number of shares set opposite the applicable date.
Date Option Becomes Number of Shares Expiration
Exercisable Available for Exercise Date
- ------------------ ---------------------- ----------
The foregoing rights are cumulative and, while the Optionee continues
to maintain a Business Relationship with the Company, may be exercised up to and
including the scheduled expiration date. All of the foregoing rights are subject
to Articles 4 and 5, as appropriate, if the Optionee ceases to maintain a
Business Relationship with the Company, or dies or becomes disabled while
involved in a Business Relationship with the Company.
4. Termination of Business Relationship. If the Optionee ceases to
maintain a Business Relationship with the Company, other than by reason of death
or disability as defined in Article 5, no further installments of this option
shall become exercisable and this option shall terminate on the date the
Optionee's Business Relationship ceases, but in no event later than the
scheduled expiration date.
1
5. Death; Disability; Dissolution. If the Optionee dies while involved
in a Business Relationship with the Company, this option may be exercised, to
the extent of the number of shares with respect to which the Optionee could have
exercised it on the date of his death, by his estate, personal representative or
beneficiary to whom this option has been assigned pursuant to Article 9, at any
time within 180 days after the date of death, but not later than the scheduled
expiration date. If the Optionee's Business Relationship with the Company is
terminated by reason of his disability (as defined in the Plan), this option may
be exercised, to the extent of the number of shares with respect to which the
Optionee could have exercised it on the date the Business Relationship was
terminated, at any time within 180 days after the date of such termination, but
not later than the scheduled expiration date. At the expiration of such 180 day
period or the scheduled expiration date, whichever is the earlier, this option
shall terminate and the only rights hereunder shall be those as to which the
option was properly exercised before such termination.
6. Partial Exercise. Exercise of this option up to the extent above
stated may be made in part at any time and from time to time within the above
limits, except that this option may not be exercised for a fraction of a share
unless such exercise is with respect to the final installment of stock subject
to this option and a fractional share (or cash in lieu thereof) must be issued
to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.
7. Payment of Price. The option price is payable in United States
dollars and may be paid: (a) in cash or by check, or any combination of the
foregoing, equal in amount to the option price; or (b) at the discretion of the
Committee, in cash, by check or by delivery of shares of the Company's Common
Stock having a fair market value (as determined by the Committee) equal as of
the date of exercise to the option price, or by any combination of the foregoing
equal in amount to the option price.
8. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at its principal executive office. Such notice shall state the election to
exercise this option and the number of shares with respect to which it is being
exercised and shall be signed by the person or persons so exercising this
option. Such notice shall be accompanied by payment of the full purchase price
of such shares, and the Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the notice shall be
received. The certificate or certificates for the shares as to which this option
shall have been so exercised shall be registered in the name of the person or
persons so exercising this option (or, if this option shall be exercised by the
Optionee and if the Optionee shall so request in the notice exercising this
option, shall be registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising this option. In
the event this option shall be exercised, pursuant to Article 5 hereof, by any
person or persons other than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise this
option. Before certificates for the shares purchased, pursuant to this option
are delivered, the Optionee shall pay the purchase price for the shares
purchased and provide for the withholding or reimbursement for taxes pursuant to
Article 14. All shares that shall be purchased upon the exercise of this option
as provided herein shall be fully paid and non-assessable.
2
9. Option Not Transferable. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
10. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
11. No Obligation to Continue Business Relationship. The Company and
any Related Corporation are not by the Plan or this option obligated to continue
to maintain a Business Relationship with the Optionee.
12. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
13. Capital Changes and Business Successions. It is the purpose of this
option to encourage the Optionee to work for the best interests of the Company
and its stockholders. Since, for example, that might require the issuance of a
stock dividend or a merger with another corporation, the purpose of this option
would not be served if such a stock dividend, merger or similar occurrence would
cause the Optionee's rights hereunder to be diluted or terminated and thus be
contrary to the Optionee's interest. The Plan contains extensive provisions
designed to preserve options at full value in a number of contingencies.
Therefore, provisions in the Plan for adjustment with respect to stock subject
to options and the related provisions with respect to successors to the business
of the Company are hereby made applicable hereunder and are incorporated herein
by reference. In particular, without affecting the generality of the foregoing,
it is understood that for the purposes of Articles 3 and 5 hereof, maintaining
or being involved in a Business Relationship with the Company includes
maintaining or being involved in a Business Relationship with a Related
Corporation as defined in the Plan.
14. Withholding Taxes. The Optionee hereby agrees that the Company may
withhold from the Optionee's wages or other remuneration the appropriate amount
of federal, state and local taxes attributable to Optionee's exercise of any
installment of this option. At the Company's discretion, the amount required to
be withheld may be withheld in cash from such wages or other remuneration, or in
kind from the Common Stock otherwise deliverable to Optionee on exercise of this
option. The Optionee further agrees that, if the Company does not withhold an
amount from the Optionee's wages or other remuneration sufficient to satisfy the
Company's withholding obligation, the Optionee will reimburse the Company on
demand, in cash, for the amount under-withheld. Certificates for shares
purchased pursuant to this option will not be delivered unless the Optionee
provides for federal, state and local taxes as set forth in this Article.
15. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware.
3
IN WITNESS WHEREOF the Company and the Optionee have caused this
Agreement to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of a copy of this
Agreement.
FLUOR DANIEL GTI, INC.
By:
------------------------------ ----------------------------
Optionee
4
EX 10.05
FLUOR DANIEL GTI, INC.
AMENDED AND RESTATED 1995 DIRECTOR STOCK OPTION PLAN
1. PURPOSE. This Non-Qualified Stock Option Plan, to be known as the Amended and
Restated 1995 Director Stock Option Plan (the "Plan"), is intended to promote
the interests of Fluor Daniel GTI, Inc. (the "Company") by facilitating its
ability to obtain and retain the services of qualified persons who are not
employees of the Company or any affiliate thereof 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. For purposes of this Plan, the
term "affiliate" shall mean any person who controls, is controlled by or is
under common control with the Company.
2. AVAILABLE SHARES. The total number of shares of Common Stock of the Company
for which options may be granted shall not exceed 108,114 shares (as adjusted on
May 20, 1996 pursuant to the Investment Agreement (as defined in Section 10.B(2)
below)), 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
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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 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:
Percentage of Option
Shares for which Option
will be Exercisable Date of Vesting
------------------- ---------------
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
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
-2-
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, Fluor Daniel GTI, 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
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so ceases to be a member of the Board of Directors, but in no event later than
the expiration date of the option; and all options shall terminate after such
thirty (30) days have expired.
(B) In the event that an optionee ceases to be a member of the Board of
Directors of the Company by reason of his or her disability or death, any option
granted to such optionee shall be immediately and automatically accelerated and
become fully vested and any unexercised option shall be exercisable by the
optionee (or by the optionee's personal representative, heir or legatee, in the
event of death) until the scheduled expiration date of the option.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION AND OTHER MATTERS. Upon the
occurrence of any of the following events, an optionee's rights with respect to
options granted to him or her hereunder shall be automatically adjusted as
hereinafter provided:
(A) STOCK DIVIDENDS AND STOCK SPLITS. If the shares of the Company's Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock deliverable
upon the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(B) RECAPITALIZATION ADJUSTMENTS. (1) 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.
(2) Notwithstanding the provisions of Section 10(B)(1) above, in the event
of a recapitalization (the "Recapitalization") pursuant to the terms of that
certain Investment Agreement by and among Fluor Daniel, Inc., Fluor Daniel
Environmental Services, Inc., the Company and GTI Acquisition Corporation dated
as of December 11, 1996 (the "Investment Agreement"), each holder of any option
outstanding hereunder on the date of the closing (the "Closing Date") of the
transactions under the Investment Agreement (an "Existing Option") shall be
entitled to receive a substitute option (an "Adjusted Option"). The Adjusted
Option shall be for the purchase of a number of shares of common stock, par
value $.001, of the Company (the "New Common Stock") authorized in connection
with the Recapitalization equal to the number of shares of Common Stock, $.01
par value (the "Common Stock") purchasable under the Existing Option multiplied
by the Adjustment Fraction (defined below), rounded up to the nearest whole
share. The per share exercise price of the Adjusted Option shall be equal to the
per share exercise price of the Existing Option divided by the Adjustment
Fraction. For purposes hereof, the term
-4-
"Adjustment Fraction" means a fraction, the numerator of which equals the
Current Market Price of a share of Common Stock and the denominator of which
equals the Current Market Price of a share of New Common Stock. The "Current
Market Price" of a share of Common Stock or of New Common Stock means the
average per share closing price for the five trading days immediately preceding
the Closing Date, in the case of the Common Stock, and the five days immediately
following the Closing Date, in the case of New Common Stock, as reported on the
Nasdaq National Market System. Notwithstanding anything to the contrary herein,
this Section 10(B)(2) shall constitute the exclusive provision respecting the
treatment of the any Existing Option in connection with the transactions
contemplated under the Investment Agreement, subject to Section 15 hereof.
(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
described in subsections (A) and (B)(1) above, 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. Upon the happening of the
events described in subsection B(2) above, the class and aggregate number of
shares set forth in Section 2 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall be
adjusted as follows: (i) the class of shares shall be deemed to be the class of
New Common Stock and (ii) the number of shares shall be adjusted upward or
downward by the number of shares equal to the net change between all of the
Existing Options and all of the Adjusted Options. 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
-5-
effectively registered under applicable Federal and state securities laws as now
in force or hereafter amended; or (b) counsel for the Company shall have given
an opinion that such shares are exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and until the Company has
complied with all applicable laws and regulations, including without limitation
all regulations required by any stock exchange upon which the Company's
outstanding Common Stock is then listed.
12. LEGEND ON CERTIFICATES. The certificates representing shares issued pursuant
to the exercise of an option granted under this Plan shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933 or any state securities laws.
13. REPRESENTATION OF OPTIONEE. If requested by the Company, the optionee shall
deliver to the Company written representations and warranties upon exercise of
the option that are necessary to show compliance with Federal and state
securities laws, including representations and warranties to the effect that a
purchase of shares under the option is made for investment and not with a view
to their distribution (as that term is used in the Securities Act of 1933).
14. OPTION AGREEMENT. Each option granted under this Plan shall be evidenced by
an option agreement, in such form as may be approved by the Board of Directors,
which option agreement shall be duly executed and delivered on behalf of the
Company and by the optionee to whom such option is granted. The option agreement
shall contain such terms, provisions, and conditions not inconsistent with this
Plan as may be determined by the Board of Directors.
15. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(A) This Plan was adopted by the Board of Directors on March 21, 1995, and
shall become effective upon approval by the holders of a majority of shares of
Common Stock present in person or by proxy and entitled to vote on such matter
at the Annual Meeting of Stockholders to be held on September 19, 1995, or any
adjournment thereof. In the event that such approval has not been received on or
before March 20, 1996, then in such event the Plan and any options granted
hereunder shall be null and void; and upon the occurrence of such approval, the
Plan and all options granted hereunder shall become effective as of the date of
the Directors' approval of the Plan or the date the option was automatically
granted pursuant to the Plan, whichever is applicable.
(B) No options may be granted under this Plan subsequent to March 20, 2005,
but the term of options theretofore granted may extend beyond that date. This
Plan shall terminate when all options granted or to be granted hereunder are no
longer outstanding.
(C) The Board of Directors may at any time terminate this Plan or make such
modification or amendment thereof as it deems advisable; provided that the
provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor
or amended provision thereof) under the Exchange Act (including without
limitation provisions as to eligibility, amount, price and timing of awards) may
not be amended more than once every six months except as necessary to comport
with changes in
-6-
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.
-7-
EX 10.06
FLUOR DANIEL GTI, INC.
Non-Qualified Stock Option Agreement
Under Amended and Restated 1995 Director Stock Option Plan
Fluor Daniel GTI, Inc., a Delaware corporation (the "Company"), hereby
grants this ____ day of ____________, 1996 to ______________ (the "Optionee"),
an option to purchase a maximum of ________ shares of its Common Stock, $.001
par value, at the price of $________ per share (being 100% of the fair market
value of such shares), on the following terms and conditions:
1. Grant Under Amended and Restated 1995 Director Stock Option Plan.
This option is granted pursuant to and is governed by the Company's Amended and
Restated 1995 Director Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used herein shall have the same meaning as in the
Plan. Determinations made in connection with this option pursuant to the Plan
shall be governed by the Plan as it exists on the date of this Agreement.
2. Grant as Non-Qualified Option; Other Options. This option is
intended to be a non- qualified option (rather than an incentive stock option),
and the Company intends to take appropriate action, if necessary, to achieve
this result. This option is in addition to any other option heretofore or
hereafter granted to the Optionee by the Company.
3. Vesting of Option. If the Optionee has continued to serve the
Company in the capacity of a non-employee director on the following dates, the
Optionee may exercise this option for the number of shares set opposite the
applicable date.
Date Option Number of Shares
Becomes Exercisable Available for Exercise
------------------- ----------------------
The foregoing rights are cumulative and, while the Optionee continues
to be a non-employee director of the Company, may be exercised up to and
including the scheduled expiration date. All of the foregoing rights are subject
to Sections 4(b) and (c), if the Optionee ceases to be a non-employee director
of the Company.
4. Period of Option. (a) Expiration. This option shall expire on the
date which is seven years after the date of grant.
(b) Termination of Business Relationship. If the Optionee ceases to be
a non-employee director of the Company, other than by reason of death or
disability as defined in Section 4(c), no further installments of this option
shall become vested, and any portion of this option which is vested may be
exercised by the Optionee within a period of thirty (30) days following such
date the Optionee ceases to be a non-employee director of the Company, but in no
event later than the scheduled expiration date.
(c) Death; Disability. In the event the Optionee ceases to be a member
of the Board of Directors of the Company by reason of his disability or death,
this option shall be immediately and automatically accelerated and become fully
vested and any unexercised portion of this option shall be exercisable by
Optionee (or by the Optionee's personal representative, heir or legatee, in the
event of death) during the period ending on the expiration date of this option.
5. Exercise of Option. (a) Method of Exercise of Option. This option
may be exercised by giving written notice to the Company at its principal
executive office. Such notice shall state the number of shares being purchased,
accompanied by payment in full for such shares. The price for the shares shall
be payable in cash or by delivery to the Company of shares of the Common Stock
of the Company already owned by the Optionee and held at least six months prior
to the date of payment, or by any combination of such methods of payment.
(b) Delivery of Stock Certificates Upon Exercise. Upon each exercise of
this option and the satisfaction of all conditions set forth in this Agreement,
the transfer agent of the Company shall, on behalf of the Company, mail or
deliver to the Optionee, as promptly as practicable after payment of the option
price in full, a certificate or certificates representing the shares then being
purchased. Such certificates shall carry appropriate legends as may be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Securities Act of 1933, as amended, or any state securities
laws.
(c) Restrictions on Issuance of Shares. (i) Notwithstanding the
foregoing, the Company shall not be obligated to deliver any such certificate or
certificates upon exercise of this option until one of the following conditions
shall be satisfied: (1) the shares with respect to which this option has been
exercised are at the time of the issue of such shares effectively registered
under applicable Federal and state securities laws as now in force or hereafter
amended; or (2) counsel for the Company shall have given an opinion that such
shares are exempt from registration under applicable Federal and state
securities laws; and until the Company has complied with all applicable laws and
regulations, including without limitation all regulations required by any stock
exchange upon which the Company's outstanding Common Stock is then listed.
(ii) The Company shall use its best efforts to bring about
compliance with the above conditions within a reasonable time, except that the
Company shall be under no obligation to cause a registration statement or a
post-effective amendment to any registration statement to be prepared at its
expense solely for the purpose of covering the issue of shares in respect of
which this option may be exercised.
-2-
(d) Agreement to Purchase for Investment. By acceptance of this option,
the Optionee agrees that a purchase of shares under this option will be made for
investment purpose only and will not be made with a view to their distribution,
as that term is used in the Securities Act of 1933, as amended, unless, in the
opinion of counsel to the Company, such distribution is in compliance with or
exempt from the registration and prospectus requirements of such Act. The
Optionee agrees to deliver to the Company written warranties and representations
to such effect upon exercise of this option and agrees that the certificate for
shares so purchased may be inscribed with a legend to ensure compliance with
such Act and with any other applicable securities laws.
(e) Partial Exercise. Exercise of this option up to the extent vested
at a given time may be made in part at any time and from time to time, except
that this option may not be exercised for a fraction of a share.
6. Option Not Transferable. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
7. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
8. Capital Changes and Business Successions. It is the purpose of this
option to encourage the Optionee to work for the best interests of the Company
and its stockholders. Since, for example, that might require the issuance of a
stock dividend or a merger with another corporation, the purpose of this option
would not be served if such a stock dividend, merger or similar occurrence would
cause the Optionee's rights hereunder to be diluted or terminated and thus be
contrary to the Optionee's interest. The Plan contains extensive provisions
designed to preserve options at full value in a number of contingencies.
Therefore, provisions in the Plan for adjustment with respect to stock subject
to options and the related provisions with respect to successors to the business
of the Company are hereby made applicable hereunder and are incorporated herein
by reference.
9. Entire Agreement, Modification. This Agreement contains the full and
complete understanding and agreement of the parties hereto as to the subject
matter hereof and may not be modified or amended, nor may any provisions hereof
be waived, except by a further written agreement duly signed by each of the
parties.
10. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns; provided, however, that
with respect to the Optionee, this Agreement is deemed to be
-3-
personal in nature and may not be assigned or transferred.
11. Interpretation and Construction. Any interpretation or construction
of this Agreement by the Company's Board of Directors, or a duly authorized
committee appointed by the Board, shall be final and conclusive. The section
headings are for convenience of reference only and shall not be deemed germane
to the interpretation or construction of this Agreement.
12. Survival. All representations, warranties and acknowledgements made
in this Agreement shall survive the delivery of the certificate or certificates
representing the shares purchased pursuant to the exercise of this option.
13. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF the Company and the Optionee have caused this
Agreement to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of a copy of this
Agreement.
FLUOR DANIEL GTI, INC.
By:
------------------------------- ----------------------------
Optionee
-4-
EX 10.09
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December 22, 1995 (the
"Agreement") by and between Groundwater Technology, Inc., a Delaware
corporation (the "Company") and Walter C. Barber (the "Employee").
WHEREAS, Employee is considered to be a key employee of the Company;
and
WHEREAS, the Company and Employee desire to enter into an
agreement in connection with certain terms of Employee_s employment with
the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Effective Date. (a) This Agreement shall become effective on the date of
consummation ("Effective Date") of a Change of Control Transaction
affecting the Company. For purposes hereof, the term "Change of Control
Transaction" means a single transaction or group of related transactions
involving Fluor Daniel, Inc. resulting in the stockholders of the Company
immediately prior to such transaction holding less than 50% of the
outstanding stock of the Company immediately after such transaction.
(b) This Agreement will terminate with no further force
or effect if the Effective Date does not occur on or before June 30, 1996.
2. Employment. During the period from the date hereof until the third
anniversary of the Effective Date (the "Employment Period"), subject to the
terms and conditions hereof, the Company shall employ Employee as the Chief
Executive Officer of the Company and as a member of the Board of Directors,
and Employee shall assume such responsibilities and perform such tasks for
the Company as are incident to or reasonably requested in connection with
such positions.
3. Salary. During the Employment Period, the Company shall pay to the
Employee a salary no lower than the salary payable to the Employee on the
date hereof together with such additional compensation and benefits as the
Company may determine in accordance with its general benefit policies.
4. Termination. The Employment Period may terminate prior to its scheduled
expiration set forth in Section 2 as set forth in this Section 4.
4.1 Termination By Company for Cause. The Company may terminate
the Employment Period and discharge the Employee for cause upon giving
written notice to the Employee of such termination. For purposes hereof,
the term "for cause" shall include
one or more of the following: (i) misappropriation by the Employee of any
money or material amount of other assets or property (tangible or
intangible) of the Company; (ii) the Employee's continuing, repeated and
willful failure or refusal to perform reasonable assignments given to
Employee which are commensurate with such Employee's position or
responsibilities; (iii) conviction of Employee of a felony; (iv) material
breach by Employee of any material Company policy or the terms of any
written agreement between Employee and the Company.
4.2 Termination By Company Without Cause. Subject to the terms of
this Section 4, the Company may terminate Employee_s employment hereunder
at any time during the Employment Term without cause upon thirty (30) days
prior written notice to Employee. Prior to any such termination, the
Company shall use reasonable efforts to identify for Employee employment
opportunities with companies that are affiliated with the Company.
4.3 Termination By Employee Upon Certain Events. This Agreement
may be terminated by Employee upon ten (10) days_ prior written notice to
the Company in the event of a material breach by the Company of any of the
terms of this Agreement which is not corrected by the Company within ten
(10) days following written notification by Employee to the Company of such
reduction or breach.
4.4 Effect of Termination.
4.4.1 In the event of the termination of Employee_s
employment by the Company under Section 4.1 above, the Company shall pay to
Employee salary and benefits owed to Employee to the date of such
termination (the "Termination Date").
4.4.2 In the event of the termination of Employee_s
employment by the Company under Section 4.2 hereof or by the Employee under
Section 4.3 hereof, the Company hereby agrees to pay to Employee the
greater of (i) for the duration of the Employment Period, salary at a rate
equal to Employee's salary at the time of termination and continued payment
of the Company's portion of all health benefits (so long as the Employee
elects to continue such benefits and continues to pay the Employee's share
of the cost of such benefits) or (ii) all amounts payable to Employee under
the Company's severance plan as in effect on the date of such termination.
4.4.3 In addition to the payments due under Section 4.4.2
and notwithstanding anything to the contrary in any stock option or other
agreement between the Company and the Employee, in the case of a
termination described by Section 4.4.2, on the Termination Date (a) all
stock options then held by the Employee shall automatically accelerate and
become fully exerciseable in accordance with their terms and (b) all
restrictions imposed by the Company on stock granted by the Company to the
Employee, including without limitation any repurchase or vesting
provisions, shall lapse and be of no further force and effect.
-2-
5. Sale of Stock. At any time during the Employment Period, (a) if Employee
intends to sell Company stock owned by Employee, Employee agrees to offer
Fluor Daniel, Inc. (if it owns at least 50% of the Company's outstanding
stock) the right to purchase Employee's stock, and (b) if Employee intends
to exercise options and immediately sell stock obtained from such exercise,
Employee agrees to offer Fluor Daniel, Inc., (if it owns at least 50% of
the Company's outstanding stock) an opportunity to pay Employee the option
spread in cash in exchange for Employee's agreement not to exercise such
options.
6. Confidentiality. The Employee will not at any time, whether during or
after the Employment Period, reveal to any person or entity the existence
or the terms of this Agreement except as may be required by applicable law
or in connection with the enforcement of this Agreement by the Employee.
7. General. This Agreement may be amended or modified, and any terms or
provisions hereof may be waived only in writing by the parties hereto or,
in the case of a waiver, by the party entitled to the benefit of such
provision. This Agreement may not be assigned by either Company or
Employee, except that the Company may assign its rights and obligations
hereunder to any affiliated corporation by means of assignment, merger, or
otherwise; and no such assignment shall impair the rights or obligations of
the parties as provided herein. All notices and other communications
required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given when delivered by hand, sent by overnight
courier service or dispatched by certified mail to the parties at the
addresses set forth on the signature pages hereto or to such other address
as such party may have designated to the other in a prior written notice.
If any provision of this Agreement or the application thereof to any person
or circumstance should for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be governed by the laws of the Commonwealth
of Massachusetts applicable to contracts made and to be performed entirely
within such Commonwealth.
[SIGNATURE PAGE FOLLOWS IMMEDIATELY.]
-3-
IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement on the date first written above.
EMPLOYEE:
/s/ Walter C. Barber
---------------------------------------
Walter C. Barber
Address:
37 Devonshire Drive
--------------------------------
Oak Brook, IL 60521
--------------------------------
--------------------------------
GROUNDWATER TECHNOLOGY, INC.
100 River Ridge Drive
Norwood, MA 02062
By: /s/ Catherine L. Farrell
-----------------------------------
Name: Catherine L. Farrell
Title: V.P. and General Counsel
-4-
EX 10.10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of December __, 1995 (the
"Agreement") by and between Groundwater Technology, Inc., a Delaware
corporation (the "Company") and ______________________ (the "Employee").
WHEREAS, Employee is considered to be a key employee of the
Company; and
WHEREAS, the Company and Employee desire to enter into an
agreement in connection with certain terms of Employee_s employment with
the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Effective Date. (a) This Agreement shall become effective on the date of
consummation ("Effective Date") of a Change of Control Transaction
affecting the Company. For purposes hereof, the term "Change of Control
Transaction" means a single transaction or group of related transactions
involving Fluor Daniel, Inc. resulting in the stockholders of the Company
immediately prior to such transaction holding less than 50% of the
outstanding stock of the Company immediately after such transaction.
(b) This Agreement will terminate with no further force
or effect if the Effective Date does not occur on or before June 30, 1996.
2. Employment. During the period from the date hereof until the second
anniversary of the Effective Date (the "Employment Period"), subject to the
terms and conditions hereof, the Company shall employ Employee in a
position having comparable responsibilities to the position held by the
Employee on the date hereof. Employee acknowledges, however, that
organizational changes which may result in reassignments or new reporting
relationships are to be expected and will not by themselves result in a
breach of this Agreement. Employee shall assume such responsibilities and
perform such tasks for the Company as are incident to or reasonably
requested in connection with Employee_s position.
3. Salary. During the Employment Period, the Company shall pay to the
Employee a salary no lower than the salary payable to the Employee on the
date hereof together with such additional compensation and benefits as the
Company may determine in accordance with its general benefit policies.
4. Relocation; Travel. During the Employment Period, the Company shall not
require the Employee to relocate as a condition of continued employment
with the
Company, except where a customer reasonably requires relocation in
connection with long-term work for such customer. The Company may, however,
request that the Employee relocate, and the Employee agrees to consider in
good faith any such request. In addition, the Employee hereby acknowledges
that employment with the Company may entail substantial travel and that any
such travel requirements shall not be considered to be a breach of this
Agreement.
5. Termination. The Employment Period may terminate prior to its scheduled
expiration set forth in Section 2 as set forth in this Section 5.
5.1 Termination By Company for Cause. The Company may terminate
the Employment Period and discharge the Employee for cause upon giving
written notice to the Employee of such termination. For purposes hereof,
the term "for cause" shall include one or more of the following: (i)
misappropriation by the Employee of any money or material amount of other
assets or property (tangible or intangible) of the Company; (ii) the
Employee_s continuing, repeated and willful failure or refusal to perform
reasonable assignments given to Employee which are commensurate with such
Employee_s position or responsibilities; (iii) conviction of Employee of a
felony; (iv) material breach by Employee of any material Company policy or
the terms of any written agreement between Employee and the Company.
5.2 Termination By Company Without Cause. Subject to the terms of
this Section 5, the Company may terminate Employee_s employment hereunder
at any time during the Employment Term without cause upon thirty (30) days
prior written notice to Employee. Prior to any such termination, the
Company shall use reasonable efforts to identify for Employee employment
opportunities with companies that are affiliated with the Company.
5.3 Termination By Employee Upon Certain Events. This Agreement
may be terminated by Employee upon ten (10) days' prior written notice to
the Company in the event of a material breach by the Company of any of the
terms of this Agreement which is not corrected by the Company within ten
(10) days following written notification by Employee to the Company of such
reduction or breach.
5.4 Effect of Termination.
5.4.1 In the event of the termination of Employee's
employment by the Company under Section 5.1 above, the Company shall pay to
Employee salary and benefits owed to Employee to the date of such
termination (the "Termination Date").
5.4.2 In the event of the termination of Employee's
employment by the Company under Section 5.2 hereof or by the Employee under
Section 5.3 hereof, the Company hereby agrees to pay to Employee the
greater of (i) for the duration of the Employment Period, salary at a rate
equal to Employee's salary at the time of termination
-2-
and continued payment of the Compan's portion of all health benefits (so
long as the Employee elects to continue such benefits and continues to pay
the Employeess share of the cost of such benefits) or (ii) all amounts
payable to Employee under the Company's severance plan as in effect on the
date of such termination.
5.4.3 In addition to the payments due under Section 5.4.2
and notwithstanding anything to the contrary in any stock option or other
agreement between the Company and the Employee, in the case of a
termination described by Section 5.4.2, on the Termination Date (a) all
stock options then held by the Employee shall automatically accelerate and
become fully exerciseable in accordance with their terms and (b) all
restrictions imposed by the Company on stock granted by the Company to the
Employee, including without limitation any repurchase or vesting
provisions, shall lapse and be of no further force and effect.
6. Sale of Stock. At any time during the Employment Period, (a) if Employee
intends to sell Company stock owned by Employee, Employee agrees to offer
Fluor Daniel, Inc. (if it owns at least 50% of the Company's outstanding
stock) the right to purchase Employee's stock, and (b) if Employee intends
to exercise options and immediately sell stock obtained from such exercise,
Employee agrees to offer Fluor Daniel, Inc., (if it owns at least 50% of
the Company's outstanding stock) an opportunity to pay Employee the option
spread in cash in exchange for Employee's agreement not to exercise such
options.
7. Confidentiality. The Employee will not at any time, whether during or
after the Employment Period, reveal to any person or entity the existence
or the terms of this Agreement except as may be required by applicable law
or in connection with the enforcement of this Agreement by the Employee.
8. General. This Agreement may be amended or modified, and any terms or
provisions hereof may be waived only in writing by the parties hereto or,
in the case of a waiver, by the party entitled to the benefit of such
provision. This Agreement may not be assigned by either Company or
Employee, except that the Company may assign its rights and obligations
hereunder to any affiliated corporation by means of assignment, merger, or
otherwise; and no such assignment shall impair the rights or obligations of
the parties as provided herein. All notices and other communications
required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given when delivered by hand, sent by overnight
courier service or dispatched by certified mail to the parties at the
addresses set forth on the signature pages hereto or to such other address
as such party may have designated to the other in a prior written notice.
If any provision of this Agreement or the application thereof to any person
or circumstance should for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be governed by the laws of the Commonwealth
of Massachusetts applicable to contracts made and to be performed entirely
within such Commonwealth.
-3-
IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement on the date first written above.
EMPLOYEE:
--------------------------
[NAME]
Address:
--------------------------
--------------------------
--------------------------
GROUNDWATER TECHNOLOGY, INC.
100 River Ridge Drive
Norwood, MA 02062
By:_______________________
Name:
Title:
-4-
EX 10.11
GROUNDWATER TECHNOLOGY, INC.
AMENDED AND RESTATED 1987 STOCK PLAN
RESTRICTED STOCK AWARD AGREEMENT
Groundwater Technology, Inc., a Delaware corporation (the "Company"),
hereby grants on this 19th day of September 1995 to Walter C. Barber (the
"Employee") 20,000 shares of its Common Stock, $.01 par value (the "Restricted
Shares"), subject to the restrictions described in Sections 3 and 4 below and in
accordance with the following terms and conditions:
1. Grant under Amended and Restated 1987 Stock Plan. This restricted
stock award is granted pursuant to and is governed by the Company's Amended and
Restated 1987 Stock Plan (the "Plan") and, unless the context otherwise
requires, terms used herein shall have the same meaning as in the Plan. Except
as hereinafter provided, this Agreement shall be governed by and be subject to
all the terms and conditions set forth in the Plan as in effect on the date
hereof, a copy of which has been delivered to the Employee and which is hereby
incorporated by reference.
2. Other Awards. This award is in addition to any other stock or option
awards heretofore or hereafter granted to the Employee by the Company.
3. Restrictions on Restricted Shares. The Restricted Shares are subject
to restrictions against disposition and forfeiture to the Company upon the
Employee's termination of employment prior to the lapsing of the restrictions
for any reason other than death or permanent and total disability. The
Restricted Shares shall not be sold, transferred, or otherwise disposed of and
shall not be pledged or otherwise hypothecated until the restrictions on the
shares have lapsed.
4. Lapsing of Restrictions and Sale of Shares. (a) The restrictions on
the Restricted Shares shall lapse with respect to 100% of the Restricted Shares
granted hereunder on the seventh anniversary of the date of this Agreement.
(b) Notwithstanding the foregoing and the provisions of Section 6 to
the contrary, but subject to all other provisions hereof, in the event the
Company's operating income on continuing operations before provision for tax as
a percentage of net revenue ("OIPNR") (on the basis of a rolling four (4) fiscal
quarters) is the following, the restrictions on the Restricted Shares shall
lapse with respect to the number of shares indicated below:
Operating Income as Restricted Shares on
Percentage of Net Revenue Which Restrictions Lapse
------------------------- ------------------------
6.0% 10,000
6.5% 15,000
7.0% 20,000
The restrictions shall lapse on the total number of shares indicated and shall
not be cumulative, such that, in the event OIPNR is 6.5% (but not 7%) for any
required period, restrictions shall remain on 5,000 Restricted Shares.
(c) Notwithstanding the foregoing, in the event of a change of control
of the Company, the restrictions on 100% of the Restricted Shares that had not
otherwise lapsed, shall lapse immediately upon such event. For purposes of this
Agreement, "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.
5. Rights as a Stockholder. Subject to the restriction against
disposition and potential forfeiture of the Restricted Shares described in
Section 3 above, the Employee shall have all the rights of a stockholder with
respect to the Restricted Shares, including voting and dividend rights.
6. Termination of Employment. (a) Death of Employee. If the Employee
dies, all restrictions on the Restricted Shares, if any, shall immediately
lapse.
(b) Disability of Employee. If the employee terminates employment with
the Company by reason of his or her permanent and total disability, all
restrictions on the Restricted Shares, if any, shall immediately lapse.
(c) Committee Determinations. Any question as to whether there has been
a "termination of employment" or a "permanent and total disability" shall be
determined by the Compensation Committee of the Board of Directors (the
"Committee"), and the Committee's determination shall be final.
7. Forfeiture Mechanics. If the Employee's employment terminates for
any reason other than those specified in Section 6 above, those Restricted
Shares for which the restrictions have not lapsed shall be forfeited to the
Company. Certificates for such Restricted Shares shall be delivered to Human
Resources within thirty (30) days following termination of employment. If
certificates for such Restricted Shares are not delivered to Human Resources
within thirty (30) days following the termination of employment, such Restricted
Shares shall remain subject to the restriction against disposition and
obligation of forfeiture and such restriction and obligation shall not lapse as
otherwise provided in this agreement and in the Plan.
8. Restricted Stock Award Not Transferable. This restricted stock award
is not transferable or assignable except by will or by the laws of descent and
distribution.
9. No Obligation to Continue Employment. The Company and its
subsidiaries are not by the Plan or this restricted stock award obligated to
continue to employ the Employee.
10. Capital Changes. In the event that the number of shares of Common
Stock of the
-2-
Company shall be changed by reason of split-ups, combinations of shares,
recapitalizations, reclassifications, or stock dividends, the number of
Restricted Shares may be appropriately adjusted by the Board of Directors. The
Board of Directors may also make adjustments to take into account material
changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions, repurchases or similar corporate
transactions, or any other event, if the Board of Directors determines that
adjustments are appropriate to avoid distortion in the operation of the Plan,
but no such adjustment, unless required by law, may adversely affect the
Employee's rights under this award.
11. Withholding Taxes. The grant of Restricted Shares hereunder is
subject to the Employee's agreement that, and the Employee hereby agrees that,
in the event the Employee does not pay to the Company (by delivering funds to
Human Resources on the day the restrictions on the shares lapse) sufficient
funds to cover the appropriate amount of federal (including FICA), state and
local taxes attributable to the income recognized by the Employee upon the
lapsing of the restrictions on the Employee's Restricted Shares, the Company may
sell a number of Restricted Shares on the Employee's behalf to cover such tax
withholding obligation. Any amount resulting from sale of Restricted Shares
which is in excess of the Company's withholding obligation will be returned to
the Employee in cash or by check.
12. Governing Law. This agreement shall be governed by and interpreted
in accordance with the laws of the Commonwealth of Massachusetts.
13. Binding Effect. This agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns; provided, however, that
with respect to the Employee, this Agreement is deemed to be personal in nature
and may not be assigned or transferred, except in accordance with the provisions
of Section 8 hereof.
14. Interpretation and Construction. Any interpretation or construction
of this agreement by the Committee, or any successor committee thereto, shall be
final and conclusive. The section headings are for convenience of reference only
and shall not be deemed germane to the interpretation or construction of this
agreement.
-3-
IN WITNESS WHEREOF, the Company and the Employee have caused this
Agreement to be executed, and the Employee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.
GROUNDWATER TECHNOLOGY, INC.
/s/ Catherine L. Farrell
- ----------------------------
/s/ Walter C. Barber
- ----------------------------
Employee
-4-
EX 10.12
GROUNDWATER TECHNOLOGY, INC.
Non-Qualified Stock Option Agreement
Under 1987 Stock Plan
Groundwater Technology, Inc., a Delaware corporation (the "Company"),
hereby grants this 27th day of June, 1995 to Walter C. Barber (the "Optionee"),
an option to purchase a maximum of 40,000 shares of its Common Stock, $.01 par
value, at the price of $12.375 per share, on the following terms and conditions:
1. Grant Under 1987 Stock Plan. This option is granted pursuant to and
is governed by the Company's 1987 Stock Plan (the "Plan") and, unless the
context otherwise requires, terms used herein shall have the same meaning as in
the Plan. Determinations made in connection with this option pursuant to the
Plan shall be governed by the Plan as it exists on this date.
2. Grant as Non-Qualified Option; Other Options. This option is
intended to be a non- qualified option (rather than an incentive stock option),
and the Company intends to take appropriate action, if necessary, to achieve
this result. This option is in addition to any other option heretofore or
hereafter granted to the Optionee by the Company.
3. Extent of Option if Business Relationship Continues. If the Optionee
has continued to serve the Company or any Related Corporation in the capacity of
an employee, officer or director (such service is described herein as
maintaining or being involved in a "Business Relationship" with the Company) on
the following dates, the Optionee may, subject to Article 2, exercise this
option for the number of shares set opposite the applicable date.
Date Option Becomes Number of Shares Expiration
Exercisable Available for Exercise Date
- ------------------- ---------------------- ---------
06/27/98 13,333 06/27/02
06/27/99 13,333 06/27/02
06/27/00 13,334 06/27/02
Notwithstanding the foregoing and the provisions of Articles 4 and 5 to the
contrary, but subject to all other provisions hereof, (a) in the event the price
of the Company's Common Stock as reported on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") is at least
$14.00 for a period of twenty (20) consecutive trading days at any time during
the term of this Agreement, then the vesting under this Option shall be
accelerated and this Option shall become available for exercise with respect to
20,000 shares without further action by the Optionee or the Company; and (b) in
the event the price of the Company's Common Stock as reported on NASDAQ is at
least $16.00 for a period of twenty (20) consecutive trading days at any time
during the term of this Agreement, then the vesting under this Option shall be
accelerated and this Option shall become exercisable in its entirety.
Notwithstanding the foregoing and the provisions of Articles 4 and 5 to the
contrary, but subject to all other provisions hereof, in the event that (i)
there is a transfer, in a single transaction or in a
series of related transactions, of more than 50% of the equity ownership of the
Company by means of (x) an exchange of the capital stock of the Company for cash
and/or securities, (y) an exchange of substantially all of the assets of the
Company for cash and/or securities, or (z) a merger, and (ii) the Optionee's
Business Relationship is terminated by the Company or its successor at any time
thereafter without cause, this Option shall become exercisable in its entirety,
and the shares covered by this Option shall be available for exercise, for a
period of thirty days after such termination. For purposes of the preceding
sentence, termination of the Optionee's Business Relationship by the Company or
its successor shall be deemed to be without cause unless it is by reason of the
Optionee's willful breach or habitual neglect of his duties as a director,
officer or employee of the Company (or its successor). In the event that the
Company or any successor entity shall become the subsidiary of another entity (a
"Reorganization"), transfer of ownership shall be determined, for purposes of
this subparagraph, by reference to the ownership of the parent entity. If,
immediately after a Reorganization, more than 50% of the equity of the parent
entity is held by stockholders who held more than 50% of the equity of the
Company or its successor prior to such Reorganization, such termination shall
not be deemed to be a transfer of more than 50% of the equity ownership of the
Company for purposes of this subparagraph.
The foregoing rights are cumulative and, while the Optionee continues to
maintain a Business Relationship with the Company, may be exercised up to and
including the scheduled expiration date. All of the foregoing rights are subject
to Articles 4 and 5, as appropriate, if the Optionee ceases to maintain a
Business Relationship with the Company, or dies or becomes disabled while
involved in a Business Relationship with the Company.
4. Termination of Business Relationship. If the Optionee ceases to
maintain a Business Relationship with the Company, other than by reason of death
or disability as defined in Article 5, no further installments of this option
shall become exercisable and this option shall terminate on the date the
Optionee's Business Relationship ceases, but in no event later than the
scheduled expiration date.
5. Death; Disability; Dissolution. If the Optionee dies while involved
in a Business Relationship with the Company, this option may be exercised, to
the extent of the number of shares with respect to which the Optionee could have
exercised it on the date of his death, by his estate, personal representative or
beneficiary to whom this option has been assigned pursuant to Article 9, at any
time within 180 days after the date of death, but not later than the scheduled
expiration date. If the Optionee's Business Relationship with the Company is
terminated by reason of his disability (as defined in the Plan), this option may
be exercised, to the extent of the number of shares with respect to which the
Optionee could have exercised it on the date the Business Relationship was
terminated, at any time within 180 days after the date of such termination, but
not later than the scheduled expiration date. At the expiration of such 180 day
period or the scheduled expiration date, whichever is the earlier, this option
shall terminate and the only rights hereunder shall be those as to which the
option was properly exercised before such termination.
6. Partial Exercise. Exercise of this option up to the extent above
stated may be made in part at any time and from time to time within the above
limits, except that this option may not be exercised for a fraction of a share
unless such exercise is with respect to the final installment of stock subject
to this option and a fractional share (or cash in lieu thereof) must be issued
to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the
-2-
preceding sentence shall remain subject to this option and shall be available
for later purchase by the Optionee in accordance with the terms hereof.
7. Payment of Price. The option price is payable in United States
dollars and may be paid: (a) in cash or by check, or any combination of the
foregoing, equal in amount to the option price; or (b) at the discretion of the
Committee, in cash, by check or by delivery of shares of the Company's Common
Stock having a fair market value (as determined by the Committee) equal as of
the date of exercise to the option price, or by any combination of the foregoing
equal in amount to the option price.
8. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at its principal executive office. Such notice shall state the election to
exercise this option and the number of shares with respect to which it is being
exercised and shall be signed by the person or persons so exercising this
option. Such notice shall be accompanied by payment of the full purchase price
of such shares, and the Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the notice shall be
received. The certificate or certificates for the shares as to which this option
shall have been so exercised shall be registered in the name of the person or
persons so exercising this option (or, if this option shall be exercised by the
Optionee and if the Optionee shall so request in the notice exercising this
option, shall be registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising this option. In
the event this option shall be exercised, pursuant to Article 5 hereof, by any
person or persons other than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise this
option. Before certificates for the shares purchased, pursuant to this option
are delivered, the Optionee shall pay the purchase price for the shares
purchased and provide for the withholding or reimbursement for taxes pursuant to
Article 14. All shares that shall be purchased upon the exercise of this option
as provided herein shall be fully paid and non-assessable.
9. Option Not Transferable. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
10. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
11. No Obligation to Continue Business Relationship. The Company and
any Related Corporation are not by the Plan or this option obligated to continue
to maintain a Business Relationship with the Optionee.
12. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.
13. Capital Changes and Business Successions. It is the purpose of this
option to
-3-
encourage the Optionee to work for the best interests of the Company and its
stockholders. Since, for example, that might require the issuance of a stock
dividend or a merger with another corporation, the purpose of this option would
not be served if such a stock dividend, merger or similar occurrence would cause
the Optionee's rights hereunder to be diluted or terminated and thus be contrary
to the Optionee's interest. The Plan contains extensive provisions designed to
preserve options at full value in a number of contingencies. Therefore,
provisions in the Plan for adjustment with respect to stock subject to options
and the related provisions with respect to successors to the business of the
Company are hereby made applicable hereunder and are incorporated herein by
reference. In particular, without affecting the generality of the foregoing, it
is understood that for the purposes of Articles 3 and 5 hereof, maintaining or
being involved in a Business Relationship with the Company includes maintaining
or being involved in a Business Relationship with a Related Corporation as
defined in the Plan.
14. Withholding Taxes. The Optionee hereby agrees that the Company may
withhold from the Optionee's wages or other remuneration the appropriate amount
of federal, state and local taxes attributable to Optionee's exercise of any
installment of this option. At the Company's discretion, the amount required to
be withheld may be withheld in cash from such wages or other remuneration, or in
kind from the Common Stock otherwise deliverable to Optionee on exercise of this
option. The Optionee further agrees that, if the Company does not withhold an
amount from the Optionee's wages or other remuneration sufficient to satisfy the
Company's withholding obligation, the Optionee will reimburse the Company on
demand, in cash, for the amount under-withheld. Certificates for shares
purchased pursuant to this option will not be delivered unless the Optionee
provides for federal, state and local taxes as set forth in this Article.
15. Employee Non-Competition Agreement. In the event the Optionee is an
employee of the Company, execution of this Agreement by the Company is
contingent upon the Optionee having returned to the Company an executed copy of
the document entitled "Employee Non-Competition Agreement". Moreover, this
option shall be void if the Optionee does not return to the Company an executed
copy of the Employee Non-Competition Agreement contemporaneously with the return
of this Agreement to the Company.
16. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware.
IN WITNESS WHEREOF the Company and the Optionee have caused this
Agreement to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of a copy of this
Agreement.
GROUNDWATER TECHNOLOGY, INC.
By: /s/ Catherine L. Farrell
-------------------------
/s/ Walter C. Barber
- -----------------------------
Optionee
-4-
EX 10.16
FOURTH AMENDMENT TO LEASE
WHEREAS, Alexander H. McNeil, Trustee of First Stone Ridge Nominee
Trust III, under a Declaration of Trust dated May 25, 1988 and registered with
the Norfolk County Registry District of the Land Court as Document No. 545593
(the "Landlord") entered into a lease dated February 13, 1991 (the "Lease") with
Groundwater Technology, Inc. (the "Tenant"); and
WHEREAS, on May 24, 1991, the Landlord and Tenant executed a First
Amendment to Lease; and,
WHEREAS, on August 20, 1991, the Landlord and Tenant executed a Second
Amendment to Lease; and,
WHEREAS, on November 28, 1994, the Landlord and Tenant executed a Third
Amendment to Lease; and,
WHEREAS, on March 28, 1995, River Ridge Limited Partnership, a
Massachusetts limited partnership succeeded to the interest of the Landlord
under the Lease; and
WHEREAS, the Landlord and Tenant desire to further amend the Lease,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, the parties hereto hereby agree to the
following changes in the Lease which shall become effective May 31, 1996:
1. Effective May 31, 1996, the Lease as it pertains to Suite 103
shall terminate and shall have no further force or effect,
provided that, each party shall remain responsible for its
obligations under the Lease which accrue prior to May 31,
1996.
2. On or before May 31, 1996, Tenant shall vacate Suite 103.
3. The description of the Premises set forth in Exhibit I of the
Lease is amended to read as follows:
Suite 102, Suite 110 and Suite 300 together consisting of
approximately 40,340 rentable square feet.
4. Basic Rent, as set forth in Exhibit I, Article 5 is amended to
read:
Year I Years 2-4 Year 5 Years 6-11
------ --------- ------ ----------
Per Year 0 $546,996.00 $621,822.00 $597,032.00
Per Month 0 $ 45,583.00 $ 51,818.50 $ 49,752.67
Per Square Foot 0 $ 14.80 $ 14.80 $ 14.80
5. The amount of the Tenant's Proportionate Building Share is amended to
read:
Tenant Square Footage 40,340 = 40%
------
Building Square Footage 101,667
6. Capitalized terms not otherwise defined herein shall have the meaning
for such terms ascribed in the Lease.
7. In all other respects, the terms and provisions of the Lease are hereby
ratified and confirmed and remain in full force and effect.
IN WITNESS WHEREOF, the Landlord and Tenant have executed this Fourth
Amendment to Lease as an instrument under seal this 31st day of May, 1996.
LESSOR: RIVER RIDGE LIMITED PARTNERSHIP
a Massachusetts Limited Partnership
By Ridge Stone Corporation
Its General Partner
By /s/Paul E. Tryder
---------------------------------
Paul E. Tryder, President
TENANT: GROUNDWATER TECHNOLOGY, INC.
By /s/Mary Stack
----------------------------------
Mary Stack, Corporate Controller
-2-
EX 10.17
FLEET NATIONAL BANK
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT made this 4th day of April, 1996, by and
between Groundwater Technology, Inc., a Delaware corporation having its
principal place of business at 100 River Ridge Drive, Norwood, Massachusetts
02062 (hereinafter referred to as "BORROWER") and Fleet National Bank, a
national banking association organized and existing under the laws of the United
States of America with a principal place of business at One Federal Street,
Boston, Massachusetts 02211-3204 (hereinafter referred to as the "BANK").
For value received and in consideration of the granting by the Bank of
financial accommodations to Borrower, Borrower represents and warrants to and
agrees with the Bank as follows:
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
For purposes of this Agreement, the following terms shall have the
following meanings:
1.01 "ADJUSTED LIBOR" shall mean an interest rate per annum determined
by Bank pursuant to the following formula:
Adjusted Libor = Libor
-------------------
1.00 - Reserve Rate
1.02 "ADVANCE" shall mean any sum of money loaned by the Bank to the
Borrower pursuant to this Agreement.
1.03 "AFFILIATE" shall mean any Person (i) which directly or indirectly
controls, or is controlled by or is under common control with the Borrower or a
subsidiary, (ii) which directly or indirectly beneficially holds or owns ten
percent (10%) or more of any class of voting stock of the Borrower or any
subsidiary, or (iii) ten percent (10%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Borrower or a
subsidiary.
1.04 "AVAILABILITY PERIOD" shall mean that period commencing with the
date of this Agreement and ending on the Expiration Date.
1.05 "BANK" shall mean and refer to Fleet National Bank, its successors
and assigns.
1.06 "BANKING DAY" shall mean a day on which banks are open for
business in Boston, Massachusetts, and if the applicable "Banking Day" relates
to a Libor Loan, a day on which dealings are carried on and banks are open for
business in the relevant Interbank Market.
-1-
1.07 "BORROWER" shall mean Groundwater Technology, Inc., a Delaware
corporation.
1.08 "BORROWING DATE" shall mean any day upon which an Advance is made.
1.09 "CASH FLOW" shall mean, for any period, the sum of earnings before
interest and taxes, plus depreciation and amortization, less capital
expenditures (not financed externally or through cash), less permitted dividends
and other distributions pertaining to its capital stock.
1.10 "COMMITMENT AMOUNT" shall mean Ten Million Dollars
($10,000,000.00).
1.11 "CURRENT ASSETS" shall mean the current assets of the Borrower
determined in accordance with GAAP, consistently applied.
1.12 "Current Liabilities" shall mean the current liabilities of the
Borrower determined in accordance with GAAP, consistently applied.
1.13 "DEBT SERVICE" shall mean, for any period, the sum of the current
maturities of all capital lease payments, the current maturities of all
long-term debt and all interest expense.
1.14 "DEFAULT" shall mean an Event of Default or an event which, with
the passage of time or the giving of notice or both, would constitute an Event
of Default.
1.15 "DOLLARS" or "$" shall mean currency of the United States of
America.
1.16 "EUROCURRENCY LIABILITIES" shall have the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
1.17 "EURODOLLARS" shall mean Dollars acquired by Bank through the
purchase or other acquisition of deposits denominated in Dollars and made with
any bank or branch of a bank (including any branch of the Bank) located outside
the United States of America.
1.18 "EVENT OF DEFAULT" is defined in Article XII of this Agreement.
1.19 "EXPIRATION DATE" shall mean April 30, 1999.
1.20 [Intentionally Deleted]
1.21 "FINANCING AGREEMENTS" shall mean this Agreement and all documents
executed in conjunction herewith, whether now or in the future, including,
without limitation, collateral documents, notes, and subordination agreements
required to be executed by Borrower or any Third Party in connection with the
loan arrangements between the Borrower and the Bank.
-2-
1.22 "GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" shall mean
generally accepted accounting principles which are (1) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and (2) such that insofar as the use of accounting principles is pertinent,
certified public accountants would be able to deliver an unqualified opinion as
to financial statements in which such principles have been properly applied.
1.23 "INDEBTEDNESS" shall mean (i) all liabilities for borrowed money,
for the deferred purchase price of property or services, and under leases which
are or should be, under generally accepted accounting principles, recorded as
capital leases, in respect of which a person or entity is directly or
indirectly, absolutely or contingently liable as obligor, guarantor, endorser or
otherwise, or in respect of which such person or entity otherwise assures a
creditor against loss, (ii) all liabilities of the type described in (i) above
which are secured by (or for which the holder has an existing right, contingent
or otherwise, to be secured by) any lien upon property owned by such person or
entity, whether or not such person or entity has assumed or become liable for
the payment thereof, and (iii) all other liabilities or obligations which would,
in accordance with generally accepted accounting principles, be classified as
liabilities of such person or entity.
1.24 "INTERBANK MARKET" shall mean, with respect to any Libor Loan, any
recognized interbank Eurodollar market chosen in good faith by Bank.
1.25 "INTEREST PAYMENT DATE" shall mean the first Banking Day of each
month commencing on the first Banking Day of the first month next succeeding the
date hereof, through the Expiration Date.
1.26 "INTEREST PERIOD" shall mean:
(a) with respect to each Libor Loan, a period commencing on the
Borrowing Date of such Advance, and ending one, two, three or
six months thereafter, as the case may be, as determined in
accordance with the provisions of this Agreement provided that
(i) any Interest Period which would otherwise end on a day
which is not a Banking Day, shall end and the next Interest
Period shall commence on the next preceding or the next
succeeding day which is a Banking Day as determined in good
faith by the Bank in accordance with the then current bank
practices in the relevant Interbank Market, and (ii) no
Interest Period for a Libor Loan shall end after the
Expiration Date; and
(b) with respect to the Prime Rate Loan(s), a period commencing on
the Borrowing Date of an Advance and ending on the date of
repayment of such Advance.
1.27 "LIBOR" shall mean, with respect to a Libor Loan, the rate per
annum at which deposits in Dollars are offered to Bank or Bank's representative
or agent for delivery on the Borrowing Date for such Advance, in the relevant
Interbank Market at 11:00 a.m., local time, two Banking Days prior to such
Borrowing Date for a period equal to the Interest Period chosen by Borrower with
respect to such Advance and in an amount substantially equal to the principal
-3-
amount of such Advance. The Bank shall give prompt notice to the Borrower of the
Libor determined for each Advance and such notice shall be conclusive and
binding, absent manifest error, for all purposes.
1.28 "LIBOR LOAN(S)" shall mean, when used in the singular, any Advance
on which the interest rate is calculated by reference to Libor and, when used in
the plural, shall mean all such Advances.
1.29 "LOAN(S)" shall mean the aggregate of the unpaid principal balance
of all Advances.
1.30 "MARGIN" shall mean one and one-quarter percent (1.25%).
1.31 "MATURITY DATE" shall mean the date on which an Interest Period
expires.
1.32 "OBLIGATIONS" shall mean all debts, liabilities and Indebtedness
of Borrower to Bank hereunder including, without limitation, all interest, fees,
charges, expenses and overdrafts, and also including, without limitation, all
obligations and liabilities which Bank may incur or become liable for, on
account of, or as a result of any transactions between Bank and Borrower
hereunder.
1.33 "PERSON" shall mean any individual, corporation (including a
business trust), partnership, trust, unincorporated association, joint stock
company, limited liability company or other legal entity or organization and any
government or agent or political subdivision thereof.
1.34 "PRIME RATE" shall mean the rate of interest announced by Bank in
Boston, Massachusetts, from time to time as its "Prime Rate", it being
understood that such rate is a reference rate, and not necessarily the lowest
rate of interest charged by Bank.
1.35 "PRIME RATE LOAN(S)" shall mean, when used in the singular, any
Advance on which the interest rate is calculated by reference to the Prime Rate
and, when used in the plural, shall mean all such Advances.
1.36 "RESERVE RATE" shall mean the rate (expressed as a decimal) at
which Bank would be required to maintain reserves under REGULATION D of the
Board of Governors of the Federal Reserve System against Eurodollar Liabilities
if such liabilities were outstanding.
1.37 "REVOLVING TIME NOTE" shall mean the note of even date in the
maximum principal amount of $10,000,000.00 evidencing the Loans and in which the
maker is the Borrower and the holder is the Bank.
1.38 "TANGIBLE NET WORTH" shall mean, as of any date, the total
stockholders' equity which would appear on a balance sheet of Borrower, prepared
as of such date in accordance with
-4-
generally accepted accounting principles, consistently applied, subtracting
therefrom (i) intangibles (as determined in accordance with such principles so
applied), (ii) accounts owing from any employee or Affiliate provided, however,
that accounts due from any Affiliate shall not be deducted from Tangible Net
Worth as long as the aggregate amount of such accounts outstanding does not
exceed $500,000.00 and (iii) Indebtedness owing from any employee or Affiliate,
provided, however, that Indebtedness from Borrower's Affiliate, Enterprise
Environmental & Earthworks, Inc. in the principal amount of $488,000.00 shall
not be deducted from Tangible Net Worth.
1.39 "TERM LOAN" shall mean the loan from the Bank to the Borrower
evidenced by the Term Note.
1.40 "TERM NOTE" shall mean the term note to be dated as of the
Expiration Date in the original principal amount to the lesser of $10,000,000.00
or the outstanding principal balance of all Advances on the Expiration Date, in
which the maker is the Borrower and the Bank is the holder.
1.41 "THIRD PARTY" means any Person who has executed and delivered, or
who in the future may execute and deliver, to Bank any agreement, instrument, or
document, pursuant to which such Person has guarantied to Bank the payment of
the Obligations or has granted Bank a security interest in or lien on some or
all of such Person's real or personal property to secure the payment of the
Obligations.
For purposes of this Agreement, the following rules of interpretation
shall be used:
1.42 A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
1.43 The singular includes the plural and the plural includes the
singular.
1.44 A reference to any law includes any amendment or modification to
such law.
1.45 A reference to any Person includes its permitted successors and
permitted assigns.
1.46 Accounting terms capitalized but not otherwise defined herein have
the meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they refer.
1.47 The words "include", "includes" and "including" are not limiting.
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1.48 All capitalized terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein.
1.49 The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
ARTICLE II
THE LOANS
2.01 Subject to and upon the terms and conditions of this Agreement,
during the Availability Period, at the request of the Borrower, as more
particularly described in Section 4.01 hereof, Bank will make Advances to the
Borrower in the form of Prime Rate Loans or Libor Loans, provided, however, that
no such Advance will be made if after giving effect to the Borrower's request
for such Advance the Loans would then exceed the Commitment Amount.
2.02 Subject to the terms and conditions of this Agreement, amounts
repaid by Borrower on account of Loans previously made may be reborrowed. No
Loans will be made after the Expiration Date.
2.03 Bank will open and maintain a loan account on its books in the
name of the Borrower with respect to the Advances (herein the "LOAN ACCOUNT").
Each Advance will be debited and each payment made on account of the Advances
will be credited to the Loan Account. Bank will render to the Borrower monthly
statements of the Loan Account and any such statement shall be deemed to be
correct and accepted by the Borrower unless the Borrower notifies Bank to the
contrary within sixty (60) days after the receipt of such statement. The failure
of Bank to render any such statement in a timely fashion shall not affect or
impair the validity or binding nature of the Loan Account.
2.04 If at any time the Loans exceed the Commitment Amount, the
Borrower shall immediately, and on demand by the Bank, pay to the Bank an amount
sufficient to reduce the Loans to an amount equal to or less than the Commitment
Amount.
2.05 All Advances shall bear interest and, at the option of the Bank,
shall be evidenced by notes in a form satisfactory to Bank, but in the absence
of notes, shall be conclusively evidenced by Bank's records of Advances and
repayments unless such Bank records are disputed by Borrower in accordance with
the provisions of Section 2.03 hereof.
ARTICLE III
PAYMENTS
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3.01 Unless the maturity of the Loans is accelerated in accordance with
the terms and provisions hereof, the Loans, plus all accrued and unpaid interest
thereon, shall be fully due and payable on the Expiration Date. Absence the
occurrence of an Event of Default hereunder, the Borrower may elect to convert
the outstanding principal balance of the Advances as of the Expiration Date into
the Term Loan by execution and delivery of the Term Note to the Bank on the
Expiration Date. Notwithstanding, in the Bank's sole and absolute discretion,
the Expiration Date may be extended, upon the Borrower's request.
3.02 The Term Loan shall thereafter be paid in accordance with the
provisions of the Term Note.
ARTICLE IV
BORROWING PROCEDURES
4.01 Bank shall not be required to make an Advance unless Bank shall
have received from the Borrower a request in the form of Exhibit A attached
hereto for such Advance (herein a "NOTICE OF BORROWING"), which request complies
with the requirements of this Section 4.01. Each Notice of Borrowing shall
designate (a) the Borrowing Date for the requested Advance, (b) the amount of
the Advance, which amount shall be no less than One Hundred Thousand Dollars
($100,000.00) and increments of One Hundred Thousand Dollars ($100,000.00) above
One Hundred Thousand Dollars ($100,000.00) if the Advance will be a Libor Loan;
and (c) if such Notice of Borrowing requests a Libor Loan, it must state the
Interest Period. Each Notice of Borrowing must be received by Bank (x) before
12:00 p.m. (Boston time) on the designated Borrowing Date if the Advance will be
a Prime Rate Loan; and (y) not less than two Banking Days prior to the Borrowing
Date if the Advance will be a Libor Loan. A Notice of Borrowing may be
transmitted by telephone, telecopier, telex, cable, overnight courier, hand
delivery or mail. If a Notice of Borrowing is transmitted by telephone,
telecopier, telex, or cable, the Borrower shall immediately mail to Bank written
confirmation thereof.
4.02 After receipt from the Borrower of any Notice of Borrowing which
requests a Libor Loan, Bank shall determine if it is able to make such Advance
(or if it is unable to do so for reasons described in this Section 4.02 only)
and will notify the Borrower upon confirmation of its ability to do so. If Bank
determines in good faith that, by reason of circumstances affecting the
Interbank Market, adequate and reasonable methods do not exist for ascertaining
the Libor which would otherwise be applicable to such Advance then Bank shall so
notify the Borrower on or before 4:00 p.m. on the Banking Day prior to the
Borrowing Date specified in the Notice of Borrowing, and in such event, Bank
shall not be obligated to make such Advance and the Notice of Borrowing shall be
deemed to have been withdrawn by the Borrower with Bank's consent and
substituted with a request for a Prime Rate Loan in an amount equal to the
requested Libor Loan.
4.03 Except as otherwise provided in Section 4.02 above, any Notice of
Borrowing requesting a Libor Loan shall be irrevocable and binding upon the
Borrower. In the event the
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Borrower fails to borrow the Advance requested on the Borrowing Date specified
in such Notice of Borrowing, the Borrower shall indemnify Bank against any and
all losses and expenses incurred by Bank by reason of such failure including,
without limiting the generality of the foregoing, all losses and expenses
incurred by reason of the liquidation, disposition or reemployment of deposits
or other funds acquired by Bank to fund such Advance including, without
limitation, compensation provided for in Section 6.08 of this Agreement.
4.04 All net proceeds of each Advance shall be credited to any demand
deposit account maintained by the Borrower with Bank, the specified amount and
account to be designated by the Borrower in the Notice of Borrowing issued with
respect to such Advance.
4.05 No Advances shall be made to or issued on the Borrower's behalf or
at the Borrower's request after the Expiration Date.
ARTICLE V
INTEREST, FEES AND OTHER CHARGES
5.01 Prior to the Expiration Date, the Borrower shall pay interest on
the unpaid principal balance of each Prime Rate Loan from the Borrowing Date for
such Advance at a variable per annum rate equal to the Prime Rate in effect from
time to time. Interest accrued under this Section 5.01 shall be paid monthly in
arrears on each Interest Payment Date.
5.02 The Borrower shall pay interest on the aggregate unpaid principal
balance of each Libor Loan from the Borrowing Date for such Advance through and
including the Maturity Date chosen by the Borrower with respect to such Advance
at a per annum rate equal to the aggregate of the Adjusted Libor plus Margin,
and shall pay all interest accrued but unpaid under this Section 5.02 on such
Maturity Date.
5.03 If a Libor Loan is not repaid in full on its Maturity Date, then
such Advance shall bear interest at the rate described in Section 5.01 from and
after such Maturity Date through the Expiration Date and thereafter, at the
option of the Bank, as set forth in Sections 5.01 or 5.04 until paid in full.
5.04 From and after the occurrence of an Event of Default and
acceleration of the Borrower's Obligations to the Bank under this Agreement, at
the option of the Bank: (a) all Prime Rate Loans shall bear interest at a
variable per annum rate equal to the aggregate of the Prime Rate in effect from
time to time plus three percent (3%) until paid in full; and (b) each Libor Loan
shall bear interest at the rate established therefor pursuant to Section 5.02
until such Advance's Maturity Date, and thereafter at the rate set forth in
clause (a) of this Section 5.04 until paid in full.
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5.05 Each rate of interest determined hereunder by reference to the
Prime Rate shall change effective as of the opening of business on each day on
which a change in the Prime Rate becomes effective.
5.06 All interest, fees and other charges payable under this Agreement
shall be computed on the basis of a year of three hundred sixty (360) days for
the actual number of days elapsed.
5.07 If the Bank shall have determined in good faith at its reasonable
discretion that the adoption of any applicable law, rule or regulation regarding
capital requirements for banks or bank holding companies, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive of such entity regarding capital adequacy (whether or not
having the force of law) has the effect of reducing the return on the Bank's
capital to a level below that which the Bank could have achieved (taking into
consideration the Bank's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that the Bank's capital
was fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of its commitment to make
Advances hereunder by any amount deemed by the Bank in good faith to be
material:
(i) the Bank shall promptly after its determination of such
occurrence give notice thereof to the Borrower; and
(ii) the Borrower shall pay to the Bank as an additional fee from
time to time on demand such amount as the Bank certifies to
be the amount that will compensate it for such reduction
(attributable to the Credit Limit under this Agreement).
A certificate of the Bank claiming compensation under this Section 5.07
shall be conclusive in the absence of manifest error. Such certificate shall set
forth the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to it hereunder and the method by which
amounts were determined. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
5.08 In consideration of the Bank establishing this revolving credit
facility, the Borrower shall pay the Bank a fee equal to one-sixteenth of one
percent (.0625%) of the difference between: (x) the Commitment Amount and (y)
the average daily principal balance of Loans outstanding to the Borrower during
any quarterly period. This unused line fee shall be payable quarterly in arrears
on the last day of each calendar quarter, commencing on the last day of the
calendar quarter in which this Agreement is executed.
ARTICLE VI
PAYMENT BY THE BORROWER
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6.01 Any Prime Rate Loan may be repaid in whole or in part at any time
without premium or penalty.
6.02 Each Libor Loan shall be repaid in full on its Maturity Date.
6.03 Except as otherwise provided herein with respect to Bank's rights
following the occurrence of an Event of Default, no Libor Loan may be repaid
prior to its Maturity Date.
6.04 Any Advance may be repaid with the proceeds of another Advance,
subject to the terms of Section 2.01.
6.05 The Borrower shall pay all principal, interest, fees, commissions
and other charges due from it to Bank hereunder to Bank at its offices at One
Federal Street, Boston, Massachusetts 02211, U.S.A., or at such other address of
which Bank may, from time to time, give written notice to the Borrower, no later
than 3:00 p.m. (Boston time) on the due date in Dollars and in immediately
available funds.
6.06 Borrower hereby authorizes and directs Bank to pay all principal,
interest, fees, commissions and other charges due from Borrower to Bank
hereunder by (i) charging such amounts against any general demand deposit
account of the Borrower with the Bank; or (ii) debiting the Loan Account in the
amount of such sums due and to treat the same as an Advance to the Borrower,
which Advance shall accrue interest as a Prime Rate Loan; provided, however, the
Bank shall have no obligation to do so unless (i) sufficient funds are on
deposit in such demand deposit accounts; and/or (ii) such Advance would not
cause the Loans to exceed the Commitment Amount and/or (iii) no Default exists.
The provisions of this Section 6.06 shall not limit the rights of the Bank under
Section 6.12 of this Agreement or the obligation of the Borrower to pay interest
as provided elsewhere in this Agreement.
6.07 Notwithstanding any other provision of this Agreement, (a) if the
introduction of or any change in any law or regulation (or change in the
interpretation thereof) applicable to Bank or any foreign branch, agent or
correspondent thereof shall make it unlawful, or (b) if any central bank or
other governmental authority having jurisdiction over Bank or any such branch,
agent or correspondent, shall assert that it is unlawful, for Bank to perform
its obligations hereunder or for any such branch, agent or correspondent to act
on behalf of Bank to make Libor Loans to the Borrower or to continue to fund or
maintain Libor Loans to the Borrower hereunder, or (c) if Bank determines after
making all reasonable efforts, that deposits of the relevant amount and for the
relevant Advances to the Borrower are not available to Bank in the Interbank
Market, then, on notice thereof by Bank to the Borrower, the obligation of the
Bank to the Borrower to make future Libor Loans shall terminate. If, as a result
of any of the foregoing described events, Bank is prohibited from maintaining
Libor Loans, the Bank shall, upon the happening of such event, notify the
Borrower and the Borrower shall, in the case of each Libor Loan, on the Maturity
Date of such Libor Loan (or, in any event, if the Bank so requests, on such
earlier date as may be
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required by the relevant law, regulation or interpretation), either prepay such
Libor Loan or convert such Libor Loan into a Prime Rate Loan.
6.08 If, due to payments made by the Borrower pursuant to this
Agreement or due to the acceleration of the maturity of the Loans pursuant to
Article XII hereof or due to any other reason, including, without limitation, by
reason of a payment made pursuant to Sections 6.07 or 2.04 of this Agreement,
Bank receives payments of principal of any Libor Loan prior to the Maturity Date
for such Advance, the Borrower shall, upon demand by Bank, pay to Bank any
amounts required to compensate Bank for any additional losses, costs or expenses
which it may reasonably incur as a result of such payment, including, without
limitation, any loss, costs or expenses incurred by reason of the liquidation of
reemployment of deposits or other funds acquired by Bank to fund or maintain
such Advances.
6.09 Whenever any payment of interest, charges or fees to be made
hereunder shall be stated to be due on a day other than a Banking Day, such
payment shall be made on the next succeeding Banking Day (except as provided in
the definition of Maturity Date) and such next succeeding Banking Day shall be
utilized in the computation of the payment of such interest, charges and other
fees.
6.10 All payments by the Borrower hereunder shall be made without
deduction on account of compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any country or any political
subdivision thereof unless the Borrower is required by law to make such
deductions. If any such obligation is imposed upon by the Borrower with respect
to any amount payable by the Borrower hereunder, the Borrower will pay to Bank
on the date on which such amount becomes due and payable hereunder and in
Dollars, such additional amount as shall be necessary to enable Bank to receive
the same net amount which Bank would have received on such due date had no such
obligation been imposed upon the Borrower.
6.11 (a) Any and all payments by the Borrower under this Agreement
including principal, interest, fees, charges and any other payments hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on Bank's net income
and franchise taxes imposed on it (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "TAXES"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to Bank, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this section)
Bank receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies, excluding taxes imposed on Bank by the jurisdiction under the
laws of which Bank is organized or any political
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subdivision thereof and taxes imposed on its net income exceeding that which
arises under this Agreement, and franchise taxes imposed on it which arise from
any payment made by the Borrower hereunder or from the execution, delivery or
registration of, or otherwise with respect to this Agreement (hereinafter
referred to as "OTHER TAXES").
(c) The Borrower will indemnify Bank on demand for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes and
Other Taxes imposed by any jurisdiction on amounts payable by the Borrower under
this section) paid by Bank or any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Bank shall provide to the
Borrower prior notice of its intention to make any payment of Taxes or Other
Taxes for which the Borrower has an obligation of indemnification hereunder. In
the event that the Borrower so requests prior to the payment by Bank of any of
such Taxes or Other Taxes, Bank will refrain from making such payment provided
the Borrower satisfies each of the following conditions prior to the date such
Taxes or Other Taxes are due: (i) the Borrower delivers to Bank assurances in
form and substance reasonably satisfactory to Bank that Bank's failure to make
such payment will not subject Bank to any charges, fees, impositions or
penalties, civil or criminal; (ii) the Borrower timely institutes and thereafter
diligently prosecutes to successful and final conclusion proper proceedings to
challenge such Taxes or Other Taxes; (iii) enforcement of any rights of the
relevant taxing authority are stayed during the prosecution of the proceedings
described in clause (ii) above; and (iv) at any time during such proceedings, at
Bank's request, the Borrower will deposit with Bank funds sufficient to
discharge such Taxes or Other Taxes should the proceedings described in clause
(ii) above be determined against the Borrower.
(d) Within thirty (30) days of any payment of Taxes or Other
Taxes by the Borrower, the Borrower will furnish to Bank, at the address
specified for delivery of notices hereunder, the original or a certified copy of
a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreement and obligations of the Borrower
contained in this section shall survive the payment in full of principal and
interest hereunder.
6.12 Borrower shall pay to Bank on demand any and all reasonable
counsel fees and other expenses incurred by Bank in connection with the
preparation, enforcement or amendment of this Agreement, or of any documents
relating thereto, and any and all expenses, including, but not limited to, all
reasonable attorneys' fees and expenses, and all other expenses of like or
unlike nature which may be expended by Bank to obtain or enforce payment or in
the prosecution or defense of any action or concerning any matter growing out of
or connected with the subject matter of this Agreement, or the Obligations or
any of Bank's rights or interests therein or thereto, including, without
limiting the generality of the foregoing, any reasonable counsel fees or
expenses incurred in any bankruptcy or insolvency proceedings of Borrower.
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ARTICLE VII
WARRANTIES AND REPRESENTATIONS BY THE BORROWER
7.01 Bank enters into this Agreement in reliance upon the warranties
and representations of the Borrower set forth in this Article, each of which is
acknowledged by the Borrower to be material. Each such warranty and
representation shall be deemed to have been newly made on each Borrowing Date
except to the extent that, on or prior thereto, Bank shall have received from
the Borrower notice of a change with respect thereto, which change is not a
breach of this Agreement.
7.02 Borrower has no places of business other than that shown at the
end of this Agreement, unless other places of business are listed on Schedule
"A", annexed hereto, in which event Borrower represents that Borrower has
additional places of business at those locations set forth on Schedule "A".
7.03 Borrower's principal executive office and the offices where
Borrower keeps its records are those shown at the end of this Agreement.
7.04 Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and shall hereafter remain
in good standing as a corporation in that state, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on the condition
(financial or otherwise), business, operations, properties or prospects of the
Borrower, and shall hereafter remain duly qualified and in good standing in
every other state in which the failure to so qualify would have a material
adverse effect on the condition (financial or otherwise), business, operations,
properties or prospects of the Borrower.
7.05 Borrower's exact legal name is as set forth in this Agreement and
Borrower will not change Borrower's legal name, without giving Bank at least ten
(10) days' prior written notice of the same. Bank recognizes that Borrower
contemplates a name change to Fluor Daniel GTI, Inc. and this document and
related Financing Agreements shall be amended to reflect that name change.
7.06 The execution, delivery and performance of this Agreement, and any
other document executed in connection herewith, are within the Borrower's
corporate powers, have been duly authorized, are not in contravention of law or
the terms of the Borrower's charter, by-laws or other incorporation papers, or
of any material indenture, agreement or undertaking to which the Borrower is a
party or by which it or any of its properties may be bound.
7.07 All charter or other incorporation papers and all amendments
thereto of Borrower have been duly filed and are in proper order. All capital
stock issued by Borrower and outstanding was and is properly issued and all
books and records of Borrower, including but not
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limited to its minute books, by-laws and books of account, are accurate and up
to date and will be so maintained.
7.08 Borrower owns all of the assets reflected in the most recent of
Borrower's financial statements provided to Bank, except assets sold or
otherwise disposed of in the ordinary course of business or as Borrower has
otherwise advised Bank, and such assets together with any assets acquired since
such date, are free and clear of any lien, pledge, security interest, charge,
mortgage or encumbrance of any nature whatsoever, except: (i) the security
interests and other encumbrances (if any) on Borrower's assets listed on
Schedule "B" annexed hereto or (ii) those capital leases set forth on Schedule
"C" annexed hereto.
7.09 Borrower has made or filed all tax returns, reports and
declarations relating to any material tax liability required by any jurisdiction
to which they are subject or has received lawful extensions of the filing of the
same; has paid all taxes shown or determined to be due thereon except those
being contested in good faith and which Borrower has, prior to the date of such
contest, identified in writing to Bank as being contested; and have made
adequate provision for the payment of all taxes so contested.
7.10 Borrower (i) is subject to no charter, corporate or other legal
restriction, or any judgment, award, decree, order, governmental rule or
regulation or contractual restriction which could have a material adverse effect
on its financial condition, business or prospects, and (ii) is in compliance
with its charter documents and by-laws, all material contractual requirements by
which it or any of its properties may be bound and all applicable laws, rules
and regulations (including without limitation those relating to environmental
protection) other than laws, rules or regulations the validity or applicability
of which Borrower is contesting in good faith or provisions of any of the
foregoing the failure to comply with which cannot reasonably be expected to
materially adversely affect Borrower's financial condition, business or
prospects.
7.11 There is no action, suit, proceeding or investigation pending or,
to Borrower's knowledge, threatened against or affecting it or any of its assets
before or by any court or other governmental authority which, if determined
adversely to Borrower, would have a material adverse effect on its financial
condition, business or prospects.
ARTICLE VIII
AFFIRMATIVE COVENANTS
8.01 The Borrower will, duly and punctually, pay all interest,
principal, fees and other charges becoming due to Bank and will duly and
punctually perform all things on its part to be done or performed under the
Financing Agreements or pursuant to any instrument, document or agreement
executed pursuant thereto.
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8.02 Borrower agrees to keep all of its insurable assets insured with
coverage and in amounts not less than that usually carried by one engaged in a
like business and in any event not less than that reasonably required by Bank.
8.03 Borrower will at all times keep accurate and complete records of
Borrower's Inventory, Accounts and other assets, and Bank, or any of its agents,
shall have the right to call at Borrower's place or places of business at
intervals to be determined by Bank, and without hindrance or delay, to inspect,
audit, check, and make extracts from any copies of the books, records, journals,
orders, receipts, correspondence which relate to Borrower's Accounts, and other
assets or other transactions, between the parties thereto and the general
financial condition of Borrower and Bank may remove any of such records
temporarily for the purpose of having copies made thereof. Prior to the
occurrence of an Event of Default, Bank shall give Borrower not less than
twenty-four (24) hours prior notice of any intended inspection or audit and
shall conduct such inspection or audit during normal business hours.
8.04 Borrower will maintain its corporate existence in good standing
and comply with all laws and regulations of the United States or of any state or
states thereof or of any political subdivision thereof, or of any governmental
authority which may be applicable to it or to its business.
8.05 Borrower will pay all real and personal property taxes,
assessments and charges and all franchises, income, unemployment, old age
benefits, withholding, sales and other taxes assessed against it, or payable by
it at such times and in such manner as to prevent any penalty from accruing or
any lien or charge from attaching to its property.
8.06 Borrower will immediately notify Bank upon receipt of notification
of any potential or known release or threat of release of hazardous materials,
hazardous waste, hazardous or toxic substance or oil from any site operated by
Borrower or of the incurrence of any expense or loss in connection therewith or
with the Borrower's obtaining knowledge of any investigation or action by any
governmental authority in connection with the assessment, containment or removal
of any hazardous material or oil from any site operated by Borrower. Bank
acknowledges that Borrower is in the environmental remediation business and that
Borrower routinely operates remediation systems at customer sites that are
contaminated or may become contaminated by hazardous materials, hazardous waste,
hazardous or toxic substances and oil, but for which Borrower is not liable
under current interpretation of the Acts (as defined below). As used herein, the
terms "hazardous waste," "hazardous or toxic substance," "hazardous material" or
"oil" shall have the same meanings as defined and used in any of the following
(the "Acts"): the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.; the Federal
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; M.G.L.A. c. 21E
(Massachusetts Oil and Hazardous Material Release Prevention Act); M.G.L.A. c.
21C (Massachusetts Hazardous Waste Management Act); and/or the regulations
adopted and
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publications promulgated pursuant to any of the Acts, as the same may be amended
from time to time.
8.07 Except for Bank's gross negligence or willful misconduct, Borrower
will indemnify and save Bank harmless from all loss, costs, damage, liability or
expenses (including, without limitation, court costs and reasonable attorneys'
fees) that Bank may sustain or incur by reason of enforcing the Obligations, or
in the prosecution or defense of any action or proceeding concerning any matter
growing out of or in connection with this Agreement and/or any other documents
now or hereafter executed in connection with this Agreement and/or the
Obligations. This indemnity shall survive the repayment of the Obligations and
the termination of Bank's agreement to make Loans available to Borrower and the
termination of this Agreement.
8.08 All Advances by Bank to Borrower under this Agreement constitute
one general revolving fluctuating loan, and all Indebtedness of Borrower to Bank
under this Agreement constitute one general Obligation. It is distinctly
understood and agreed that all of the rights of Bank contained in this Agreement
shall likewise apply, insofar as applicable, to any modification of or
supplement to this Agreement. Any default of this Agreement by Borrower shall
constitute, likewise, a default by Borrower of the Term Note, and any default by
Borrower of the Term Note shall constitute a default of this Agreement. The
entire Obligation of Borrower to Bank shall become due and payable when payments
become due and payable hereunder upon termination of this Agreement.
8.09 Borrower will, at its expense, upon request of Bank promptly and
duly execute and deliver such documents and assurances and take such actions as
may be necessary or desirable or as Bank may reasonably request in order to
correct any defect, error or omission which may at any time be discovered or to
more effectively carry out the intent and purpose of this Agreement.
8.10 Borrower will maintain its principal operating accounts with the
Bank.
ARTICLE IX
NEGATIVE COVENANTS
9.01 Borrower will not permit its Tangible Net Worth to be less than
Sixty-five Million Dollars ($65,000,000.00) as at the end of any fiscal quarter
of Borrower.
9.02 Borrower will not permit the aggregate amount of its Indebtedness
to be more than its Tangible Net Worth as at the end of any fiscal quarter of
Borrower.
9.03 Borrower will not permit its Current Assets to be less than two
hundred percent (200%) of its Current Liabilities as at the end of any fiscal
quarter of Borrower.
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9.04 The Borrower will not permit its Cash Flow to be less than two
hundred fifty percent (250%) of its Debt Service for the twelve (12) month
period ending on the last day of any fiscal quarter of Borrower.
9.05 Borrower will not at any time create, permit to be created or
suffer to exist any lien, encumbrance or security interest of any kind upon any
of its assets, now owned or hereafter acquired, except liens and encumbrances
set forth on Schedule "B" annexed hereto, and except: (i) liens for taxes not
yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
Borrower's books in accordance with GAAP; (ii) carrier's, warehousemen's,
mechanic's, materialmen's, repairmen's or other like liens arising in the
ordinary course of business which are not overdue for a period of more than 30
days or which are being contested in good faith and by appropriate proceedings;
(iii) pledges or deposits in connection with workers' compensation, unemployment
insurance and other social security legislation; (iv) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business of the
Borrower; (v) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business; (vi) liens in favor of the United
States of America for amounts paid as progress payments under government
contracts; (vii) liens which were in existence at closing and which secured
obligations reflected on the Borrower's financial statements; and (viii) liens
pursuant to capitalized leases incurred in the ordinary course of business.
9.06 Borrower will not at any time pay any dividends on or make any
distribution on account of any class of Borrower's capital stock in cash or in
property (other than additional shares of such stock), or redeem, purchase or
otherwise acquire, directly or indirectly any such stock, if, immediately after
giving effect to such dividend, redemption or purchase, Borrower would be in
violation of the financial covenant set forth in this Article IX.
9.07 Borrower will not have outstanding at any time loans or advances
to Borrower's directors, officers and employees in excess of $250,000.00 in the
aggregate, excluding advances to officers or employees with respect to expenses
incurred by them in the ordinary course of their duties which are properly
reimbursable by Borrower.
9.08 Borrower will not at any time assume, guaranty, endorse or
otherwise become directly or contingently liable in respect of any indebtedness
(except guarantees by endorsement of instruments for deposit or collection in
the ordinary course of business and guarantees in favor of Bank) of any Person,
unless Borrower shall provide prompt written notice to Bank of such action being
taken by Borrower and Borrower shall remain in compliance with the financial
covenants contained in this Article IX after giving effect to any such action.
-17-
9.09 Borrower will not at any time (i) use any loan proceeds to
purchase or carry any "margin stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) or (ii) invest in or purchase any stock
or securities of any individual, partnership, trust or other corporation except
(x) readily marketable direct obligations of, or obligations guaranteed by, the
United States of America or any agency thereof or (y) time deposits with or
certificates of deposit issued by Bank.
9.10 Borrower will not at any time (except with Bank's prior consent)
sell, transfer or otherwise dispose of any stock of any subsidiary of Borrower.
9.11 Borrower will not at any time (except with Bank's prior consent or
as indicated in Section 16.01 hereof): (a) merge or consolidate with or into any
corporation; (b) convey, lease or sell all or any material portion of its
property or assets or business to any Person, or (c) convey, lease, trade or
sell any of its assets to any Person for less than the fair market value thereof
except for obsolescent equipment or equipment or other assets of minimal value
to Borrower.
9.12 All Indebtedness to officers, stockholders, directors, employees
or associates shall be subordinated to the Obligations on terms and conditions
reasonably satisfactory to Bank.
ARTICLE X
BORROWER'S REPORTS
10.01 Borrower will furnish Bank as soon as available, and in any event
within forty-five (45) days after the close of each of the first three quarterly
periods of its fiscal year, internally prepared financial statements, including
a balance sheet as of the end of such period, a statement of income and retained
earnings for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter and a statement of cash flows for such
period, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year, and
all prepared in accordance with generally accepted accounting principles
consistently applied, and certified by the Chief Financial Officer of the
Borrower (subject to year end adjustment).
10.02 Borrower will furnish Bank, annually, as soon as available, and
in any event within one hundred and twenty (120) days after the end of each
fiscal year of Borrower, a balance sheet as of the end of such fiscal year, a
statement of income and retained earnings for such fiscal year, and a statement
of cash flows for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the prior fiscal year, and all prepared in accordance with generally accepted
accounting principles consistently applied, accompanied by an opinion thereon
reasonably acceptable to Bank by any of the "Big Six" accounting firms or other
independent public accountants selected by the Borrower and reasonably
acceptable to Bank.
-18-
10.03 Borrower will furnish Bank, annually, as soon as available, and
in any event within ninety (90) days after the end of each fiscal year of
Borrower, its financial projections for the next succeeding year in form and
substance reasonably satisfactory to Bank.
10.04 Borrower shall deliver to Bank notice of non-compliance with the
provisions of this Agreement promptly upon learning of such non-compliance, or
if any representation or warranty contained herein is no longer true and
accurate.
10.05 Borrower shall also deliver to Bank a Covenant Compliance
Certificate in the form of Exhibit "B" attached hereto indicating its compliance
or lack thereof with the financial covenants set forth in Article IX. Such
Covenant Compliance Certificate shall be furnished to the Bank simultaneously
with the submission of financial statements required hereunder.
10.06 In addition to the foregoing, the Borrower promptly shall provide
the Bank with such other and additional information concerning the Borrower, the
operation of the Borrower's business, and the Borrower's financial condition,
including financial reports and statements furnished to its stockholders and to
the Securities and Exchange Commission, and as the Bank may from time to time
reasonably request from the Borrower so as not to unreasonably disrupt
Borrower's business or operations. All financial information provided to the
Bank by the Borrower shall be prepared in accordance with generally accepted
accounting or auditing principles (as applicable) applied consistently in the
preparation thereof and with prior periods to fairly reflect the financial
conditions of the Borrower at the close of, and its results of operations for,
the periods in question.
ARTICLE XI
CONDITIONS TO ADVANCES
11.01 The obligation of Bank to make each Advance to the Borrower is
subject to the continuing satisfaction of the conditions set forth in this
Article XI.
11.02 Bank shall have received the following documents in form and
substance reasonably satisfactory to the Bank prior to the first Advance
hereunder: (i) the certified resolutions of the Board of Directors of the
Borrower approving and authorizing the execution, delivery and performance by
the Borrower of its obligations under this Agreement and under each of the other
Financing Agreements; (ii) a certificate of the Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower
authorized to sign this Agreement; (iii) the certified charter and by-laws of
the Borrower; (iv) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement and all other
Financing Agreements; and (v) such other documents, instruments, certificates
and other agreements as Bank shall reasonably request.
11.03 The representations and warranties contained in this Agreement
shall have been correct in all material respects as of the date on which made
and shall also be correct in all
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material respects and as of the date of each Advance with the same effect as if
made on the date of such Advance except to the extent that (i) the facts upon
which such representations and warranties are based may in the ordinary course
be changed by the transactions permitted or contemplated hereby, (ii) such
representations and warranties relate expressly to an earlier date or (iii) such
representations and warranties are or have not been current as a result of
changes for which the Borrower has notified the Bank and such changes do not
constitute a breach of the terms of this Agreement.
11.04 The Borrower shall have performed and complied with all terms and
conditions herein required to be performed or complied with by it prior to or at
the time of the Advance and at such Advance there shall exist and be continuing
no Default.
11.05 All corporate action required by law of the Borrower necessary
for the valid execution, delivery and performance by the Borrower of this
Agreement and all other Financing Agreements shall have been duly and
effectively taken.
11.06 Bank shall have received a Notice of Borrowing from the Borrower
as required by Section 4.01 and, the giving of such Notice of Borrowing shall be
deemed a representation and warranty by the Borrower on the date of such Advance
that all conditions set forth in this Article XI have been satisfied.
11.07 No change shall have occurred in any law, regulations thereunder
or interpretations thereof, which in the reasonable opinion of Bank would make
it illegal for Bank to made the Advances at the rates provided for hereunder.
11.08 No Advance shall be made after the Expiration Date.
ARTICLE XII
EVENTS OF DEFAULT
12.01 The occurrence of any one or more of the following events shall
constitute an Event of Default:
12.02 Nonpayment when due of any principal, interest, premium, fee,
cost, or expense due under this Agreement, the Financing Agreements, or the Term
Note.
12.03 Default in the observance of any of the covenants or agreements
of Borrower contained in Section 9.01, 9.02, 9.03 or 9.04 of this Agreement and
the expiration of fifteen (15) calendar days from the date of Borrower's
delivery of a covenant compliance certificate reflecting such Default in
accordance with Section 10.05 hereof, without waiver or cure.
-20-
12.04 Default in the observance of any of the material covenants or
agreements of Borrower contained in this Agreement or the Financing Agreements
(other than those specified in Sections 12.02 or 12.03 above), which is not
remedied within the earlier of ten (10) Banking Days after (i) written notice
thereof by Bank to Borrower, or (ii) the date Borrower was required to give
notice to Bank under Section 10.04.
12.05 The determination by Bank that any representation or warranty now
or hereafter made by the Borrower to Bank under this Agreement or in any
documents, instrument, agreement, or paper delivered by Borrower pursuant to
this Agreement was not true or accurate when given in any material respect.
12.06 The occurrence of any event such that any Indebtedness for
borrowed money of the Borrower to any lender other than Bank, in excess of One
Million Dollars ($1,000,000.00) is accelerated.
12.07 [Intentionally deleted]
12.08 Any act by, against, or relating to the Borrower, or its property
or assets, which act constitutes the application for, consent to, or sufferance
of the appointment of a receiver, trustee or other person, pursuant to court
action or otherwise, over all, or any material part of the Borrower's property.
12.09 The granting of any trust mortgage or execution of an assignment
for the benefit of the creditors of the Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for the
Borrower; the failure by the Borrower to generally pay the uncontested debts of
the Borrower as they mature; adjudication of bankruptcy or insolvency relative
to the Borrower; the entry of an order for relief or similar order with respect
to the Borrower in any proceeding pursuant to Title 11 of the United States Code
entitled "Bankruptcy" (hereinafter the "Bankruptcy Code") or any other federal
bankruptcy law; the filing of any complaint, application, or petition by or
against the Borrower initiating any matter in which the Borrower is or may be
granted any relief from the debts of the Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure; the calling or sufferance of
a meeting of creditors of the Borrower; the meeting by the Borrower of a formal
or informal creditor's committee; the offering by or entering into by the
Borrower of any composition, extension or any other arrangement seeking relief
or extension for a material portion of the debts of the Borrower, or the
initiation of any other judicial or non-judicial proceeding or agreement by,
against or including the Borrower which seeks or intends to accomplish a
reorganization or arrangement with creditors.
12.10 The entry of any judgment(s) in excess of One Million Dollars
($1,000,000.00) (after deducting the portion of any such judgment(s) which is
fully covered by insurance issued by a reputable insurer) against Borrower,
which judgment(s) is not satisfied or appealed from (with execution or similar
process stayed) within thirty (30) days of its entry.
-21-
12.11 The occurrence of any material uninsured loss, theft, damage or
destruction to any material asset(s) of the Borrower in excess of One Million
Dollars ($1,000,000.00).
12.12 The termination of existence, dissolution, or liquidation of the
Borrower, or the ceasing to carry on actively any substantial part of Borrower's
current business.
Upon the occurrence of an Event of Default, Bank may declare any
obligation Bank may have hereunder to be canceled, declare all Obligations of
Borrower to be due and payable and proceed to enforce payment of the Obligations
and to exercise any and all of the rights and remedies afforded to Bank under
the terms of this Agreement or otherwise. In addition, upon the occurrence of an
Event of Default, if Bank proceeds to enforce payment of the Obligations,
Borrower shall be obligated to deliver to Bank cash collateral in an amount
equal to the aggregate amounts then undrawn on all Financial Accommodations
issued for the account of Borrower (if any), and Bank may proceed to enforce
payment of the same and to exercise all rights and remedies afforded to Bank
under the terms of this Agreement or otherwise.
Upon the filing of any complaint, application, or petition by or
against the Borrower initiating any matter in which the Borrower is or may be
granted any relief from the debts of the Borrower pursuant to the Bankruptcy
Code, Bank's obligation hereunder shall be canceled immediately, automatically,
and without notice, and all Obligations of the Borrower then outstanding shall
become immediately due and payable without presentation, demand, or notice of
any kind to the Borrower.
ARTICLE XIII
NOTICE
13.01 All notices and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including overnight
courier, telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered to the addresses set forth
in Section 13.02 below. All such notices and communications shall, when mailed,
telecopied (with confirmed receipt), telegraphed, telexed or cabled, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company, confirmed by telex answer back or delivered to the cable company,
respectively.
13.02 The addresses to which such communications shall be sent are as
follows:
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(a) If intended for the Borrower, to:
Groundwater Technology, Inc.
100 River Ridge Drive
Norwood, MA 02062
Attn: Chief Financial Officer and to
General Counsel's Office
Telecopier No.: (617) 769-7992
(b) If intended for Bank, to:
Fleet National Bank
One Federal Street
Boston, MA 02211
Attn: Thomas F. Brennan, Vice President
Telecopier No.: (617) 346-0600
with copies to:
Brian T. Garrity, Esq.
Shapiro, Israel & Weiner, P.C.
100 North Washington Street
Boston, MA 02114
Telecopier No.: (617) 742-2355
13.03 The addresses and telecopier numbers set forth herein may be
changed by notice hereunder.
ARTICLE XIV
CONSENT TO JURISDICTION AND JURY TRIAL WAIVER
14.01 BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE OR HEREAFTER HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT. Borrower hereby certifies that neither Bank nor any of its
representatives, agents or counsel has represented, expressly or otherwise, that
Bank would not, in the event of any such suit, action or proceeding, seek to
enforce this waiver of right to trial by jury. Borrower acknowledges that Bank
has been induced to enter into this Agreement by, among other things, this
waiver. Borrower acknowledges that Borrower has read the provisions of this
Agreement and in particular, this Section 14.01; has consulted legal counsel;
understands the right Borrower is granting in this Agreement and is waiving in
this Section 14.01 in particular; and makes the above waiver knowingly,
voluntarily and intentionally.
-23-
14.02 Borrower and Bank agree that any action or proceeding to enforce
or arising out of this Agreement may be commenced in any court of the
Commonwealth of Massachusetts sitting in the county of Suffolk, or in the United
States District Court for the District of Massachusetts, and Borrower waives
personal service of process and agrees that a summons and complaint commencing
an action or proceeding in any such court shall be properly served and confer
personal jurisdiction if served by registered or certified mail to Borrower, or
as otherwise provided by the laws of the Commonwealth of Massachusetts or the
United States of America.
ARTICLE XV
MISCELLANEOUS
15.01 The Borrower will, from time to time, execute and deliver to Bank
all such other and further instruments and documents and take or cause to be
taken all such other and further action as Bank may reasonably request in order
to effect and confirm more securely in Bank all rights contemplated in this
Agreement.
15.02 The Borrower may take any action herein prohibited or omit to
perform any act required to be performed by the Borrower upon obtaining Bank's
prior written consent to each such action, or omission to act. No waiver on
Bank's part on any one occasion shall be deemed a waiver on any other occasion.
Bank shall not be deemed to have waived any of its rights hereunder unless such
waiver shall be in writing and duly signed by an authorized officer of Bank,
which shall include any vice president or more senior officer of Bank.
15.03 This Agreement may be amended only by an instrument in writing
and duly signed by the Borrower and an authorized officer of Bank which shall
include any vice president or more senior officer of Borrower.
15.04 All covenants, agreements, representations and warranties
contained in this Agreement shall bind the Borrower, its successors and assigns,
and shall inure to Bank's benefit and the benefit of Bank's successors and
assigns, whether expressed or not.
15.05 All rights of Bank hereunder shall be cumulative. Bank shall not
be required to have recourse to any property of the Borrower before enforcing
its rights or remedies against the Borrower. The Borrower hereby waives
presentment and protest of any instrument and any notice thereof.
15.06 If any provision of this Agreement or any other Financing
Agreement shall be held to be illegal or unenforceable, such illegality or
unenforceability shall relate solely to such provision and shall not affect the
remainder of this Agreement.
15.07 This Agreement shall be construed and enforced in accordance with
the laws of the Commonwealth of Massachusetts.
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15.08 This Agreement shall take effect as an instrument under seal.
15.09 The captions herein contained are inserted as a matter of
convenience only and such captions do not form a part of this Agreement and
shall not be utilized in the construction hereof.
15.10 In the event that the Borrower fails to make any payment or take
any action required by this Agreement, Bank may, but shall not be required to,
make such payment or take, or cause to be taken, such action. If Bank chooses to
make any such payment or to take or cause to be taken any such action, the
amount of such payment and the cost of such action shall become one of the
Obligations, shall be payable upon demand and, until paid in full, shall bear
interest at the rate established pursuant to the terms of this Agreement. Unless
circumstances otherwise require, Bank shall give the Borrower five (5) Business
Days notice of Bank's intention to make such payment or take or cause to be
taken such action.
15.11 Calculation of Adjusted Libor, as well as all other fees and
charges payable with respect to each Libor Loan shall be made and paid as though
Bank had actually funded the relevant Libor Loan through the purchase of a
Eurodollar deposit at Libor in an amount equal to the amount of the Libor Loan
and having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore agent or office of Bank to
a domestic office of Bank in the United States of America, provided, however,
that Bank may fund each Libor Loan in any manner it sees fit and the foregoing
assumptions shall be nevertheless used for the calculation of the Libor Rate and
such other fees and charges.
ARTICLE XVI
FLUOR DANIEL, INC.
16.01 The Borrower and the Bank have discussed the Borrower's
anticipated affiliation with Fluor Daniel, Inc. and the Loans and the provisions
of this Agreement will be available to the Borrower after that affiliation is
formalized. The Bank recognizes that the Borrower has created a wholly-owned
subsidiary called GTI Acquisition Corporation, which will be merged into Fluor
Daniel, Inc.'s subsidiary Fluor Daniel Environmental Services, Inc. The Bank
also understands that the Borrower will receive cash plus the stock of Fluor
Daniel Environmental Services, Inc. and in return Fluor Daniel, Inc. will
receive stock of the Borrower (whose name will be changed to Fluor Daniel GTI,
Inc. "FDGTI"). The current stockholders of the Borrower will in turn receive
stock of FDGTI and approximately Sixty Million Dollars ($60,000,000.00) in cash,
including substantially all of the Borrower's current cash, cash equivalents and
marketable securities. As a result of these transactions (the "AFFILIATION"),
the Borrower's name will be changed to FDGTI. The Bank understands that the
Affiliation is subject to a number of factors, including approval by Borrower's
stockholders and the Bank and the Borrower hereby confirm their agreement to
modify this Agreement in the event that the final structure and terms of the
Affiliation materially differ from those set forth above. After the Affiliation
has been completed,
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this Agreement will be modified, in any event, to reflect the new "Borrower"
hereunder and to reflect any other changes resulting from the Affiliation.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed as an instrument under seal as of the day and year first above written.
Witness: GROUNDWATER TECHNOLOGY, INC.
(As to Both)
\s\ Brian T. Garrity By: \s\ Robert E. Sliney, Jr.
- --------------------- ------------------------------------
Brian T. Garrity
Address: 100 River Ridge Drive
Norwood, MA 02062
FLEET NATIONAL BANK
By: \s\ Thomas F. Brennan
------------------------------------
Thomas F. Brennan, Vice President
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REVOLVING TIME NOTE
$10,000,000.00 April 4, 1996
Boston, Massachusetts
On April 30, 1999, for value received, the undersigned promises to pay
to the order of Fleet National Bank (the "BANK") at the office of Bank at One
Federal Street, Boston, Massachusetts 02211, or such other place as the Bank
shall designate, Ten Million ($10,000,000.00) Dollars, or such lesser principal
amount advanced to the undersigned by the Bank under the line of credit
established pursuant to a Revolving Credit Agreement of even date (the
"AGREEMENT"), together with interest thereon as follows: (a) on outstanding
principal designated as a Prime Rate Loan pursuant to Section 4.01 of the
Agreement, interest shall accrue from the date hereof, payable monthly in
arrears on the first day of each calendar month prior to the due date hereof,
and upon the due date hereof, at a fluctuating interest rate per annum equal to
the Bank's Prime Rate in effect from time to time. Each change in such interest
rate shall take effect simultaneously with the corresponding change in such
Prime Rate. "PRIME RATE" shall mean the rate of interest announced by Bank in
Boston, Massachusetts, from time to time as its Prime Rate, it being understood
that such rate is a reference rate and not necessarily the lowest rate of
interest charged by Bank. Interest shall be calculated on the basis of actual
days elapsed and a 360-day year; (b) on outstanding principal designated as a
Libor Loan pursuant to Section 4.01 of the Agreement, interest shall accrue from
the Borrowing Date for such Advance through and including the Maturity Date
chosen by the undersigned with respect to such Advance, at a fixed interest rate
per annum equal to the aggregate of the Adjusted Libor plus Margin, and shall be
payable on the Maturity Date. All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Agreement.
This note shall, at the option of the Bank, become immediately due and
payable without notice or demand upon the occurrence of any of the following
events:
(a) Failure to make any payment of principal or interest when due; or
(b) The occurrence of any other Event of Default under the Agreement,
subject to any applicable grace periods set forth therein.
If any payment or installment to be made hereunder, whether interest,
principal or both, shall not be paid when due (and after Bank has exhausted its
authorized rights under Section 6.06 of the Agreement), then, in addition to
interest and without limiting the holder's rights by reason of such default,
there shall be paid, upon demand, the greater of one percent (1%) of such
payment or installment or $15.00.
Any deposits or other sums at any time credited by or due from the
holder to any maker, endorser or guarantor hereof and any securities or other
property of any such maker, endorser or guarantor at any time in the possession
of the holder may at all times be held and treated as
collateral for the payment of this note and any and all other liabilities
(direct or indirect, absolute or contingent, sole, joint or several, secured or
unsecured, due or to become due, now existing or hereafter arising) of any such
maker to the holder. The holder may apply or set off such deposits or other sums
against such liabilities at any time in the case of makers but only with respect
to matured liabilities in the case of endorsers and guarantors.
Every maker, endorser and guarantor hereof hereby waives presentment,
demand, notice, protest and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement hereof and consents
that this note may be extended from time to time and that no such extension or
other indulgence, and no substitution, release or surrender of collateral, and
no discharge or release of any other party primarily or secondarily liable
hereon, shall discharge or otherwise affect the liability of any such maker,
endorser or guarantor. No delay or omission on the part of the holder in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder, and a waiver of any such right on any one occasion shall
not be construed as a bar to or waiver of any such right on any future occasion.
Every maker, endorser and guarantor hereof agrees to pay on demand all
reasonable costs and expenses (including legal costs and reasonable attorneys'
fees) incurred or paid by the holder in enforcing this note on default.
This note shall take effect as a sealed instrument and shall be
governed by the laws of the Commonwealth of Massachusetts.
WITNESS: GROUNDWATER TECHNOLOGY, INC.
\s\ Brian T. Garrity By: \s\ Robert E. Sliney, Jr.
- --------------------- --------------------------------
Brian T. Garrity
Address: 100 River Ridge Drive
Norwood, MA 02062
-2-
EX 10.20
FIRST AMENDMENT TO STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENT, dated May 30, 1996
(this "Amendment") is entered into between Fluor Daniel, Inc., a California
corporation (the "Purchaser"), and Fluor Daniel GTI, Inc. a Delaware corporation
(the "Company"). The Company was formerly known as "Groundwater Technology,
Inc."
WHEREAS, the Purchaser and the Company entered into that certain Stock
Option Agreement, dated as of December 11, 1995 (the "Option Agreement"),
pursuant to which, the Company granted to the Purchaser an option to purchase
certain shares of Common Stock of the Company, subject to certain adjustments;
and
WHEREAS, the parties desire to amend the Option Agreement as set forth
below:
NOW, THEREFORE, the parties hereto, in consideration of the premises
and agreements herein contained and intending to be legally bound hereby, agree
as follows:
1. The fifth and sixth sentences of Section 1 of the Option
Agreement are hereby amended and restated in their entirety to read as follows:
For purposes of the adjustments described in this section, the
"Adjustment Fraction" means a fraction, the numerator which
equals the Current Market Price (as defined below) of a share
of Old Common Stock, and the denominator of which equals the
Current Market Price of a share of New Common Stock. The
"Current Market Price" of a share of Old Common Stock or a
share of New Common Stock means the average per share closing
price for the five trading days immediately preceding the
Closing Date, in the case of the Old Common Stock, and the
five trading days immediately following the Closing Date, in
the case of the New Common Stock, as reported on the NASDAQ
National Market.
This Amendment may be executed in counterparts, each of which shall
constitute an original, but all of which together shall constitute one and the
same instrument. Except as amended herein, the Option Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the date and year
first above written.
Fluor Daniel GTI, Inc. Fluor Daniel, Inc.
By: /s/ Walter C. Barber By: /s/ DL Myers
--------------------------------- ---------------------------------
Walter C. Barber, President David L. Myers, Vice President
EX 22.1
SUBSIDIARIES OF THE REGISTRANT
The following is a list of the Subsidiaries of the Company:
<TABLE>
<CAPTION>
SUBSIDIARY PLACE OF INCORPORATION
---------- ----------------------
<S> <C>
Groundwater Technology Government Services, Inc. Delaware
GTI Investment Company, Inc. Delaware
Fluor Daniel GTI International, Inc. Delaware
Fluor Daniel GTI Canada, Inc.* Province of Ontario,
Canada
Fluor Daniel GTI International Limited* United Kingdom
Groundwater Technology B.V.* The Netherlands
Fluor Daniel GTI Australia PTY, Limited* Australia
Groundwater Technology Italia S.r.l.* Italy
Groundwater Technology (NZ) Limited+ New Zealand
Fluor Daniel Environmental Services, Inc. California
</TABLE>
*Fluor Daniel GTI Canada, Inc. ("Canada"), Fluor Daniel GTI
International Limited ("UK"), Groundwater Technology B.V. ("GTBV"),
Fluor Daniel GTI Australia PTY, Limited ("Australia") and Groundwater
Technology Italia S.r.l. ("GTI") are indirect or "second-tier"
subsidiaries of the Company. Canada, UK, GTBV, Australia and GTI are
subsidiaries of Fluor Daniel GTI International, Inc. which, in turn, is
a wholly-owned subsidiary of the Company.
+Groundwater Technology (NZ) Limited is a subsidiary of Australia.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration
statements of Fluor Daniel GTI, Inc. on Form S-8 (File Nos. 33-9756, 33-19289,
33-28059, 33-43156 and 33-65363) of our report dated May 23, 1996, on our audit
of the consolidated financial statements and financial statement schedule of
Fluor Daniel GTI, Inc. as of and for the year ended April 27, 1996, which report
is incorporated by reference or included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 22, 1996
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8 Nos. 33-9756, 33-19289, 33-28059, 33-43156 and 33-65363)
pertaining to the 1986 Employee Stock Purchase Plan, the 1987 Stock Plan, the
1987 Stock Plan, as amended, the 1986 Employee Stock Purchase Plan, as amended,
and the Amended and Restated 1986 Employee Stock Purchase Plan and 1995 Director
Stock Option Plan, respectively, of Fluor Daniel GTI, Inc., formerly Groundwater
Technology, Inc., of our report dated May 26, 1995, with respect to the
consolidated financial statements and schedule of Fluor Daniel GTI, Inc.
included in the Annual Report (Form 10-K) for the year ended April 27, 1996.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
July 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10K FOR
PERIOD ENDING APRIL 27, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-27-1996
<PERIOD-START> APR-30-1995
<PERIOD-END> APR-27-1996
<CASH> 36,729
<SECURITIES> 0
<RECEIVABLES> 40,793
<ALLOWANCES> 2,063
<INVENTORY> 0
<CURRENT-ASSETS> 98,769
<PP&E> 8,634
<DEPRECIATION> 0
<TOTAL-ASSETS> 118,807
<CURRENT-LIABILITIES> 18,726
<BONDS> 0
0
0
<COMMON> 81
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 118,807
<SALES> 168,939
<TOTAL-REVENUES> 168,939
<CGS> 64,133
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 38,465
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,151
<INCOME-TAX> 1,660
<INCOME-CONTINUING> 2,491
<DISCONTINUED> (1,334)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,157
<EPS-PRIMARY> .17
<EPS-DILUTED> 0
</TABLE>
