EXECUTION COPY
STOCK OPTION AGREEMENT
between
FLUOR ▇▇▇▇▇▇, INC.
and
GROUNDWATER TECHNOLOGY, INC.
December 11, 1995
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), dated as of December 11, 1995,
is entered into between FLUOR ▇▇▇▇▇▇, INC. a Delaware corporation (the
"Purchaser"), and GROUNDWATER TECHNOLOGY, INC. a Delaware corporation (the
"Company").
WHEREAS, the Purchaser, Fluor ▇▇▇▇▇▇ Environmental Services, Inc., a
California corporation ("FDESI"), the Company and GTI Acquisition Corporation
("Newco") propose to enter into an Investment Agreement of even date herewith
(the "Investment Agreement") providing for the merger of FDESI and Newco and the
issuance to Purchaser of shares in a new class of shares of Common Stock par
value $0.001 per share (the "New Common Stock"), of the Company to be created in
the reclassification of the Common Stock, par value $0.01 per share, of the
Company (the "Old Common Stock") immediately prior to the closing (the
"Closing") of the merger under the Investment Agreement;
WHEREAS, as a condition to their willingness to enter into the
Investment Agreement, the Purchaser and FDESI have requested that the Company
agree, and the Company has agreed, to sell to the Purchaser an irrevocable
option as set forth herein to purchase up to 1,366,000 shares of Old Common
Stock, if exercised prior to the Closing, or up to 1,366,000 shares of New
Common Stock (subject to adjustment as set forth in Section 1) if exercised on
or after the Closing (such Old Common Stock and such New Common Stock,
collectively, the "Optioned Shares"), and grant Purchaser certain other rights;
2
NOW THEREFORE, to induce the Purchaser and FDESI to enter into the Investment
Agreement, and in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
1. Purchase and Sale of Option. Upon the terms and subject to the
conditions set forth herein, the Company hereby sells, issues and delivers to
the Purchaser and the Purchaser hereby purchases and accepts, an irrevocable
option (the "Option") to purchase for $17.00 per share in cash (the "Per Share
Price") up to 1,366,000 (the "Base Shares") authorized but unissued shares of
the Optioned Shares; provided, however, that after the Closing, the Option shall
be automatically adjusted so that the Base Shares shall equal 1,366,000
multiplied by the Adjustment Fraction (as defined below) and the Per Share Price
shall equal $17.00 multiplied by a fraction equal to one divided by the
Adjustment Fraction. The Option shall expire if not exercised on or prior to
December 11, 1998. The price the Purchaser shall pay for the Option is
$1,650,000 (the "Option Purchase Price"). The Option Purchase Price shall be
payable by wire transfer of immediately available funds, in accordance with the
Company's written instructions, on the date hereof. For purposes of the
adjustments described in this section, the "Adjustment Fraction" means a
fraction, the numerator of which equals the Current Market Price (as defined
below) of a share of Old Common Stock, and the denominator of which equals the
Current Market Price of a share of Old Common Stock or a share of New Common
Stock. The "Current Market Price of a share of Old Common Stock or a share of
New Common Stock means the average per share closing price for the five trading
days immediately preceding the Closing Date, in the case of the
3
Old Common Stock, and the five trading days immediately following the Closing
Date, in the case of the New Common Stock, as reported on the NASDAQ National
Market.
2. Exercise of Option. The Purchaser may exercise the Option in whole or
in part at any time or from time to time prior to the expiration of the Option
and after the first to occur of (a) December 11, 1996, or (b) the Purchaser
becoming entitled to terminate the Investment Agreement by virtue of Section 9.1
thereof. In the event that the Purchaser wishes to exercise the Option, the
Purchaser shall give written notice (the date of any such notice being herein
called a "Notice Date") to the Company specifying the number of Optioned Shares
it will purchase pursuant to such exercise and a place and date (the "Closing
Date") not later then 10 business days from such Notice Date for the closing of
such purchase ("Closing"); provided, however, that if any approvals under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") shall be
required with respect to such exercise, then the Closing shall be the later of
the Closing Date as specified or the next business day following the date on
which the applicable waiting periods under the HSR Act shall have expired.
3. Payment of Purchase Price and Delivery of Certificates for Optioned
Shares. At any Closing hereunder, (a) the Purchaser will make payment to the
Company of the aggregate price for the Optioned Shares purchased at such Closing
in New York Clearing House funds by certified or official bank check payable to
the order of the Company, in an amount equal to the product of the Per Share
Price multiplied by the number of Optioned Shares being purchased at such
Closing and (b) the Company will deliver to the Purchaser a duly executed
certificate or
4
certificates, as requested by the Purchaser, representing the number of Optioned
Shares so purchased, registered in the name of the Purchaser or its nominee in
the denominations designated by the Purchaser in its notice of exercise.
4. Representations and Warranties of the Company.
(a) Incorporation of Company's Representations and Warranties by
Reference. The representations and warranties of the Company contained in
Article III of the Investment Agreement are incorporated by reference into this
Agreement with the same effect as though set forth in full this place (the
representations and warranties contained in the first sentence of Section 3.1
and in Section 3.2 of the Investment Agreement being deemed repeated at each
Closing at which Optioned Shares are purchased).
(b) Compliance with Securities Laws. None of the Company, any of
its Affiliates (as defined in the Investment Agreement) or anyone acting on its
or their behalf has issued, sold or offered any security of the Company to any
person under circumstances that would cause the issuance and sale of the
Optioned Shares, as contemplated by this Agreement, to be subject to the
registration requirements of the Securities Act of 1933 (the "Securities Act").
Assuming the representations of Purchaser contained in Section 4.14 of the
Investment Agreement are true and correct on the date hereof and on the date of
each Closing at which Optioned Shares are purchased, the issuance, sale and
delivery of the Optioned Shares hereunder are exempt from the registration and
prospectus delivery requirements of the Securities Act.
5
(c) The Optioned Shares. The Company has taken all necessary
corporate action to authorize and reserve for issuance upon exercise of the
Option 1,366,000 (as adjusted pursuant to Section 1) shares of authorized but
unissued Old Common Stock or New Common Stock, as the case may including
approval by the Board of Directors of the Company. Such approval by the Board of
Directors of the Company is intended to be and is sufficient to render
inapplicable to this Agreement and the transactions contemplated hereby as well
as any future acquisitions of Old Common Stock or New Common Stock or other
transactions involving the Purchaser or any of its Affiliates and the Company,
the provisions of Section 203 of the Delaware General Corporation Law (whether
or not this Agreement is terminated). No vote is required by the holders of any
securities of the Company to approve this Agreement and the transactions
contemplated hereby.
5. Representations and Warranties of the Purchaser.
(a) Incorporation of the Purchaser's Representations and
Warranties by Reference. The representations and warranties of the Purchaser
contained in Article IV of the Investment Agreement are incorporated by
reference into this Agreement with the same effect as though set forth in full
at this place.
(b) Securities Act. Any Optioned Shares purchased by the
Purchaser will be acquired for investment only and not with a view to any public
distribution thereof and the Purchaser will not offer to sell or otherwise
dispose of any Optioned Shares so acquired by it in violation of the
registration requirements of the Securities Act.
6
6. Adjustment upon Changes in Capitalization. In the event of any change
in the number of outstanding shares of Old Common Stock or New Common Stock by
reason of any stock dividend, stock split, recapitalization, combination,
exchange of shares, merger, consolidation, reorganization or the like or any
other change in the corporate or capital structure of the Company (except for
the reclassification of Old Common Stock at the Closing) that would have the
effect of diluting the Purchaser's rights hereunder, the number of Optioned
Shares and the Per Share Price shall be adjusted appropriately so as to restore
the Purchaser to its rights hereunder; provided, however, that nothing in this
Agreement shall be construed as permitting the Company to take any action or
enter into any transaction prohibited by the Investment Agreement, it being
understood and agreed that Section 6.3 of the Investment Agreement shall not
restrict in any way the ability of the Purchaser to exercise this Option.
7. Registration Rights. Upon the request of the Purchaser at any time
and from time to time within three years of any Closing hereunder, the Company
agrees (i) to effect, as promptly as practicable, up to two registrations (each
a "Demand Registration") under the Securities Act covering any part or all (as
may be requested by the Purchaser) of the Optioned Shares (or any other
securities that have been acquired by or are issuable to the Purchaser upon
exercise of the Option), and to use its best efforts to qualify such Optioned
Shares (or such other securities) under any applicable state securities laws and
to ensure that they are qualified for trading through the NASDAQ National Market
(or on any securities exchange on which the Common Stock is traded at such time)
and (ii) at the written request of the Purchaser delivered within ten (10) days
after notice of the intent to file such registration statements is delivered to
the Purchaser, to
7
include any part or all of the Optioned Shares (or such other securities) in any
registration statement for common stock filed by the Company under the
Securities Act in which such inclusion is permitted under applicable rules and
regulations (other than a registration statement on Form ▇-▇, ▇-▇ or any
successor form) provided that no request for registration pursuant to clause (i)
of this Section 7 may be made within 120 days after the effective date of a
registration statement filed by the Company in which the Optioned Shares have
been entitled to join. So long as the Company satisfies the eligibility
requirements for use of a registration statement on Form S-3 under the
Securities Act, the Purchaser may request one Demand Registration for an
offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act and will file all supplements to the prospectus and take all
other actions necessary to facilitate an offering thereunder. The Company will
use its best efforts to keep each such registration described above effective
for a period of not less than one year (or, if sooner, until the Purchaser shall
have disposed of all of the Optioned Shares). Notwithstanding anything to the
contrary herein, the Company's obligation to file a registration statement or to
cause such registration to become and remain effective shall be suspended upon
notice to Purchaser for a period of up to 90 days in any 12-month period if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed. Such
obligation of the Company shall continue after any such suspension. The
Purchaser shall choose the managing underwriter in any Demand Registration,
which managing underwriter shall be of recognized national standing. If the
managing underwriter of a proposed offering of securities by the Company shall
advise the Company in writing that, in the reasonable opinion of such managing
underwriter, the distribution of the Optioned Shares requested by the Purchaser
to be
8
included in a registration statement concurrently with securities being
registered for sale by the Company would adversely affect the distribution of
such securities by the Company, then the Company shall, at its option, either
(x) include such Optioned Shares in the registration statement, but the
Purchaser shall agree to delay the offering and sale of such Optioned Shares for
such period of time as the managing underwriter may reasonably request (provided
that the Purchaser may at any time withdraw its request to include Optioned
Shares in such offering) or (y) include such portion, if any, of the Optioned
Shares in the registration statement as the managing underwriter advises may be
so included for sale simultaneously with sales by the Company. The registrations
effected under this Section 7 shall be effected at the Company's expense except
for underwriting commissions allocable to the Optioned Shares and the fees and
disbursements of the Purchaser's counsel. The Company shall indemnify and hold
harmless the Purchaser its Affiliates and controlling persons and their
respective officers, directors, agents and representatives, and the underwriters
for any such offering, in accordance with the indemnification provisions
customarily included by the managing underwriter in its standard-form
underwriting agreement for offerings of common stock, from and against any and
all losses, claims, damages, liabilities and expenses (including, without
limitation, all out-of-pocket expenses and all fees and disbursements of counsel
and accountants) arising out of or based upon any statements contained in, or
omissions or alleged omissions from, each registration statement (and related
prospectus) filed pursuant to this Section 7 (other than statements or omissions
made in reliance upon, and in conformity with, written information furnished to
the Company with respect to it specifically for use in the preparation of such
documents by such indemnified persons). The Purchaser shall indemnify and hold
harmless the Company, its Affiliates and controlling persons and their
respective officers,
9
directors, agents and representatives, and the underwriters for any such
offering, in accordance with the indemnification provisions customarily included
by the managing underwriter in its standard-form underwriting agreement for
offerings of common stock, from and against any and all losses, claims, damages,
liabilities and expenses and all fees and disbursements of counsel and
accountants) arising out of or based upon any statements contained in, or
omissions from, each registration statement (and related prospectus) filed
pursuant to this Section 7 which statements or omissions were made in reliance
upon, and in conformity with, written information furnished by the Purchaser to
the Company with respect to the Purchaser specifically for use in the
preparation of such documents by the Company.
8. Further Assurances.
(a) Each of the Company and the Purchaser shall as promptly as
practicable following the execution and delivery of this Agreement make all
necessary filings and use all reasonable efforts to obtain any clearance
required under the HSR Act for, and to provide assistance to the other any
antitrust proceedings related to, the transactions contemplated by this
Agreement.
(b) If the Purchaser shall exercise the Option in whole or in
part in accordance with the terms of this Agreement, from time to time and
without additional consideration the Company will execute and deliver, or cause
to be executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as the Purchaser may reasonably
request for the purpose of effectively carrying out the transactions
contemplated
10
by this Agreement, including the transfer of any and all of the Optioned Shares
to the Purchaser and the release of any and all liens, claims and encumbrances
with respect thereto.
9. Survival of Agreement: Termination. All representations and
warranties made by the Company and the Purchaser herein (including those
incorporated by reference) survive the execution and delivery of this Agreement
and any exercise or expiration of the Option and shall terminate on the fifth
anniversary of the date of this Agreement. The covenants and agreements
contained in this Agreement shall survive and shall continue in accordance with
their terms notwithstanding the expiration of the Option provided in Section 1
hereof.
10. Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by either party (except by operation of law in
connection with a merger, consolidation or sale of substantially all the assets
of such party) without the prior written consent of the other party hereto;
provided that the Purchaser may assign, in its sole discretion, any or all of
its rights, interests and obligations under this Agreement to any other wholly
owned, direct or indirect, subsidiary of the Purchaser. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
11. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses, except as otherwise provided in this
Agreement.
11
12. Waivers; Amendment.
(a) No failure or delay of the Purchaser or the Company in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Purchaser hereunder are
cumulative and are not exclusive of any rights or remedies which the Purchaser
would otherwise have. No waiver of any provision of this Agreement or consent to
any departure by the Company therefrom shall in any event be effective except
pursuant to a writing signed by the Purchaser, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Company in any case shall entitle the Company
to any other or further notice or demand in similar or other circumstance.
13. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or enforceable provisions.
14. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by
12
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Purchaser, to
Fluor ▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Fluor ▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(b) if to the Company, to
Groundwater Technology, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
13
with a copy to:
Groundwater Technology, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
and:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
15. Interpretation. When a reference is made in this Agreement to a
Section such reference shall be to a Section of this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
16. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
17. Entire Agreement: No Third-Party Beneficiaries. This Agreement and
the Investment Agreement constitute the entire agreement, and supersede all
prior agreements and
14
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and the Investment Agreement and are not
intended to confer upon any person other than the parties any rights or remedies
hereunder and therewith.
18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
19. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal Court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal or state court sitting in the
State of Delaware or a Delaware state court.
15
IN WITNESS WHEREOF, the Company and Purchaser have duly executed this
Stock Option Agreement as of the day and year first above written.
GROUNDWATER TECHNOLOGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
FLUOR ▇▇▇▇▇▇, INC.
By: /s/ ▇.▇. ▇▇▇▇▇
Name: ▇.▇. ▇▇▇▇▇, Vice President
16
