EXECUTION COPY

                             STOCK OPTION AGREEMENT

                                     between

                               FLUOR DANIEL, INC.
                           
                                       and
                        
                           GROUNDWATER TECHNOLOGY, INC.








                               December 11, 1995


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                             STOCK OPTION AGREEMENT


THIS STOCK OPTION AGREEMENT (this  "Agreement"),  dated as of December 11, 1995,
is  entered  into  between  FLUOR  DANIEL,  INC.  a  Delaware  corporation  (the
"Purchaser"),  and  GROUNDWATER  TECHNOLOGY,  INC. a Delaware  corporation  (the
"Company").

        WHEREAS,  the Purchaser,  Fluor Daniel Environmental  Services,  Inc., a
California  corporation ("FDESI"),  the Company and GTI Acquisition  Corporation
("Newco")  propose to enter into an  Investment  Agreement of even date herewith
(the "Investment Agreement") providing for the merger of FDESI and Newco and the
issuance  to  Purchaser  of shares in a new class of shares of Common  Stock par
value $0.001 per share (the "New Common Stock"), of the Company to be created in
the  reclassification  of the Common  Stock,  par value $0.01 per share,  of the
Company  (the  "Old  Common  Stock")  immediately  prior  to  the  closing  (the
"Closing") of the merger under the Investment Agreement;

         WHEREAS,  as a  condition  to  their  willingness  to  enter  into  the
Investment  Agreement,  the Purchaser and FDESI have  requested that the Company
agree,  and the Company  has agreed,  to sell to the  Purchaser  an  irrevocable
option as set forth  herein to  purchase  up to  1,366,000  shares of Old Common
Stock,  if  exercised  prior to the Closing,  or up to  1,366,000  shares of New
Common Stock  (subject to  adjustment as set forth in Section 1) if exercised on
or after  the  Closing  (such  Old  Common  Stock  and such  New  Common  Stock,
collectively,  the "Optioned Shares"), and grant Purchaser certain other rights;

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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 

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Old Common Stock,  and the five trading days  immediately  following the Closing
Date,  in the case of the New Common Stock,  as reported on the NASDAQ  National
Market.

        2. Exercise of Option. The Purchaser may exercise the Option in whole or
in part at any time or from time to time prior to the  expiration  of the Option
and after the first to occur of (a)  December  11,  1996,  or (b) the  Purchaser
becoming entitled to terminate the Investment Agreement by virtue of Section 9.1
thereof.  In the event that the  Purchaser  wishes to exercise  the Option,  the
Purchaser  shall give  written  notice (the date of any such notice being herein
called a "Notice Date") to the Company  specifying the number of Optioned Shares
it will  purchase  pursuant to such  exercise and a place and date (the "Closing
Date") not later then 10 business  days from such Notice Date for the closing of
such purchase  ("Closing");  provided,  however, that if any approvals under the
Hart-Scott-Rodino  Antitrust  Improvements  Act of 1976 (the "HSR Act") shall be
required with respect to such  exercise,  then the Closing shall be the later of
the Closing  Date as specified or the next  business day  following  the date on
which the applicable waiting periods under the HSR Act shall have expired.

        3. Payment of Purchase Price and Delivery of  Certificates  for Optioned
Shares.  At any Closing  hereunder,  (a) the Purchaser  will make payment to the
Company of the aggregate price for the Optioned Shares purchased at such Closing
in New York Clearing  House funds by certified or official bank check payable to
the order of the  Company,  in an amount  equal to the  product of the Per Share
Price  multiplied  by the number of  Optioned  Shares  being  purchased  at such
Closing  and (b) the  Company  will  deliver to the  Purchaser  a duly  executed
certificate or  

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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.

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                (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.

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        6. Adjustment upon Changes in Capitalization. In the event of any change
in the number of  outstanding  shares of Old Common Stock or New Common Stock by
reason  of any  stock  dividend,  stock  split,  recapitalization,  combination,
exchange of shares,  merger,  consolidation,  reorganization  or the like or any
other change in the  corporate or capital  structure of the Company  (except for
the  reclassification  of Old Common Stock at the  Closing)  that would have the
effect of diluting  the  Purchaser's  rights  hereunder,  the number of Optioned
Shares and the Per Share Price shall be adjusted  appropriately so as to restore
the Purchaser to its rights hereunder;  provided,  however, that nothing in this
Agreement  shall be  construed as  permitting  the Company to take any action or
enter into any  transaction  prohibited by the  Investment  Agreement,  it being
understood  and agreed that Section 6.3 of the  Investment  Agreement  shall not
restrict in any way the ability of the Purchaser to exercise this Option.

        7.  Registration  Rights.  Upon the request of the Purchaser at any time
and from time to time within three years of any Closing  hereunder,  the Company
agrees (i) to effect, as promptly as practicable,  up to two registrations (each
a "Demand  Registration")  under the Securities Act covering any part or all (as
may be  requested  by the  Purchaser)  of the  Optioned  Shares  (or  any  other
securities  that have been  acquired by or are  issuable to the  Purchaser  upon
exercise of the Option),  and to use its best  efforts to qualify such  Optioned
Shares (or such other securities) under any applicable state securities laws and
to ensure that they are qualified for trading through the NASDAQ National Market
(or on any securities exchange on which the Common Stock is traded at such time)
and (ii) at the written request of the Purchaser  delivered within ten (10) days
after notice of the intent to file such registration  statements is delivered to
the Purchaser,  to

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include any part or all of the Optioned Shares (or such other securities) in any
registration  statement  for  common  stock  filed  by  the  Company  under  the
Securities Act in which such inclusion is permitted under  applicable  rules and
regulations  (other  than a  registration  statement  on  Form  S-8,  S-4 or any
successor form) provided that no request for registration pursuant to clause (i)
of this  Section 7 may be made  within  120 days after the  effective  date of a
registration  statement  filed by the Company in which the Optioned  Shares have
been  entitled  to  join.  So  long as the  Company  satisfies  the  eligibility
requirements  for  use  of a  registration  statement  on  Form  S-3  under  the
Securities  Act,  the  Purchaser  may  request  one Demand  Registration  for an
offering  to be made on a  continuous  basis  pursuant  to Rule  415  under  the
Securities  Act and will file all  supplements  to the  prospectus  and take all
other actions necessary to facilitate an offering  thereunder.  The Company will
use its best efforts to keep each such  registration  described  above effective
for a period of not less than one year (or, if sooner, until the Purchaser shall
have disposed of all of the Optioned  Shares).  Notwithstanding  anything to the
contrary herein, the Company's obligation to file a registration statement or to
cause such  registration to become and remain  effective shall be suspended upon
notice  to  Purchaser  for a period of up to 90 days in any  12-month  period if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company,  should not be disclosed.  Such
obligation  of the  Company  shall  continue  after  any  such  suspension.  The
Purchaser  shall choose the  managing  underwriter  in any Demand  Registration,
which managing  underwriter  shall be of recognized  national  standing.  If the
managing  underwriter of a proposed  offering of securities by the Company shall
advise the Company in writing that, in the  reasonable  opinion of such managing
underwriter,  the distribution of the Optioned Shares requested by the Purchaser
to be

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included  in  a  registration   statement  concurrently  with  securities  being
registered for sale by the Company would  adversely  affect the  distribution of
such securities by the Company,  then the Company shall,  at its option,  either
(x)  include  such  Optioned  Shares  in the  registration  statement,  but  the
Purchaser shall agree to delay the offering and sale of such Optioned Shares for
such period of time as the managing underwriter may reasonably request (provided
that the  Purchaser  may at any time  withdraw  its request to include  Optioned
Shares in such  offering) or (y) include such  portion,  if any, of the Optioned
Shares in the registration  statement as the managing underwriter advises may be
so included for sale simultaneously with sales by the Company. The registrations
effected under this Section 7 shall be effected at the Company's  expense except
for underwriting  commissions  allocable to the Optioned Shares and the fees and
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, 

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directors,  agents  and  representatives,  and the  underwriters  for  any  such
offering, in accordance with the indemnification provisions customarily included
by the managing  underwriter  in its  standard-form  underwriting  agreement for
offerings of common stock, from and against any and all losses, claims, damages,
liabilities  and  expenses  and  all  fees  and  disbursements  of  counsel  and
accountants)  arising  out of or based  upon any  statements  contained  in,  or
omissions  from,  each  registration  statement (and related  prospectus)  filed
pursuant to this Section 7 which  statements or omissions  were made in reliance
upon, and in conformity with, written information  furnished by the Purchaser to
the  Company  with  respect  to  the  Purchaser  specifically  for  use  in  the
preparation of such documents by the Company.

        8.  Further Assurances.

                (a) Each of the Company and the  Purchaser  shall as promptly as
practicable  following  the execution  and delivery of this  Agreement  make all
necessary  filings  and use all  reasonable  efforts  to  obtain  any  clearance
required  under  the HSR Act for,  and to  provide  assistance  to the other 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  

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by this Agreement,  including the transfer of any and all of the Optioned Shares
to the Purchaser and the release of any and all liens,  claims and  encumbrances
with respect thereto.

        9.  Survival  of  Agreement:   Termination.   All   representations  and
warranties  made  by the  Company  and the  Purchaser  herein  (including  those
incorporated by reference)  survive the execution and delivery of this Agreement
and any exercise or  expiration  of the Option and shall  terminate on the fifth
anniversary  of the  date  of  this  Agreement.  The  covenants  and  agreements
contained in this Agreement  shall survive and shall continue in accordance with
their terms  notwithstanding  the expiration of the Option provided in Section 1
hereof.

        10.  Assignment.  This Agreement and the rights  hereunder  shall not be
assignable  or  transferable  by either  party  (except by  operation  of law in
connection with a merger,  consolidation or sale of substantially all the assets
of such party)  without  the prior  written  consent of the other party  hereto;
provided that the Purchaser may assign,  in its sole  discretion,  any or all of
its rights,  interests and obligations  under this Agreement to any other wholly
owned, direct or indirect, subsidiary of the Purchaser. Subject to the preceding
sentence,  this Agreement shall be binding upon,  inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.

        11.  Expenses.  All costs and expenses  incurred in connection with this
Agreement and the  transactions  contemplated  hereby shall be paid by the party
incurring  such  costs  or  expenses,  except  as  otherwise  provided  in  this
Agreement.

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        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 

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overnight courier  (providing proof of delivery) to the parties at the following
addresses  (or at such other  address for a party as shall be  specified by like
notice):

                (a)     if to the Purchaser, to
                                Fluor Daniel, Inc.
                                3333 Michelson Drive
                                Irvine, California  92730
                                Attention:  David L. Myers

                        with a copy to:

                                Fluor Daniel, Inc.
                                3333 Michelson Drive
                                Irvine, California  92730
                                Attention:  General Counsel

                (b)     if to the Company, to
                                Groundwater Technology, Inc.
                                100 River Ridge Drive
                                Norwood, Massachusetts  02062
                                Attention:  Walter C. Barber

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                        with a copy to:
                                Groundwater Technology, Inc.
                                100 River Ridge Drive
                                Norwood, Massachusetts  02062
                                Attention:  Brian D. Goldstein, Esq.
                        and:
                                Testa, Hurwitz & Thibeault
                                125 High Street
                                Boston, Massachusetts 02110
                                Attention: Andrew E. Taylor, Jr., Esq.

        15.  Interpretation.  When a reference  is made in this  Agreement  to a
Section such reference shall be to a Section of this Agreement  unless otherwise
indicated.  Whenever the words "include",  "includes" or "including" are used in
this  Agreement,  they  shall be deemed  to be  followed  by the words  "without
limitation".

        16.  Counterparts.  This  Agreement  may be  executed  in  one  or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

        17. Entire Agreement: No Third-Party  Beneficiaries.  This Agreement and
the  Investment  Agreement  constitute the entire  agreement,  and supersede all
prior  agreements and  

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understandings,  both  written and oral,  among the parties  with respect to the
subject  matter  of this  Agreement  and the  Investment  Agreement  and are not
intended to confer upon any person other than the parties any rights or remedies
hereunder and therewith.

        18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware,  regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.

        19.  Enforcement.  The parties agree that irreparable damage would occur
in the event that any of the  provisions of this Agreement were not performed in
accordance  with  their  specific  terms  or  were  otherwise  breached.  It  is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the terms and  provisions  of this  Agreement in any court of the United  States
located in the State of  Delaware  or in  Delaware  state  court,  this being in
addition to any other remedy to which they are entitled at law or in equity.  In
addition,  each of the  parties  hereto  (a)  consents  to submit  itself to the
personal  jurisdiction  of any Federal Court located in the State of Delaware or
any Delaware  state court in the event any dispute  arises out of this Agreement
or any of the  transactions  contemplated by this Agreement,  (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request  for leave from any such court and (c) agrees that it will not bring any
action  relating to this Agreement or any of the  transactions  contemplated  by
this  Agreement in any court other than a Federal or state court  sitting in the
State of Delaware or a Delaware state court.

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        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/ Walter C. Barber
                                        
                                        Name: Walter C. Barber, President
                                       
                                        FLUOR DANIEL, INC.

                                        By:   /s/ D.L. Myers

                                        Name: D.L. Myers, Vice President

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