SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required] for the Fiscal Year Ended September
28, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the Transition Period from
_________________________ to _________________________
Commission File Number 0-2052
GODDARD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2268165
(State or other juris- (I.R.S. Employer Identifi-
diction of incorporation cation No.)
or organization)
705 Plantation Street, Worcester, Massachusetts, 01605
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (508) 852-2435
Securities registered under Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
None N/A
Securities registered under Section 12(g) of the Act:
Common Stock $.01 par value
(Title of class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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 _____
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and if no disclosure will
be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB []
The registrant's revenues for its most recent fiscal year are
$8,300,167.
The aggregate market value of the registrant's Common Stock, par value
$.01 per share, held by non-affiliates of the registrant at December 13,
1996 was approximately $1,945,850, based on the mean of the high and low
sale prices on that date as reported by the National Quotation Bureau,
Inc.
As of December 13, 1996, there were outstanding 2,040,129 shares of
Common Stock, par value $.01 per share.
Transitional Small Business Disclosure Format:
Yes No X
-2-
PART I
ITEM 1. Business.
General.Goddard Industries, Inc. (which together with its wholly-
owned subsidiaries is hereinafter referred to as the "Company") is
primarily engaged in the design, manufacture, distribution and sale of
cryogenic valves for industrial and commercial use and in the
distribution of plumbing goods, valves and fittings for residential and
commercial use.
The Company's Goddard Valve subsidiary designs, manufactures and
sells cryogenic gate, globe and check valves and control devices
required for the handling of liquefied natural gas, liquid oxygen and
other liquefied gases. The principal markets for Goddard Valve's
cryogenic valves historically have been public utility companies
involved with liquefied natural gas and manufacturers of cryogenic tanks
and transport trailers. In more recent years, markets for special
cryogenic valves have developed for use on tanks required by the semi-
conductor manufacturing and medical technology industries. Goddard
Valve's cryogenic valves are distributed domestically both by direct
sales to customers and through independent sales representatives.
Goddard Valve also makes direct sales of the valves to customers in
Canada, Europe and Asian countries.
The Company's Webstone subsidiary is an importer of brass,
stainless steel and plastic plumbing products, as well as valves for the
gas industry, all of which are manufactured and packaged to Webstone's
specifications in the Far East and in Europe, and marketed under the
Webstone name nationally through sales representatives and in Canada
through distributors. In addition, Webstone also manufactures and
distributes nationally certain domestic plumbing products, some of which
have been designed by the Goddard Valve subsidiary. The principal
markets for Webstone's plumbing products are plumbing supply and
hardware wholesalers who redistribute products to plumbers and
contractors involved in new construction or home alterations, and to
retail hardware outlets.
The Company is a Massachusetts corporation organized in 1959. Its
executive offices are located at 705 Plantation Street, Worcester,
Massachusetts 01605.
Sources of Supply; Foreign Suppliers.
Raw materials for the Goddard Valve business consist of stainless
steel, aluminum and bronze castings and bar stock, which are available
from a variety of regular and competitive suppliers. The Company does
not anticipate difficulty in obtaining sufficient raw materials for that
business.
Webstone purchases substantially all of the products for its
plumbing supply business from a variety of sources in foreign countries.
Webstone's name is stamped or cast into the part as well as its brand
name being included in the packaging. These foreign operations involve
hazards shared by most enterprises doing business in foreign countries,
such as political risks, currency controls and fluctuations, tariffs and
import controls. To date, Webstone has not been adversely affected by
these matters. Webstone has alternative sources of supply in each
country and does not anticipate problems in maintaining adequate sources
of supply.
-3-
Dependence Upon Principal Customers.
During fiscal 1996 the Goddard Valve division sold a substantial
majority of its products to three customers, manufacturers of cryogenic
vessels. It was dependent on one customer for 46% of its cryogenic valve
business (approximately 28% of the Company's total revenue), and any
loss or significant decrease in business from this customer would have a
material adverse effect on the business of the Company. In addition,
two other customers accounted for approximately 14% and 12%,
respectively, of the Goddard Valve division's cryogenic valve revenues
during fiscal 1996, and the loss of either of those customer could have
a material adverse effect upon the Company.
No single customer accounts for 10% of the revenues of the Webstone
plumbing supply subsidiary.
Backlog.
The dollar amount of backlog of orders believed to be firm for the
Company's cryogenic valve subsidiary was approximately $1,846,000 as of
the end of the 1996 fiscal year, as compared with approximately $776,000
at the end of the preceding fiscal year. The dollar amount of orders
believed to be firm in the Company's plumbing supply subsidiary as of
the end of the 1996 fiscal year was approximately $110,000, as compared
with approximately $98,000 as of the end of the preceding fiscal year.
No part of the backlog of either business is seasonal, and all
backlog is expected to be shipped within the current fiscal year.
Backlog varies according to business conditions within the industry for
both businesses.
Competition.
All aspects of the Company's business are highly competitive. The
Company believes there are between six and eight principal competitors
in its cryogenic valve business. Goddard Valve competes on the basis of
product performance and dependability. The Company believes that its
competitive position within that industry has improved during the past
couple of years, although there can be no assurance that that situation
will continue.
The Company believes there are approximately eight to ten other
major importers of foreign plumbing supplies which distribute nationally
and which compete with the Company's plumbing supply subsidiary. The
Company does not believe that there have been any changes in competitive
conditions in the plumbing supply business or in the competitive
position of Webstone in that industry during the past fiscal year.
Webstone competes on the basis of price and delivery.
Research and Development.
During the last fiscal year, the Company spent approximately
$175,000 and had seven employees working full or part time on Company-
sponsored research and development, all of which was spent on cryogenic
valve development. During the previous year the Company spent
approximately $138,000 for research and development. This increase
reflected the effort on development of valves for the cryogenic
business.
-4-
The Company has obtained a number of patents and has additional
patent applications pending with respect to certain of the products of
its cryogenic valve subsidiary. There can be no assurance that any of
the pending patent applications will be granted or that existing patents
will be enforceable. While the Company believes the patents have value,
it believes that the success of the cryogenic valve subsidiary depends
more upon the technical competence and manufacturing skills of its
employees than upon patents.
Employees.
The Company employs approximately 50 people, of whom 45 are full-
time.
ITEM 2. Properties.
The Company's executive offices and the business of both the
cryogenic valve subsidiary and the plumbing products subsidiary are
located at 703-705 Plantation Street, Worcester, Massachusetts in a
building on a main thoroughfare owned by Goddard Valve. The building is
a one-story masonry building erected in 1961, containing 27,000 square
feet. It is owned by Goddard Valve. The Company anticipates that as a
result of the growth of both divisions over the past couple of years, it
will be necessary to acquire approximately 10,000 additional square feet
of warehouse and manufacturing space for its business. It is presently
contemplated that this will be done by an addition to the existing
building in the near future. With that addition, the facility should
be adequate to meet Company needs.
The Company believes that its existing facilities and equipment are
well maintained and in good operating condition.
ITEM 3. Legal Proceedings.
In 1987, the Company notified the Massachusetts Department of
Environmental Protection ("DEP") of the fact that an environmental site
assessment performed at its facility at 705 Plantation Street, Worcester
for a proposed bank financing had revealed that there may have been a
release or threat of release of oil or hazardous materials. In 1989,
the DEP designated the site as a disposal site under the Massachusetts
Oil and Hazardous Material Release, Prevention and Response Act
(popularly known as Chapter 21E). In 1991, the Company submitted a
Phase One Limited Site Investigation report to DEP. The site has been
designated as a Tier 1C Site under the Massachusetts Contingency Plan
and further site investigation is required to be performed.
Separately, in 1990, the Town of Shrewsbury commenced a lawsuit
against the Company and Neles-Jamesbury, Inc. in Massachusetts Superior
Court, alleging that they had caused Shrewsbury to incur response costs
for assessment, containment and removal of oil and hazardous materials
in relation to the town's Home Farm water wells. Shrewsbury sought
damages for environmental response costs and injunctive relief. The
Company filed an answer generally denying the allegations and joined
eight other businesses located in the same industrial park area as
third-party defendants. During 1992-93 some but not all counts of
Shrewsbury's complaint were dismissed.
-5-
The Company gave notice to its comprehensive general liability
insurance carriers of the DEP claim and the Shrewsbury litigation and
asked the carriers to defend and indemnify the Company against the
claims. One of the carriers, St. Paul Fire and Marine Insurance Co.,
assumed primary responsibility for the defense of the litigation and two
other carriers agreed to each pay a portion of defense costs, while
reserving their right to contest coverage under the policies. In 1992,
St. Paul filed suit in the Federal District Court of Massachusetts for a
declaratory judgment that it had no duty to defend or indemnify the
Company under its liability policies. That suit was dismissed without
prejudice pending disposition of the Town of Shrewsbury litigation.
In January 1997 the Company and five of the other defendants
reached a settlement of the Shrewsbury litigation with the Town of
Shrewsbury. The Company agreed to pay a total of $750,000 by March 31,
1997 as its share of the settlement, and other defendants agreed to pay
additional amounts. In addition, the Company reached an agreement with
its three insurance carriers. In exchange for a release of certain
further claims, they will pay a total of $715,000 of the $750,000 amount
Goddard is obligated to pay the Town of Shrewsbury. One of the
insurance carriers has also agreed to pay $70,000 in full settlement of
any claim for insurance coverage with respect to the Company's facility,
to be used as the Company determines in defense of the DEP proceeding.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the stockholders of the Company during
the fourth quarter of the 1996 fiscal year.
-6-
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The Company's Common Stock is traded in the over-the-counter market
in the "pink sheets". As of December 13, 1996, there were 911 holders
of the Company's Common Stock. The quarterly high and low bid prices of
the Company's Common Stock for the two fiscal years ending September 30,
1995 and September 28, 1996 are set forth below. Prices are based upon
quotations from the National Quotation Bureau, Inc.
FISCAL 1995 BID PRICES
High Low
Quarter Ending: 12/31/94 $.310 $.250
3/31/95 $.310 $.180
6/30/95 $.250 $.220
9/30/95 $.625 $.250
FISCAL 1996 BID PRICES
High Low
Quarter Ending: 12/31/95 $ .937 $ .312
3/31/96 1.000 .531
6/30/96 1.000 .812
9/28/96 1.250 .812
The Company has never declared a cash dividend, although it has
declared stock dividends from time to time.
ITEM 6. Management's Discussion and Analysis or Plan of Operation.
Results of Operations - 1996 Compared to 1995
Consolidated sales for fiscal 1996 were a record $8,300,000. This
was a 22.6% increase over consolidated sales in fiscal 1995. The 34%
increase in sales in the Valve division resulted from substantially
larger orders for both standard and newly designed product lines. The
8.5% increase in Webstone division revenues resulted from larger orders
in a newly acquired faucet line and from an increased market share of
standard catalog items. At year-end, the backlog of orders in the Valve
division was approximately 2 times higher than it was at last year-end.
The Company's gross profit margins increased slightly to 36.4% from
35.8%, reflecting the efficiencies resulting from increased sales
volume, while sales and administrative expenses declined as a percentage
of sales from 23.8% to 22.0% for the same reason.
Interest expense declined 32.1% for fiscal 1996 as a result of
lower interest rates and somewhat lower borrowing levels.
As a result of the above, the Company's net income increased 59.3%
to $685,000 ($.33 per share), compared to $430,000 ($.21 per share) in
fiscal 1995.
-7-
Results of Operations - 1995 Compared to 1994
Consolidated sales for fiscal 1995 were a record $6,771,000, a
34.8% increase compared to 1994 sales of $5,024,000. The sales increase
was shared by the Valve and Webstone divisions, both of which met their
early sales forecasts for fiscal 1995. Sales increases in the Valve
division reflected an increased level of orders for more sophisticated,
higher priced products. Sales increases in the Webstone division
reflected increased orders from geographic areas not previously serviced
and the replacement of some less productive sales representatives with
new, more productive ones. At the end of the fiscal year the order
backlog was higher in both divisions compared to the previous year.
Gross profit margins improved from 33.8% to 35.8%, reflecting
efficiencies gained from increased volume and larger average order sizes
in the Goddard division. Sales and administrative expenses declined as
a percentage of sales from 28.7% to 23.8%, reflecting efficiencies
gained from larger volume as well as certain operating efficiencies
achieved.
Interest expense increased by $60,000 as a result of an increase in
interest rates and larger borrowings throughout the year to support
increased inventory needs.
As a result of the foregoing, consolidated net income for the year
was a record $430,000 ($.21 per share). This represents a 350% increase
over fiscal 1994.
Liquidity and Capital Resources
Historically, the Company has funded operations primarily through
earnings and bank borrowings. At September 28, 1996, the Company had
working capital of approximately $3,679,000, including $66,000 in cash.
The Company also had a line of credit of $1,750,000 with The First
National Bank of Boston collateralized by substantially all of the
assets of the Company. On September 28, 1996, approximately $884,000
had been drawn under that line of credit, which bears interest at a rate
equal to the bank's prime rate plus 3/4 of 1%.
During fiscal 1996, the operations of the Company produced $417,000
of cash. The major sources of cash were net income ($685,000), accrued
environmental settlement ($795,000), depreciation ($208,000), and
increases in accrued expenses ($143,000). Principal uses of cash were
the other receivables related to the environmental costs ($785,000),
additional investment in inventories ($401,000) and increased accounts
receivable ($181,000).
During fiscal 1996, the Company used approximately $140,000 in
investment activities for the purchase of machinery and equipment,
compared to $132,000 in the prior year. Financing activities consumed
approximately $287,000 as the Company paid down long term debt.
-8-
The Company plans to add an additional 10,000 square feet of
manufacturing and warehouse space to the rear of its existing building
in Worcester and to finance the addition using moneys available under
the First National Bank of Boston line of credit. After the use of a
portion of the line of credit for that purpose, the Company believes
that the remaining amounts available under line of credit should still
provide sufficient liquidity to handle the normal working capital
requirements of its present business, although there can be no assurance
that that will be the case.
The Company borrows funds for periods of up to five years for the
purchase of new machinery and meets the required amortization and
interest payments from its current working capital. The Company
believes that its future capital requirements for equipment can be met
from the cash flow from operations, bank borrowings and other available
sources.
As more fully described under Item 3 and in Note 8 to the financial
statements, the Company has been a party to two lawsuits and an
administrative proceeding relating to environmental matters. In
January, 1997, the Company reached a settlement with the Town of
Shrewsbury and the other defendants and third party defendants in the
Shrewsbury litigation under which it is obligated to pay $750,000 by
March 31, 1997. However, under settlements reached with its insurers,
those insurers will pay $715,000 of that total. The Company expects
that it will have to pay at least $45,000 for additional testing in
connection with the DEP proceeding. One of the insurers will also pay
the Company $70,000 for a release of any further Company claim against
it related to that proceeding. Based upon presently available
information, the Company does not anticipate that the resolution of all
previously pending environmental matters will have a material adverse
affect on the Company's financial resources.
The Company's results of operations have not been materially
affected by seasonality.
ITEM 7. Financial Statements and Supplementary Data.
The financial statements and supplementary data are listed under
Part III, Item 13 in this report.
ITEM 8. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosures.
There have not been any changes in the Company's auditors in more
than two fiscal years.
-9-
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange Act.
Information As To Officers, Directors and Beneficial Owners
The following table sets forth certain information, as of November
30, 1996, with respect to each director, all officers and directors as a
group (6 persons) and each person owning five percent or more of the
Company's Common Stock. This table is based on information furnished by
such persons.
Number of
Shares of
Common Stock Year Term
Name, Age and Principal Director Beneficially Percent Would
Occupation Since Owned (1) of Expire
Class and Class
Dr. Jacky Knopp, Jr., 74 1972 77,000 (2) 3.8% 1999
President, Crosby Research Class 3
Associates
(marketing and management
consultants)
211 Delamere Road, Buffalo, NY;
Account Executive, Moors &
Cabot, Inc.
(stock brokerage firm)
4575 Main Street, Amherst, NY;
Professor Emeritus of Canisius
College,
Buffalo, NY
Saul I. Reck, 78 1959 321,955 (3) 15.2% 1997
President of the Company Class 1
Lyle E. Wimmergren, 65 1978 5,000 (4) * 1998
Professor Emeritus of Class 2
Management
Worcester Polytechnic Institute
55 Liberty Hill Road, Henniker,
NH
Robert E. Humphreys, 54 1997 457,950 (5) 22.5% 1998
President of Antigen Express, Class 2
Inc., a company focused on
creating drugs for auto-immune
diseases, August 1995-present;
Professor and Interim Chair,
Department of Pharmacology,
University of Massachusetts
Medical School prior to August
1995
64 Alcott Street, Acton, MA
All executive officers and -- 939,805 (6) 44.4% --
directors as a group
(6 persons)
-10-
Joseph A. Lalli -- 183,550 (7) 9.0% --
6 Middlemont Way, Stow, MA
*Less than one percent
(1) Unless otherwise noted, each person identified possesses
sole voting and investment power.
(2) Includes 36,000 shares owned Dr. Knopp's wife, as to which
he disclaims beneficial interest, and an option to acquire
5,000 shares held by Dr. Knopp.
(3) Includes 5,250 shares held by Mr. Reck's wife, as to which
he disclaims beneficial interest. Also includes an option
to purchase 75,000 shares held by Mr. Reck.
(4) Consists of option to acquire 5,000 shares held by Mr.
Wimmergren.
(5) Includes 217,650 shares as to which Mr. Humphreys has sole
voting and dispositive power and 225,300 shares as to which
Mr. Humphreys' shares voting and dispositive power by virtue
of a power of attorney over the investment accounts of seven
persons. Mr. Humphreys and certain other persons, acting as
a group, beneficially own an aggregate of 457,950 shares.
(6) In addition to the matters noted above in (2)-(5), includes
19,900 shares owned by an executive officer jointly with his
wife and options on 10,000 shares held by the officer.
(7) Mr. Lalli has reported to the Company that a Schedule 13D,
Amendment No. 6, was filed with the Securities and Exchange
Commission indicating that he has sole voting and
dispositive power of 154,050 shares and shared voting and
dispositive power with his wife of 29,500 shares.
All of the directors other than Mr. Humphreys have had the same
principal occupation for the last five years, except that the Amherst,
New York office of Moors & Cabot, Inc. at which Dr. Knopp is an account
executive was previously owned by other brokerage firms, and each of Dr.
Knopp and Mr. Wimmergren has become a professor emeritus at his
institution. Saul I. Reck is the father of Joel M. Reck, Clerk of the
Company.
The Board of Directors of the Company held three meetings during
the fiscal year ended September 28, 1996. Each present director
attended at least 75% of the meetings of the Board of Directors and of
all committees of which he was a member.
The Board of Directors has an Audit Committee and a Compensation
Committee, both composed of Dr. Knopp and Mr. Wimmergren. The Audit
Committee, which met twice during the last fiscal year, is charged with
recommending to the Board of Directors retention of a firm of
independent accountants and with reviewing the Company's internal audit
and accounting controls, the report of the independent accountants and
the financial statements of the Company. The Compensation Committee,
which met twice during the last fiscal year, is responsible for
recommending salary and bonus levels of officers and key employees.
There is no Nominating Committee of the Board of Directors. The Board
of Directors as a whole will consider nominees for director submitted to
it in writing by any shareholder.
-11-
Executive Officers of the Company.
The executive officers of the Company are as follows:
Name Age Position Officer Since
Saul I. Reck 78 Chairman of the Board 1959
President and Treasurer
Donald R. Nelson 61 Vice President 1973
The term of office for all officers is from one annual meeting of
the Board of Directors to the next, subject to the right of the Board of
Directors to remove an officer at any time, subject to the provisions of
Mr. Reck's Employment Agreement described under item 10 below.
Saul I. Reck and Donald R. Nelson have been employed by the Company
in the above-described capacities for more than five years.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who
own more than 10% of the Company's Common Stock, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. Executive officers, directors and
greater than 10% stockholders are required to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it
has received and written representations from certain reporting persons
that they were not required to file Forms 5 for specified fiscal years,
the Company believes that all of its executive officers, directors and
greater than 10% stockholders complied with all Section 16(a) filing
requirements applicable to them during the Company's fiscal year ended
September 28, 1996, except that in January 1997 Messrs. Nelson,
Wimmergren and Knopp filed Form 4s reflecting the grant of options for
the purchase of shares of Common Stock to them on December 17, 1995.
ITEM 10. Executive Compensation.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other Annual
Name and Fiscal Year Salary Bonus (1) Compensation
(2)
Principal Ended ($) ($) ($)
Position
Saul I. Reck 9/28/96 $115,000 $108,700 $10,000
President & 9/30/95 115,000 55,000 10,000
Treasurer 10/1/94 115,000 0 10,000
(1) Under the terms of his Employment Agreement with the Company
described below, Mr. Reck is entitled to receive a bonus equal to 10% of
the amount by which Company pre-tax profits exceed specified base
amounts.
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(2) Consists of cash payments to Mr. Reck to be used for purchase
of retirement benefits.
The following table shows information concerning the exercise of
stock options during fiscal 1996 and the fiscal year-end value of
unexeercised options and stock appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Value of
Securities Unexercised
Underlying In-the Money
Unexercised Options/SARs at
Options/SARs 9/28/96
Shares 9/28/96
Acquired
on Exercise Value Exercisable Exercisable
Realized
Name (#) ($) (#) ($)
Saul I. -- -- 75,000 $65,625
Reck
Under an Employment Agreement with Saul I. Reck entered into in
1989, as amended in 1992 and again in 1994, Mr. Reck has agreed to be
employed by the Company as Chairman of the Board and President on a full
time basis. Mr. Reck received a base salary of $115,000 in fiscal 1996,
plus $10,000 to be used to purchase a retirement benefit. In addition,
Mr. Reck receives a bonus equal to 10% of the amount by which the
Company's pre-tax profits exceed a base amount. After he retires, Mr.
Reck will be entitled to receive an unfunded annuity of $60,000 per year
for his life and his surviving spouse will be entitled to an annuity of
$30,000 per year for life, with both amounts payable under these
annuities subject to adjustment based upon cost of living increases
after October 1, 1993.
Compensation of Directors
Each director who is not also an officer or employee of the Company
receives a base fee of $2,400 per year. Each director who is not also
an officer or employee of the Company and who lives in the greater
Worcester area receives $500 for each directors meeting he attends.
Each director who is not also an officer or employee of the Company and
who lives outside the greater Worcester area receives $600 for each such
meeting, plus travel expenses to and from Worcester. No extra
compensation is paid for attendance at meetings of committees. All non-
employee directors as a group were paid $10,200 for services rendered
during fiscal year 1996. During fiscal 1996, options to purchase 5,000
shares of Common Stock were granted to each of the Company's then non-
employee directors, including Messrs. Knopp and Wimmergren.
-13-
The Board of Directors has a Severance Compensation Plan for
certain officers and all directors in the event that there is a "change
in control" of the Company not approved by the Board of Directors
resulting in the termination of employment or reduction in the duties
and responsibilities of the President, Vice-Presidents and Treasurer (as
determined by the Board of Directors) and/or a termination of service as
director of the Company. The plan provides that such President, Vice
Presidents and Treasurer will continue to receive the compensation being
paid to them at the time of the termination or change in the nature of
employment, for a period of five years following such termination or
change, and the non-employee directors will continue to receive
directors' fees of $500 or $600 per fiscal quarter, depending on whether
or not the director lives in the greater Worcester area, for such five
year period. At the current rate of compensation this would entail an
aggregate payment of $1,668,500 to the executive officers as a group and
a payment of $34,000 to the non-employee directors as a group.
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management.
Information concerning security ownership of certain beneficial
owners and management required by this Item 11 is hereby incorporated by
reference to the information contained under the heading "Information As
To Officers, Directors and Beneficial Owners" in Item 9 above
ITEM 12. Certain Relationships and Related Transactions.
None.
ITEM 13. Exhibits and Reports on Form 8-K.
(a)(1) Financial Statements.
1. Report of Greenberg, Rosenblatt, Kull & Bitsoli, P.C. dated
November 19, 1996 and January 31, 1997. (See page 18 hereof.)
2. Consolidated Balance Sheet as of September 28, 1996 and September
30, 1995. (See page 19 hereof.)
3. Consolidated Statement of Income for the fifty-two weeks ended
September 28, 1996, the fifty-two weeks ended September 30, 1995
and fifty-two weeks ended October 1, 1994. (See page 20 hereof.)
4. Consolidated Statement of Stockholders' Equity for the fifty-two
weeks ended September 28, 1996, the fifty-two weeks ended
September 30, 1995 and fifty-two weeks ended October 1, 1994.
(See page 21 hereof.)
5. Consolidated Statement of Cash Flows for the fifty-two weeks ended
September 28, 1996, the fifty-two weeks ended September 30, 1995
and fifty-two weeks ended October 1, 1994. (See page 22 hereof.)
6. Notes to the Consolidated Financial Statements. (See pages
23 to 33 hereof.)
(a)(2) Exhibits.
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(3) Articles of Incorporation and By-Laws:
(a) Articles of Organization. (Filed as Exhibit 3 to the
Company's Registration Statement on Form S-1 (Registration
No. 2-16854 of Reva Enterprises, Inc., now Goddard
Industries, Inc.))*
Articles of Amendment to the Articles of Organization, dated
December 14, 1962. (Filed as Exhibit 3 to the Company's Form
10-K for the fiscal year ended September 28, 1985.)*
Articles of Merger and Consolidation, dated July 29, 1968.
(Filed as Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Restated Articles of Organization, dated March 31, 1971.
(Filed as Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of Organization,
dated June 1, 1972. (Filed as Exhibit 3 to the Company's
Form 10-K for the fiscal year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of Organization,
dated October 11, 1985. (Filed as Exhibit 3 to the Company's
Form 10-K for the fiscal year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of Organization
dated March 13, 1987. (Filed as Exhibit 3 to the Company's
Form 10-Q for the quarter ended March 28, 1987.)*
(b)(1) By-Laws (filed as Exhibit 19 to the Company's Form 10-Q for
the quarter ended March 31, 1984.)*
(b)(2) By-Law Amendment dated as of September 28, 1990. (Filed as
Exhibit 3(b)(2) to the Company's Form 10-K for the fiscal
year ended September 29, 1990.)*
(4) Instruments Defining the Rights of Security Holders:
(a) Specimen certificate of common stock. (Filed as
Exhibit 4(a) of Registration Statement on Form S-1
Registration No. 2-16854 of Reva Enterprises, Inc., now
Goddard Industries, Inc.))*
(10) Material Contracts:
(a) Consolidating Revolving and Term Credit and Security
Agreement dated as of January 3, 1991 among subsidiaries of
the Company and The First National Bank of Boston (the
"Bank"). (Filed as Exhibit 10(h) to the Company's Form 10-Q
for the quarter ended March 31, 1991.)*
(b) $1,600,000 revolving loan note and $383,124 term loan note,
both dated January 3, 1991 from subsidiaries of the Company
to the Bank. (Filed as Exhibit 10(i) to the Company's Form
10-Q for the quarter ended March 31, 1991.)*
-15-
(c) Unlimited guaranty to the Bank by the Company of the
obligations of the subsidiaries to the Bank. (Filed as
Exhibit 10(v) to the Company's Form 10-Q for the quarter
ended March 31, 1991.)*
(d) Letter agreement between the Company's subsidiaries and the
Bank dated April 27, 1992 modifying banking arrangements.
(Filed as Exhibit (10) to the company's Form 10-Q for the
quarter ended June 30, 1992.)*
(e) Amended and Restated Employment Agreement between the
Company and Saul I. Reck effective as of October 1, 1991 and
executed May 1, 1992. (Filed as Exhibit 10(c) to the
Company's Form 10-Q for the quarter ended June 30, 1992.)*
(f) Restated Non-Qualified Stock Option Agreement between the
Company and Saul I. Reck. (Filed as Exhibit 10(d) to the
Company's Form 10-K for the fiscal year ended September 30,
1989.)*
(g) Adoption Agreement (Non-Standardized Code 401(k)
Profit Sharing Plan) dated July 31, 1991, together with
related Defined Contribution Prototype Plan and Trust
Agreement. (Filed as Exhibit 10(h) to the Company's Form 10-
K for the fiscal year ended September 28, 1991.)*
(h) Employee Stock Purchase Plan dated December 9, 1993.
(Filed as Exhibit 10(h) to the Company's Form 10-KSB for
the fiscal year ended October 1, 1994.)*
(i) (A) Settlement Agreement and Release between the Company,
and St. Paul Fire and Marine Insurance Company dated July,
1996.
(B) Amendment to Settle Agreement and Release executed
December 3, 1996.
(j) Form of Settlement Agreement and Release between the
Company, and Gibralter Casualty Company dated January 31,
1997.
(k) Form of Settlement Agreement and Release between the
Company and Lexington Insurance Company dated
January 31, 1997.
(l) Form of Settlement Agreement among the Town of Shrewsbury,
the Company and certain defendants and third-party
defendants dated January 31, 1997.
(11) Statement Re Computation of Per Share Earnings. The Statement Re
Computation of Per Share Earnings is set forth in Note 14 to the
Company's Consolidated Financial Statements.
(21) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the
Company's Form 10-K for the fiscal year ended September 30,
1989.)*
-16-
(27) Financial Statement Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the last
quarter of its fiscal year ended September 28, 1996.
______________________
*Not filed herewith. In accordance with Rule 12b-23 under the
Securities Exchange Act of 1934, as amended, reference is made to the
documents previously filed with the Commission.
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.
GODDARD INDUSTRIES, INC.
Dated: January 31, 1997 By: /s/ Saul I. Reck
Saul I. Reck, President
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Saul I. Reck Director, Principal Executive January 31, 1997
Saul I. Reck Officer, Principal Financing
Officer and Principal Accounting
Officer
/s/ Jacky Knopp, Jr. Director January 31, 1997
Jacky Knopp, Jr.
/s/ Lyle Wimmergren Director January 31, 1997
Lyle Wimmergren
_________________________Director
Robert E. Humphreys
-17-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
Independent Auditors' Report
The Shareholders and Board of Directors
Goddard Industries, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Goddard
Industries, Inc. and Subsidiaries as of September 28, 1996 and September
30, 1995 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the
period ended September 28, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Goddard Industries, Inc. and Subsidiaries as of September
28, 1996 and September 30, 1995 and the consolidated results of their
operations and cash flows for each of the three years in the period
ended September 28, 1996, in accordance with generally accepted
accounting principles.
/s/ GREENBERG, ROSENBLATT, KULL & BITSOLI,
P.C.
Worcester, Massachusetts
November 19, 1996, except for Note 8,
as to which the date is January 31, 1997
-18-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995
1996 1995
ASSETS (All pledged, Note 4)
Current assets:
Cash $ 65,951 $ 74,937
Accounts receivable (less allowance for doubtful
accounts of $27,600 in 1996 and $28,600 in
1995) 1,154,871 973,477
Other receivable (Note 8) 785,000 -
Inventories (Note 2) 3,312,449 2,911,234
Prepaid expenses 33,809 23,018
Deferred income taxes (Note 7) 82,000 56,000
Total current assets 5,434,080 4,038.666
Property, plant and equipment (Note 3) 1,052,566 950,734
Other assets:
Excess of cost of investment in subsidiaries over
equity in net assets acquired (less accumulated
amortization of $121,905 in 1996 and
$118,149 in 1995) 18,380 22,136
Deferred income taxes (Note 7) 167,000 139,000
Total other assets 185,380 161,136
Total assets $6,672,026 $5,150,536
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt (Note 4)$ 51,000 $ 109,191
Accounts payable 317,321 305,655
Accrued expenses 399,861 256,631
Accrued environmental costs (Note 8) 795,000 -
Income taxes payable 191,771 222,626
Total current liabilities 1,754,953 894,103
Long-term debt (Note 4) 1,026,398 1,092,503
Deferred compensation (Note 9) 551,000 513,000
Shareholders' equity: (Notes 5 and 13)
Common stock - par value $.01 per share;
authorized 3,000,000 shares, issued and
outstanding 2,040,129 shares in 1996 and
2,032,804 in 1995 20,401 20,328
Additional paid in capital 399,353 395,763
Retained earnings (Note 4) 2,919,921 2,234,839
Total shareholders' equity 3,339,675 2,650,930
Total liabilities and shareholders' equity $6,672,026 $5,150,536
The accompanying notes are an integral part
of the consolidate financial statements.
-19-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 28, 1996,
SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
1996 1995 1994
Sales $8,300,167 $6,770,841 $5,023,858
Cost of sales (Note 10) 5,280,654 4,343,329 3,326,064
Gross profit 3,019,513 2,427,512 1,697,794
Selling and administrative expenses
(Notes 8, 11 and 12) 1,822,502 1,614,656 1,443,436
Operating profit 1,197,011 812,856 254,358
Other income (expense):
Interest expense (102,529) (151,009) (91,491)
Other income 55,600 47,241 24,273
Total other income (expense)(46,929) (103,768) (67,218)
Income before income taxes 1,150,082 709,088 187,140
Income taxes (benefit): Note (7)
Current 519,000 296,000 85,000
Deferred (54,000) (17,000) (16,000)
Total income taxes 465,000 279,000 69,000
Net income $ 685,082 $ 430,088 $ 118,140
Net income per share: (Note 14)
Primary $ 0.33 $ 0.21 $ 0.06
Fully diluted $ 0.32 $ 0.21 $ 0.06
The accompanying notes are an integral part
of the consolidated financial statements
-20-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 28,1 996
SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
Shares of Additional
common Common paid-in Retained
stock stock capital earnings Total
Balance at
October 2, 1993 2,030,698 $20,307 $ 394,862 $1,686,611 $2,101,780
Net income - - - 118,140 118,140
Stock issued under
employee stock
purchase plan
(Note 13) 2,106 21 901 - 922
Balance at
October 1, 1994 2,032,804 20,328 395,763 1,804,751 2,220,842
Net income - - - 430,088 430,088
Balance at
September 30,1995 2,032,804 20,328 395,763 2,234,839 2,650,930
Net income - - - 685,082 685,082
Stock issued under
employee stock
purchase plant
(Note 13) 7,325 73 3,590 - 3,663
Balance at
September 28, 2,040,129 $20,401 $399,353 $2,919,921 $3,339,675
1996
The accompanying notes are an integral part
of the consolidated financial statements
-21-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 28, 1996,
SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
1996 1995 1994
Operating activities:
Net income $ 685,082 $ 430,088 118,140
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 207,740 205,708 197,200
Provision for losses on accounts (1,000) 12,000 15,621
receivable
Changes in assets and liabilities:
Accounts receivable (180,394) (235,272) (99,859)
Other receivables (785,000) - -
Inventories (401,215) (333,017) (663,121)
Prepaid expenses and other (10,790) 52,098 (53,784)
Accounts payable 11,666 (68,768) 265,817
Accrued expenses 143,230 99,484 (48,962)
Accrued environmental costs 795,000 - -
Income taxes payable (30,855) 222,626 (27,214)
Deferred income taxes (54,000) (17,000) (16,000)
Deferred compensation 38,000 38,000 68,106
Net cash provided by (used in)
operating activities 417,464 405,947 (244,056)
Investing activities:
Property, plant and equipment (139,817) (131,717) (133,364)
additions
Financing activities:
Proceeds from long-term debt 2,900,000 1,909,000 1,740,003
Repayments of long-term debt (3,190,296) (2,170,927) (1,420,459)
Issuance of common stock 3,663 - 922
Net cash provided by (used in)
financing activities (286,633) (261,927) 320,466
Net increase (decrease) in cash (8,986) 12,303 (56,954)
Cash - beginning 74,937 62,634 119,588
Cash - ending $ 65,951 $ 74,937 $ 62,634
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year:
Interest $ 105,108 $ 150,069 $ 83,543
Income taxes $ 549,855 $ 46,945 $ 164,980
The accompanying notes are an integral part
of the consolidated financial statements
-22-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation:
The consolidated financial statements include the accounts of
Goddard Industries, Inc. and its wholly-owned subsidiaries. All
material intercompany transactions have been eliminated.
Fiscal year:
The Company's fiscal year ends on the Saturday nearest to
September 30. The years ended September 28, 1996, September 30,
1995 and October 1, 1994 each contain 52 weeks.
Inventories:
Inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method.
Property, Plant and Equipment:
Property, plant and equipment are carried at cost and depreciated
using the straight - line method over the following estimated
useful lives:
YEARS
Building and improvements 10 - 35
Machinery, equipment and tools 3 - 10
Office equipment and fixtures 5 - 10
Intangible Assets:
The excess of cost of investment in subsidiaries over equity in
net assets acquired is being amortized on a straight-line basis
over 40 years.
Advertising:
Advertising costs are expensed when incurred.
Income taxes:
Taxes are provided for items entering into the determination of
net income for financial reporting purposes, irrespective of
when such items are reported for income tax purposes.
Accordingly, deferred income taxes have been provided for all
temporary differences. Tax credits are accounted for on the
flow-through method, whereby credits earned during the year are
used to reduce the current income tax provision.
Estimates:
The preparation of financial statements inconformity with
generally accepted accounting principles requires the company
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Although these estimates are
based on management's knowledge of current events and actions to
be undertaken in the future, they may differ from actual
results.
-23-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Forward Exchange Contracts:
The Company periodically enters into forward exchange contracts
in foreign currencies to hedge against anticipated foreign
currency commitments with respect to inventory purchases. The
gains or losses on these contracts are included as part of the
inventory costs.
(2) INVENTORIES
Inventories consist of the following:
1996 1995
Finished goods $3,003,898 $2,705,283
Work in process 21,687 11,003
Raw materials 286,864 194,948
$3,312,449 $2,911,234
(3) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
1996 1995
Land $ 12,865 $ 12,865
Building and improvements 665,658 651,344
Machinery, equipment and 2,821,028 2,543,826
tools
Office equipment and 142,267 127,966
fixtures
3,641,818 3,336,001
Accumulated depreciation (2,589,252) (2,385,267)
$1,052,566 $ 950,734
Depreciation expense charged to income was $203,984, $201,952 and
$193,443 in 1996, 1995 and 1994, respectively.
-24-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(4) LONG-TERM DEBT
Long-term debt consists of the following:
1996 1995
Revolving line of credit of $1,750,000 of
which a maximum of $300,000 may be used for
letters of credit, due to expire March 31
1998. Advances are limited by a formula
applied to eligible receivables and inventory
and are secured by all assets of the Company.
The agreement carries interest at the bank's
prime rate plus 3/4% (9.0% and 9.5% for 1996 and
1995 respectively) and provides for a commitment
fee of 1/2% of any unused balance. $884,503 $1,057,503
Capital lease obligation, payments of $5,273
per month including interest at 9%, 157,895 -
due in 1999
Notes due 1998, unsecured, interest payable
monthly at 10%, due to related parties. 35,000 35,000
Term note repaid in 1996 - 35,360
Capital lease obligations repaid in - 73,831
1,077,398 1,201,694
Current maturities 51,000 109,191
1,026,398 1,092,503
Minimum estimated principal payments are as follows:
1997 $51,000
1998 976,000
1999 50,398
$1,077.398
The above principal payments include amounts due under the capital
lease obligation of $63,000 in 1997 and 1998 and $53,300 in 1999,
including amounts representing interest of $21,400.
The Company entered into the above reference lease agreements for
certain machinery and equipment. Assets directly financed through
leases totaling $166,000 for 1996 and $248,000 for 1995 are
included in property plant and equipment. Amortization of these
assets totaling $8,300 in 1996, $24,864 in 1995 and $21,280 in
1994, is included in depreciation expense and accumulated
depreciation.
Under the revolving line of credit and term note agreements, the
Company is subject to a number of convenants, the most restrictive
of which relate to maintenance of minimum working capital, tangible
net worth, and profitability levels. These agreements also
restrict payment of cash dividends to 10% of the immediately
preceding year's net income which represents unrestricted
consolidated retained earnings.
-25-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(5) COMMON STOCK OPTIONS
In 1989 the Company granted options to its chairman for 75,000
shares of common stock. In 1996 the Company granted options for
5,000 shares to each non-employee director and in varying amounts
to certain employees, for an aggregate of 30,000 shares of common
stock. The exercise price of each option equals the market price
of the Company's stock on the date of grant and the option's
maximum term is between five and ten years.
The fair value of each option is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted average assumptions used for grants in 1996:
Dividend yield None
Expected volatility 62.12%
Risk free interest rate 6.12%
Expected lives 5 years
A summary of the status of the Company's outstanding options as of
September 28, 1996, September 30, 1995 and October 1, 1994 and the
changes during the years ending on those date is presented below:
September 28, 1996 September 30, 1995 October 1, 1994
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at beginning
of years: 75,000 $.25 75,000 $.25 85,000 $.32
Granted 30,000 $.50 - - - -
Exercised - - - - - -
Forfeited - - - - (10,000) $.84
Outstanding at end
of year: 105,000 $.32 75,000 $.25 75,000 $.25
Options exerciseable
at year end 105,000 75,000 75,000
Weighted average fair
value of options
granted during
the year $.28 $ - $ -
-26-
GODDARD INDUSTRIES INC AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(5) COMMON STOCK OPTIONS (continued)
The following summarizes information about fixed stock options
outstanding at September 28, 1996:
Options Outstanding Options Exercisable
Weighted-
Average Weighted Weighted
Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Price at 9/28/96 Life Price at 9/28/96 Price
$.25 75,000 3.25 years $.25 75,000 $.25
$.50 30,000 4.25 years $.50 30,000 $.50
105,000 105,000
The Company applies APB Opinion 25 in accounting for employee stock
options. Accordingly, no compensation cost has been recognized.
Had compensation costs been determined on the basis of FASB
Statement 123 in 1996, net income would have been reduced to
$680,065 which would have decreased primary net income per share by
$.01 and would have had no affect on fully diluted net income per
share.
(6) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reflected in the consolidated balance sheets
for cash, accounts receivable, accounts payable and accrued
expenses approximate fair value due to the short maturities of
these instruments. The carrying value of long term debt
approximate fair value since the rates and terms of these
instruments are substantially equivalent to those the Company would
offer or obtain at the balance sheet date.
(7) INCOME TAXES
The following is a reconciliation of income tax expense computed at
the Federal statutory income tax rate to the provision for income
taxes:
1996 1995 1994
Federal income taxes at
the statutory rate $ 391,000 $241,000 $ 66,500
State income taxes net of
federal income tax benefit 72,100 44,000 9,200
Surtax exemption - - (10,100)
Nondeductible expenses 5,500 4,900 3,400
Other (3,600) (10,900) -
Income taxes $ 465,000 $279,000 $ 69,000
-27-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(7) INCOME TAXES (continued)
The provision for income taxes is summarized as follows:
1996 1995 1994
Current:
Federal $ 400,000 $ 227,000 $ 62,500
State 119,000 69,000 22,500
519,000 296,000 85,000
Deferred:
Federal (42,000) (12,800) (12,300)
State (12,000) (4,200) (3,700)
(54,000) (17,000) (16,000)
$ 465,000 $ 279,000 $ 69,000
The tax effects of the principal temporary differences giving rise
to the net current and non-current deferred tax assets totaling
$249,000 at September 28, 1996 and $195,000 at September 30, 1995
are as follows:
1996 1995
Deferred tax assets:
Deferred compensation $ 220,400 $ 205,200
Inventory valuation 60,800 39,000
Accrued salaries 6,200 5,800
Environmental settlement 4,000 -
Bad debts 11,000 11,000
Total gross deferred tax assets 302,400 261,000
Deferred tax liabilities:
Depreciation 53,400 66,000
Net deferred income tax assets $ 249,000 $ 195,000
Management does not believe that any valuation allowance is
necessary.
(8) ENVIRONMENTAL MATTERS
The Company is involved in the following environmental matters:
Shrewsbury matter:
In 1990, the Town of Shrewsbury, Massachusetts commenced a
lawsuit in Massachusetts Superior Court against the Company and
another Corporation, Neles-Jamesbury, alleging that they had
caused the Town to incur response costs for assessment,
containment, and removal of oil and hazardous materials in
relation to the Town's Home Farm water wells. The Town sought
damages for environmental response costs and injunctive relief.
The Company filed an answer generally denying the
allegations and joined, as third party defendants, eight other
-28-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(8) ENVIRONMENTAL MATTERS (continued)
businesses located in the same industrial park area. During 1992
and 1993 some, but not all, counts of the Shrewsbury complaint
were dismissed. The Company gave notice to its comprehensive
general liability insurance carriers of the Shrewsbury litigation
and the DEP claim (see below) and asked the carriers to defend
and indemnify the Company against the claims. One of the
carriers, St. Paul Fire and Marine Insurance Co., assumed primary
responsibility for the defense of the litigation on behalf of all
of the carriers while reserving their right to contest coverage
under the policies. In 1992, St. Paul filed suit in the Federal
District court of Massachusetts for a declaratory judgment that
it had no duty to defend or indemnify the Company under its
liability policies. That suit was dismissed without prejudice
pending disposition of the Town of Shrewsbury litigation.
In January 1997, the Company and five of the other defendants
reached a settlement of the Shrewsbury litigation with the Town
of Shrewsbury. The Company agreed to pay a total of $750,000 by
March 31, 1997 as its share of the settlement, and other
defendants agreed to pay additional amounts. In addition, the
Company reached an agreement with its three insurance carriers.
In exchange for a release of certain claims, they
will pay a total of $715,000 of the $750,000 amount the Company
is obligated to pay the Town of Shrewsbury.
DEP matter:
In connection with a proposed bank financing in 1987, the Company
retained an environmental engineering firm to perform a site
assessment at its corporated headquarters. The results of that
assessment revealed that there may have been a release or threat
of release of oil or hazardous materials and that an off-site
source may be introducing the contaminants. As required by law,
the Company notified the Massachusetts Department of
Environmental Protection (DEP). In 1989 the DEP designated the
site as a priority disposal site. A Phase One Limited Site
Investigation report has been submitted to the DEP. In 1995, the
Company received a Tier I Transition Classification and Permit
Statement Cover Letter designating the site as a Tier IC Site
under the Massachusetts Contingency Plan. Under DEP regulations,
the Company must complete further site investigation by November
1997.
One of the Company's insurance carriers has agreed to pay the
Company $70,000 to be used as the Company determines in defense
of the DEP proceeding in exchange for a release of any further
claim with respect to this matter. In addition, environmental
engineers employed by the Company estimate that the required
remediation costs will be a minimum of $45,000.
-29-
In the accompanying financial statements other receivables represents
amounts due from insurance carriers with respect to the above
environmental matters and accrued environmental costs represents
amounts due the Town of Shrewsbury and the minimum estimated
remediation costs related to the DEP matter. The net amount
($10,000) is reported in selling and administrative expense.
(9) COMMITMENTS AND CONTINGENCIES
Employment Agreements:
The Company extended, on a year to year basis, the employment
agreement with its President and Chairman of the Board. In
connection with the contract, the President is entitled to
incentive compensation equal to 10% of pretax earnings exceeding
$200,000. Upon his retirement, the Company must pay an annuity
which is being amortized over the period of the employment
contract. Accordingly $38,000 has been charged to operations in
1996 and 1995, and $68,106 in 1994.
-30-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(9) COMMITMENTS AND CONTINGENCIES (continued)
The Company has employment agreements with certain key executive
officers and directors that become operative only upon a change
in control of the Company without the approval of the Board of
Directors. Compensation which might be payable under these
agreements has been reflected in the consolidated financial
statements of the Company as of September 28, 1996, since a
change in control, as defined, has not occurred.
Other Commitments:
At September 28, 1996 and September 30, 1995, the Company had
approximately $88,000 and $118,000 in letters of credit
outstanding.
(10) RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to operations in 1996, 1995,
and 1994 were approximately $175,000, $138,000 and $115,000,
respectively.
(11) ADVERTISING COSTS
Advertising costs charged to operations in 1996, 1995 and 1994
were approximately $41,000, $47,000 and $40,000, respectively.
(12) PROFIT SHARING PLAN
The Company has a profit sharing plan covering substantially all
employees. The Company's contribution is determined annually by
the Board of Directors. The amount approved for 1996, 1995, and
1994 was $50,000, $30,000 and $24,000, respectively.
(13) EMPLOYEE STOCK PURCHASE PLAN
The Company has a qualified employee stock purchase plan covering
all employees except officers and directors. Employees
participating in the plan are granted options semi-annually to
purchase common stock of the Company. The number of full shares
available for purchase is a function of the employee's accumulated
payroll deductions at the end of each six month interval. The
option price is the lesser of 85% of the fair value
of the Company's common stock on the first day of the payment
period or 85% of the fair value of the Company's common stock on
the last day of the payment period. As of September 28,1 996,
September 30, 1995 and October 1, 1994 there were no options
outstanding under the plan.
(14) NET INCOME PER SHARE
Net income per share is computed on the weighted average number of
shares outstanding.
-31-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(15) INDUSTRY SEGMENT INFORMATION
The Company produces and sells cryogenic valves (industrial valves)
and imports and distributes plumbing supplies for use in
households,
industry and agriculture (plumbing supplies).
The financial information relating to foreign and export sales is
not presented as those items are not material.
Summarized segment financial information for the years ended
September 28, 1996, September 30, 1995 and October 1, 1994 is
summarized as follows:
For the year ended Industrial Plumbing
September 28, 1996 Valves Supplies Consolidated
Sales to unaffiliated customers $5,009,952 $3,290,215 $8,300,167
Operating profit $1,102,708 $ 94,303 $1,197,011
Interest expense (102,529)
Other income, net 55,600
Income before income taxes $1,150,082
Assets September 28, 1996 $4,519,965 $2,152,061 $6,672,026
Depreciation expense $ 194,276 $ 9,708 $ 203,984
Acquisition of property,
plant and equipment $ 126,014 $ 13,803 $ 139,817
For the year ended Industrial Plumbing
September 30, 1995 Valves Supplies Consolidated
Sales to unaffiliated customers $3,738,962 $3,031,879 $6,770,841
Operating profit $ 669,752 $ 143,104 $ 812,856
Interest expense (151,009)
Other income, net 47,241
Income before income taxes $ 709,088
Assets September 30, 1995 $2,840,762 $2,309,774 $5,150,536
Depreciation expense $ 192,862 $ 9,090 $ 201,952
Acquisition of property,
plant and equipment $ 123,777 $ 7,940 $ 131,717
-32-
GODDARD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 1996, SEPTEMBER 30, 1995 AND OCTOBER 1, 1994
(15) INDUSTRY SEGMENT INFORMATION (continued)
For the year ended Industrial Plumbing
October 1, 1994 Valves Supplies Consolidated
Sales to unaffiliated customers $2,774,434 $2,249,424 $5,023,858
Operating profit $ 213,402 $ 40,956 $ 254,358
Interest expense (91,491)
Other income, net 24,273
Income before income taxes $ 187,140
Assets October 1, 1994 $2,590,475 $2,100,558 $4,691,033
Depreciation expense $ 181,461 $ 11,982 $ 193,443
Acquisition of property,
plant and equipment $ 191,838 $ 2,972 $ 194,810
The industrial valve segment of the Company sells a majority of its
products to a limited number of customers, predominantly
manufacturers of cryogenic vessels. Sales in thousands of
dollars, to individual customers constituting 10% or more of total
sales of the industrial valve segment were as follows:
1996 1995 1994
Customer A $2,317 46% $1,025 27% $ 491 18%
Customer B $ 594 12% $ 426 11% $ 325 12%
Customer C $ 703 14% $ - 0% $ 313 11%
$3,614 72% $1,451 38% $1,129 41%
-33-
EXHIBITS
-34-
EXHIBIT INDEX
Exhibit
Number Page
(3) Articles of Incorporation and By-Laws:
(a) Articles of Organization. (Filed as Exhibit 3 to the
Company's Registration Statement on Form S-1 (Registration
No. 2-16854 of Reva Enterprises, Inc., now Goddard
Industries, Inc.))*
Articles of Amendment to the Articles of Organization, dated
December 14, 1962. (Filed as Exhibit 3 to the Company's Form
10-K for the fiscal year ended September 28, 1985.)*
Articles of Merger and Consolidation, dated July 29, 1968.
(Filed as Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Restated Articles of Organization, dated March 31, 1971.
(Filed as Exhibit 3 to the Company's Form 10-K for the fiscal
year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of Organization,
dated June 1, 1972. (Filed as Exhibit 3 to the Company's
Form 10-K for the fiscal year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of Organization,
dated October 11, 1985. (Filed as Exhibit 3 to the Company's
Form 10-K for the fiscal year ended September 28, 1985.)*
Articles of Amendment to Restated Articles of Organization
dated March 13, 1987. (Filed as Exhibit 3 to the Company's
Form 10-Q for the quarter ended March 28, 1987.)*
(b)(1)By-Laws (filed as Exhibit 19 to the Company's Form 10-Q for
the quarter ended March 31, 1984.)*
(b)(2)By-Law Amendment dated as of September 28,1990. (Filed as
Exhibit 3(b)(2) to the Company's Form 10-K for the fiscal
year ended September 29, 1990.)*
(4) Instruments Defining the Rights of Security Holders:
(a) Specimen certificate of common stock. (Filed as Exhibit 4(a)
of Registration Statement on Form S-1 Registration No. 2-
16854 of Reva Enterprises, Inc., now Goddard Industries,
Inc.))*
-35-
Page
(10) Material Contracts:
(a) Consolidating Revolving and Term Credit and Security
Agreement dated as of January 3, 1991 among subsidiaries of
the Company and the First National Bank of Boston (the
"Bank"). (Filed as Exhibit 10(h) to the Company's Form 10-Q
for the quarter ended March 31, 1991.)*
(b) $1,600,000 revolving loan note and $383,124 term loan note,
both dated January 3, 1991 from subsidiaries of the Company to
the Bank. (Filed as Exhibit 10(i) to the Company's Form 10-Q
for the quarter ended March 31, 1991.)*
(c) Unlimited guaranty to the Bank by the Company of the
obligations of the subsidiaries to the Bank. (Filed as
Exhibit 10(v) to the Company's Form 10-Q for the quarter ended
March 31, 1991.)*
(d) Letter agreement between the Company's subsidiaries and the
Bank dated April 27, 1992 modifying banking arrangements.
(Filed as Exhibit (10) to the company's Form 10-Q for the
quarter ended June 30, 1992.)*
(e) Amended and Restated Employment Agreement between the Company
and Saul I. Reck effective as of October 1, 1991 and executed
May 1, 1992. (Filed as Exhibit 10(c) to the Company's Form
10-Q for the quarter ended June 30, 1992.)*
(f) Restated Non-Qualified Stock Option Agreement between the
Company and Saul I. Reck. (Filed as Exhibit 10(d) to the
Company's Form 10-K for the fiscal year ended September 30,
1989.)*
(g) Adoption Agreement (Non-Standardized Code 401(k)
ProfitSharing Plan) dated July 31, 1991, together with related
Defined Contribution Prototype Plan and Trust Agreement.
(Filed as Exhibit 10(h) to the Company's Form 10-K for the
fiscal year ended September 28, 1991.)* (h) Employee Stock Purchase
Plan dated December 9, 1993. (Filed as Exhibit 10(h) to the
Company's Form 10-KSB for the fiscal year ended October 1,
1994.)* (i) (A) Settlement Agreement and Release between the
38
Company, and St. Paul Fire and Marine Insurance
Company dated July, 1996.
(B) Amendment to Settlement Agreement and 44
Release executed December 3, 1996.
(j) Form of Settlement Agreement and Release between the 47
Company and Gibralter Casualty Company dated
January 31, 1997.
(k) Form of Settlement Agreement and Release between the 51
Company and Lexington Insurance Company dated
January 31, 1997.
-36-
Page
(l) Settlement Agreement among the Town of 55
Shrewsbury, the Company and certain defendants
and third-party defendants dated January 31,
1997. (Portions of the agreement have been omitted
pursuant to a grant of confidential treatment.)
(11) Statement Re Computation of Per Share Earnings. The Statement Re
Computation of Per Share Earnings is set forth in Note 13 to the
Company's Consolidated Financial Statements.
(21) Subsidiaries of the Registrant. (Filed as Exhibit 22 to the
Company's Form 10-K for the fiscal year ended September 30,
1989.)*
(27) Financial Statement Schedule. 61
-37-
EXHIBIT 10 (i) (A)
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is entered
into in July 1995, by and between Goddard Industries, Inc. and Goddard
Valve Corp., for themselves, as well as for their predecessors in
interest, and their successors in interest, current parents,
subsidiaries, divisions, affiliates, directors, officers, shareholders,
partners, agents and employees, heirs and assigns, all other insureds or
additional named insureds under the Policies and all persons and
entities acting through or under any of them (collectively "Goddard")
and St. Paul Fire and Marine Insurance Company, for itself and for its
predecessors in interest, successors in interest, current and former
parents, subsidiaries, divisions, affiliates, directors, officers,
shareholders, agents, attorneys, employees, heirs, assigns and all
persons and entities acting through or under any of them (collectively
"St. Paul");
RECITALS
WHEREAS, St. Paul is alleged to have issued primary and/or
excess and/or umbrella liability insurance policies to Goddard,
including but not necessarily limited to those listed in Exhibit A
hereto (hereinafter the "Alleged Policies");
WHEREAS, St. Paul has filed suit against Goddard entitled St.
Paul Fire and Marine Insurance Company v. Goddard Industries, Inc. No.
92-40075-NMG (D.Mass.) (the "Coverage Action"), which the court
dismissed sua sponte without prejudice but which may be reopened,
wherein it has sought a declaration that it is not responsible under the
Alleged Policies to defend or indemnify Goddard for various suits or
claims that have been filed or asserted or that may be filed or asserted
against Goddard (the "Underlying Suits and Claims") involving or arising
out of Goddard's facility and operations at 705 Plantation Street,
Worcester, Massachusetts (the "Site");
WHEREAS the Underlying Suits and Claims include, but are not
limited to, the following:
1. Town of Shrewsbury v. Neles-Jamesbury Inc., Civil No. 90-
3751-B (Super. Ct. Mass., Worcester County) ("Shrewsbury
Action"); and
2. Massachusetts Department of Environmental Protection
("DEP") March 30, 1989 Notice of Responsibility letter
pursuant to M.G.L. c.21E and the Massachusetts Contingency
Plan, 310 CMR 40.000, and further orders, agreements, and
actions proceeding therefrom ("DEP Action").
WHEREAS, St. Paul has defended Goddard against certain
Underlying Suits and Claims;
WHEREAS, there is a dispute between Goddard and St. Paul with
respect to the obligations of St. Paul under the Alleged Policies to
indemnify Goddard with respect to the Underlying Suits and Claims;
WHEREAS, St. Paul has denied that it has any obligation to
provide coverage for the Underlying Suits and Claims;
-38-
WHEREAS, the parties believe that it is in their mutual
interest to reach an amicable resolution with respect to the Coverage
Action, without admission of any issue of fact or law, and to resolve
all past, present or future disputes relating to any obligations of St.
Paul to Goddard with respect to any claims for property damage or
personal injury arising out of or allegedly arising out of the Site;
WHEREAS, the parties specifically intend to exclude from this
Agreement any potential claims for bodily injury arising out of the
Site, of which none are currently known to exist;
NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, Goddard and
St. Paul hereby agree as follows:
1. In full and final settlement of all claims for property
damage or personal injury (but excluding bodily injury) that Goddard has
or may have, nor or in the future, known or unknown, against St. Paul
with respect to the Site, arising out of the Site, and with respect to
the Underlying Suits and Claims, St. Paul with contribute fifty percent
(50%) of any amount up to three hundred thousand dollars ($300,000) and
seventy five percent (75%) of any amount over three hundred thousand
dollars ($300,000) and up to five hundred thousand dollars ($500,000)
towards any settlement Goddard can negotiate with the Town of Shrewsbury
in the Shrewsbury Action. Under this formula, St. Paul's maximum
contribution to any settlement of the Shrewsbury Action would be three
hundred thousand dollars ($300,000), consisting of 50% of the first
$300,000 (i.e., $150,000) plus 75% of the next $200,000 (i.e.,
$150,000).
2. In addition to the amount to be paid by St. Paul pursuant
to Paragraph 1, in full and final settlement of all claims for property
damage or personal injury (but excluding bodily injury) that Goddard has
or may have, now or in the future, known or unknown, against St. Paul
with respect to the Site, arising out of the Site, and with respect to
the Underlying Suits and Claims, St. Paul will pay to Goddard seventy
thousand dollars ($70,000) to be used by Goddard, as Goddard determines,
in its defense of the DEP Action.
3. In consideration of the payments referred to in Paragraphs
1 and 2 and as of the date both payments are made by St. Paul, Goddard
fully, absolutely and unconditionally releases and for all purposes
forever discharges St. Paul from any and all claims, liabilities,
obligations, demands, rights, actions and causes of action of every kind
and nature, known and unknown, past, present and future, for property
damage or personal injury (but excluding bodily injury) arising out of
any alleged past, present or future duty or obligation with respect to
the Site, arising out of the Site, and with respect to the Underlying
Suits and Claims.
4. Infurther consideration of the payments referred to in
Paragraphs 1 and 2, Goddard also agrees that it will be responsible for
fifty percent (50%) of any amount up to three hundred thousand dollars
($300,000) and twenty five percent (25%) of any amount over three
hundred thousand dollars ($300,000) and up to five hundred thousand
dollars ($500,000) towards any settlement Goddard can negotiate with the
-39-
Town of Shrewsbury in the Shrewsbury Action. Under this formula,
Goddard's maximum responsibility in a settlement of the Shrewsbury
Action would be two hundred thousand dollars ($200,000), consisting of
50% of the first $300,000 (i.e., $150,000) plus 25% of the next $200,000
(i.e., $50,000). It as agreed that Goddard can fulfill its
responsibility under this Paragraph with funds from third-party sources
and is free to pursue third-parties, including insurers other than St.
Paul, for said amounts.
5. As of the date St. Paul makes the payments referred to in
Paragraphs 1 and 2, Goddard forever fully and completely covenants not
to sue or to tender any claim to St. Paul with respect to property
damage or personal injury (but excluding bodily injury) at or arising
out of the Site and with respect to the Underlying Suits and Claims.
6. It is agreed that all obligations under this Agreement are
fully contingent upon Goddard successfully negotiating a settlement of
the claims asserted against it in the Shrewsbury Action for five hundred
thousand dollars ($500,000) or less. If Goddard is unable to reach a
settlement in principle of the claims against it in the Shrewsbury
Action for five hundred thousand dollars ($500,000) or less by the time
the court in the Shrewsbury Action holds the pretrial conference in that
matter, this Agreement is null and void in its entirety. It is agreed
that the time deadline recited in this Paragraph for settlement of the
Shrewsbury Action by Goddard can be extended only by written agreement
signed by the parties to this Agreement.
7. Within thirty (30) days of St. Paul's receipt of an
executed settlement agreement by Goddard and the Town of Shrewsbury in
settlement of the Shrewsbury Action within the parameters set forth in
Paragraph 6 above, St. Paul will issue a check to Goddard for seventy
thousand dollars pursuant to Paragraph 2 above and a separate check to
Goddard's counsel, Brown, Rudnick, Freed & Gesmer, as trustee for
Goddard in the full amount as determined under the formula set forth in
Paragraph 1. Goddard's counsel, as trustee, will deposit the check
issued pursuant to Paragraph 1 in a trust account (the
"Goddard/Shrewsbury Trust"), which at Goddard's option may bear interest
to the benefit of Goddard. The parties agree that the money in the
Goddard/Shrewsbury Trust is to be used solely for payment of the
settlement by Goddard of the Shrewsbury Action.
8. In settling the Shrewsbury Action within the parameters
set forth in Paragraph 6, Goddard is at liberty to arrange for payments
of the settlement amount in that action to take place over a period of
time or in installments. Any such provision in the settlement of the
Shrewsbury Action will not affect the time period for St. Paul to make
its payments as set forth in Paragraph 7 above.
9. As of the date St. Paul makes the payments referred to in
Paragraph 7, Goddard shall defend St. Paul in connection with, indemnify
St. Paul for and hold St. Paul harmless from, all claims that have been
or might be made or suits that have been or might be filed against St.
Paul with respect to property damage or personal injury (but excluding
suits or claims solely involving bodily injury) at or arising out of the
Site, including but not limited to direct actions, garnishment actions,
third-party actions, and claims for contribution, indemnification,
equitable allocation, equitable subrogation, or quantum meruit. In
exercise of this obligation, Goddard shall have the right in its sole
-40-
discretion to settle or otherwise compromise each judgment, claim or
suit arising from each such claim or suit and to use counsel of its own
choosing. However, should Goddard undertake the defense of St. Paul
pursuant to this paragraph, St. Paul shall have the right of prior
approval with respect to selection of counsel and with respect to the
interpretation of the Alleged Policies. As a condition to Goddard's
rights and obligations set forth in this paragraph, St. Paul shall have
the duty to provide Goddard with prompt written notice of each claim or
suite against it involving or arising out of the Site.
10. This Agreement shall be solely binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns. Nothing in this Agreement is intended nor shall it be
construed to confer any benefit whatsoever on any persons other than the
parties. No persons or entities are intended to be, nor will they be
construed to be, third-party beneficiaries to this Agreement.
11. This Agreement does not constitute an admission by St.
Paul of an obligation to defend or indemnify Goddard with respect to any
policy or any suit or claim.
12. This Agreement is not intended to be and is not to be
construed as a contract of insurance.
13. This Agreement shall not be admissible in any legal
proceeding except to enforce its terms.
14. The terms of this Agreement shall remain confidential and
shall not be disclosed to any person or entity without the prior written
consent of all parties, except as required in the normal course of
business for such purposes as audits, accounting and reinsurance.
Should this Agreement be disclosed, the party making such disclosure
shall use its best efforts to get a confidentiality agreement in keeping
with this paragraph from the person or entity to which disclosure is
made. Should a court order the disclosure of the terms of this
Agreement to any other person, the parties shall use their best efforts
to maintain its terms under seal.
15. Each of the parties has entered into this Agreement after
consulting with counsel. Therefore, the language of this Agreement
shall not presumptively be construed in favor or against either party.
16. This Agreement represents the entire understanding between
the parties and, without limitation, the parties expressly agree that
any previous communications, correspondence, memorialization of
agreement and previous agreements are excluded from this Agreement and
are not to be employed to construe this Agreement. Any other provisions
of this Agreement to the contrary notwithstanding, this Agreement can
only be modified by a writing signed by all parties and this provision
cannot be orally waived.
17. Goddard has not assigned any of its rights pursuant to the
Alleged Policies, and Goddard agrees that it will not attempt
prospectively to assign any such rights that are to be released under
this Agreement.
-41-
18. Goddard warrants that it has made reasonable inquiry of
its officers and management, and as of its execution of this Agreement,
it is unaware of any bodily injury claims or suits at or arising out of
the Site that exist, that have been asserted or alleged, or that have
been threatened. It is agreed that this warranty is an essential part
of this Agreement, without which and for breach of which this Agreement
fails in its entirety.
19. Goddard and St. Paul respectively warrant and represent
that they are authorized to enter into this Agreement on their own
behalf and on behalf of their respective shareholders, directors,
officers, partners, employees, agents, heirs, subsidiaries, divisions,
affiliates, predecessors in interest, successors in interest, assigns
and all persons or entities acting through or under any of them and that
they respectively have the authority to bind such persons and entities
to the terms of this Agreement. Goddard and St. Paul also represent and
warrant that the persons who signatures are affixed hereto are
authorized to sign this Agreement on their behalf and have the legal
authority to bind them hereto.
20. If any provision of this Agreement or any portion of any
provision of this Agreement is declared null and void or unenforceable
by any court or tribunal having jurisdiction, then such provision or
such portion of a provision shall be considered separate and apart from
the remainder or this Agreement which shall remain in full force and
effect.
21. All notices or other communications which any party
desires or is required to give shall be given in writing and shall be
deemed to have been given if hand-delivered, sent by facsimile or mailed
by depositing in the United States mail, prepaid to the party at the
address noted below or such other person or address as either party may
designate in writing from time to time:
If to Goddard Saul I. Reck
President
Goddard Industries, Inc.
705 Plantation Street
Box 765
Worcester, MA 01613-0765
If to St. Paul: David E. Nanzig
Environmental Claim Manager
The St. Paul Companies
385 Washington Street
St. Paul, MN 55102
22. This Agreement shall be executed in two duplicate
originals, with Goddard to retain one original and St. Paul to retain
one original.
IN WITNESS WHEREOF, the parties, by their duly authorized
representatives, affix their signatures hereto.
-42-
By:
/s/ Saul I. Reck
President
Goddard Industries, Inc.
By:
/s/ David E. Nanzig
Environmental Claim Manager
St. Paul Fire and Marine Insurance Company
St. Paul Mercury Insurance Company
-43-
EXHIBIT 10 (i) (B)
AMENDMENT TO
SETTLEMENT AGREEMENT AND RELEASE
Pursuant to Paragraph 16 of the Settlement Agreement and Release
("Agreement")(Attached hereto as Exhibit A) entered into in July 1995,
by and between Goddard Industries, Inc. and Goddard Valve corp., for
themselves, as well as for their predecessors in interest, and their
successors in interest, current parents, subsidiaries, divisions,
affiliates, directors, officers, shareholders, partners, agents and
employees, heirs and assigns, all other insureds or additional named
insureds under the Policies and all persons and entities acting through
or under any of them (collectively "Goddard") and St. Paul Fire and
Marine Insurance Company, for itself and for its predecessors in
interest, successors in interest, current and former parents,
subsidiaries, divisions, affiliates, directors, officers, shareholders,
agents, attorneys, employees, heirs, assigns and all persons and
entities acting through or under any of them (collectively "St.Paul"),
Goddard and St. Paul hereby, for good and valuable consideration which
is acknowledged, amend and modify the Agreement as follows:
1. Paragraph number 1 of the Agreement is replaced with the
following language:
In full and final settlement of all claims for property
damage or personal injury (but excluding bodily injury)
that Goddard has or may have, now or in the future, known
or unknown, against St. Paul with respect to the Site,
arising out of the Site, and with respect to the
Underlying Suits and Claims, St. Paul will contribute
fifty percent (50%) of any amount up to three hundred
thousand dollars ($300,000), seventy five percent (75%)
of any amount over three hundred thousand dollars
($300,000) and up to five hundred thousand dollars
($500,000), ninety percent (90%) of any amount over
five hundred thousand dollars ($500,000) and up to six
hundred fifty thousand dollars ($650,000), and sixty
five percent (65%) of any amount over six hundred fifty
thousand dollars ($650,000) and up to seven hundred fifty
thousand dollars ($750,000) towards any settlement
Goddard can negotiate with the Town of Shrewsbury in the
Shrewsbury Action. Under this formula, St. Paul's
maximum contribution to any settlement of the Shrewsbury
Action would be five hundred thousand dollars ($500,000),
consisting of 50% of the first $300,000 (i.e., $150,000)
plus 75% of the next $200,000 (i.e., $150,000) plus 90%
of the next $150,000 (i.e., $135,000) plus 65% of the
next $100,000 (i.e., $65,000).
2. Paragraph number 4 of the Agreement is replaced with the
following language:
4. In further consideration of the payments referred to
in Paragraphs 1 and 2, Goddard also agrees that it will
be responsible for fifty percent (50%) of any amount up
to three hundred thousand dollars ($300,000), twenty five
percent (25%) of any amount over three hundred thousand
-44-
dollars ($300,000) and up to five hundred thousand
dollars ($500,000), ten percent (10%) of any amount over
five hundred thousand dollars ($500,000) and up to six
hundred fifty thousand dollars ($650,000), and thirty
five percent (35%) of any amount over six hundred fifty
thousand dollars ($650,000) and up to seven hundred and
fifty thousand dollars ($750,000) towards any settlement
Goddard can negotiate with the Town of Shrewsbury in
the Shrewsbury Action. Under this formula, Goddard's
maximum responsibility in a settlement of the Shrewsbury
Action would be two hundred fifty thousand dollars
($250,000), consisting of 50% of the first $300,000
(i.e., $150,000) plus 25% of the next $200,000 (i.e.,
$50,000) plus 10% of the next $150,000 (i.e.,
$15,000) plus 35% of the next $100,000 (i.e., $35,000).
It is agreed that Goddard can fulfill its responsibility
under this Paragraph with funds from third-party sources
and is free to pursue third-parties, including insurers
other than St.Paul, for said amounts.
3. paragraph number 6 of the Agreement is replaced with the
following language:
6. It is agreed that all obligations under this Agreement are
fully contingent upon Goddard successfully negotiating a
settlement of the claims asserted against it in the
Shrewsbury Action for seven hundred fifty thousand dollars
($750,000) or less. If Goddard is unable to reach a
settlement in principle of the claims against it in the
Shrewsbury Action for seven hundred fifty thousand dollars
($750,000) or less by the time the court in the Shrewsbury
Action holds the pretrial conference in that matter, this
Agreement is null and void in its entirety. It is agreed
that the time deadline recited in this Paragraph for
settlement of the Shrewsbury Action by Goddard can be
extended only by written agreement signed by the parties
to this Agreement.
4. All other terms and conditions of the Agreement remain
unchanged and binding on the parties.
5. Goddard and St. Paul respectively warrant and represent that
they are authorized to enter into this Amendment to the
Agreement on their own behalf and on behalf of their
respective shareholders, directors, officers, partners,
employees, agents, heirs, subsidiaries, divisions, affiliates,
predecessors in interest, successors in interest, assigns and
all persons or entities acting through or under any of them
and that they respectively have the authority to bind such
persons and entities to the terms of this Amendment to the
Agreement. Goddard and St. Paul also represent and warrant
that the persons whose signatures are affixed hereto are
authorized to sign this Amendment to the Agreement on their
behalf and have the legal authority to bind them hereto.
6. This Amendment to the Agreement shall be executed in two
duplicate originals, with Goddard to retain one original and
St. Paul to retain one original.
-45-
IN WITNESS WHEREOF, the parties, by their duly authorized
representatives, affix their signatures hereto.
By: _/s/ Saul I. Reck Dated: 12/3/96
Saul I. Reck
President
Goddard Industries, Inc.
By: _/s/ David E. Nanzig Dated: ______________
David E. Nanzig
Environmental Claim Manager
St. Paul Fire and Marine Insurance Company
St. Paul Mercury Insurance Company
-46-
EXHIBIT 10 (j)
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is made on this 31st
day of January, 1997, by and between Goddard Industries, Inc. and
Goddard Valve Corp. ("Policyholder") and Gibralter Casualty Company
("Insurer").
RECITALS
WHEREAS, Insurer issued Insurance Policy No. GSL00619 to Policyholder,
effective for the period of 4/18/83-4/18/84 (the "Policy");
WHEREAS, a coverage dispute has arisen between Policyholder and Insurer,
relating to coverage for various suits or claims that have been filed or
asserted against Policyholder (the "Underlying Suits and Claims")
involving or arising out of Policyholder's facility and operations at
705 Plantation Street, Worcester, Massachusetts (the "Site");
WHEREAS, the Underlying Suits and Claims are:
Town of Shrewsbury v. Neles-Jamesbury, Inc., Civil Action 90-3751-B
(Super. Ct. Mass., Worcester County) ("Shrewsbury Action"); and
Massachusetts Department of Environmental Protection ("DEP") March 30,
1989 Notice of Responsibility letter pursuant to G.L. c.21E and the
Massachusetts Contingency Plan, 310 CMR 40.000, and further orders,
agreements, and actions proceeding therefrom (the "DEP Action").
WHEREAS, Insurer has provided a partial defense for Policyholder against
the Underlying Suits and Claims;
WHEREAS, there is a dispute between Policyholder and Insurer with
respect to the obligations of Insurer under the policy to indemnify
Policyholder with respect to the Underlying Suits and Claims;
WHEREAS, Insurer has denied that it has any obligation to provide
coverage for the Underlying Suits and Claims;
WHEREAS, the parties believe that it is in their mutual interest to
reach an amicable resolution with respect to the coverage action,
without admission of any issue of fact or law;
NOW, THEREFORE, in consideration of the foregoing recitals, covenants,
conditions and payment hereinafter described, and for other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereby agree as follows:
In full and final settlement of all environmental claims for
property damage or personal injury that Policyholder has or may have,
now or in the future, known or unknown, against Insurer with respect to
the Site, arising out of the Site, and with respect to the Underlying
Suits and Claims, Insurer will contribute One Hundred Twenty-Five
Thousand Dollars ($125,000.00) toward a settlement that Policyholder
negotiates with the Town of Shrewsbury in the Shrewsbury Action.
-47-
In consideration of the payment referred to in Paragraph 1, and as
of the date the payment is made by Insurer, Policyholder fully,
absolutely and unconditionally releases and for all purposes forever
discharges Insurer from any and all environmental claims, liabilities,
obligations, demands, rights, actions and causes of action of every kind
and nature, known and unknown, past, present and future, for property
damage or personal injury arising out of any alleged past, present or
future duty or obligation with respect to the Site, arising out of the
Site, and with respect to the Underlying Suits and Claims.
As of the date Insurer makes the payments referred to in Paragraphs
1, Policyholder forever fully and completely covenants not to sue or to
tender any environmental claim to Insurer with respect to property
damage or personal injury at or arising out of the Site and with respect
to the Underlying Suits and Claims.
Within ten (10) days of Insurer's receipt of an executed settlement
agreement by Policyholder and the Town of Shrewsbury in settlement of
the Shrewsbury Action, Insurer will issue a check to Policyholder for
One Hundred Twenty-Five Thousand Dollars ($125,000.00) pursuant to
Paragraph 1 above.
The parties agree that the money paid by Insurer is to be used solely
for payment of the settlement by Policyholder of the Shrewsbury Action,
but Policyholder is at liberty to arrange for payments of the settlement
amount in that action to take place over a period of time or in
installments. Any such provision in the settlement of the Shrewsbury
Action will not affect the time period for the Insurer to make its
payment as set forth in Paragraph 4 above.
This Agreement shall be solely binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.
Nothing in this Agreement is intended nor shall it be construed to
confer any benefit whatsoever on any persons other than the parties. No
persons or entities are intended to be, nor will they be construed to
be, third-party beneficiaries to this Agreement,.
This Agreement does not constitute an admission by Insurer of an
obligation to defend or indemnify Policyholder with respect to any
policy or any suit or claim.
This Agreement is not intended to be and is not to be construed as a
contract of insurance.
This Agreement shall not be admissible in any legal proceeding except
to enforce its terms.
Each of the parties has entered into this Agreement after consulting
with counsel. Therefore, the language of this Agreement shall not
presumptively be construed in favor or against either party.
This Agreement represents the entire understanding between the
parties and, without limitation, the parties expressly agree that any
previous communications, correspondence, memorialization of agreement
and previous agreements are excluded from this Agreement and are not to
be employed to construe this Agreement. Any other provisions of this
Agreement to the contrary notwithstanding, this Agreement can only be
modified by a writing signed by all parties and this provision cannot be
orally waived.
-48-
Policyholder has not assigned any of its rights pursuant to the
alleged Policy, and Policyholder agrees that it will not attempt
prospectively to assign any such rights that are to be released under
this Agreement.
Policyholder and Insurer respectively warrant and represent that they
are authorized to enter into this Agreement on their own behalf and on
behalf of their respective shareholders, directors, officers, partners,
employees, agents, heirs, subsidiaries, divisions, affiliates,
predecessors in interest, successors in interest, assigns and all
persons or entities acting through or under any of them and that they
respectively have the authority to bind such persons and entities to the
terms of this Agreement. Policyholder and Insurer also represent and
warrant that the persons whose signatures are affixed hereto are
authorized to sign this Agreement on their behalf and have the legal
authority to bind them hereto.
If any provision of this Agreement or any portion of any provision of
this Agreement is declared null and void or unenforceable by any court
or tribunal having jurisdiction, then such provision or such portion of
a provision shall be considered separate and apart from the remainder or
this Agreement which shall remain in full force and effect.
All notices or other communications which any party desires or is
required to give shall be given in writing and shall be deemed to have
been given if hand-delivered, sent by facsimile or mailed by depositing
in the United States mail, prepaid to the party at the address noted
below or such other person or address as either party may designate in
writing from time to time.
If to Policyholder: Saul I. Reck
President
Goddard Industries, Inc.
705 Plantation Street
Box 765
Worcester, MA 01613-0765
If to Insurer: Mr. Anthony Leanza
Gibralter Insurance Company
Eight Center Drive
Jamesburg, NJ 08831
This Agreement shall be executed in two duplicate originals, with
Policyholder to retain one original and Insurer to retain one original.
IN WITNESS WHEREOF, the parties, by their duly authorized
representatives, affix their signatures hereto.
GODDARD INDUSTRIES, INC.
By: _______________________________
Saul I. Reck, President
-49-
Gibralter CASUALTY COMPANY
By: _______________________________
-50-
EXHIBIT 10 (k)
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release ("Agreement") is made on this 31st
day of January, 1997, by and between Goddard Industries, Inc. and
Goddard Valve Corp. ("Policyholder") and Lexington Insurance Company
("Insurer").
RECITALS
WHEREAS, Insurer issued Insurance Policy No. 8632097 to Policyholder,
effective for the period of 1984-1985 (the "Policy");
WHEREAS, a coverage dispute has arisen between Policyholder and Insurer,
relating to coverage for various suits or claims that have been filed or
asserted against Policyholder (the "Underlying Suits and Claims")
involving or arising out of Policyholder's facility and operations at
705 Plantation Street, Worcester, Massachusetts (the "Site");
WHEREAS, the Underlying Suits and Claims are:
1. Town of Shrewsbury v. Neles-Jamesbury, Inc., Civil Action 90-3751-B
(Super. Ct. Mass., Worcester County) ("Shrewsbury Action"); and
2. Massachusetts Department of Environmental Protection ("DEP") March
30, 1989 Notice of Responsibility letter pursuant to G.L. c.21E and
the Massachusetts Contingency Plan, 310 CMR 40.000, and further
orders, agreements, and actions proceeding therefrom (the "DEP
Action").
WHEREAS, Insurer has provided a partial defense for Policyholder against
the Underlying Suits and Claims under a reservation of rights.
WHEREAS, there is a dispute between Policyholder and Insurer with
respect to the obligations of Insurer under the policy to indemnify
Policyholder with respect to the Underlying Suits and Claims;
WHEREAS, Insurer has denied that it has any obligation to provide
coverage for the Underlying Suits and Claims;
WHEREAS, the parties believe that it is in their mutual interest to
reach an amicable resolution with respect to the coverage action,
without admission of any issue of fact or law;
NOW, THEREFORE, in consideration of the foregoing recitals, covenants,
conditions and payment hereinafter described, and for other good and
valuable consideration, the receipt whereof is hereby acknowledged, the
parties hereby agree as follows:
1. In full and final settlement of all environmental claims for
property damage, bodily injury, or personal injury that Policyholder has
or may have, now or in the future, known or unknown, against Insurer
with respect to the Site or any other known sites, arising out of the
Site, and with respect to the Underlying Suits and Claims, Insurer will
contribute Ninety Thousand Dollars ($90,000.00) toward a settlement that
Policyholder negotiates with the Town of Shrewsbury in the Shrewsbury
Action.
-51-
2. In consideration of the payment referred to in Paragraph 1, and
as of the date the payment is made by Insurer, Policyholder fully,
absolutely and unconditionally releases and for all purposes forever
discharges Insurer from any and all environmental claims, liabilities,
obligations, demands, rights, actions and causes of action of every kind
and nature, known and unknown, past, present and future, for property
damage or personal injury arising out of any alleged past, present or
future duty or obligation with respect to the Site, arising out of the
Site, and with respect to the Underlying Suits and Claims.
3. As of the date Insurer makes the payments referred to in
Paragraphs 1, Policyholder forever fully and completely covenants not to
sue or to tender any environmental claim to Insurer with respect to
property damage or personal injury at or arising out of the Site and
with respect to the Underlying Suits and Claims.
4. Within thirty (30) days of Insurer's receipt of an executed
settlement agreement by Policyholder and the Town of Shrewsbury in
settlement of the Shrewsbury Action, Insurer will issue a check to
Policyholder for Ninety Thousand Dollars ($90,000.00) pursuant to
Paragraph 1 above.
5. The parties agree that the money paid by Insurer is to be used
solely for payment of the settlement by Policyholder of the Shrewsbury
Action, but Policyholder is at liberty to arrange for payments of the
settlement amount in that action to take place over a period of time or
in installments. Any such provision in the settlement of the Shrewsbury
Action will not affect the time period for the Insurer to make its
payment as set forth in Paragraph 4 above.
6. This Agreement shall be solely binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. Nothing in this Agreement is intended nor shall it be
construed to confer any benefit whatsoever on any persons other than the
parties. No persons or entities are intended to be, nor will they be
construed to be, third-party beneficiaries to this Agreement,.
7. This Agreement does not constitute an admission by Insurer of an
obligation to defend or indemnify Policyholder with respect to any
policy or any suit or claim.
8. This Agreement is not intended to be and is not to be construed
as a contract of insurance.
9. This Agreement shall not be admissible in any legal proceeding
except to enforce its terms.
10. Each of the parties has entered into this Agreement after
consulting with counsel. Therefore, the language of this Agreement
shall not presumptively be construed in favor or against either party.
11. This Agreement represents the entire understanding between the
parties and, without limitation, the parties expressly agree that any
previous communications, correspondence, memorialization of agreement
and previous agreements are excluded from this Agreement and are not to
be employed to construe this Agreement. Any other provisions of this
Agreement to the contrary notwithstanding, this Agreement can only be
modified by a writing signed by all parties and this provision cannot be
orally waived.
-52-
12. Policyholder has not assigned any of its rights pursuant to the
alleged Policy, and Policyholder agrees that it will not attempt
prospectively to assign any such rights that are to be released under
this Agreement.
13. Policyholder and Insurer respectively warrant and represent that
they are authorized to enter into this Agreement on their own behalf and
on behalf of their respective shareholders, directors, officers,
partners, employees, agents, heirs, subsidiaries, divisions, affiliates,
predecessors in interest, successors in interest, assigns and all
persons or entities acting through or under any of them and that they
respectively have the authority to bind such persons and entities to the
terms of this Agreement. Policyholder and Insurer also represent and
warrant that the persons whose signatures are affixed hereto are
authorized to sign this Agreement on their behalf and have the legal
authority to bind them hereto.
14. If any provision of this Agreement or any portion of any
provision of this Agreement is declared null and void or unenforceable
by any court or tribunal having jurisdiction, then such provision or
such portion of a provision shall be considered separate and apart from
the remainder or this Agreement which shall remain in full force and
effect.
15. All notices or other communications which any party desires or
is required to give shall be given in writing and shall be deemed to
have been given if hand-delivered, sent by facsimile or mailed by
depositing in the United States mail, prepaid to the party at the
address noted below or such other person or address as either party may
designate in writing from time to time.
If to Policyholder: Saul I. Reck
President
Goddard Industries, Inc.
705 Plantation Street
Box 765
Worcester, MA 01613-0765
If to Insurer: Timothy Potvin
Lexington Insurance Co.
200 State Street,3rd Floor
Boston, MA 02109
16. This Agreement shall be executed in two duplicate originals, with
Policyholder to retain one original and Insurer to retain one original.
IN WITNESS WHEREOF, the parties, by their duly authorized
representatives, affix their signatures hereto.
GODDARD INDUSTRIES, INC.
By: _______________________________
Saul I. Reck, President
-53-
LEXINGTON INSURANCE COMPANY
By: _______________________________
Timothy Potvin
-54-
Portions of Paragraph 14 have been omitted pursuant to
a grant of confidentiality treatment EXHIBIT 10 (l)
SETTLEMENT AGREEMENT
This Settlement Agreement, entered into as of the 31st day of
January, 1997 ("the Agreement") between and among the Town of
Shrewsbury, Neles-Jamesbury, Inc., Goddard Industries, Inc., Sprague
Electric Company, which has been merged with and into American Annuity
Group, Inc., Micro Tech Manufacturing, Inc., Worcester Sand & Gravel
Company, Custom Coating & Laminating Corporation and Edward Garrepy
Platers is for the release and settlement of all claims and causes of
action that were or could have been raised between and among the
parties, as that term is defined below, and Allegro Microsystems, Inc.
in the civil action known as Town of Shrewsbury v. Neles-Jamesbury et
al., Worcester Superior Court, Civil Action No. 90-3751B, including but
not limited to claims related to the contamination of the Home Farm
Wells, all as more specifically set forth below.
I. DEFINITIONS
1. "The Town" means the Town of Shrewsbury and its boards,
departments, elected and appointed officials, employees, agents,
attorneys and other representatives.
2. "Neles-Jamesbury" means Neles-Jamesbury, Inc. and its parent,
subsidiary, predecessor and successor corporations and related entities,
including Jamesbury Corp., and their respective officers, directors,
shareholders, employees, insurers, agents, attorneys or other
representatives.
3. "Goddard" means Goddard Industries, Inc. and its parent,
subsidiary, predecessor and successor corporations and related entities,
including Goddard Valve Corporation and Webstone Industries, Inc., and
their respective officers, directors, shareholders, employees, insurers,
agents, attorneys or other representatives.
4. "Sprague" means Sprague Electric Company, which has been
merged with and into American Annuity Group, Inc., and its parent,
subsidiary, predecessor and successor corporations and related entities
and their respective officers, directors, shareholders, employees,
insurers, agents, attorneys or other representatives.
5. "Micro Tech" means Micro Tech Manufacturing, Inc., and its
parent, subsidiary, predecessor and successor corporations and related
entities and their respective officers, directors, shareholders,
employees, insurers, agents, attorneys or other representatives.
6. "Worcester Sand" means Worcester Sand and Gravel Company,
Incorporated and its parent, subsidiary, predecessor and successor
corporations and related entities and their respective officers,
directors, shareholders, employees, insurers, agents, attorneys or other
representatives.
7. "Custom Coating" means Custom Coating & Laminating
Corporation and its parent, subsidiary, predecessor and successor
corporations and related entities and their respective officers,
directors, shareholders, employees, insurers, agents, attorneys or other
representatives.
-55-
8. "Garrepy Platers" means Edward Garrepy Platers and its
parent, subsidiary, predecessor and successor corporations and related
entities and their respective officers, directors, shareholders,
employees, insurers, agents, attorneys or other representatives.
9. "Allegro" means Allegro MicroSystems, Inc. and its parent,
subsidiary, predecessor and successor corporations and related entities
and their respective officers, directors, shareholders, employees,
insurers, agents, attorneys or other representatives.
10. "The defendants" means Neles-Jamesbury, Goddard, Sprague,
Micro Tech, Custom Coating, Worcester Sand and Garrepy Platers.
11. "The parties" means the Town and the defendants, except where
indicated below.
12. "The Action" means the civil action filed by the Town in
Worcester Superior Court and designated "Town of Shrewsbury v. Neles-
Jamesbury. Inc., et al, Worcester Superior Court, Civil Action No. 90-
3751B.
II. SETTLEMENT OF THE ACTION
13. By entering into this Agreement, the parties make no
admissions as to liability in the Action. This Agreement is a
compromise of disputed claims.
14. The defendants and Allegro agree to pay the Town the sum of
Three Million, Six Hundred Thousand Dollars ($3,600,000). The
contribution (also referred to herein as "share") by or on behalf of the
individual defendants shall be as follows:
a. Neles-Jamesbury: $ [ * ]
b. Goddard: $ 750,000
c. Sprague/Allegro/Micro Tech: $ [ * ]
d. Worcester Sand: $ [ * ]
e. Custom Coating: $ [ * ]
f. Garrepy Platers: $ [ * ]
TOTAL: $3,600,000
15. In consideration of these payments, and for other good and
valuable consideration, the Town agrees to (a) enter into this
Agreement, (b) execute a Mutual Release with each of the defendants and
Allegro in the form attached as Exhibit A, and (c) dismiss the Action,
with prejudice and without costs, as to all defendants by its execution
of Stipulations of Dismissal in the form attached as Exhibit C.
16. In consideration thereof, and in consideration of entering
this Agreement and making payments to the Town as set forth herein, each
of the defendants and Allegro agree to (a) enter this Agreement, (b)
execute a Mutual Release with the Town in the form attached as Exhibit A
and (c) execute Mutual Releases for the benefit of each of the other
parties in the form attached as Exhibit B, and each of the defendants
agree to the dismissal, with prejudice and without costs, of all claims
between and among the parties in the action, by its execution of
Stipulations of Dismissal in the form attached as Exhibit C.
* Information omitted pursuant to a grant of confidentiality
treatment. -56-
17. Duplicate originals shall be executed for each release
referred to in paragraphs 15 and 16, above.
18. Each of Neles-Jamesbury, Sprague, Allegro, Micro Tech, Custom
Coating and Garrepy Platers shall pay its entire contribution towards
the $3,600,000, in accordance with paragraph 14, above, on or before
February 3, 1997.
19. Each of Worcester Sand and Goddard have entered into an
agreement with the Town with respect to the terms and conditions under
which each will pay its contribution towards the $3,600,000 (the
"Payment Agreements") in accordance with Paragraph 14 above. Said
Payment Agreements shall be consistent with the terms of this Agreement.
20. Worcester Sand shall make an initial payment of $50,000 and
Goddard shall make an initial payment of $500,000 on or before February
3, 1997.
21. The payments described in paragraphs 18, 19 and 20 may be in
the form of a cashier's check, certified check or check drawn on an
attorney's client's trust account.
22. By February 3, 1997, the Town shall receive payments under
paragraphs 19 and 20, above, totaling no less than $2,925,000. In the
event that the Town does not receive payments totaling $2,925,000 by
February 3, 1997, this Agreement, along with all Mutual Releases and
Stipulations of Dismissal executed pursuant to paragraphs 15 and 16 of
this Agreement shall be null and void, and the case shall proceed to
trial on April 7, 1997.
23. Each of Worcester Sand and Goddard shall make any remaining
payment to the Town, in accordance with their respective Payment
Agreements, until each has paid its entire contribution.
24. On February 3, 1997, counsel for the parties shall meet at a
mutually agreed time and place for the purpose of the Town receiving the
payments described in paragraphs 19 and 21, above, and for counsel to
deliver to each other the Mutual Releases as follows: .
(a) between the Town and each of Neles-Jamesbury, Sprague,
Allegro, Micro Tech, Custom Coating, Worcester Sand and Garrepy Platers;
(b) between Neles-Jamesbury and each of Sprague, Allegro, Micro
Tech, Custom Coating, Goddard, Worcester Sand and Garrepy Platers;
(c) between Sprague and each of Neles-Jamesbury, Allegro, Micro
Tech, Custom Coating, Goddard, Worcester Sand and Garrepy Platers;
(d) between Allegro and each of Sprague, Neles-Jamesbury, Micro
Tech, Custom Coating, Goddard, Worcester Sand and Garrepy Platers;
(e) between Micro Tech and each of Sprague, Allegro, Neles-
Jamesbury,
Custom Coating, Goddard, Worcester and Garrepy Platers;
-57-
(f) between Custom Coating and each of Sprague, Allegro, Micro
Tech,
Neles-Jamesbury, Goddard, Worcester Sand and Garrepy Platers;
(g) between Garrepy Platers and each of Sprague, Allegro, Micro
Tech,
Custom Coating, Goddard, Worcester and Neles-Jamesbury; and
(h) between Goddard and each of Neles-Jamesbury, Sprague, Allegro,
Micro
Tech, Custom Coating, Goddard, Worcester and Garrepy Platers.
Releases between the Town and Goddard shall be delivered in accordance
with the Payment agreement between those two parties.
25. At or before the February 3, 1997 meeting described in
paragraph
24, above, counsel for the parties shall execute Stipulations of
Dismissal for all claims by and against the parties and file said
Stipulations with the Worcester Superior Court.
26. At or before the February 3, 1997 meeting described in
paragraph
24, above, counsel for the parties shall provide their written
assent
to Motions for the Entry of Separate Judgment in Civil Action No.
90-
3751B, file said Motions with the Worcester Superior Court.
IV. MISCELLANEOUS PROVISIONS
27. In the event of ambiguity or conflict between this
Agreement and a
Mutual Release, the terms of the Mutual Release shall govern
as to the
parties entering into that Mutual Release.
28. For purposes of paragraphs 24, above and 29, 30, 31, 32 and
33 below, the terms "party", "parties" and "defendant" shall also
include and mean Allegro.
29. Each defendant shall be responsible to pay only its share, as
specified above, of the settlement amount. Failure by one defendant to
pay its share shall not effect the rights and liabilities of any other
defendant under this Agreement.
30. In any action by the Town to collect a defendant's share of
the settlement amount, the Town shall be entitled to recover all costs
of collection, including reasonable attorneys' fees, from that
defendant.
31. Except to the extent necessary to enforce the obligations
assumed under and imposed by this Agreement, neither the Agreement nor
any Payment Agreement shall be admissible in evidence in any action for
any purpose. The terms and conditions of the Agreement and the Payment
Agreements shall not be disclosed to any third parties to the Agreement
or to the Payment Agreements except:
-58-
(a) the total sum to be paid to the Town (i.e.,
$3,600,000);
(b) as necessary to comply with applicable laws, including
without limitation, laws and regulations regarding disclosures to the
Securities and Exchange Commission and other financial regulations;
(c) to any parties' accountants or attorneys;
(d) to any parties' insurers; or
(e) by written agreement of all of the Parties.
32. The parties specifically agree that the individual
contribution amounts of each party as set forth in paragraph 14, above,
and in the Payment Agreements, shall remain confidential, except to the
extent necessary to consider, agree to, execute and enforce the
obligations of the parties; provided, however, that this paragraph shall
be subject to disclosures which the Town may be required to make under
M.G.L. c. 66, section 10 and M.G.L. c. 4, section 7, clause twenty-sixth.
33. Each of the undersigned specifically represents and warrants
that he or she is authorized to sign this Agreement and bind the party
for which he or she executes this Agreement.
34. This Agreement may be executed in multiple original
counterparts, which collectively will constitute one agreement.
35. This Agreement shall be effective as an instrument under
seal and shall be governed by and construed in accordance with the Laws
of the Commonwealth of Massachusetts.
36. Promptly upon signing this Agreement, and prior to February
3, 1997, the parties agree to seek judicial approval of the provisions
of this Agreement with respect to the Stipulations of Dismissal referred
to in paragraphs 15 and 16, above.
TOWN OF SHREWSBURY
by:____________________________Witnessed by:__________________
Richard Carney Address:
Town Manager
NELES-JAMESBURY, INC.
by:____________________________Witnessed by:__________________
William Rawstron Address:
Vice President
GODDARD INDUSTRIES, INC.
by:____________________________Witnessed by:__________________
Saul I. Reck Address:
President
-59-
SPRAGUE ELECTRIC COMPANY,
WHICH HAS BEEN MERGED WITH
AND INTO AMERICAN ANNUITY
GROUP, INC.
by:____________________________Witnessed by:__________________
Name Address:
Position
MICRO TECH MANUFACTURING, INC.
by:____________________________Witnessed by:__________________
Theodore Jasiewicz Address:
President
WORCESTER SAND AND GRAVEL
COMPANY INCORPORATED
by:____________________________Witnessed by:__________________
Matteo Trotto Address:
President
CUSTOM COATING & LAMINATING CORP.
by:____________________________Witnessed by:__________________
Roger Plourde Address:
President
EDWARD GARREPY PLATERS
by:____________________________Witnessed by:__________________
David Barlow Address:
President
Dated: ________________________
ALLEGRO MICROSYSTEMS, INC.
by:____________________________Witnessed by:__________________
Fred Windover Address:
Vice President and General Counsel
Dated: ________________________
-60-
EXHIBIT (27)
This schedule contains summary financial information
extracted from Form 10-KSB and is qualified in its entirety
by reference to such financial statements.
12 MOS
Fiscal year end Sep 28 1996
Period start Oct 01 1995
Period end Sep 28 1996
CASH 65,951
SECURITIES 0
RECEIVABLES 1,182,471
ALLOWANCE 27,600
INVENTORY 3,312,449
CURRENT ASSETS 5,434,080
PP&E 3,641,818
DEPRECIATION 2,589,252
TOTAL ASSETS 6,672,026
CURRENT LIABILITIES 1,754,953
COMMON 20,401
OTHER 3,319,174
TOTAL LIABILITY 6,672,026
AND EQUITY
SALES 8,300,167
TOTAL REVENUES 3,019,513
COS 5,280,654
TOTAL COSTS 1,822,502
INTEREST EXPENSES 102,529
LOSS PROVISION 3,000
INCOME PRETAX 1,150,082
INCOME TAX 465,000
NET INCOME 685,082
EPS .33
-61-
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No.
1 to its Report on Form 10-KSB for the year ended September 28, 1996 to
be signed on its behalf by the undersigned, thereto duly authorized.
GODDARD INDUSTRIES, INC.
Dated: April 25, 1997 By: /s/ Saul I. Reck
Saul I. Reck, President
